Township High School District 211 2013 Tax Levy Information

October 17, 2013

2-Year Property Tax Cycle

Assessment/Review

Levy

State Equalization

Final EAV / Tax Rates

Collections/Distribution

Levy / EAV = Tax Rate

Dec. 2013

Summer 2014 Summer/Fall 2014

Summer/Fall 2014

Property EAV

Cook County Converging Factors

•2013 North Suburban Cook

•Phase out of 7% Expanded Exemption

Triennial Reassessment

•25% Commercial

•10% Residential Property Classification

•Large Commercial assessment reductions – Legal resources.

Commercial Appeals – Assessment Reduction

•Multiplier determined by the Illinois Dept. of Revenue

•Based on historical sales data

Cook County Equalization Factor

• TIFs

• 6b, 7a, 7b, 8

Commercial Tax Incentives

Levy/EAV = Tax Rate

Implications of the Converging Factors

Residential Non-Residential Residential Non-Residential

District 211 65% 35% 57% 43%

North Triad 68% 32% 66% 34%

Countywide 63% 37% 62% 38%

2012 Tax Burden 2008 Tax Burden

"Tax Burden Shift"

Residential

Non-

Residential

8% Tax Burden Shift since 2008

Key factors to consider for 2013…

1. Cook County assessment – (two levels – 10%/25%)

2. Equalization factor (“multiplier”) – decreasing trend

– Comparing recorded sales prices to assessed values for the 3 prior years

3. Phase out of 7% Expanded Homeowners Exemption ($20,000 -

2010; $16,000 – 2011 ; to $12,000 for 2012; to $7,000 for 2013)

4. Record volume of appeals being processed through the Board of Review (assessment reductions to large businesses – Tax burden shift)

5. Increasing trend of refunds from prior years

Tax Burden Shift

EAV change - assessment reduction/appeal

Levy / EAV = Tax Rate (Decreased EAV = Higher Tax Rate)

Disproportionate changes in EAV by tax parcel results in tax burden shift (from commercial to residential)

Nearly impossible to predict the tax impact on individual homeowners

SCENARIO

Year 2012 Tax Cap Limit: 1.7% Year 2013Tax Levy Extension 20,000$ Levy Extension Change 20,340$ + 1.7%

Tax Rate 2.000% 2.171%

2011 EAV % of Total Tax Bill

EAV

Change 2012 EAV % of Total Tax Bill $ Inc. (Dec.)

Tax Bill %

Change

Residential A 100,000$ 10.00% 2,000$ (1.0%) 99,000$ 10.57% 2,149$ 149$ 7.5%

Residential B 100,000$ 10.00% 2,000$ (2.0%) 98,000$ 10.46% 2,127$ 127$ 6.4%

Commercial C 400,000$ 40.00% 8,000$ (5.0%) 380,000$ 40.55% 8,249$ 249$ 3.1%

Commercial D 400,000$ 40.00% 8,000$ (10.0%) 360,000$ 38.42% 7,815$ (185)$ (2.3%)

Total EAV 1,000,000$ 100% 20,000$ 937,000$ 100.00% 20,340$ 340$

(6.3%) + 1.7% Tax Burden Shift

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Tax Refunds Paid $4,755,048 $3,660,184 $5,364,490 $5,356,994 $6,068,801 $4,594,228 $6,074,890

Tax Refunds Paid from Current Year Collections FY2007 - FY2013 -- $35.9 Million in losses

Effect of Property Tax Refunds

Current Year Losses as

a % Levy Extended

(2.0 - 3.0%) of Levy

Net Result:

District unable to

access the

statutory levy

limit

Levy Increase

limited by Tax Cap

(CPI)

( - Refunds )

Net Collections

Property Tax Distributions/Refunds

Prior Year (2007, 2008,

2010, 2011) Refunds

deducted from current

year 2012 collections

• October 17, 2013 - Review levy material for 2013

• November 14, 2013 – Review levy material for further discussion. Determine amount of proposed 2013 levy

• November 28 – December 5, 2013 - Publish notice of levy hearing

• December 12, 2013 – Public hearing/Levy adoption.

• December 31, 2013 – Last day to file levy with County Clerk

2013 Tax Levy Calendar

District 211 Tax Rate

Tax Cap limits levy growth

Lowered and maintained tax rate since 2007 through Debt Service reduction plan (abatements)

EAV Growth of 22.6% (2007-2009)

EAV Decrease of 27.8% (2010-2012)

Equalized Assessed Valuation (EAV)

EAV Growth Factors

2013 Reassessment year

New Property Growth - 0.5%

Schaumburg TIF – 2013

Cook Co. Multiplier

Phase out of 7% Expanded Homeowners Exemption

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Tax Rate 2.066 2.165 2.158 2.190 2.261 1.972 1.928 1.916 2.204 2.482 2.772

0.000%

0.500%

1.000%

1.500%

2.000%

2.500%

3.000%

$-

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

Projected CPI-U

Consumer Price Index (CPI-U)

• CPI for 2012– 1.7% (Tax Cap limitation for 2013)

• 12-Month CPI (Aug. 12’- Aug. 13’) at 1.5%

• Projection Assumption – 1.7% for 2013; 1.8% for 2014-2016

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

1.6%

2.4%

1.9%

3.3% 3.4%

2.5%

4.1%

0.1%

2.7%

1.5%

3.0%

1.7% 1.8% 1.8% 1.8%

Maximum Levy per Tax Cap - 1.7% (based on 12-month CPI-U for 2012)

New Property estimate (0.5%)

Olde Schaumburg Centre TIF (Tax Increment Financing) expired in 2012

Debt Service reduction (abatements) through 2014 Levy (Lower principle/interest to $3.3 million)

Average Levy % increase (including additional new property) has been lower than CPI-U limitation per Tax Cap

2013 Tax Levy Information

Levy Extensions

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

2006 2007 2008 2009 2010 2011 2012 2013 2014

TAX TOTAL LEVY $ AMOUNT LEVY %

YEAR EXTENSION INCREASE INCREASE CPI-U

2012 209,731,319 6,462,707 3.2 3.0

2011 203,268,612 3,339,722 1.7 1.5

2010 TR 199,928,890 5,691,094 2.9 2.7

2009 194,237,796 592,977 .3 0.1

2008 193,644,819 5,975,692 3.2 4.1

2007 TR 187,669,127 2,520,799 1.3 2.5

Average Levy % Increase w/ New Property: 2.1 2.3

2013 Levy/Consumer Price Index (CPI-U)

CPI for 2012 – 1.7% (Tax Cap limitation for 2013 Levy)

Projection Assumption – 1.7% for 2013; 1.8% for 2014-2016

New Property consideration 2013 – TIF Expiration

Olde Schaumburg Tax Increment Financing District

Created in 1989 (EAV $11.7 million – Expired in 2012 (EAV $39.5 million)

Increment (est. $27.8 million) accessible as new property in first year only – 2013 levy

TIF Increment:

$27.8 million

2012 EAV - $39.5 million

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

EAV

Olde Schaumburg Tax Increment Financing (1989-2012)

Actual EAV – Additional Property Taxes used to fund redevelopment area

TIF Frozen EAV of $11.7 Million – Property Taxes to all taxing districts

Proposed 2013 Tax Levy

Aggregate Levy

Extension subject to

Tax Cap limit

(CPI + New Property)

1.7% + 0.5%= 2.2%

Fund Levy Extension

Levy %

Inc.(Dec.)

2013 Tax

Rate

Educational 161,945,283 2.2% 2.1738

Working Cash 2,068,034 19.9% 0.0278

Oper./Maint. 28,207,371 1.0% 0.3786

Transportation 7,070,850 2.5% 0.0949

Municipal Retire. 4,717,702 3.2% 0.0633

Social Security 4,717,702 3.2% 0.0633

Sub-Total 208,726,942 2.2% 2.802

Debt Service** 3,460,852 (37.8%) 0.0465

TOTAL 212,187,794 1.2% 2.848

Levy Extension per Limiting Rate

** Includes proposed levy reduction of $2.0 million

Debt Service Schedule

• Levy Reductions - $24.3 million through 2012

• Proposed further lowering of debt service levy from $5.3 million to $3.3 million

• $28.4 million through 2015

Decreases Levy to $3.3 million

Principal/ Interest Due

Levy Year

Life Safety Bonds 2002

Life Safety Bonds 2012/2013

Working Cash Bonds 2006 Levy

(Levy Reduction) Net Levy

6/1/07-12/1/07 2006 5,766,075 4,532,250 10,298,325 10,298,325

6/1/08-12/1/08 2007 3,931,200 6,365,050 10,296,250 (3,000,000) 7,296,250

6/1/09-12/1/09 2008 10,296,000 10,296,000 (5,000,000) 5,296,000

6/1/10-12/1/10 2009 10,295,750 10,295,750 (5,000,000) 5,295,750

6/1/11-12/1/11 2010 8,995,000 8,995,000 (3,700,000) 5,295,000

6/1/12-12/1/12 2011 8,997,750 8,997,750 (3,700,000) 5,297,750

6/1/13-12/1/13 2012 203,349 8,996,000 9,199,349 (3,958,372) 5,240,977

6/1/14-12/1/14 2013 4,687,050 609,000 5,296,050 (2,000,000) 3,296,050

6/1/15-12/1/15 2014 5,297,650 5,297,650 (2,000,000) 3,297,650

6/1/16-12/1/16 2015 3,274,650 3,274,650 3,274,650

6/1/17-12/1/17 2016 3,050,200 3,050,200 3,050,200

Total ($28,358,372)

Why Levy at Tax Cap limit?

1. Property Taxes account for 85% of D211 revenue. Aggregate levies projected to support the instructional program

2. Proposed legislation to change Tax Cap law and Pension Reform (potential charges to D211)

3. Volatility of State funding (categorical payments)

4. Expenditure categories subject to inflationary increases greater than CPI (i.e health insurance, energy, food, fuel)

5. Though capped at CPI-U, net collections adversely affected by refunds from prior years.

6. Aggregate levy extension per Tax Cap since 1994

1. Lowering the levy from Tax Cap limit (Approx. $1.0 million less in levy per 0.5% reduction compounded annually)

2. Cumulative effect – unable to recapture reduced levy amount. Aggregate extension from the prior year + CPI increase

7. Debt Service levy reduced through abatements

2012 Base Year Aggregate Levy

Extension

2013 Levy Scenario

2013 Levy Considerations

Levy Difference

from Tax Cap Levy 2014

Levy Diff. from Tax Cap Levy 2015

Levy Diff. from Tax Cap

$204,147,561 2.2% (CPI Tax

Cap + New Prop.)

$208,726,941 $212,901,480 $217,159,509

1.7% $207,618,070 ($1,108,871) $211,770,431 ($1,131,049) $216,005,840 ($1,153,670)

1.2% $206,597,332 ($2,129,609) $210,729,278 ($2,172,201) $214,943,864 ($2,215,645)

0.7% $205,576,594 ($3,150,347) $209,688,126 ($3,213,354) $213,881,888 ($3,277,621)

Levy Scenarios: Non-Accessible levy loss Allowable tax levy capped in relation to the previous years’

amount (Base Year – 2012 Extension)

Levying less than the levy limitation results in non-accessible levy loss in each subsequent levy year

For 2013 - Approx. $1.0 million less in levy per 0.5% reduction compounded annually

Cumulative Levy (Loss)

($3,393,590)

($6,517,456)

($9,641,322)

Operating Funds Projection Summary: (Education, Operations/Maintenance, Transportation, Illinois Municipal Retirement/Social Security, and Working Cash Funds)

Projection based on aggregate levy increases per tax cap limitation

Budget Projections ---------------------------------------------------------------------------------------------------------

Revenue 2013-2014 % +(-) 2014-2015 % +(-) 2015-2016 % +(-) 2016-2017 % +(-) 2017-2018 % +(-)

Local $214,156,000 2.0% $218,428,246 2.0% $222,856,947 2.0% $226,964,360 1.8% $231,217,486 1.9%

State $14,421,000 (13.1%) $14,676,075 1.8% $14,957,496 1.9% $15,227,324 1.8% $15,425,621 1.3%

Federal $6,045,000 7.9% $6,135,675 1.5% $6,227,710 1.5% $6,321,126 1.5% $6,415,943 1.5%

Total Direct Revenue $234,622,000 1.0% $239,239,996 2.0% $244,042,153 2.0% $248,512,810 1.8% $253,059,050 1.8%

Expenditures 2013-2014 % +(-) 2014-2015 % +(-) 2015-2016 % +(-) 2016-2017 % +(-) 2017-2018 % +(-)

Salary/Benefits $187,302,000 3.5% $192,909,340 3.0% $198,028,255 2.7% $203,372,238 2.7% $208,907,192 2.7%

Other $40,109,000 3.1% $41,018,800 2.3% $41,913,145 2.2% $42,782,037 2.1% $43,663,861 2.1%

Total Direct Expenditures $227,411,000 3.4% $233,928,140 2.9% $239,941,399 2.6% $246,154,275 2.6% $252,571,053 2.6%

Excess/Deficit $7,211,000 $5,311,856 $4,100,754 $2,358,535 $487,997

Beginning Fund Balance

$166,243,584 $152,356,584 $153,168,440 $154,269,194 $153,627,729

Projected Year End Balance

$152,356,584 $153,168,440 $154,269,194 $153,627,729 $153,627,729

Operating Funds Projection Summary -- Revenue over Expenditure Excess (Deficit)

2012 Levy 2013 Levy Scenario 2014-2015 2015-2016 2016-2017 2017-2018

$204,147,561 2.2% (CPI Tax Cap +

New Prop.) $5,311,856 $4,100,754 $2,358,535 $487,997

1.7% $4,238,566 $2,966,587 $1,097,941 ($1,043,258)

1.2% $3,116,716 $1,783,109 ($53,929) ($2,029,993)

0.7% $2,236,524 $868,783 ($1,062,621) ($3,161,498)

Illustrates the impact of requesting an amount less than the allowable tax cap limitation

Assumed no change in Expenditures to highlight the necessary reduction necessary to maintain a balanced budget

Operating Funds Projection Comparison: (Education, Operations/Maintenance, Transportation, Illinois Municipal Retirement/Social Security, and Working Cash Funds)

Max. Levy 2.2% (Includes New Property

2002-2003 2005-2006 2008-2009 2011-2012 2014-2015

Expenditures Revenue

Public Awareness Issues/Planning Challenges

1. State’s education funding system for education - property taxes account for the majority revenue.

2. Tax Cap legislation has been in place since 1994 to limit taxation.

3. State mandates for educational programs and services are unfunded.

4. District 211 has kept all expenditures at or below revenue levels.

5. Since 2007, District 211 has reduced its’ overall levy by $24.3 million.

Legislation is needed…

• ….to modify the Tax Cap law to permit a taxing agency the ability to recover losses sustained from prior year commercial refunds.

• ….to address the growing tax burden shift from businesses to residential property owners in Cook County.

• ….to revise the tax cap limiting rate calculation to allow a taxing agency that lowers the aggregate levy extension, the ability to access loss revenue in a subsequent year without experiencing the future compounding losses recognized by a lower base.