Q: What is the difference between the tax levy and tax rate?
A: The tax levy is the total amount of money a school district raises in taxes each year from all property owners in the district.
The tax rate is the amount paid for each $1,000 of taxable assessed value of property. The rate is used to calculate each individual property tax bill. In districts that cover just one municipality, the tax rate is figured by dividing the tax levy by the total taxable assessed value of the district, then multiplying by 1,000. This gives you the tax rate, which is expressed as the amount per $1,000 of assessed property value.
In districts that encompass more than one municipality, equalization rates are factored in as well to assign a fair share of the tax levy among the municipalities and to the taxpayers within them.
Q: What is the equalization rate?
A: In New York state, each municipality determines its own level of property assessment. This means that property in different municipalities could be assessed less than, higher than or at actual full market value (i.e., the price for which a property could be sold). In order to distribute school district or county taxes evenly among multiple municipalities, the level of assessment for each of those municipalities must be equalized to full market value. To do this, the state uses an equalization rate:
Total assessed value of the municipality ÷ Total market value of the municipality = Equalization rate
Once the full market value of each municipality is established, the school district or county can determine the amount of taxes that should be collected from each municipality.
Q: What is the tax levy limit, or tax cap?
A: The tax levy limit is the highest allowable tax levy (before exemptions) that a school district can propose as part of its annual budget with the support of a simple majority of voters (50% + 1) required for approval. In other words, if a district proposes a tax levy increase at or below the limit, a simple majority of voters is needed for the budget to pass. Any proposed tax levy amount above this limit would require the support of a 60% supermajority of voters to be approved. The tax levy limit sets a threshold requiring districts to obtain a higher level of community support for a proposed tax levy above a certain amount.
Q: What is a “fund balance” and how does it help offset what I pay in school taxes?
A: Fund balance is created when there is money left at the end of the fiscal year, either by the district spending less than budgeted or receiving more revenue than anticipated.An “unassigned” fund balance provides monies that can be used for a variety of needs, unlike reserve funds, which are targeted for specific purposes. While recommendations from within the financial industry often suggest that an organization should have an unassigned fund balance of between 5 and 10 percent of their total annual budget, New York state limits school districts’ fund balances to 4 percent.
Q: What is the state’s School Tax Relief, or STAR, Program?
A: New York State’s School Tax Relief Program, or STAR, provides partial school property tax savings to eligible homeowners. Most New Yorkers who own and live in their homes are eligible for STAR savings on their primary residences. Because the STAR program is not a district program, taxpayers STAR savings are not factored into a school budget.
More information about STAR can be found at: https://www.tax.ny.gov/pit/property/star/eligibility.htm.
Q: Why do salaries and benefits comprise so much of the budget?
A: It takes many people to create and maintain a safe and productive learning environment for nearly 3,900 children in our five schools. Employees teach, transport, coach and care for the community’s children. They clean buildings, cook meals, maintain playing fields, order supplies, comply with regulations and make decisions so that schools run effectively and efficiently and more. The district has nearly 639 employees, including many part-time staff members. Every year, approximately 69% percent of the district’s budget goes to pay salaries and benefits.
NOTE: As the 2021-22 budget development process continues, and more information becomes available, additional Q&As will be posted to this page.