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.
Click here to find more information about equalization rates and local assessment rolls.
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: How would the proposed budget affect my taxes? Is it within the cap?
A: The proposed tax levy increase of 1.8% percent is within the tax levy limit that is calculated for 2022-23 through a prescribed state formula. As a result, the budget requires the support of a simple majority (50 percent + 1) of voters to be approved based on the state’s tax cap law.
Residents’ tax bills are determined by several other factors that are out of the district’s control, including assessment levels, which vary by municipality, and equalization rates, which are set by the New York State Office of Real Property Services.
Q: What happens if the budget is defeated?
A: Under New York state law, if the school budget is defeated, the board of education typically has two options: hold another vote in June on either the same budget or a revised budget, or adopt a contingent budget without a second vote. If residents defeat the proposed budget during a second vote, the board must adopt a contingent budget.
Q: What is a contingent budget?
A: State law mandates that under a contingent budget, a school district must adopt a budget with no tax levy increase and eliminate all non-contingent expenses, such as certain student supplies, certain equipment purchases and community use of school facilities that results in a district expense. (In other words, the district would likely need to charge fees for any community use of buildings and grounds.) The administrative budget would also be subject to certain restrictions.
Q: What would be cut under a contingent budget for 2022-23?
A: If Washingtonville Central School District adopts a contingent budget for 2022-23, the district would have to cut $2,202,291 from school programs, staffing and equipment.
All equipment such as technology and bus replacements would be cut. Field trips, the Capital outlay project and use of facilities without fees would be prohibited.
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.
As part of the 2022-23 budget, Washingtonville Central School District plans to allocate $5,000,000 from its fund balance to lower the total tax levy and reduce the tax impact on district residents in the coming year.
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 3850 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 665 employees, including many part-time staff members. Every year, approximately 78% percent of the district’s budget goes to pay salaries and benefits.
Q: What is a capital reserve fund?
A: A capital reserve fund allows the district to set aside money for future construction projects and major purchases such as buses. Much like a savings account, this money is set aside so that a significant project or expense does not affect the budget all at once. The fund cannot be established without voter approval, and reserve funds cannot be spent without voter approval. Because capital assets have a predetermined useful life expectancy, a reserve fund reduces the need to borrow money to replace those assets in the future, while also enabling the district to still maximize state aid.
NOTE: As the 2022-23 budget development process continues, and more information becomes available, additional Q&As will be posted to this page.