Underlying Assumptions. A forecast of the financial impact that the proposed value limitation will have on SBISD’s future revenue is critical information that will be very useful to the district when making the decision to grant the limitation and for the district’s long range financial planning process. Analysis for this application covers the 2021-22 through the 2036-37 school years. The Revenue Protection Clause of the proposed agreement calls for the school district to be held harmless against any potential state and local maintenance and operation revenue losses as a result of the value limitation agreement. Revenue protection calculations are to be made using whatever property tax laws and school funding formulas are in place at that time in years one through ten of the agreement. This stipulation is a statutory requirement under Section 313.027 of the Tax Code. The approach used in this report was to predict 16 years of base data including average daily attendance, M&O and I&S tax rates, maintenance and operation (M&O) tax collections and current year (CAD) values and prior year (CPTD) values for each year of the agreement. For the purposes of this analysis, final 2018 CPTD values were used as well as 2019 CAD values from ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ County CAD (Central Appraisal District). These values have been included in the base data illustrated in Table 1. To isolate the impact of the value limitation on the District’s finances over this 16 year agreement, average daily attendance and maintenance and operation tax rates were held constant at levels that were projected to exist in the 2019-20 school year. An ADA of 217.214, a WADA of 398.261 and a 2019 M&O tax rate of $1.17, compressed to $1.0684 under HB 3, were used for each year of the forecast. A tax collection rate of 100% is assumed in all of the calculations used in this analysis. The ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ CAD certified value for 2019 was used as the 2019 CAD value. This value was used as the basis for subsequent current year (CAD) values in this report. The final 2018 T1, T2, T3 and T4 Comptroller Property Tax Division (CPTD) values, certified to school districts in late July, 2019, were used as a basis for predicting prior year (CPTD) values for each of the agreement years. The proposed agreement calls for Sulphur Bluff ISD to be held harmless against potential state and local revenue losses that might occur as a result of the value limitation being in effect for any given year of the agreement. In order to predict when and if these revenue losses may occur, a state and local revenue projection for the 2019-2020 school year was completed to serve as base line data and is displayed in Table 2. In any year of the limitation period where total state and or local funding with the full project value exceeds the total state and local funding produced when the limited value is used, a Revenue Protection Payment is indicated for that year. The results of these calculations are illustrated in Table 3. Utilizing the assumptions and methodology described above, total maintenance and operation revenue was estimated for each year of the agreement. Table 3, which summarizes the difference between the two models, indicates that there will be a total revenue loss of $1.324 million over the course of the agreement. The revenue loss by the district, due to the agreement, is estimated to be mostly in the first year of the value limitation period. The terms of the proposed agreement call for the maintenance and operation (M&O) value of the project to be limited to $20 million starting in school year 2022-23 and remaining limited through school year 2031-32. The potential gross and net tax savings to ▇▇▇▇▇▇▇ are shown in Table 3. As stated earlier, an M&O tax rate of $1.0684 and a collection rate of 100% is used throughout the calculations in this report. Table 3 shows gross tax savings due to the limitation of $6.49 million over the length of the contract. Net tax savings are estimated to be $5.17 million. To estimate supplemental payments to the school district of $100 per ADA, a growth model was applied to the base ADA of 217.214, which was the projected ADA for SBISD for the 2019-20 school year. Chapter 313 allows for a $50,000 minimum annual supplemental payment for districts that have less than 500 ADA. Reports submitted by ▇▇▇▇▇▇▇ show the full value of the property being depreciated over time. Even so, the full value of the project will be available to the district for I&S taxes and will enhance the district’s ability to service current and future debt obligations. While the project is expected to provide additional employment opportunities in the area, the impact on student enrollment is predicted to be minimal.
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Underlying Assumptions. A forecast of the financial impact that the proposed value limitation will have on SBISDSSISD’s future revenue is critical information that will be very useful to the district when making the decision to grant the limitation and for the district’s long range financial planning process. Analysis for this application covers the 2021-22 through the 2036-37 school years. The Revenue Protection Clause of the proposed agreement calls for the school district to be held harmless against any potential state and local maintenance and operation revenue losses as a result of the value limitation agreement. Revenue protection calculations are to be made using whatever property tax laws and school funding formulas are in place at that time in years one through ten of the agreement. This stipulation is a statutory requirement under Section 313.027 of the Tax Code. The approach used in this report was to predict 16 years of base data including average daily attendance, M&O and I&S tax rates, maintenance and operation (M&O) tax collections and current year (CAD) values and prior year (CPTD) values for each year of the agreement. For the purposes of this analysis, final 2018 CPTD values were used as well as 2019 CAD values from ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ County CAD (Central Appraisal District). These values have been included in the base data illustrated in Table 1. To isolate the impact of the value limitation on the District’s finances over this 16 year agreement, average daily attendance and maintenance and operation tax rates were held constant at levels that were projected to exist in the 2019-20 school year. An ADA of 217.2144,069.91, a WADA of 398.261 5,758 and a 2019 M&O tax rate of $1.171.04, compressed to $1.0684 0.97 under HB 3, were used for each year of the forecast. A tax collection rate of 100% is assumed in all of the calculations used in this analysis. The ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ CAD certified value for 2019 was used as the 2019 CAD value. This value was used as the basis for subsequent current year (CAD) values in this report. The final 2018 T1, T2, T3 and T4 Comptroller Property Tax Division (CPTD) values, certified to school districts in late July, 2019, were used as a basis for predicting prior year (CPTD) values for each of the agreement years. The proposed agreement calls for Sulphur Bluff Springs ISD to be held harmless against potential state and local revenue losses that might occur as a result of the value limitation being in effect for any given year of the agreement. In order to predict when and if these revenue losses may occur, a state and local revenue projection for the 2019-2020 school year was completed to serve as base line data and is displayed in Table 2. In any year of the limitation period where total state and or local funding with the full project value exceeds the total state and local funding produced when the limited value is used, a Revenue Protection Payment is indicated for that year. The results of these calculations are illustrated in Table 3. Utilizing the assumptions and methodology described above, total maintenance and operation revenue was estimated for each year of the agreement. Table 3, which summarizes the difference between the two models, indicates that there will be a total revenue loss of $1.324 million over the course of the agreement. The revenue loss by the district, due to the agreement, is estimated to be mostly in the first year of the value limitation period. The terms of the proposed agreement call for the maintenance and operation (M&O) value of the project to be limited to $20 million starting in school year 2022-23 and remaining limited through school year 2031-32. The potential gross and net tax savings to ▇▇▇▇▇▇▇ are shown in Table 3. As stated earlier, an M&O tax rate of $1.0684 and a collection rate of 100% is used throughout the calculations in this report. Table 3 shows gross tax savings due to the limitation of $6.49 million over the length of the contract. Net tax savings are estimated to be $5.17 million. To estimate supplemental payments to the school district of $100 per ADA, a growth model was applied to the base ADA of 217.214, which was the projected ADA for SBISD for the 2019-20 school year. Chapter 313 allows for a $50,000 minimum annual supplemental payment for districts that have less than 500 ADA. Reports submitted by ▇▇▇▇▇▇▇ show the full value of the property being depreciated over time. Even so, the full value of the project will be available to the district for I&S taxes and will enhance the district’s ability to service current and future debt obligations. While the project is expected to provide additional employment opportunities in the area, the impact on student enrollment is predicted to be minimal.
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