Is it true that Danville Community School Corporation will stop providing transportation services to students in 2017?
Does Danville Community School Corporation plan to file a referendum for a tax increase in order to continue providing transportation services to students?
- The school district’s goal is to continue providing transportation for students to and from school. The resolution passed at the December 2013 school board meeting to stop transportation services in 2017 is merely the first step in addressing the property tax cap issue that the district will face starting in 2014.
What do the circuit breaker tax caps mean to taxpayers?
- No, the School Board is not considering that option at this time.
What school funds are affected by tax caps?
- Tax caps are just that—caps, or upper limits, on tax bills. Caps are aimed at helping Hoosiers by ensuring they do not pay more than a fixed percent of their property’s gross assessed value in property taxes.
What do each of these 5 funds pay for?
- Property tax supported funds are affected by tax caps. Danville Community School Corporation has 5 funds that are affected. Those funds are Debt Service, Pension Debt, Capital Projects, Transportation, and Bus Replacement.
How long have tax caps been in place?
- Debt Service pays for the corporation’s debt obligations including lease rentals, bond sales for construction and renovation projects, common school fund loans, and repayment of temporary loan interest for cash flow purposes
- Pension Debt pays for the issuance of a bond that was used for teacher severance and retirement obligations through the teachers’ Master Contract. The corporation no longer pays severance benefits for retiring teachers. This bond will be paid off in December 2018.
- Capital Projects pays for capital improvement for our school facilities, leases for copiers, energy-savings contracts, and technology-related expenses.
- Transportation pays the salaries, benefits and wage-related benefits for our bus drivers, director, secretary, and mechanics. It also pays for fuel, tires, shop supplies, and contracted repair services. This fund not only pays for the daily transportation of students to and from school, it also pays for the transportation of students for extra-curricular and field trips.
- Bus Replacement pays for bus purchases. We cannot pay for the drivers’ salaries out of this fund. We operate a fleet of 42 vehicles on a 12-year bus replacement cycle approved by the Department of Local Government Finance. We should replace 3 - 4 buses each year in order to ensure that all buses are replaced within the 12 year time period.
- General Fund pays for the salaries, benefits and wage-related benefits for teachers, administrators, instructional aides, secretaries, housekeepers and maintenance personnel. It also pays for operational and instructional supplies, utilities, and purchased services such as trash pick-up, telephone service, and municipal water and sewage. This fund is supported by state tax dollars and not by local property taxes. Therefore, the General Fund is not subject to tax cap loss.
What do we know about tax caps relevant to Hendricks County?
- In 2008, the Indiana General Assembly passed property tax relief, which lowered homeowners’ property tax by approximately 30%. In November 2010 Indiana voters elected to include property taxes caps into the state’s constitution, making property tax caps permanent.
Why is Hendricks County more adversely affected than other counties?
- Only about 22% of homesteads statewide qualify for tax cap credit. Put another way, nearly 8 out of 10 homesteads statewide do not qualify for tax cap credit and therefore, the taxing units are not penalized with tax cap loss. In Hendricks County nearly 60% of homesteads qualify for the tax cap credit which means the taxing units (schools, libraries, and municipalities) absorb tax cap loss in 6 out of 10 homesteads.
How has tax cap loss specifically affected Danville Community School Corporation since tax caps were implemented in 2008.
- Hendricks County’s average home assessment is about $166,000, which is much higher than the $125,000 average statewide. Higher valued homes are more likely to be eligible for tax cap credits because the fixed $45,000 homestead deduction provides a smaller percentage reduction in taxes. Also, Hendricks County’s taxing unit’s overall tax rate is higher than the statewide average.
How does Danville’s overall all property tax rate compare with similar communities statewide?
- In 2009 Danville Community School Corporation lost $169 to circuit breaker credit; in 2010 we lost $83,257; in 2011 we lost $426,555; and in 2012 we lost $394,046. Our 2013 circuit breaker loss is estimated to be $793, 111.
How are tax cap credits calculated?
- The statewide average tax rate for small towns in Indiana is $2.17 per $100 of assessed valuation while Danville’s rate is approximately $2.29. The higher the tax rate, the greater the tax cap credit for taxpayers and the greater the tax cap loss for tax units.
Are all school districts affected by tax caps?
- Tax cap credits are based on the total property tax rate of all taxing units in the taxing district in which the units are located. The legislation limited homeowners’ property tax liability at 1% of the home’s assessed value, apartments and farm land at 2%, and business property at 3% of the assessed value. Statewide most homeowners have tax bills under the 1% cap and therefore, do not qualify for tax cap credit. Those homesteads that do qualify for tax cap credits were generally located in places with high tax rates. Others that qualified were owners of expensive homes, which tend to have higher tax bills because the fixed homestead deductions provide them with less tax relief. School districts located in cities or towns lose more revenue to tax cap credits than do those in unincorporated areas because more services are provided in cities and towns.
I’ve seen TV news clips and read articles in the paper regarding “protected” and “unprotected” taxes. What do those terms mean?
- No, over 1/3 of school districts statewide will lose less than 1% of their 2013 property tax levies due to tax cap loss assuring those districts of minimal tax cap impact. Danville Community School Corporation lost approximately 8.5% of its tax levy ($793,000) in 2013. In 2013, we ranked 63rd out of 291 school districts in tax cap loss.
Can the school corporation use money from another fund to pay for transportation services?
- House Enrolled Act 1072 (2012) stated that property taxes imposed to pay debt obligations are protected from the application of tax cap credit and would be fully funded. For Danville Community School Corporation, our Debt Service Fund and Pension Debt Fund would be protected. However, HEA 1072 did not change the way tax cap credits are calculated meaning that the unprotected funds (Transportation, Bus Replacement, and Capital Projects) would now absorb all of the tax cap loss. Instead of 5 funds absorbing the $793,000 loss, starting in 2014 those 3 unprotected funds will absorb the loss. While Debt Service and Pension will be fully funded, Capital Projects, Transportation and Bus Replacement will be funded at minimal levels making it incredibly difficult to provide the needed services from these funds.
How can the district think about cutting bus service when they put in a new football field and bought devices for the students?
- No, the Department of Local Government Finance does not allow for transportation-related costs to be paid from one of the other school funds.
- The majority of the stadium project came from donations from Hendricks Regional Health. The remainder of the money came from a fund that cannot be used for transportation. The devices were purchased through the Qualified School Construction Bond made available to school districts from the state of Indiana.
FAQ's last updated on 8/7/2015