FY18 HB49 Reimbursement for the Phase-out of Tangible Personal Properties and Utility Deregulation
Am. Sub. H. B. 49 of the 132nd General Assembly continues to reimburse school districts and joint vocational schools for the phase-out of the Tangible Personal Properties (TPP) and the Public Utility Deregulation (PUD) in FY18 and the ensuing fiscal years while phasing out these reimbursements at an annual rate. The calculation and distribution methodology for these reimbursements are provided in S.B. 208 of the 131st General Assembly and S.B. 08 of the 132nd General Assembly.
This is an attempt to explain the calculation and the distribution methodologies for the reimbursement of various levy losses in FY18 and beyond. Since some aspects of the reimbursement calculations go back to FY16 and FY17, it will be helpful to the reader to revisit the narratives provided for those years in conjunction with the postings of the reimbursement distributions on ODE website.
Operating Expense Levy Loss Reimbursement (FY16 to as long as levies are in place)
ORC Section 5709.92(C)(2) provides that in FY18 and the subsequent fiscal years, payment shall be made to school districts and joint vocational school districts based on the difference obtained by subtracting from the FY17 reimbursement for fixed rate current operating levy losses, an amount equal to 1/16 of 1% of the 3-year average total taxable valuation of the district for TY16, TY15 and TY14.
Non-Current Expense Reimbursement (FY16 only)
Am. Sub. H. B. 64 of the 131st General Assembly provided reimbursements for fixed rate non-current operating levy losses such as permanent improvement, facilities, recreational, library and technology issues in FY16 only. The FY16 reimbursement was based on 50% of the reimbursement districts and joint vocational schools received in FY15. After FY16 this reimbursement was completely phased out.
Fixed Sum Operating Levy Loss Reimbursement (FY16 through FY21)
ORC Section 5709.92(D)(1) provides that in FY16 and the ensuing fiscal years, reimbursement for fixed sum operating levies which amount to all emergency and substitute levies will be calculated separately from bond and facilities levy loss reimbursements. Under this section of the law, for each year districts will receive reimbursements based on a phase-out schedule that progressively reduces the portion of the FY15 reimbursement in each fiscal year. The law provides a reimbursement calculation based on tax years, however since the reimbursement distributions are based on fiscal years, this requires adjusting the tax year based reimbursement amounts to reflect exactly what districts should receive in each fiscal year.
The phase-out schedule is as follows:
TY16 Amount = (FY15 TPP Reimbursement X 1.0) + (FY15 PUD Reimbursement X 1.0)
TY17 Amount = (FY15 TPP Reimbursement X 1.0) + (FY15 PUD Reimbursement X 0.8)
TY18 Amount = (FY15 TPP Reimbursement X 0.8) + (FY15 PUD Reimbursement X 0.6)
TY19 Amount = (FY15 TPP Reimbursement X 0.6) + (FY15 PUD Reimbursement X 0.4)
TY20 Amount = (FY15 TPP Reimbursement X 0.4) + (FY15 PUD Reimbursement X 0.2)
TY21 Reimbursement = (FY15 TPP Reimbursement X 0.2)
In order to convert the tax year based reimbursement calculation to fiscal year reimbursement distribution, for each scheduled payment in a fiscal year (November and May), we correspond the half of the tax year based calculation with the fiscal year with which the tax year overlaps. In this manner, in FY17, half of the tax year 2016 calculation is distributed in November 2016 and half of the tax year 2017 calculation is distributed in May 2017. The same distribution methodology is applied to the ensuing fiscal years.
Fixed Sum Debt Purpose Reimbursement (FY16 to as long as the levies are in place)
ORC Section 5709.92(E)(1) provides that from FY16 this reimbursement will be distributed as fixed sum debt purpose reimbursement and will be comprised of 100% of the FY15 combined PUD and TPP reimbursements for such levy losses.
Inside Debt Purpose Reimbursement (FY16 through FY18)
ORC Section 5709.92(F)(1) provides for the reimbursement in FY16 equal to 100% of the FY15 reimbursement for PUD and TPP levy losses.
S. B. 08 Supplemental Payment
After ODE distributed the first installment of the FY18 reimbursements in November 2017, the legislature passed S. B. 08 which provides for the calculation of a supplemental reimbursement in FY18 and FY19. The calculation of the Supplemental Payment S. B. 08 introduced is based on fixed rate current operating levy loss reimbursements districts had received in FY17. For that reason, any Supplemental Payment received by eligible districts should be treated as reimbursement for operating levies and accounted for accordingly. Since no S. B. 08 Supplemental Payment was distributed in November 2017, we included the November 2017 portion of this payment for eligible districts with the May 2018 portion and distributed the annual amount in May 2018.
The calculation of S. B. 08 Supplemental Payment is predicated on the calculation of the Total Resources for FY17 in a manner similar to the calculation of the FY15 Total Resources which was done back in FY16 that provided the basis for the distribution of the reimbursements for the fixed rate current operating levy losses in FY16 and the ensuing fiscal years. The FY17 Total Resources for traditional school districts is comprised of the following revenue components:
- State Education Aid for fiscal year 2017
- The sum of the reimbursements received in fiscal year 2017 under ORC Section 5709.92(C)(1) and (D) which amounts to reimbursements for fixed rate current operating and operating emergency levy losses
- Total taxes charged and payable for current expense purposes including operating emergency levies for tax year 2016 excluding any JVS taxes
- Revenue received in calendar year 2016 from all school income taxes levied under Chapter 5748. This is not limited to income tax collections for operating purposes
- Distributions received during fiscal year 2016 under ORC Section 718.09 or 718.10. These amount to municipal income taxes that presently only Euclid City SD in Cuyahoga County has
- Distributions received during fiscal year 2017 from the Casino Revenue County Student Fund
The FY17 Total Resources for joint vocational school districts is comprised of the following revenue components:
- State Education Aid for fiscal year 2017
- Reimbursements received in fiscal year 2017 under ORC Section 5798.92(C)(1) which amounts to reimbursements for fixed rate current operating levy losses
- Total taxes charged and payable for current expense purposes
- Distributions received in fiscal year 2017 from the Casino Revenue County Student Fund
Section 5709.92(B) of S. B. 08 provides for the calculation of the Supplemental Payment for traditional school districts and JVSs in FY18 based on the following steps:
- Sum up the payments the district has received in FY17 under ORC Section 5709.92 and Section 263.325 of Am. Sub. H. B. 64 as amended by Sub. S. B. 208 of the 131st General Assembly which amounts to the total of reimbursements received for fixed rate current expense levy losses and any payment the district may have received as TPP Supplement
- Calculate 3.5% of the Total Resources for FY17
- Subtract #2 above from #1 above
- If the amount calculated in #3 above is greater than the fixed rate current expense levy loss reimbursement the district is slated to receive in FY18, then subtract the fixed rate current expense levy loss reimbursement for FY18 from #3 above and distribute the difference to school districts as Supplemental Payment under S. B. 08
S. B. 08 sections (C) and (D) provide for the calculation of Supplemental Payment for traditional and joint vocational school districts in FY19 as well. However, at this point we are not providing those amounts in the context of this narrative.
Distributions of the reimbursements in each fiscal year continue to be scheduled for November and May. The distributions will be made prior to the end of these months. If a levy on the basis of which local losses had occurred and subsequently reimbursements were calculated on, cease to exist (expired, repealed or change purpose) the reimbursements will be adjusted accordingly to reflect the levy changes. Sometimes these adjustments occur in mid fiscal year, after the November and before the May distributions and as a result the distributions for these months would differ.
To view the FY18 reimbursements broken down by levy type for traditional and joint vocational school districts, please click here. In addition to the calculation of the FY18 distributions, we have projected the reimbursement amounts for FY19 through FY21 based on provisions Am. S. B. 208 without the inclusion of S. B. 08 provisions at this time. This information can be accessed through this link.
Last Modified: 8/5/2019 5:09:59 PM