FY19 HB49 Reimbursement for the Phase-out of Tangible Personal Properties and Public Utility Deregul

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 FY19 and the ensuing fiscal years while phasing out these reimbursements at various annual rates.  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 FY19 and beyond.  Since some aspects of the reimbursement calculations go back to FY16 and FY17, it will be helpful for 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 TY14, TY15 and TY16.  For each ensuing fiscal year the exact same amount is to be subtracted from the latest annual calculation of the Fixed Rate Current Operating levy reimbursement to come up with the annual reimbursement for that year. So, in FY19, 1/16 of 1% of the 3-year average total taxable valuation of the district for TY14, TY15 and TY16 is subtracted from the FY18 reimbursement amount and so on.

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 for 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 on Inside Debt Purpose levy losses in FY16 equal to 100% of the FY15 reimbursement for PUD and TPP levy losses.  The last fiscal year in which these levy losses are reimbursed is FY18.

S. B. 08 Supplemental Payment

S. B. 08 of the 132nd General Assembly provides for the calculation of a Supplemental Reimbursement in FY18 and FY19.  The calculation of the Supplemental Payment 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.

The calculation of the FY18 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 FY18 Supplemental Payment calculation is directly linked to the FY17 Total Resources.  The FY19 Supplemental Payment is a derivative of the FY18 amount, and since the structure of the FY17 Total Resources has been explained in the context of the FY18 reimbursement calculations, we refer the reader to the FY18 narrative on this subject for that explanation.    

Division (C) of this section of S. B. 08 provides for the calculation of the Supplemental Payment for traditional school districts in FY19 based on the following steps:

  1. Division (C)(2)(a) of this section provides for combining the Total Fixed Rate Current Expense Reimbursement a district has received in FY18 pursuant to ORC Section 5709.92 and the amount the district has received in FY18 as Supplemental Payment under this section of the law.
  2. Division (C)(2)(b) of this section provides for the calculation of an amount equal to 1/16 of 1% of the average of total assessed valuation of the district for TY14, TY15 and TY16.
  3. Division (C)(2) of this section provides for subtracting the amount calculated in #2 from the amount calculated in #1.
  4. Division (C)(1) of this section provides that if the amount described in #3 is greater than the reimbursement calculated for the district for Total Fixed Rate Current Expense levy losses in FY19 pursuant to ORC Section 5709.92, the district should receive the difference in the form of Supplemental Payment for FY19.

Division (D) of this section of S.B. 08 provides for the calculation of Supplemental Payment for joint vocational school districts in FY19 based on the following steps:   

  1. Division (D)(2)(a) of this section provides for combining the Total Fixed Rate Current Expense Reimbursement a district has received in FY18 pursuant to ORC Section 5709.92 and the amount the district has received in FY18 as Supplemental Payment under this section of the law.
  2. Division (D)(2)(b) of this section provides for the calculation of an amount equal 3.5% of the FY17 Total Resources.
  3. Division (D)(2) of this section provides for subtracting the amount calculated in #2 from the amount calculated in #1.
  4. Division (D)(1) of this section provides that if the amount described in #3 is greater than the reimbursement calculated for the district for Total Fixed Rate Current Expense levy losses in FY19 pursuant to ORC Section 5709.92, the district should receive the difference in the form of Supplemental Payment for FY19.

Distribution 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, ceases to exist (expired, repealed or changed 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. 

Last Modified: 8/6/2019 8:46:27 AM