Mill Levy Override and Bond Elections in our Communities
Next week, voters in several Colorado communities will decide whether or not to vote for a mill levy override or bond measure to support education. Thirteen bond measure questions and 18 mill levy override questions appear on ballots. Both measures impact property taxes, though they each have different purposes. How do mill levy overrides and bonds work, and what’s their impact on school finance? Here’s a 101:
As explained in this Chalkbeat article from last year, a bond request usually asks voters two things. One is: Can the district take on more debt to meet its capital needs? The second: Can the district increase property taxes to pay off that debt? If approved, school districts hire underwriters to sell bonds and secure a good rate on the interest payments they’ll be making–usually over the course of 20 to 30 years. The money that is generated from selling bonds can only be used for construction, maintenance or infrastructure needs. This year, four Colorado school districts have a bond request on the ballot.
An additional nine districts are asking voters to approve bonds that will provide “matching funds” for a Building Excellent Schools Today (BEST) grant, which can be used for the construction of new schools and the renovation of existing school facilities. Money for these grants comes from a combination of public sources, including interest made from the State Land Trust Fund, and revenue from excise taxes on retail marijuana.
BEST grants are the only way new schools can get built, especially in many of our small rural communities, due to both small local property tax bases and the amount of resources needed to complete projects. Mountain Valley School District in Saguache, for example, has been awarded a $27 million BEST grant to help build a new preK-12 school, but only if local voters approve $3.7 million in matching funds. For the average homeowner with $50,000 of property value in that community, the tax impact will be an additional $56 per year.
A district’s mill levy is essentially its property tax rate. A district’s Total Program Mill Levy is controlled by the state, based on Colorado’s school funding formula (more on that in a future KidsFlash story). When school districts want to spend more money per student than what they are required to spend based on the state formula, districts must seek approval from voters to raise and spend “override” property tax revenues via an additional mill levy. Money generated from this tax stays in the community and goes directly to the school district, without impacting the amount of state funding a school district is eligible to receive. Often, override dollars are used to increase teacher pay, purchase new curriculum, fund early childhood education, or invest in technology updates. However, several of this year’s 18 local mill levy override proposals reference the reduction in state funding as the reason for requesting additional local funding, with one just “trying to keep our heads above water.”
Our state’s system of basing school funding partially on local property values creates profound inequities. As noted in our 2017 KIDS COUNT in Colorado! report, in some districts with lower property wealth, one mill raises less than $4,000, while in districts with higher levels of property wealth, one mill raises more than $13 million. Due to the differences in property values from community to community, poor districts may be taxing themselves at the highest allowable rate but generating negligible amounts of funding, while other very wealthy districts can generate substantial amounts of funding by raising their property taxes by a relatively small amount. This exacerbates inequities from district to district. As just one comparative example, in the 2015-16 school year Mapleton School District levied 9.73 override mills, with each mill raising approximately $501,000, or $61 per pupil in the district. On the other hand, Platte Valley RE-7 levied 1.51 override mills, with each mill raising approximately $1,654,000, or $1,465 per pupil in the district. In other words, Mapleton residents are taxed at a much higher rate than residents in Platte Valley RE-7, but each mill raises much less funding per pupil in Mapleton due to lower property wealth in the district.
Until steps are taken to modernize Colorado’s wildly inequitable funding formula and unequal statewide revenue system for K-12 education, local school districts will have to continually ask local voters for their support. Some communities are more successful than others at getting voters to approve tax measures, which the Denver Post recently noted in its recent editorial supporting the ballot measures in Brighton, Greeley and Grand Junction. And as noted above, some districts are able to raise more than others.
In the past four years of elections, 57 percent of bond and mill levy overrides have passed. In the same amount of time, 100 percent of BEST matching bonds have been approved. Check back after the election for an update on how school districts fare in this election.