702 KAR 3:275. School district tax rate formulas

Link to law: http://www.lrc.ky.gov/kar/702/003/275.htm
Published: 2015

      702 KAR 3:275.

School district tax rate formulas.

 

      RELATES TO: KRS

132.010, 134.590, 157.440, 157.620, 157.621, 160.470, 160.473, 160.476, 160.477

      STATUTORY

AUTHORITY: KRS 156.070, 156.160

      NECESSITY,

FUNCTION, AND CONFORMITY: KRS 156.070 sets forth the State Board for Elementary

and Secondary Education's plenary powers over the management and control of

local school districts. KRS 156.160 gives the State Board for Elementary and

Secondary Education the authority to promulgate administrative regulations deemed

necessary for the management of the school districts under its control. This

administrative regulation is necessary to provide guidelines for the

calculation of the tax rates certified to the school districts by the

Department of Education.

 

      Section 1.

Definitions. (1) "Current year total valuation of adjusted property at

full rates" means the prior year assessment of adjusted property at full

rates minus current year homestead exemptions plus current year net assessment

growth all as certified by the Revenue Cabinet.

      (2)

"Current year total valuation of personal property" means the sum of

tangible personal property, effective public service company tangible property

and distilled spirits property all as certified by the Revenue Cabinet.

      (3) "Current

year total valuation of real property" means real estate plus effective

public service company real estate property minus net new real estate and new

effective public service company real estate property all as certified by the

Revenue Cabinet.

      (4) "Effective

public service company property" means assessments which may be adjusted

by the Revenue Cabinet for apportioned property not subject to full taxation.

      (5)

"Maximum revenue collectible" means the prior year's permissive tax

revenue plus the levied tax rates per $100 of assessed value for real and

tangible property times the prior year assessment of real and tangible property

as certified by the Revenue Cabinet and the maximum motor vehicle revenue collectible.

      (6)

"Maximum motor vehicle revenue collectible" means seven (7) times the

prior year levied motor vehicle tax rate plus five (5) times the current year

levied motor vehicle tax rate divided by twelve (12) times the prior year

assessment of motor vehicles as certified by the Revenue Cabinet.

      (7) "Prior

year adjusted tax base" means the prior year assessment of adjusted

property at full rates minus current year homestead exemptions both as

certified by the Revenue Cabinet.

      (8) "Prior

year revenue from real property" means the prior year real estate tax rate

levy times the prior year total valuation of real property as certified by the

Revenue Cabinet.

      (9) "Prior

year revenue from personal property" means the prior year personal

property tax rate levy times the prior year total valuation of personal

property as certified by the Revenue Cabinet.

      (10) "Prior

year total valuation of personal property" means the sum of prior year

tangible personal property, prior year effective public service company

tangible personal property and prior year distilled spirits property all as

certified by the Revenue Cabinet.

      (11) "Prior

year total valuation of real property" means prior year real estate

property plus prior year effective public service company real estate property

both as certified by the Revenue Cabinet.

      (12)

"Current year projection for permissive taxes" means prior year

permissive tax collections divided by prior year total valuation of property

and motor vehicles times the current year total valuation of property and motor

vehicles all as certified by the Revenue Cabinet or as estimated by the school

district.

 

      Section 2.

Required Data. Required data for school district tax rate and related

calculations shall include:

      (1) Property

assessments from the Department of Property Taxation, Revenue Cabinet provided

pursuant to KRS 160.470(5);

      (2) Tax rates

levied by school districts;

      (3) Average

daily attendance (ADA) as calculated pursuant to 702 KAR 3:270, Section

2(3)(a);

      (4) Estimated

growth ADA;

      (5) The state

equalization amount as defined in 702 KAR 3:270, Section 1(11);

      (6) Calculated

base SEEK funding as defined in 702 KAR 3:270, Section 1(2);

      (7) Tax receipts

collected based on prior year tax levies which may be adjusted for unusual

circumstances as determined by the local school district and the Division of

Finance, Department of Education;

      (8) Collection

rates as defined in 702 KAR 3:270, Section 1(3); and

      (9) The annual

report of tax collections as prepared by the school district's tax collector

pursuant to KRS 160.510.

 

      Section 3. Compensating,

Four (4) Percent Increase and Subsection (2) Tax Rate Formulas. (1)

Compensating tax rate. The compensating tax rate defined in KRS 132.010(6) and

certified to the school district by the Department of Education pursuant to KRS

160.470(4)(b) shall be calculated as follows:

      (a) Compensating

Tax Rate I. The Compensating Tax Rate I formula shall be as follows:

      1. Prior year

revenue from real property;

      2. Divided by

the current year total valuation of real property;

      3. Rounded to

the next higher one-tenth (1/10) cent;

      4. Equals the

Compensating Tax Rate I.

      (b) Compensating

Tax Rate II. The Compensating Tax Rate II formula shall be as follows:

      1. Prior year

revenue from real property plus prior year revenue from personal property;

      2. Divided by

the current year total valuation of adjusted property at full rates;

      3. Rounded to

the next higher one-tenth (1/10) cent;

      4. Equals the

Compensating Tax Rate II.

      (c) The

Compensating Tax Rate shall be the higher of the Compensating Tax Rate I and

the Compensating Tax Rate II.

      (2) Four (4)

percent increase rate. The four (4) percent increase rate certified to the

school district by the Department of Education pursuant to KRS 160.470(c) shall

be calculated as follows:

      (a) Compensating

tax rate as calculated pursuant to subsection (1) of this section;

      (b) Times

current year total valuation of real property;

      (c) Times 104

percent;

      (d) Divided by

current year total valuation of real property;

      (e) Rounded to

the next lower one-tenth (1/10) cent;

      (f) Equals the

four (4) percent increase rate.

      (3) Subsection

(2) rate. The Subsection (2) rate certified to the school district by the

Department of Education pursuant to KRS 160.470(4)(a) shall be calculated as

follows:

      (a) Prior year

maximum real estate property tax rate;

      (b) Times prior

year total valuation of real property;

      (c) Plus prior

year maximum personal property tax rate;

      (d) Times prior

year total valuation of personal property;

      (e) Divided by

the prior year adjusted tax base;

      (f) Rounded to the

next lower one-tenth (1/10) cent;

      (g) Equals the

Subsection (2) rate.

      (4) If the

percentage increase in revenue from real property produced by the compensating,

four (4) percent increase and Subsection (2) tax rates is less than the

percentage increase in revenue from personal property based on the same rates,

then equal tax rates as calculated pursuant to this section for the

compensating, four (4) percent increase and Subsection (2) tax rates shall be

certified for both real estate and personal property.

 

      Section 4.

Limits on Personal Property Tax Rates. If the percentage increase in revenue

from real property produced by the compensating, four (4) percent increase or

Subsection (2) tax rates is more than the percentage increase in revenue from

personal property based on the same rates, then personal property tax rates

certified to the local school district shall be the lower of the prior year

personal property tax levy or the tax rates calculated as follows:

      (1) Personal

property compensating tax rate.

      (a) Prior year

revenue from personal property,

      (b) Times 100

percent plus the percent increase in real property revenue based on the

compensating tax rate as calculated pursuant to Section 3(1) of this

administrative regulation;

      (c) Divided by

the current year total valuation of personal property;

      (d) Rounded to

the next higher one-tenth (1/10) cent;

      (e) Equals the

personal property compensating tax rate.

      (2) Personal

property four (4) percent increase rate.

      (a) Prior year

revenue from personal property;

      (b) Times 100

percent plus the percent increase in real property revenue based on the four

(4) percent increase tax rate as calculated pursuant to Section 3(2) of this

administrative regulation;

      (c) Divided by

the current year total valuation of personal property;

      (d) Rounded to

the next higher one-tenth (1/10) cent;

      (e) Equals the

personal property four (4) percent increase tax rate.

      (3) Personal

property Subsection (2) tax rate.

      (a) Prior year

revenue from personal property;

      (b) Times 100 percent

plus the percent increase in real property revenue based on the Subsection (2)

tax rate as calculated pursuant to Section 3(3) of this administrative

regulation;

      (c) Divided by

the current year total valuation of personal property;

      (d) Rounded to

the next higher one-tenth (1/10) cent;

      (e) Equals the

personal property Subsection (2) tax rate.

 

      Section 5.

Maximum Equivalent Tax Rate Allowed Pursuant to KRS 157.440(1)(a). The maximum

equivalent tax rate allowed pursuant to KRS 157.440(1)(a) shall be the higher

of the 1989-90 equivalent and the maximum Tier I equivalent tax rate calculated

as follows:

      (1) Calculated

base SEEK funding as defined in 702 KAR 3:270, Section 1(2);

      (2) Times

fifteen (15) percent;

      (3) Divided by

average daily attendance;

      (4) Equals

maximum per pupil Tier I revenue;

      (5) Divided by

the greater of the current year total valuation of property and motor vehicles

divided by the average daily attendance and the statewide equalization amount

as defined in 702 KAR 3:270, Section 1(9);

      (6) Rounded to

the next higher one-tenth (1/10) cent;

      (7) Plus the

required minimum thirty (30) cent equivalent tax rate pursuant to KRS

160.470(12)(a) and the five (5) cent levy pursuant to KRS 157.620(1)(a);

      (8) Equals the

maximum Tier I equivalent tax rate.

 

      Section 6.

Maximum Equivalent Tax Rate Allowed Pursuant to KRS 157.440(2). The maximum

Tier II equivalent tax rate allowed pursuant to KRS 157.440(2) shall be

calculated as follows:

      (1) Calculated

base SEEK funding as defined in 702 KAR 3:270, Section 1(2);

      (2) Times

thirty-four and one-half (34.5) percent;

      (3) Divided by

average daily attendance;

      (4) Equals

maximum per pupil Tier II revenue;

      (5) Divided by

the current year total valuation of property and motor vehicles divided by the average

daily attendance;

      (6) Plus the

maximum Tier I equivalent tax rate as calculated pursuant to Section 5 above

minus five(5);

      (7) Rounded to

the next higher one-tenth (1/10) cent;

      (8) Equals the

maximum Tier II equivalent tax rate.

 

      Section 7. Motor

Vehicle Tax Rates. (1) Motor vehicle tax rates may be raised to the maximum

Tier I equivalent tax rate allowable pursuant to KRS 157.440(1)(a).

      (2) Motor

vehicle tax rates levied pursuant to KRS 132.487 which are higher than those

allowed pursuant to KRS 157.440(1)(a) shall not be lowered.

 

      Section 8. (1)

The Exonerations Tax Rate allowable pursuant to KRS 134.590(7) shall be

calculated as follows:

      (a) Exonerations

Recovery Rate I. The Exonerations Recovery Rate I shall be calculated as

follows:

      1. Prior year

real estate property tax levy;

      2. Times prior

year total valuation of real property plus prior year real exonerations both as

certified by the Revenue Cabinet;

      3. Divided by

current year total valuation of real property;

      4. Rounded to

the next higher one-tenth (1/10) cent;

      5. Equals the

Exonerations Recovery Rate I.

      (b) Exonerations

Recovery Rate II. The Exonerations Recovery Rate II shall be calculated as

follows:

      1. Prior year

real estate property tax levy;

      2. Times prior

year total valuation of real property plus prior year real exonerations both as

certified by the Revenue Cabinet;

      3. Plus prior

year personal property tax levy;

      4. Times prior

year total valuation of personal property plus current year tangible

exonerations both as certified by the Revenue Cabinet;

      5. Divided by

current year total valuation of adjusted property at full rates;

      6. Rounded to

the next higher one-tenth (1/10) cent;

      7. Equals the

exonerations recovery Rate II.

      (2) The

exonerations tax rate certified to the school district by the Department of

Education shall equal the difference between the higher of the exonerations

recovery Rates I and II and the compensating rate as calculated pursuant to

Section 3(c) of this administrative regulation.

 

      Section 9. SEEK

Rates Calculations. SEEK rates calculations to determine the property tax rates

necessary to achieve the required minimum thirty (30) cent equivalent rate,

maximum Tier I and maximum Tier II equivalent tax rates and a five (5) cent

equivalent rate shall be as follows:

      (1) Minimum

thirty (30) cent equivalent rate. The property tax rate required to achieve the

minimum thirty (30) cent equivalent rate required pursuant to KRS

160.470(12)(a) shall be calculated as follows:

      (a) Thirty (30)

cents;

      (b) Times the

current year total valuation of property and motor vehicles as certified by the

Revenue Cabinet;

      (c) Divided by

the collection rate as defined in 702 KAR 3:270, Section 1(3);

      (d) Minus the

current year projection for permissive taxes;

      (e) Minus the prior

year levied motor vehicle tax rate times the current year motor vehicle

assessment as certified by the Revenue Cabinet time ninety-six (96) percent;

      (f) Divided by

the current year property assessment as certified by the Revenue Cabinet;

      (g) Rounded to

the next higher one-tenth (1/10) cent;

      (h) Equals the

property tax rate required to achieve the required minimum thirty (30) cent

equivalent rate.

      (2) Maximum Tier

I property tax rate. The property tax rate required to achieve the maximum Tier

I equivalent rate allowable pursuant to KRS 157.440(1)(a) shall be calculated

as follows:

      (a) Maximum Tier

I equivalent tax rate as calculated pursuant to Section 5 of this

administrative regulation;

      (b) Times the

current year total valuation of property and motor vehicles as certified by the

Revenue Cabinet;

      (c) Divided by

the collection rate as defined in 702 KAR 3:270, Section 1(3);

      (d) Minus the

current year projection for permissive taxes,

      (e) Minus the

prior year levied motor vehicle tax rate times the current year motor vehicle

assessment as certified by the Revenue Cabinet times ninety-six (96) percent;

      (f) Divided by

the current year property assessment as certified by the Revenue Cabinet;

      (g) Rounded to

the next lower one-tenth (1/10) cent;

      (h) Equals the

property tax rate required to achieve the maximum Tier I equivalent tax rate

allowable.

      (3) The property

tax rate required to produce a five (5) cent equivalent tax rate shall be

calculated as follows:

      (a) Five(5)

cents;

      (b) Times the

current year total valuation of property and motor vehicles as certified by the

Revenue Cabinet;

      (c) Divided by

the collection rate as defined in 702 KAR 3:270, Section 1(3);

      (d) Divided by

the current year property assessment as certified by the Revenue Cabinet;

      (e) Rounded to

the next higher one-tenth (1/10) cent;

      (f) Equals the

property tax rate required to produce a five (5) cent equivalent tax rate.

      (4) Maximum Tier

II property tax rate. The property tax rate required to achieve the maximum

Tier II equivalent rate allowable pursuant to KRS 157.440(2) shall be

calculated as follows:

      (a) Maximum Tier

II equivalent tax rate as calculated pursuant to Section 6 of this

administrative regulation;

      (b) Times the

current year total valuation of property and motor vehicles as certified by the

Revenue Cabinet;

      (c) Divided by

the collection rate as defined in 702 KAR 3:270, Section 1(3);

      (d) Minus the

current year projection for permissive taxes;

      (e) Minus the

prior year levied motor vehicle tax rate times the current year motor vehicle

assessment as certified by the Revenue Cabinet times ninety-six (96) percent;

      (f) Divided by

the current year property assessment as certified by the Revenue Cabinet;

      (g) Rounded to

the next lower one-tenth (1/10) cent;

      (h) Equals the

property tax rate required to achieve the maximum Tier II equivalent tax rate

allowable.

 

      Section 10.

Equivalent Tax Rates. (1) The levied equivalent tax rate used to determine

eligibility for Tier I and Facility Support Program of Kentucky (FSPK) state

equalization shall be calculated as follows:

      (a) Current year

real estate tax levy times current year total valuation of real property as

certified by the Revenue Cabinet;

      (b) Plus the

current year personal property tax levy times the current year total valuation

of personal property as certified by the Revenue Cabinet;

      (c) Plus the

current year motor vehicle tax levy times the current year total valuation of

motor vehicles as certified by the Revenue Cabinet;

      (d) Plus current

year projected permissive tax collections;

      (e) Times the

collection rate as defined in 702 KAR 3:270, Section 1(3);

      (f) Divided by

the current year total valuation of property and motor vehicles as certified by

the Revenue Cabinet;

      (g) Rounded to

the next lower one-tenth (1/10) cent;

      (h) Equals the

levied equivalent tax rate.

      (2) The

collected equivalent tax rate used for comparison to the prior year's levied

equivalent tax rate to determine if the tax receipts as submitted are

reasonable shall be calculated as follows:

      (a) Total prior

year tax receipts;

      (b) Divided by

the prior year total valuation of property and motor vehicles as certified by

the Revenue Cabinet;

      (c) Equals the

collected equivalent tax rate.

 

      Section 11. Five

(5) Cent Tax Rate for Growth. (1) To meet the eligibility requirements to levy

the five (5) cent tax rate for growth pursuant to House Bill 810 of the 1994

General Assembly, the following shall apply:

      (a) Adjusted

average daily attendance (AADA) as calculated pursuant to 702 KAR 3:270(3)

shall be used to calculate the required growth in ADA as follows:

      1. Prior year

end of year AADA;

      2. Minus the

fifth previous year end of year AADA;

      3. Equals the

growth in ADA used to calculate eligibility

to levy the five (5)

cent tax rate for growth;

      (b) Districts

qualifying to levy the five (5) cent tax rate for growth shall certify to the

Division of Finance, Department of Education that current student enrollment

exceeds available classroom space; and

      (c) Qualifying

debt service shall be in place at the time of the levy of the five (5) cent tax

rate for growth.

      (2) The property

tax levy required to achieve the five (5) cent tax rate for growth shall be

calculated pursuant to Section 9(3) of this administrative regulation.

 

      Section 12. Tax

Rate Certification. (1) Tax rates shall be certified to the school district by

the Department of Education upon receipt of the assessment from the Revenue

Cabinet, a listing of tax receipts collected based on the prior year tax levy

as provided by the school district and an annual tax collector's report as

provided by the school district to verify prior year tax collections.

      (2) Pursuant to

House Bill 81 of the 1994 General Assembly, school districts shall levy tax

rates within forty-five (45) days of the Revenue Cabinet's assessment

certification. Failure to meet this deadline shall require the use of the

compensating tax rate as calculated pursuant to Sections 3 or 4 of this

administrative regulation for that year's tax bills. Levies which are subject

to recall shall follow the provisions of KRS 132.017.

      (3) Unusual

circumstances as determined by the local school district and the Division of

Finance, Department of Education may allow a school district's tax rates to be

revised and recertified by the Department of Education. (21 Ky.R. 1404; Am.

1735; eff. 2-2-95.)
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