The Farmington R-7 School District's Board of Education held a tax rate/budget public hearing Aug. 20 to approve its 2019-2020 tax levy.
Director of Business Services Don Eaton presented the tax levy calculations based on the final St. Francois County reassessment results.
“We went through some serious reassessment here in St. Francois County,” he said. “We had a huge jump. Obviously, we have no control over the assessments in our district, but it does affect our tax rates in a major way.
“When we calculate our rates each year, we calculate two different rates, one for operating funds and one for debt service. We calculate what is the maximum allowable rate under law and of course, the state auditor certifies those.”
Eaton first explained about the school district’s operating rate. This rate was calculated based upon the increase in valuations, without factoring in new construction.
“That percentage this year was 13.9 percent,” he said. “The increase in the Consumer Price Index (CPI) was 1.9 percent this year, and there is a statutory limit of 5 percent. These are protections for taxpayers under the Hancock Amendment which have taxing entities limit the amount of their rate to those amounts. You have to take the lower of those percentages.
“This year that lowest percentage was the increase in CPI at 1.9 percent, but when you have assessments that go up 13.9 percent, that’s a big gap. So generally when that happens, basically you take last year’s tax rate, the big jump in valuation, the low CPI that’s allowable and it’s going to have a major impact on your tax rate and force it downward. This year it actually forced our rate well below the state minimum.”
According to Eaton, the school district is subject to the Hancock Amendment as are cities and counties. However, schools do have a protection that the other entities do not have. In 1998 Missouri voters passed Constitutional Amendment No. 2 which said that schools are allowed a levy of no less than 2.75 percent.
“This is the first time, and I have been here 24-25 years, that we have calculated less than 2.75 (percent),” he said.
Eaton then turned to explaining the debt service rate, which deals with payments of school bonds that voters pass during elections.
“When we look at the debt service rate, it too is influenced greatly by the assessed valuation,” he said. “But it’s also dependent on payments that you have scheduled. Every time we pass a bond issue, we have bond payments that are scheduled out into the future. When we are calculating that rate, we are allowed to look at the next two years payments to determine that rate.
You have free articles remaining.
“The maximum allowable rate this year for debt service was a little over $1.04. We are in the habit of levying 90 cents, this would be the ninth year in a row, we will keep our levy at 90 cents.”
Taxpayers in the past have asked about reducing the debt servicing rate, an idea that Eaton explained would be a financial concern in the near future.
“One of the catch-22s about saving taxpayers money in those previous years, is that we have not built up our debt service balances,” he said. “When we get in a year like this and people ask why don’t reduce our debt service levy even further that makes it more difficult.
"(Superintendent Matt Ruble) and I noticed, even dropping it a nickel or a dime is going to put us in a bind in the next two to four years. So whatever additional reduction we took now from 90 cents, we would probably have to come back and raise the rate again pretty quick.”
Ruble supplied a list of tax rate comparison data for the region and state:
Farmington School District (2019-20) is at $3.65 (.46 cents below state and $1.02 below regional average).
The state average (2018-19) was $4.1099 and the regional average (2018-19) was $4.6714. Regionally, they ranked 45th lowest out of 51 schools in Iron, Jefferson, Madison, St. Francois, St. Louis, Ste. Genevieve and Washington Counties.
The $3.65 levy is per $100 of assessed valuation of a property. The assessed valuation for residential properties is 19 percent of the reassessment value.
An example of a tax calculation on a residence valued at $100,000 based on last year’s calculations is $712.50 taxes levied by school. This year $832.20 taxes would be levied by school.
Note: The above calculations are only on the Farmington School District levies. This does not include taxes by the city of Farmington, St. Francois County, Mineral Area College or other taxing entities.