What is the difference between the tax levy and tax rate?

The tax levy is the total amount of money a school district raises in taxes each year from all property owners in the district.

The tax rate is the amount paid for each $1,000 of taxable assessed value of property. The rate is used to calculate each individual property tax bill. In districts that cover just one municipality, the tax rate is figured by dividing the tax levy by the total taxable assessed value of the district, then multiplying by 1,000. This gives you the tax rate, which is expressed as the amount per $1,000 of assessed property value.

What is the equalization rate?

In New York, each municipality determines its own level of property assessment. This means that property in different municipalities could be assessed less than, higher than or at actual full market value (i.e., the price for which a property could be sold.) In order to distribute school district or county taxes evenly among multiple municipalities, the level of assessment for each of those municipalities must be equalized to full market value. To do this, the state uses an equalization rate:

• Total assessed value of the municipality ÷ Total market value of the municipality = Equalization rate

Once the full market value of each municipality is established, the school district or county can determine the amount of taxes that should be collected from each municipality.

Learn more about equalization rates and local assessment rolls here.

What is the tax levy limit, or tax cap?

The tax levy limit is the highest allowable tax levy (before exemptions) a school district can propose as part of its annual budget with the support of a simple majority of voters (50 percent + 1) required for approval. In other words, if a district proposes a tax levy increase at or below the limit, a simple majority of voters is needed for the budget to pass.

Any proposed tax levy amount above this limit requires the support of a 60 percent supermajority of voters to be approved. The tax levy limit sets a threshold requiring districts to obtain a higher level of community support for a proposed tax levy above a certain amount.

What happens if the budget is defeated?

Under New York law, if the school budget is defeated, the board of education two options: Hold another vote in June on either the same budget or a revised budget, or adopt a contingent budget without a second vote. If voters defeat the proposed budget a second time, the board must adopt a contingent budget.

What is a contingent budget?

State law mandates that under a contingent budget, a school district must adopt a budget with no tax levy increase and eliminate all non-contingent expenses, such as certain student supplies, certain equipment purchases and community use of school facilities that results in a district expense. (The district would likely need to charge fees for any community use of buildings and grounds.) The administrative budget would also be subject to restrictions.

What is a “fund balance” and how does it help offset school taxes?

Fund balance is created when there is money left at the end of the fiscal year, either by the district spending less than budgeted or receiving more revenue than anticipated. An “unassigned” fund balance provides monies that can be used for a variety of needs, unlike reserve funds, which are targeted for specific purposes. New York limits school districts’ fund balances to 4 percent.

What is the School Tax Reduction, or STAR, Program?

STAR provides partial school property tax savings to eligible homeowners. Most New Yorkers who own and live in their homes are eligible for STAR savings on their primary residences. Because STAR is not a district program, taxpayers STAR savings are not factored into a school budget. Learn more about Star here. 

Why do salaries and benefits make up so much of the budget?

It takes many people to maintain a safe and productive learning environment for Liberty’s students. Employees teach, transport, coach and care for the community’s children. They clean buildings, cook meals, maintain playing fields, order supplies, comply with regulations and make decisions so that schools run effectively and efficiently.

What is a capital reserve fund?

A capital reserve fund allows the district to set aside money for future construction projects and major purchases such as buses. Like a savings account, this money is set aside so that a significant project or expense does not affect the budget all at once. The fund cannot be established without voter approval, and reserve funds cannot be spent without voter approval. Because capital assets have a predetermined useful life expectancy, a reserve fund reduces the need to borrow money to replace those assets in the future, while also enabling the district to maximize state aid.