6 310 072 4b Finance
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6 310 072 4b Finance

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    6 310 072 4b Finance 6 310 072 4b Finance Presentation Transcript

    • Education Finance
      • Who Pays?
      Who Cares?
    • The Tax Collector School Boards set their own tax rates (called “Mill Rates”), but the municipal governments have to collect them.
    • Regina Public’s 2002 Budget 2002 Expenditures = $132,552,712
    • Regina Public’s 06-07 Budget
      • Expenditures $155,967,607
      • Mill rate will be 18.5528 mills, up 2.92% from 2005
      • Estimated average public school tax on a Regina home will be $1,004.98
      • Provincial grant is expected to cover 45.33% of the costs
    • Regina Catholic’s 04 & 05 Budgets 2005 Expenditures = $68,999,339 2006-2007 mill rate will increase 2.92%
    • The lines are drawn . . . .
    • And the gloves are off . . . .
    • Horizontal Equity
      • Equal Treatment of Presumed Equals
      = =
    • Vertical Equity Unequal Treatment of Presumed Unequals ≠ ≠
    • Horizontal & Vertical Equity
      • The concepts of horizontal and vertical equity do not just apply to who receives what from education. They apply equally to who pays.
      • Is it fair to make everyone pay the same amount?
      Or should the amount be based on ability to pay? Horizontal Equity Vertical Equity
    • Saskatchewan K-12 Funding Local/Provincial Share: 83-84 to 93-94
      • Saskatchewan Education, Training and Employment. (February, 1994). Saskatchewan education indicators report , p. 77.
      0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 83-84 84-85 85-86 86-87 87-88 88-89 89-90 90-91 91-92 92-93 93-94 Percentage Share Local Property Taxes Provincial Grants School Year
    • Local/Prov. Share, Canada and Provinces, 1989-90
      • Saskatchewan Education, Training and Employment. (February, 1994). Saskatchewan education indicators report , p. 77.
      0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Canada N.W.T. Yukon B.C. Alta. Sask. Man. Ont. Que. N.B. N.S. P.E.I. Nfld. Local/Provincial Share Other Local Property Taxes Provincial Grants
    • Saskatchewan’s Equalized Mill Rate
        • Property assessments are “equalized” (i.e., comparable from one location to another) — this done by assuring that all property assessors use the same criteria in the same ways in all areas of the province; and
        • Property tax rates are “equalized” (i.e., everyone is subject to the same mill rate). To do this the province requires all school boards to levy the same “Equalized” Mill Rate . In 2004 this was 17.4 Mills
      In order to insure that the property tax levied on Saskatchewan citizens is fair (i.e., that everyone is required to make an equal “tax effort”), it is necessary to insure that:
    • So how is the “Mill Rate” used to calculate property tax?
      • A “Mill” is 1/1000 , just like a “Percent” is 1/100.
      • Revenue generated by a given Mill Rate can be calculated using the following simple formula:
        • Assessed
        • Revenue = Value X Mill Rate ÷ 1000
        • of Property
      • Simple transposition allows you to adjust the formula so that you can calculate how many Mills it will take to generate a given amount of revenue from a given assessment:
        • Revenue Assessed
        • Mill Rate = Required ÷ Value X 1000
        • of Property
      • [ X = Y x Z ÷ 1000 = Z = X ÷ Y x 1000]
    • Setting a School Board’s Mill Rate
      • Establish program and service priorities and their associated costs (i.e., what do you want to do; how much money are you going to need ?)
      • Guesstimate probable Foundation Grant from the Province
      • Determine the value of your property-tax base
      • Determine , given the foundation grant, how much money you have to raise locally
      • Determine , given the amount to raise and the local property-tax base, what tax rate (“Mill Rate”) you are going to have to charge
      • Hope your guesses were reasonably accurate and that the public will be willing to support your decision
    • Property Taxes in Rex: 2004
      • Mill Rate = 40.3204 Mills [40.3204 ÷ 1000]
        • Municipal taxes +
        • Libraries tax +
        • Hospitals tax = ~ 51% or 20.5704 Mills
        • School Taxes (Whether Public or Separate) = ~49% or 19.725 Mills
    • School Property Tax Revenue in Rex, Saskatchewan, 2004
      • Rex’s school boards had the following equalized assessments in 2004
      • Rex Public $3,864,913,900
      • Rex Catholic $1,681,489,350
      • Since: Revenue = Assessment x (Mill Rate ÷ 1000)
      • Rex Public School District, using the “Equalized Assessment” and the School Board’s “Mill Rate,” raised
      • Revenue = $3,864,913,900 x (19.725 ÷ 1000)
      • = $76,235,426.43
      • Rex Catholic School District, using the “Equalized Assessment” and the School Board’s “Mill Rate,” raised
      • Revenue = $1,681,489,350 x (19.725 ÷ 1000)
      • = $33,167,377.43
    • A Rex Tax Bill for a house with a “Market” Value of Approximately $100,000
      • Property Tax = Assessed Value of Property X Mill Rate
        • = $60,000 X .0403204 [40.3204 ÷ 1000]
        • = $2,419.22
      • In Rex, the School Boards’ mill rate ( 19.725 mills ) accounts for about 49% of your property tax bill; therefore:
      • School Tax = Assessed Value of Property X Mill Rate
        • = $60,000 X .019725 [19.725 ÷ 1000]
        • = $1,183.50
      • Assume the assessed value of your property is:
        • Land $15,000
        • Buildings $ 45,000
        • Total $60,000
    • Topping Up If you can afford it!
      • The Province only required Boards to levy a Mill Rate of 17.4 Mills . Thus Rex Boards decided to levy an additional 2.325 Mills in order to raise “extra” funds for their educational programs.
      • Note that, in 2004, both the Rex Public and Rex Catholic School Boards set their Mill Rates at 19.725 .
    • Topping Up If you can afford it!
      • Recall that Rex’s school boards had the following equalized assessments in 2004
        • Rex Public $3,864,913,900
        • Rex Catholic $1,681,489,350
      • Since: Revenue = Assessment X (Mill Rate ÷ 1000)
      • Rex Public , using their “Equalized Assessment” and the extra 2.325 Mills, raised an extra:
        • Extra Revenue = $ 3,864,913,900 X ( 2.325 ÷ 1000)
        • = $ 8,985,924
      • Rex Catholic , using their “Equalized Assessment” and the extra 2.325 Mills, raised an extra:
        • Extra Revenue = $ 1,681,489,350 X (2.325 ÷ 1000)
        • = $ 3,909,462
    • What Difference Does it Make?
      • Humdinger , Saskatchewan
      • A. Recog. Cost/Pupil $7,000
      • B. Enrolment 2,000
      • C. Total recognized
      • expenditure (A x B) $14,000,000
      • D. Assessment $900,000,000
      • E. Equalized Mill Rate 17.4
      • F. Yield from Prov. Mill
      • Rate (D x (E÷1000)) $15,660,000
      • G. Prov. Grant (C - F) $0
      • H. Prov. Share 0%
      • I. Local Share 100%
        • Armiworm , Saskatchewan
      • A. Recognized Cost $7,000
      • B. Enrolment 2,000
      • D. Total recognized
      • expenditure (A x B) $14,000,000
      • D. Assessment $500,000,000
      • E. Equalized Mill Rate 17.4
      • F. Yield from Prov. Mill
      • Rate (D x (E÷1000)) $8,700,000
      • G. Prov. Grant (D - F) $5,300,000
      • H. Prov. Share 37.86%
      • I. Local Share 62.14%
      Foundation Grant Horizontal Equity
    • What Difference Does it Make?
      • Over Ceiling Spending: Horizontal Equity?
        • Armiworm , Saskatchewan
      • Equalized Assessment = $500,000,000
      • J. Extra $ per pupil $1000
      • K. Additional cost to
      • taxpayer (100% local) $2,000,000
      • L. Addition to Mill Rate
      • (K x 1000)÷Assessment) 4 mills
      • M. Final mill rate 21.4 mills
      • N. % increase in mill rate 22.99%
      • O. On a house with an assessed
      • value of $60,000, school taxes would go up $240.00
      • TOTAL REVENUE = $16,000,000
      Humdinger , Saskatchewan Equalized Assessment = $900,000,000 J. Extra $ per pupil $1000 K. Additional cost to taxpayer (100% local) $2,000,000 L. Addition to Mill Rate (K x 1000)÷Assessment 2.22 mills M. Final mill rate 19.62 mills N. % increase in mill rate 12.78% O. On a house with an assessed value of $60,000, school taxes would go up $132.00 TOTAL REVENUE = $17,658,000
    • Equity Via the Foundation Grant Plan 0 3000 3500 4000 4500 Wealthy System Average System Poor System System Wealth Revenue Source Extras Provincial Grants Property Tax Foundation Grant Ceiling Level (~$5,000+ in 2004) 5500 5000 6000 7000 6500
    • Where They Spent Your Money Education spending by Saskatchewan school boards, 1999, 2000, 2001
    • Where Boards Spent Your Money 2001
    • Teacher Salaries by Province
    • Class 4 (More or Less)
    • Class 6 (More or Less)