Nevada School Board members continue to study the district’s overall financial picture as they look at both current and future needs.
At Monday’s regular meeting, the board received a lesson about TIF (Tax Increment Financing) from Larry Sigel, partner with Iowa School Finance Information Services (ISFIS).
TIF is used primarily by cities and counties as an economic development tool. The theory behind it, Sigel explained, is that they (the city or county) have a “geographical area that needs improvements. By making improvements to the area, over the long run it will generate more economic development and hence property value” than if they didn’t make the improvements.
TIF caps the property value at a given level, which is now called the “base.” Any growth in property value is attributed to the project, which is called the “increment.” Property tax dollars that are generated by the increment are then used to finance the project.
The way that TIF impacts the school is that for its general fund tax rate, TIF masks the growth that the school finance formula would otherwise see, and in the end, impacts the overall tax rate. Because TIF freezes the property valuation, school districts have to levy at a higher rate to raise the needed funds.
Sigel shared with Nevada School board members that presently, 9 percent of this district’s valuation (which adds about 65 cents per thousand to Nevada’s levy) is tied up in TIF. He said the highest district in the state has 42 percent of its valuation in TIF, and some very high levy rates to go along with that.
Superintendent Steve Gray told the board that he doesn’t see TIF as a major barrier to the Nevada School District, given that only 9 percent of the district’s valuation is tied up in it.
“The reality is that our per pupil property valuation is lower than 85 percent of the districts in the state. So we’re already valuation challenged, which causes our levy rate to be higher than many districts.” For this reason, Gray said, it isn’t appropriate to compare levy rates between districts, because it’s comparing “apples to oranges.”
Sigel, too, pointed out, that being “valuation challenged” really is the bigger issue for Nevada. He said if Nevada’s enrollment continues to grow (up 45 students just this year), the district will become more “student rich” and “property poor.” Nevada currently ranks 299th out of 346 districts in property valuation, putting it in the bottom third. This statistic has greater impact than TIF on the district’s levy rate.
Sigel used the following example: For every child that moves into the district at this point, assuming you have one child move into each home, they would each have to be living in a $460,000 home for the district not to become more property poor.
Even though the district’s general fund revenue is driven by student numbers – the district receives $6,121 per student – it is also supported by the amount of property that can be taxed in the district. And presently, Nevada’s taxable property doesn’t measure up proportionately to the number of students attending school here.
“No matter what happens, you’re going to be valuation challenged over the long run, because your enrollment growth will probably exceed your valuation growth,” Sigel said.
As for TIF, Gray added, that while it may create some short-term challenges, “I think it’s important to recognize that it can be an important tool for economic growth and attracting entities that will actually increase valuation in the long term.”
At Monday’s meeting, board members also began talking about the possibility of shifting money from the management levy (which would affect the early retirement incentive that the district has been providing) into the debt service levy as one way to pay down its debt sooner and save on interest payments.
Board President Marty Chitty noted that as the district looks to the future and looks at its needs, both now and in the future, it is going to have to make some difficult decisions about money. When it comes to the school’s management levy, “We are either going to have to go to the community and say we need more of their money to do this (make improvements and pay for needs) or to our retiring staff and say, ‘Sorry, we need some of this money’ or we need a combination of these (two things).”
In other business:
The school board looked at two digital projects that district technology director Joe Wakeman is working on. One is digital signage that would be put on screens in the buildings in the district to show current events of the school, along with “tweets” about what’s going on in the district and other information and photos. The second project is the redesign/updating of the school’s website.
The goal of these digital projects is to pull the school’s information together from the various digital sources and to improve the image of the district.