NKY schools may benefit from new property value relief
Northern Kentucky has experienced fluctuations in property values that factor into school funding. Retiring Ludlow superintendent Mike Borchers has seen the impact in his independent school district.
“The last (assessment) we generated 4% revenue and still dropped our tax rate by 12 points,” Borchers told LINK nky. “The property value went up so high we were only allowed to generate 4% more revenue, not 4% new tax. Over the past four or five years we’ve seen a lot of fluctuation. If you have a 30% increase in your property value it’s going to drive down your rate. The district can only pull 4% more revenue out of that.”
One issue is the state SEEK formula, which is the main funding formula for public schools in Kentucky. The state pays a share of SEEK, and school districts pay a share. The more taxable property a school district has, the more it pays — with the state paying a smaller share.
Enter House Bill 6, the state’s new two-year budget which could bring districts in NKY and elsewhere some local relief.
The budget includes “property assessment growth relief” – a provision allowing school districts experiencing real estate growth to receive an additional local adjustment and potentially stave off a cut in state funding through SEEK.
School districts where cumulative assessed real estate growth exceeds 14.4% would have a chance to qualify for relief in 2024-25, with another chance to qualify the following year, Kentucky Department of Education finance director Chay Ritter told public school superintendents during a May 14 webcast.
“So if you were at 16.2%, (the department) would adjust for that amount above 14.4%,” Ritter said during the webcast. “Your local effort specific to that real property would come back to you in the form of an adjustment” or payment. Local effort refers to the local SEEK share which is 30 cents for each $100 in taxable property in the district.
Participating districts must also have qualified for a 4% real property assessment adjustment under current law and levied a tax rate of 4% or greater.
Here are specifics for district qualification, according to the department:
To qualify for the 2024-2025 school year, districts:
- Must have qualified in 2023-2024 and 2024-2025 for the 4% adjusted assessment;
- Must levy the 4% tax rate or greater in 2024-2025; and
- Must have experienced a cumulative growth in real estate assessments from fiscal year 2022-2023 to 2024-2025 of more than 14.4%. KDE will adjust local effort specific to real property for growth above 14.4%.
For the 2025-2026 school year, districts:
- Must have qualified in 2024-2025 and 2025-2026 for the 4% adjusted assessment;
- Must levy the 4% tax rate or greater in 2025-2026; and
- Must have experienced a cumulative growth in real estate assessments from fiscal year 2022-2023 to 2025-2026 of more than 25.8%. KDE will adjust local effort specific to real property for growth above 25.8%.
Payments will ultimately depend on available funding at the state level, said Ritter. If there’s not enough funding or real property assessments don’t keep up, districts that have experienced growth up till now may lose out.
Ritter said the department won’t know until it calculates final SEEK funding (around March 1 each fiscal year) how much money will be available for the new adjustment.
“The good news is that typically we have base SEEK (funds) and other pots of money in there. If there’s money left over across the board typically we can access those funds to fund adjustments like this,” he said.
More good news? State lawmakers increased state SEEK funding in the next budget, just as they did in the current budget passed by the 2022 Kentucky General Assembly. Borchers calls that “a big help,” especially when it comes to salaries for teachers and other staff.
“It’s allowed us to put more money into our salaries,” he told LINK. “Northern Kentucky is always going to have the challenge of competing with Ohio, it’s a higher start for their teachers. So we work really hard for ours.”
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