LIMITATION ON SCHOOL DISTRICT EXCESS LEVIES UNDER CHAPTER 325, LAWS OF 1977, 1ST EX. SESS.

DISTRICTS ‑-  SCHOOLS ‑-  TAXATION ‑-  PROPERTY ‑-  LIMITATION ON SCHOOL DISTRICT EXCESS LEVIES UNDER CHAPTER 325, LAWS OF 1977, 1ST EX. SESS.

(1) The maximum amount of a given school district's excess property tax levy under § 4(2), chapter 325, Laws of 1977, 1st Ex. Sess., for collection during the following calendar year, is to be computed solely on the basis of the district's basic education allocation for the last completed school year prior to the date of the levy.

(2) Explanation of the circumstances under which a school district, pursuant to § 4(4), chapter 325, supra, may be permitted to exceed the levy lid established by § 4(2) thereof, and how the modified levy lid for such a district is to be determined.

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                                                                December 5, 1977

Honorable Frank Brouillet
Superintendent of Public
Instruction
Old Capitol Building
Olympia, Washington 98504                                                                                                               Cite as:  AGLO 1977 No. 55

Dear Sir:

            By letter previously acknowledged you have requested our opinion on certain questions regarding the limitations on school district excess property tax levies which are contained in chapter 325, Laws of 1977, 1st Ex. Sess.  We paraphrase your questions as follows:

            (1) Is the maximum amount of a given school district's excess property tax levy under § 4(2), chapter 325, Laws of 1977, 1st Ex. Sess., for collection during the following calendar year, to be computed solely on the basis of the district's basic education allocation for the last completed school year prior to the date of the levy?

             [[Orig. Op. Page 2]]

            (2) Pursuant to § 4(4), chapter 325, supra, under what circumstances may a school district be permitted to exceed the levy lid established by § 4(2) thereof, and how is the modified levy lid for such a district to be determined?

            We answer your first question in the affirmative and your second question in the manner set forth in our analysis.

                                                                     ANALYSIS

            Before taking up directly the two questions which you have asked it may be helpful to explain the relationship between two timetables ‑ one for the operation of our public school system and the other which governs the property tax system.

            Pursuant to RCW 28A.01.020, a school year runs from September 1 of one calendar year until August 31 of the next calendar year.  On the other hand, our property tax system operates on a calendar year basis.  Under RCW 84.52.030 the tax is levied in October of one calendar year1/ and is then, pursuant to RCW 84.56.020, collected partially in the spring and partially in the fall of the next calendar year ‑ with the spring portion normally representing about 55% of the total collections and the fall portion representing the remaining 45%.2/

             As a consequence, it is readily to be seen that the tax collections resulting from a single school district excess levy will be received in two different school years.  For example, the spring collections from a 1978 levy will be received during the 1978-79 school year and the fall collections from the same levy will be received during the 1979-80  [[Orig. Op. Page 3]] school year.  Or, to state the same thing conversely, in a given school year property tax collections will be received (assuming no levy failure) from two different levies.  We might further illustrate this by the following chart.3/

CALENDAR YEAR

1977                            1978                            1979                            1980                            1981

SC‑55% FC‑45%        SC‑55% FC‑45%        SC‑55% FC‑45%        SC‑55% FC‑45%        SC‑55%

1976‑77                       1977‑78                       1978‑79                       1979‑80                       1980‑81

SCHOOL YEAR

            With this in mind we turn to the questions raised in your opinion request.

            Question (1):

            Your first question involves what we might call the "basic" levy lid law.  As contained in § 4(2) of chapter 325, Laws of 1977, 1st Ex. Sess., that law reads as follows:

             [[Orig. Op. Page 4]]

            "The maximum dollar amount which may be levied by or for any school district for maintenance and operation support under the provisions of section 3 of this amendatory act shall be as follows:

            ". . .

            "(2) For excess levies in 1977 for collection in 1979; for excess levies in 1978 for collection in 1979 and thereafter, the sum of:

            "(a) That amount equal to ten percent of each school district's prior year basic education allocation converted to one hundred percent of formula; plus

            "(b) That amount equal to each school district's prior year basic education allocation converted to one hundred percent of formula minus each school district's basic education allocation for such school year."

            In analyzing this language we shall focus upon levies "for collection in 1979," recognizing that the same analysis will apply, mutatis mutandis, for levies to be collected in subsequent years.  The question we must answer is two-fold.  First, what precisely is being limited?  And second, how is that limitation to be determined?

            The answer to the first part of the question is obvious.  The language of the law limits the dollar amount which may be levied by a school district in October of 1978 for collection in the spring and fall of 1979.4/   But how, then, is the limitation determined?

             [[Orig. Op. Page 5]]

            We understand that your office has taken the position that the "prior year" referred to in § 4(2)(a) and (b), supra, will be the completed school year immediately prior to a given October levy or ‑ and this would amount to the same thing ‑ the completed school year immediately prior to the first collection from that levy.  Thus, the "prior year" in the case of a 1978 levy for 1979 collection would be the 1977-78 school year.  In view, particularly, of the reference to "such school year" in § 4(2)(b), we agree with that position.  Accordingly, in determining the lid for a particular district's October 1978 levy, for collection in calendar year 1979, the computations called for in both (a) and (b) are to be madesolely with reference to the 1977-78 school year, without reference to the amount of funds to be received in the 1978-79 school year from excess levies, from a district's basic education allocation, or from any other source for the 1978-79 school year.

            An example will serve to illustrate the foregoing.  Assume (1) that the basic education allocation actually received by a given district for the 1977-78 school year is $15 million and (2) that the basic education allocation for that same school year, converted to one hundred percent of formula, is $20 million.  The lid for the October 1978 levy, for collection in calendar year 1979, would then be the sum of (a) 10% of $20 million (or $2 million) and (b) $20 million less $15 million (or $5 million).  Thus the lid in this case would be $7 million, and that would be so irrespective of the amount of funds to be received in the ensuing, 1978-79, school year either in the aggregate or from any particular source.

            In thus concluding we fully realize that under this approach, what might be called a hypothetical "need" is to be computed for the 1977-78 school year, and is then used to limit a levy the collections from which will occur during the 1978-79 and the 1979-80 school years.  But this is clearly what the statutory language contemplates.5/

            Question (2):

            Your second question, in turn, relates to the so-called "grandfather" clause which will be found in the following language of § 4(4), chapter 325, supra:

             [[Orig. Op. Page 6]]

            ". . .

            "For the purpose of subsection (2) of this section, the superintendent of public instruction may grant local school districts authority to exceed the levy limitations imposed by said subsection:  PROVIDED, That said limitations can only be exceeded by an amount that will insure local school districts the ability to raise a total excess levy dollar amount per annual average full time equivalent student which when combined with the basic education allocation is equal to, but does not exceed, one hundred and four percent of, the previous school year's comparable dollars per annual average full time equivalent student.

            ". . ."

            By this provision the legislature appears to have recognized that for the 1978-79 school year, for example,6/ the basic levy lid might provide too little, rather than too much.7/   The limit here applies to exactly the same thing as the basic limit in § 4(2);e.g., the October 1978 levy for collection in 1979.  However, the method of computation is quite different from that used in computing the basic lid.

            Under the basic levy lid, the limit is computed solely with reference to the prior (e.g., 1977-78) school year, a school year during which no money will be actually received from the levy to which the limit applies.  Further, under the basic lid, the question of whether excess levy revenues will be collected at all in calendar year 1978 from an earlier, October, 1977, levy is irrelevant to the required computations.  However, under the grandfather clause of § 4(4), the focus instead shifts to the 1978-79 school year;i.e., the school year in which the spring 1979 collections from an October 1978 levy will be received.  And thus the question of whether excess levy revenues will be collected in calendar year 1978 from an earlier (1977) levy becomes very relevant in computing the lid under that subsection.

             [[Orig. Op. Page 7]]

            Under § 4(4), a district may be assured that it will receive a certain amount of revenue per full-time equivalent student in 1978-79; namely, 104% of the amount of revenues received per average annual FTE in 1977-78.  And the revenues referred to consist of the basic education allocation plus any excess levy revenues received in 1977-78.  In short, under the grandfather clause, the amount of the October 1978 levy is to be set so that thespring 1979 collection, which is derived therefrom, when combined with the actual basic education allocation for the 1978-79 school year and with the fall, 1978, levy collection (derived from a 1977 levy), will be sufficient to provide the appropriate amount per average annual FTE in the 1978-79 school year ‑ the "appropriate amount" being 104% of the comparable dollars per average annual FTE in 1977-78.  Once the amount of the necessary spring 1979 revenue collection is thus determined, then the actual lid for the October 1978 levy can also be determined ‑ by simply multiplying the spring collection amount by, in the "typical" case, 1.818.8/

             [[Orig. Op. Page 8]]

            Again, an example may be useful for illustrative purposes.  Assume the following for a given school district for the 1977-78 school year.

            (1) The annual average FTE enrollment is 10,000.

            (2) Excess levy collections in the fall of 1977 are $2 million.

            (3) The basic education allocation (combined, for reasons explained below, with compensation increases to be received pursuant to § 96, chapter 339, Laws of 1977, 1st Ex.Sess.)9/ is $15 million.

             [[Orig. Op. Page 9]]

            Next, assume the following for the 1978-79 school year:

            (1) The annual average FTE enrollment is estimated at 9,500.

            (2) Excess levy collections from fall 1978 collections will be 0.

            (3) The basic education allocation will be $16 million.

            $1,768 multiplied by 9,500 is $16,891,000.  Thus, there will be a "shortfall" of $891,000 which can be made up through the spring 1979 levy collection.  However, to obtain this amount, the total amount levied must be ‑ again using a 55%-45% split ‑ $891,000 multiplied by 1.818, or $1,620,000.  And accordingly it is this latter amount which will constitute the lid under the grandfather clause and which, if it is larger than the amount computed under the "basic" lid, will be the controlling lid.

            We trust that the foregoing will be of some assistance to you.