A proposed school district tax increase would impact residents in a $300,000 home by just $66 per year, according to a public notice announcing the proposal, but the details of the change are nuanced.

Pat Wilson is the business administrator for the Grand County School District; he sat down with the Moab Sun News to explain the components of the school district tax, the reasons for a proposed increase, and how Utah’s Truth in Taxation law affects the way the change is publicized.

Wilson reported that the district is cutting the fiscal year 2022 budget by $600,000 by reducing or re-organizing some positions. For example, a speech therapist position has been changed from a full-time post to an aide position.

Wilson explained that the proposed tax change to the Grand County School District tax rate will actually lower the tax rate, but it must be advertised as a tax increase under state law.

The Grand County School District uses six tax levies to fund different aspects of the school system: Basic School, Capital Outlay, Board Local, Charter School Replacement, Debt Service, and Voted Leeway.

The Voted Leeway, or Voted Local, levy is a five-year incremental property tax rate increase that was approved by school district voters in 2016 to boost teacher salaries. The levy expires this year. Wilson explained the district needs to offer better than competitive wages to make up for the high cost of housing in the area. Teachers are turning down jobs, he said, because they can’t find housing.

Teacher salaries increased about 3.5% over last year in the Grand County School District; statewide, they rose by about 4.3%.

“It’s hard to stay competitive,” Wilson said.

When the Grand County School District offered a position to Jaysen Radonski as an auto-shop teacher at the high school, the Nevada native was excited to bring his 30 years of experience as an auto mechanic to Grand County High School. However, when Radonski looked for housing for his wife and five children, he was shocked by the prices in Moab.

“We found one house, and I look at the price tag, and we see it’s $700,000. I can’t even come close to qualifying for that on a teacher’s salary,” he said. As of August, the family is living in an RV. “It’s bringing the family closer together,” he said. Utah law mandates that if a local taxing entity wants to increase the revenue it generates from taxes, even if the rates are being lowered, it must go through a “Truth in Taxation” process.”

This year’s previously approved increase to teacher salaries is included in the tax increase notice, though it has already been passed by voters.

Area schools have other needs, like maintaining buildings and grounds. The high school track will need to be replaced soon, for example, at an estimated cost of $500,000. Wilson said the district plans to resurface the track one more time, at a cost of $100,000, to extend its life before needing to rebuild it entirely. The schools also need money to stay current with technology infrastructure like Chromebooks for students, wi-fi, internet servers, projectors, and audio enhancement systems.

Weighted pupil units and Basic Levy

The state determines how much it contributes to a school district using a “weighted pupil unit,” which is a dollar amount calculated for each enrolled student. Currently that amount is $3,809 per student enrolled for 180 days.

The district levies a basic tax rate, which is set by the State Tax Commission and State Office of Education based on legislative intent. If the revenue from that levy falls short of the guaranteed dollar amount per student, the state contributes the difference.

Wilson said the Grand County School District lost about 170 of its roughly 1500 students in 2020, the highest percentage of students lost out of all school districts in the state. So while the state legislature approved a 5.92% increase in the WPU for the upcoming school year, the district only saw a 0.86% increase in state revenues.

Some of those lost students are returning for the upcoming school year, he said, but not all. A smaller student population means a smaller overall guaranteed amount from the state.

Part of the proposed tax change includes an approximately 2% increase in the Basic Levy, which translates to about $5 of the hypothetical $66 example. In projections for the coming year, the district is expected to be funded about 57% through local funds, 34% through state funds, and 9% from federal funds. Ten years ago, Wilson said, that ratio was 37% local, 51% state, and 12% federal.

Other levies

The district imposes a Debt Service Levy to pay back bonds for school buildings built prior to the new Margaret L. Hopkin Middle School, which opened this year. The debt service outstanding for those buildings will be repaid by 2028. This levy has continued to decrease each year as the assessed valuation in the county has grown.

The Board of Education used a local building authority to fund the new middle school building, which students and staff began using in April. Crews are still working on the school grounds and small interior tasks, and plan to be finished early this fall. The cost of the Hopkin Middle School building will come to $39 million, and the debt repayment for that endeavor is projected to be paid off by 2039. The funds to pay off the debt incurred under the local building authority come from the Capital Outlay levy.

The Charter School Replacement tax rate is set by the state of Utah and provides funds to charter schools, which are not authorized to collect taxes. That levy is increasing by about 54%, but the school district does not control that tax, and only some of those revenues go to the public school system. The increase accounts for about $4 of the hypothetical $66.

Of that hypothetical $66 property tax increase on a $300,000 home, $42 are accounted for in the Voted Leeway Levy, the Basic Levy, and the Charter School Replacement Levy. The remaining $24 is split between the Capital Outlay Levy and the Board Local Levy, two discretionary levies that a school district board may choose to implement up to limits set by the state.

Truth in taxation

If the proposed tax adjustment is approved, the Grand County School District will increase its property tax budgeted revenue by 10.15% above last year’s, excluding new growth like new homes and businesses. However, the actual tax rate will drop by almost 1%. That’s due to increased assessed property values. Even as the rate drops, revenues increase because the value at which properties are being taxed is rising. If a property has not been reassessed, or has been assessed at the same value as last year, that property owner's taxes will actually go down.

Since 1985, Utah has had a “Truth in Taxation” law that dictates when and how the public is notified of planned changes to property tax rates.

“Utah’s ‘Truth in Taxation’ laws are revenue-driven, not rate-driven,” reads an explanatory document from the Utah State Board of Education. “That means the requirement to hold a ‘Truth in Taxation’ hearing is based upon the collections of a taxing entity, not the rate charged.”

A taxing entity, like a school district, must set its tax rates by identifying a target revenue amount and setting a rate that will generate that amount. If assessed property values increase, the rate is automatically adjusted down to maintain the same revenue. The formula to achieve that is set by the State Tax Commission’s Property Tax Division. That adjusted rate is called the “certified tax rate.”

If that taxing entity wants to levy a rate higher than the certified rate, it must follow a specific public notification and hearing process, even if the rate is still lower than the previous year's actual tax rate.

Even though under the proposed tax change, the Grand County School District tax rate will actually drop by 0.83% over last year, the proposed rate is advertised as a tax increase because it exceeds the certified tax rate and will result in increased revenue for the district, thanks to increased assessed property values.