Every November, somewhere in Colorado, voters decide on school tax measures.
Some districts are asking for money to pay bond debt, some are asking for what are called factory tax waivers, and some are doing both.
While bond measures and mill royalty waivers can affect property taxes, they each serve different purposes.
Here’s how they work:
What is a school deposit measure used for?
A request for bail on a Colorado ballot typically asks for two things: Can the district take on more debt, and can the district raise your property taxes to pay off that debt?
If approved, school districts will hire underwriters to sell bonds and get a good rate on interest payments from the district. When districts sell bonds, they typically enter into 20-30 year agreements to pay off the debt with interest. Debt can be refinanced during this period if there is a chance of lower interest rates.
Sometimes districts have a bond request that will not increase the tax rate. This occurs when the school district can collect more money from the same tax rate because property values have increased or because the school district has reduced its existing debt payments and created wiggle room for take on more debt.
Bonds are typically used to construct new school buildings or facilities or to make major repairs and improvements.
Sometimes school districts ask voters to approve a bond that will help the district qualify for public matching funds. The states Building Great Schools Today or BEST Program helps pay for new schools and major upgrades in districts struggling to pay the full cost. If voters reject the bond measure, the school district receives no money from the state.
What is a factory sample waiver request?
Mill levy refers to the rate charged for property taxes. The state establishes factory tax in each school district and that money pays for a portion of the schools’ base operating budget, with the state covering the rest of the costs, according to Colorado’s school funding formula.
Districts that want to raise more money on top of that rate must first seek voter approval. This is called a factory offtake waiver.
The money generated by this tax stays in the community and goes directly to the school district. School districts must tell voters how they will use the money, such as raising teachers’ salaries.
There is a limit to the amount districts can raise their factory taxes, even with voter approval. It’s based on a percentage of their total public funding.
Why do some districts require both a deposit and a factory tax waiver?
The money generated from the sale of bonds can only be used for one-time expenses such as construction, maintenance or infrastructure needs.
But if a school is looking for more money to raise teachers’ salaries, buy new books or create a new arts program, it will ask voters for a factory tax waiver because that money is not limited. Factory fee waivers generate money each year that can be used for day-to-day expenses.
Depending on what local leaders think students need – and what they think voters will accept – school boards could put a bond measure and a factory tax replacement on the ballot in the same year or ask voters to approve a bond in one year and a factory levy in a different year.
So if my district says they are at 20 factories, what does that mean?
This is the rate applied to the assessed value of your home to calculate the amount you owe in property taxes.
A mill means that $1 is charged for every $1,000 of assessed value. In a district charging 20 factories, $20 would be charged for every $1,000 of assessed value.
What is the difference between the factory levy rate in the state?
“It’s radically different,” said Tracie Rainey, executive director of the Colorado School Fundraising Projecta non-profit group that researches and collects data on school funding.
This financing method also produces different results depending on a neighborhood’s land mix—residential, commercial, agricultural, oil and gas—and its value.
A factory tax waiver that would generate $235 per student in Denver would yield only $58 per student in the property-poor center. From 2022, the state offers some matching funds to increase factory fee waivers in low-income neighborhoods.
Yesenia Robles is a reporter for Chalkbeat Colorado, covering K-12 school districts and multilingual education. Contact Yesenia at [email protected].