Operating Millage Proposal

The operating millage is a levy on non-homestead properties that are not an owned primary residence or qualified agricultural property, such as a business, vacation home, investment and rental property.

All school districts in Michigan must levy 18 mills on non-homestead property to receive their full foundation allowance from the state.

Owned primary residences do not pay the 18-mills tax ($0 per year).

No, this is not a new tax. It was first levied in 1994 with the passage of Proposal A, and RCS voters have periodically voted renewals and restorations of that tax over the years.

No. Owned primary residences do not pay the 18-mills levy. The operating millage renewal proposal would apply to commercial and industrial properties, second homes and rental properties.

No. The district proposal would renew the current 18.5004 mills levy and restore 0.5000 mills eroded by the Headlee Amendment. Approval of the millage would not cause tax rates to increase, and the total millage proposed is less than that approved by voters in 2014.

All school districts in Michigan must levy 18 mills on non-homestead property within district boundaries, such as a business, vacation home, investment and rental property, to receive their full foundation allowance, or per pupil funding, established by the state. If this millage does not pass, a Michigan school district would not receive its full foundation allowance.

The non-homestead operating millage represents approximately 10.7% of current budgeted general fund revenues.

If this millage does not pass, RCS would not receive its full foundation allowance. RCS per-pupil revenue would fall from $9,608 to $8,060, which equates to a loss of approximately $24.5 million per year from the district’s general fund. The Board of Education may vote to place this proposal on a future ballot. However, future dates would incur additional costs for the district and may not be ideal for voters, especially during the summer.

In 2014, RCS voters last approved a levy for 19.9307 mills on non-homestead property over a 10-year period. Since then, the millage has been eroded by the Headlee Amendment and now stands at 18.5004 mills. However, at no time can the district levy more than 18 mills.

In 1978, Michigan voters approved an amendment to the Michigan Constitution known as the Headlee Amendment, which included provisions related to state and local tax.

The Headlee Amendment automatically rolls back a millage rate to ensure taxes do not increase more than the rate of inflation. For example, if a tax base for a local unit increased from $1 million to $1.1 million in excess of the rate of inflation and the tax rate was one mill, the millage would have to be reduced from 1.0 mills to 0.909 mills, so that total revenue would be the same, $1,000, as originally generated.

However, the state-funded portion of a school district’s per pupil foundation allowance is calculated presuming a school district is levying a full 18 mills to provide the locally-funded portion of that foundation allowance.  When there is Headlee erosion, the state-funded portion of the foundation allowance is not increased to offset that erosion in the local contribution.  Because of that, if the operating millage is eroded below 18 mills by the Headlee Amendment and is not restored, the school district does not receive its full foundation allowance.

The district is proposing a renewal of 18.5004 mills and a restoration of 0.5000 mills, even though at no time can the district levy more than 18 mills. If approved, the total 1.0004 mills above 18 mills would be used to offset potential Headlee erosion, which can reduce the millage rate to adjust for inflation. It’s important to note that if the millage rate falls below 18 mills due to the Headlee erosion, the district will not receive its full foundation allowance.

In all Michigan school districts, the 18-mill, non-homestead levy is subject to rollbacks, per the 1978 Headlee Amendment to the Michigan Constitution.

While school districts cannot levy more than 18 mills on non-homestead property, Rochester Community Schools is requesting that voters consider a 19.0004 millage authorization to protect against future rollbacks if and when they should happen over the next five years.

Extending the proposed 19.0004 millage authorization for 10 years, versus the proposed five years, may not be sufficient to protect against possible rollbacks due to the Headlee Amendment.

If the RCS millage rate falls below 18 mills, the district will not receive its full foundation allowance.

A millage rate is the rate at which taxes are levied on property. Property taxes are computed by multiplying the taxable value of the property by the number of mills levied, where a mill is 1/1000 of a dollar. So, if a business property has a value of $100,000, and is assessed a 1 mill tax rate, $100 in taxes are owed.

The election polls will open at 7 a.m. and close at 8 p.m. on Tuesday, Feb. 27, 2024.

To learn more about voter registration, such as eligibility requirements, how to register to vote in Michigan, and updating or canceling voter registration, go to: https://www.michigan.gov/sos/elections/voting/register-to-vote.

Methods and requirements for voter registration depend on the following deadlines. For more information, go to: https://www.michigan.gov/sos/elections/voting/register-to-vote.

• Monday, Feb. 12, 2024, is the last day for voters to register by mail.
• Voters may register in person through Tuesday, Feb. 27, 2024 (Election Day) by visiting their local clerk’s office to register in person with proof of residency documentation.

Election clerk offices must be open for at least 8 hours on the last Saturday (Feb. 24, 2024) and/or Sunday (Feb. 25, 2024) before the election to issue and receive absent voter ballots. The election clerk must post notice of any dates and times at least 30 days before the election.

Voters can learn about election calendar dates and deadlines at:  https://www.michigan.gov/sos/elections/ballot-access/deadlines.

All registered voters in Michigan have the right to vote by mail using an absentee ballot delivered to their home. Voters can also request an absentee ballot directly from their local clerk’s office. Absentee ballots are available beginning 40 days prior to every election.

Michigan voters can decide to be placed on a permanent absentee ballot list. The local clerk will then mail them an absentee ballot for all local, state, and federal elections.

For more information about absentee voting, go to: https://www.michigan.gov/sos/elections/voting/absentee-voting.

In 1994, statewide ballot question was considered, called Proposal A. Michigan voters approved it, and school funding in Michigan changed dramatically. After Proposal A, the structure of funding local schools through local homeowners’ property taxes shifted to equalize school funding across the state. A statewide education tax of 6 mills on all property was established. Other sources like state sales and income tax, lottery revenue, tobacco and use taxes contribute to school funding. Additionally, local school operating millages were capped at 18 mills.

School district operating funds then were calculated on a per-pupil amount, called the foundation allowance. This enabled the lowest funded schools in the state to receive a basic level of funding, which helped narrow the funding gap between school districts.

Public schools in Michigan are primarily funded on a per-pupil basis using the pupil blend count, also known as the State Aid Membership. Each district counts the number of students twice during a school year, once in October and once in February. The state decides the amount of foundation allowance for each school district and multiplies that number by the number of countable students in the district.

The foundation allowance has two components: state aid and local non-homestead property taxes. The state calculates its portion of the foundation allowance as if the district is collecting 18 mills, whether true or not. If the voters do not approve the 18 mills levy, the state does not make up the difference and the district does not receive the full foundation allowance.

The estimated FY2023-24 foundation allowance for RCS indicates that the Rochester Community Schools foundation allowance is quite modest. When considering the district with the highest foundation allowance in the state and applying that value to the approximate number of students in the RCS, the difference totals more than $57.5 million.

While the foundation allowance is the major source of funding for RCS, the district also gets a small amount of federal, local, and inter-district funding. Local revenue includes the renewable 18-mills non-homestead property tax; tuition from special programs such as preschool; dues and fees; community services such as school-age care; and other miscellaneous sources. Inter-district funding comes from the County Act 18 special education tax.

The general fund is the primary operating fund for the district and covers everything necessary to provide educational programs and services for our students.

Rochester Community Schools budgets in four main areas: instruction; support services; community service; debt service and capital outlay. Instruction includes salaries for teachers to educate our students. Support services includes counselors, speech therapists, psychologists, social workers, athletics, transportation, operations and maintenance, and administration. Community service includes recreation and enrichment programs and school-age care. Debt service and capital outlay (<1%) includes copiers, furniture and equipment. If the Board of Education elects to do so, the general fund can also be used to purchase buildings for the district.

Most of what school districts spend their funds on is salaries and benefits. For the 2022-23 school year, approximately 80% of the RCS general fund expenditures supported salaries and benefits.

Building and site bonds and a sinking fund provide an opportunity for schools to increase funds beyond the state-established foundation allowance, state categoricals and federal sources.

According to the Stifel public finance report for 2022, Rochester Community Schools has the fourth lowest school tax rate in the county.

RCS plans a budget for every fiscal year that is sustainable, promotes growth, minimizes impact on student programs, is team-based, open and transparent, and supports the district’s strategic plan. The district carefully monitors the budget to make sure expenditures align with available resources. The district also maintains an adequate fund balance to make sure it has enough money to continue operations in case of surprise expenses or state revenue shortfalls. This is especially important since school districts do not receive the first payment of the year from the state until October, after school has already started.