2018-02-08 / Opinions

Guest VIEWpoint

School Millage Funding 101
By Brian Keim
Laker Superintendent


Brian Keim Brian Keim In the past few weeks, several area school districts have announced millage proposals that will go to their voters on the May ballot. The Laker School District is among them, and we are asking our voters to consider two different requests, one for a traditional bond issue, and one for a sinking fund.

For many, this leads to basic questions about the different types of millage funds and the terminology that goes with them. So, rather than focusing on the details of specific bond proposals, this column will take a more general look at some of the millage types and terms that you will likely hear more about in the next few months.

Let’s start by defining what a “millage” actually is. Millage comes from the term “mill,” which is equal to $1 for every $1,000 of the taxable value of the homes, land, and businesses in a given district. For example, in a district with a collective taxable value of $300,000,000, one mill would be worth $300,000 for that year. This amount can vary greatly from one district to another, based on the type and value of property (primary homes, vacation homes, farmland, etc.), local business facilities and assets (factories, wind turbines, retail spaces, etc.) and other factors.

So, a millage is a special tax that is levied against the value of those properties. Millages are most commonly requested by a local school district or ISD, but it is also possible for towns to propose millages for recreational programs, etc.

Next, let’s look at the most common types of millages among school districts. The first is a traditional “bond proposal” or “bond issue”, in which the plans for the entire project are laid out up front and full funding for the project is provided right away.

In very simple terms, a bond issue functions like a home mortgage, with payments being made through millage taxes collected over the life of the bond. The term length for a bond can vary, but it is rare to see a proposal for more than 30 years.

Another type of millage is a “technology bond”. A technology bond is like a traditional bond issue, but it can only be used for technology and transportation purchasing. As personal technology devices with relatively rapid turnover become more common in schools, technology bonds are often proposed to help with those costs.

One last type of millage you may hear about is a “sinking fund”. A sinking fund is based on a specific mill rate, with an annual distribution of funds based on the current taxable value in a district. In the earlier example, a one mill sinking fund would provide $300,000 per year for the length of the proposal, which is capped by the state at a maximum of ten years and three mills.

Unlike a traditional bond issue, a sinking fund has very restricted uses. It can be used for major repairs, remodeling, new construction, and some technology, but it cannot be used to purchase furnishings, equipment, or transportation.

Sinking funds can be “renewed” by local voters, provided they maintain the exact same millage rates and terms. However, new laws have changed what sinking funds can be used for, so even simple renewals like the one being proposed by our district must be called a “new” millage on the ballot.

It is important to note that none of these millages can be used for personnel-related expenses, which would include salaries, insurance, retirement, and so on. Those expenditures come from a district’s general budget, which is funded primarily by the state on a per-pupil basis.

There is certainly a lot to digest when it comes to school millage funding, but hopefully this information has been useful and will help voters to make informed decisions when their local proposals come up later this spring.

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