How does the City of Carmel justify “robbing the schools” of tax money when they do TIF projects?
This is a fair question. Here is the background: whenever Carmel partners with a private developer on a TIF project, property tax revenues from incremental assessed value for that specific TIF area are captured for a set number of years. The developer and the City use that money to build various community assets like sidewalks, parking garages and other infrastructure projects that will benefit the public long into the future.
In order to determine the true impact these projects have on the schools, we turned to Roger McMichael, Associate Superintendent for Business Affairs of Carmel Clay School Corporation to get his take on the issue. If anyone should worry about this question, it is the guy in charge of paying the bills at Carmel Clay Schools!
Beginning in 2019, Carmel Clay Schools will have 4 tax-supported funds – the Education Fund, the Referendum Fund, the Debt Service Fund and the Operations Fund. The Debt Service Fund is the only fund affected by TIF and it affects the tax rate not the levy (the amount of funds raised).
TIF areas and property taxes are not a part of the funding calculation and thus have no impact to the school district’s Education Fund.
McMichael explains that it is the Education Fund and the Referendum Fund that are used for day-to-day operating expenses, mostly salaries and benefits – and neither of them suffer due to TIF.
Here are the facts. The Education Fund for all Indiana school districts is funded entirely from State revenue, primarily sales and income tax. The assessed value, TIF areas and property taxes are not a part of the funding calculation and thus have no impact to the school district’s Education Fund.
The local school Referendum Fund is based on property taxes, so the levy is a part of the calculation. However, the assessed values in the TIF areas are included in the funding calculation for the Referendum Fund. Therefore, the TIF areas have no negative impact on the Referendum fund.
The assessed values in the TIF areas are not included for the revenue calculations for the Debt Service Fund. However, the levy for the Debt Service Fund is approved in an amount necessary to repay the debt, therefore the assessed values in the TIF areas have no impact on the amount of funding raised.
Beginning in 2019 the Transportation Fund, the Bus Replacement Fund and the Capital Projects Fund will be replaced with a new Operations Fund. The Assessed Value is no longer a factor in determining the maximum levy for the new Operations Fund, thus TIF has no impact on the Fund.
Even with the TIF areas excluded from the Assessed Value, CCS has the highest assessed value per pupil and the lowest school tax rate in Hamilton County.
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Authored by Laura Campbell, Sue Finkam, Bruce Kimball, Kevin Rider and Jeff Worrell