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A Closer Look: An Operating Levy & A Debt Service Levy

The Lawson R-XIV School District is seeking approval from voters to add 95-cents to the operating levy in the upcoming August 3, 2021 election. Many patrons have asked about the debt service levy and how that is different from an operating levy.  The term levy simply refers to a property tax rate.  Missouri school districts can only raise local funds through property tax levies, therefore to pay for both costs of operations (operating levy) and bond issues (debt service levy) requires a distinct and separate levy to provide the funding.

An Operating Levy

The District currently has a $2.9547 operating levy. An operating levy provides funding for the ongoing day-to-day operations of our schools, such as paying faculty and staff, providing for student activities & programs, funding utilities, acquiring supplies and providing for facility maintenance and repairs.  The state requires a minimum operating levy of $2.7500 for all school districts.  Lawson R-XIV currently has the lowest operating levy in the region west of Hwy 65 and north of I-70.  The rate of an Operating levy is determined by the District’s Assessed Valuation (AV) of all real and personal property owned in the district.  Assessed Valuation (AV) is not market or actual value, but rather determined by the local county assessor.  If AV increases at a rate faster than inflation, then state law requires the District to lower its operating levy rate.  It is the amount of monies the rate provides that is guaranteed, not the rate itself.  An example of this is in 2013-14, the District had an operating levy of $3.4024.  As AV growth has outpaced inflation, the District has reduced its operating levy by almost 45 cents in the past 7 years down to $2.9547 in 2020.  

A Debt Service Levy

The District has a 95-cent debt service levy in addition to the current $2.9547 operating levy.  A debt service levy pays the debt of a bond issue (like those the District passed in 2019 and 2020) approved by voters when a school district needs to borrow money for major renovations, new construction or even large purchases of equipment. The debt service levy pays the debt off over time and these funds can ONLY be used for that purpose. Funds approved for a bond issue cannot be used for operating expenses. Not all school districts have a debt service levy, but then again not all school districts have newer facilities either.

Voters in the Lawson R-XIV School District have passed several bond issues since 1992 when the current high school was constructed.  These are general obligation bonds where municipal bonds are sold to allow the district to incur debt (much like a home mortgage). A general obligation bond repayment requires a levy in the debt service fund to repay the bond debt. The current debt service levy is 95 cents.

Lawson R-XIV’s debt service levy has paid for the construction of many district facilities to accommodate for growth and expansion.  These include:

  • The current High School
  • An 8-room classroom expansion for the High School
  • The Middle School Art Room
  • The Kindergarten wing at Southwest
  • The 1st Grade wing including the Library, Art Room & Music Room at Southwest
  • The All-Weather Track
  • The Multi-Purpose Building
  • The Sellers Performing Arts Center
  • The Middle School Commons & 6th Grade Classrooms
  • The High School Remodel including the Library Media Center, Science Lab & Broadcast Studio.
  • The Softball Concession Stand & Seating
  • The Baseball Concession Stand & Seating
  • The Barker Center, Tornado Safe Room
  • Middle School Roof Replacement, 7th & 8th Hallway
  • High School Roof Replacement, All Classrooms
  • Solar Lighting, Security Camera Upgrades, & Intercom Replacement #
  • The Southwest (Tornado) Safe Room, estimated completion 2023. #

# These two projects are accomplished with the assistance of federal grants.  The SVPP grant is providing approximately $300,000 federal grant money matched by $100,000 of local money to complete the Solar Lighting, Security Camera Upgrades, and Intercom Replacement projects.  A FEMA grant of $1.7 Million has been awarded to assist with the construction of the Southwest Safe Room.

Can the District utilize Debt Service Levy Money to Cover Operating Expenditures?

In the state of Missouri, the only major source of local revenue a public school district can receive is through property taxes. Other entities such as counties and municipalities can tax by sales tax or other flat tax rates. By law, School districts in Missouri do not have the ability to levy a local sales tax.

A debt service levy is required by law to pay ONLY on debt for buildings and renovations. It’s a legal guarantee to the taxpayer that the district will pays its ‘mortgage’ obligations. The Debt Service Levy cannot be utilized for operating expenditures. 

The Operating Levy is used for the operating purposes of the district. The overall decline in state funding is forcing the district to rely more on local funds to operate.  Lawson R-XIV is not the only school district facing this burden. The passage of the 95-cent operating levy increase will provide funds to cover rising costs of operations that have forced the District to utilize reserve funds in the past few years to make up for the decline of state revenue.  Additionally, the new levy proceeds will provide funding for salary increases for all staff. 

Why does the ballot language not include the debt service levy?

When a question regarding property taxes (levy or bond) is stated on a ballot it must state how many dollars and cents for each $100 of assessed value is to be levied to meet legal requirements. The Lawson R-XIV School District is asking it’s voters on August 3rd to approve a 95-cent levy increase to the operating levy.

The Lawson R-XIV Operating Levy Question states an increase $0.95 per $100 of assessed value. “If this proposition is approved, the adjusted operating levy of the school district is estimated to be $3.9047 (total operating levy after the increase) per one hundred dollars of assessed valuation”. 

The current operating levy increase ballot question does not pertain to nor affect the debt service levy.  Therefore, it is not a part of the legal ballot language.  The debt service levy is determined annually by the amount of debt payments required annually to pay debt obligations.  The debt service levy is a calculated amount approved by the state auditor’s office. 

If approved the total of the Lawson R-XIV’s levies (both operating and debt service) is estimated to be $4.8547.  This total includes:

  1. The current $2.9547 operating levy, which is recalculated annually.
  2. The operating levy increase of $0.9500 (95 cents)
  3. The debt service levy of $0.9500 (95 cents).

Total: $4.8547

 

The chart below shows the 2020 overall levies of selected Northland school districts, the KCI conference, and area schools, Richmond, Polo, and Cameron.

School Districts

Operating Levy

Debt Service Levy

Total Levy

Liberty 53

$4.8956

$1.5594

$6.4550

Mid-Buchanan Co. R-V

$4.6774

$0.9000

$5.5774

Park Hill

$4.7608

$0.6347

$5.3955

Lathrop R-II

$4.3900

$0.9725

$5.3625

East Buchanan Co. C-1

$5.2934

$0.0000

$5.2934

Excelsior Springs 40

$4.1309

$1.1453

$5.2762

Kearney R-I

$4.0245

$1.1902

$5.2147

Smithville R-II

$4.0988

$1.0012

$5.1000

Platte Co. R-III

$3.8810

$1.1383

$5.0193

Clinton Co. R-III

$3.9134

$1.0000

$4.9134

Hamilton R-II

$3.4814

$1.3800

$4.8614

North Platte Co. R-I

$3.8900

$0.8500

$4.7400

Polo R-VII

$3.5023

$1.1101

$4.6124

Richmond R-XVI

$4.5436

$0.0000

$4.5436

Cameron R-I

$3.6207

$0.7533

$4.3740

West Platte Co. R-II

$4.1000

$0.0000

$4.1000

Lawson R-XIV

$2.9547

$0.9500

$3.9047