4-10-2023 4:54pm

Proposed Saline Schools Millage Renewal Won't Impact Most Taxpayers

Absentee ballots are already in voters’ hands for the May 2 election. There’s a single question on the ballot.

Shall Saline Area Schools renew its operating millage on properties that aren’t principal residences?

The tax isn’t applied to your typical homeowner’s property. One only pays this tax on second properties, rentals, or commercial/industrial properties. For those taxpayers, it’s not a new tax, it’s a renewal.

Still, it’s a vital millage that will raise $8.5 million in the first year of the 10-year tax.

That’s $8.5 million of a general fund budget of nearly $67 million.

Saline Area Schools Superintendent Steve Laatsch said it was critical to the district’s operations.

“Miranda Owsley, our assistant superintendent for finance, describes this as being worth 56 days of doing business in the district,” Laatsch said.

The non-homestead millage renewals are often seen as routine but in 2022, Whitmore Lake voters rejected their millage, which sent school officials scrambling. Saline Area Schools want to avoid that fate.

What would happen if Saline voters rejected the millage? You’d likely see the issue on the next available ballot.

“We would need to figure out how to go back out and collect these funds,” Laatsch said,

Or spending cuts, right? Laatsch didn’t even want to entertain the idea.

“$8.5 million is very significant. 87 percent of the general fund goes for salaries, health care and benefits. Those kinds of cuts would be very, very difficult,” Laatsch said.

Laatsch said he’s confident the community will pass the renewal to maintain the quality of our schools. Still, the district is about to start messaging on the issue to ensure there isn’t any confusion.

One issue that comes up consistently when talking to school officials is the potential confusion of the recent bond issue and the new renewal proposal. Last fall, the district’s voters approved a $180 million bond proposal.

“There has been some talk in the community and we want to set the record straight that this is not some sort of new bond proposal. The timing of this is a little unfortunate. It just so happens the existing millage expires in December of 2023, so that's why this renewal proposal comes now,” Laatsch said.

In addition, the bond language itself is a little confusing.

The district seeks to collect no more than 18 mills on non-homestead properties. But because of the Headlee amendment, which chips away at millages over time, the district seeks the authority to levy almost 21.9 mills.

The resolution to put the millage on the ballot was passed unanimously by the Saline Board of Education. Board President Michael McVey is urging residents to support the renewal.

“Failing to pass this motion would have enormous adverse effects on the district and its students,” McVey said. “I am urging you all to vote yes on this millage on May 2 or to fill out your absentee ballot and mail it in or drop it off at the appropriate location.”

Board Vice President Jennifer Steben is also encouraging voters to support the millage renewal.

“I absolutely support this renewal. This is the way that schools have been funded since the 90s. It is a critical part of daily operations, and is not a bond, such as the one that was passed in November,” Steben said. “Because staff salaries and benefits comprise roughly 87 percent of our general fund, this renewal supports them, and in turn every student.”

Board Trustee Tim Austin also supports the renewal proposal.

“If the renewal of the operating millage does not pass the Saline school district will lose this funding as part of our ‘Foundation Allowance.’ The Saline schools general fund budget is greatly impacted by this renewal. The general fund budget is what we use to fund our classroom needs, our staff’s wages and benefits, and our day-to-day operations of our schools.”

The Saline Area Schools district is providing the following information to voters.

What is it?
- THIS IS NOT A BOND. This is Saline Area Schools’ ongoing renewal request for the operating millage (general fund-regular, day-to-day operations) that is part of how the State of Michigan organizes school funding as set by Proposal A in 1994.

What does it change?
- There is NO CHANGE. If approved, it is a renewal to continue the operating millage for another 10 years

Who pays this millage?
- This millage, if approved, would be paid by owners of second homes, businesses and all other non-principal residence properties. If you own one home, you WOULD NOT PAY this millage.

Does this raise my taxes?

No. This is a straight renewal and there is no change. In addition, if you own one home, you do not currently pay this millage and you would not pay this millage if passed. Thus, if you own one home, no matter the result, this will not affect your taxes.

Why right now?

The operating millage was renewed 10 years ago and will expire in December of 2023.

What does the operating millage generate for Saline Area Schools?

It is estimated that in 2024, this millage will generate $8,501,850. This is annual revenue that Saline Area Schools generates to fund general operations, including paying for salary and benefits of staff (approximately 87% of general fund expenses).

Why does Saline Area Schools have this millage?
ALL State of Michigan schools have an operating millage as it is part of how the State of Michigan organizes school funding, starting when Proposal A was passed in 1994.

Doesn’t the State of Michigan fund school operations?
Each year, the State of Michigan sets a per pupil foundation allowance for Michigan which is the main revenue source for general operations. For example, if a school has 5,000 students and the per pupil foundation allowance is $9,000 then the school will receive $45 million. However, this is not all paid for by the State of Michigan. The $45 million will be made up of local tax and state funding. The State of Michigan assumes each school will collect 18 mills of local property tax and subtracts that amount from the amount given in state funding. If the 18 mills is not collected from local taxes, the State of Michigan will not make up the difference and the school district simply loses that revenue. For Saline Area Schools, the estimated amount is $8,501,850.

In November 2022 the BOND MILLAGE promised a tax reduction, why have I not seen that reduction?

Saline Area Schools’ collects 100% of taxes in the summer. In the summer of 2022, the bond proposal had not yet happened, thus it was the same 8 mills. In the upcoming summer of 2023, the BOND millage will be reduced to 7.5 mills. Saline Area Schools does not collect any winter taxes and thus no change could be seen yet.

Why 18 mills?
This is set by the State of Michigan as part of Proposal A was passed in 1994. The State of Michigan will subtract 18 mills worth of revenue from the payments they send us. They subtract this amount whether or not it is collected. Thus, without this millage it is estimated that Saline Area Schools would lose $8,501,850.

As of June 30th, 2022 Saline Area Schools had a fund balance of $9,455,486, why can’t you just use that?
Though $9 million seems like a large sum of funding, it represents about 56 days of expenditures. Theoretically if the district stopped receiving revenue, the district would be able to function for just under 2 months on our reserve funding.

The operating millage is annual revenue. The district’s fund balance is not an ongoing source of funding.

Why does it say not to exceed 18 mills but then authorize 21.8505 mills?
By law, Michigan Schools can levy a maximum of 18 mills. The State of Michigan assumes all schools will collect 18 mills whether they do or not. If a school collected less than 18 mills their revenue is reduced. The amount authorized of 21.8505 mills is Saline Area Schools current millage, even though we only collect 18 mills. We authorize more than we collect to make sure that we do not fall below 18 mills and lose revenue. Headlee Rollback (Headlee Amendment to Michigan Constitution in 1978), will reduce the mills when annual taxable growth on existing property is greater than the rate of inflation. Thus, each year if Headlee reduces the 21.8505 mills, Saline Area Schools should fall below 18 mills and risk losing revenue.