FERNDALE, Wash. — Ferndale School District Superintendent Dr Linda Quinn noted during last night’s regular meeting of the Ferndale School Board, “The rules have changed.” Quinn was referring to how different the Washington state rules regarding levies are now compared with how they were in 2015 when voters approved the 2016-2020 local school levy. These rule changes made the decisions for setting the levy rate for the last year of the current levy, 2020, and for the rate that will be brought to the voters in February for the replacement 4-year levy.
Last night’s meeting needed to result in 2 levy rate decisions.
- The rate to set for 2020, the last year of the current levy
- The rate to take to the voters in a February special election for the levy renewal
Unlike the recently approved school bond and recently discussed city levy, which are based on the total amount of tax collected, local school levies are based on a rate.
Local school levies pay for operating expenses not fully paid by the state.
Voters approved the 2016-2020 local school levy that would tax property at a rate of about $3.70 per $1,000 of assessed value. But the state since placed caps on local levies across the state. For 2018, the cap was set to $1.50 per $1,000. This was due to the increase in the state levy rate as the state began to more fully fund education. The expectation was the drop in taxes collected by local levies would be offset by the increase in the state levies, resulting in little net difference to the taxpayers.
During the campaign to pass a $112 million bond issue to build the new high school, projections were made to assist voters in estimating the property tax impact and those projections assumed the $1.50 cap would remain in place for 2018 and subsequent years.
But this year, the state legislature raised the levy cap from $1.50 to $2.50 for 2020.
This change in the levy cap presented the School Board with what Board President Dr. Kevin Erickson referred to as “a frustrating conundrum.” Erickson was referring to how voters gave permission to be taxed up to a $3.70 per $1,000 rate for 2016 to 2020 but the bond campaign projections created an expectation the rate would remain at $1.50 from 2018 and on.
In the meantime, the bond issue was approved by voters and in June of this year the first $39.9 million of the $112 million total bond issue was sold. Due to a favorable bond market and achieving a credit rating that makes Ferndale 1 of the 2 highest-rated in the state, the interest rate taxpayers need to pay, 2.79%, is reportedly much less than was expected when making earlier projections. “The bond is over-performing by $0.67 [per $1,000],” Quinn told the board last night.
Quinn noted that during the last board meeting 3 different options for setting the rate for the last year, 2020, of the current levy were proposed.
- $1.50 per $1,000 – what was used in projections when voters approved the bond
- $2.17 per $1,000 – a rate that, when combined with the actual lower bond cost, would reportedly be the same net rate as would $1.50 combined with the previously projected higher bond cost
- $2.50 per $1,000 – the state levy cap and below what voters approved
When asked at last night’s meeting what levy rate the district needed to fully fund programs currently in place, District Assistant Superintendent Mark Deebach responded, “$3.39.”
After some discussion, the directors were all in favor to set the 2020 levy rate at $2.17.
The board directors then took on the topic of what rate to take to the voters for the replacement local levy for 2021 to 2024. The board eventually agreed to set the replacement local levy rate at the current levy cap of $2.50. This replacement local levy will be brought to the voters on a February 11, 2020 special election ballot and will require a simple majority (more than 50%) to pass.