Fairfield school board hears about taxes, budgets

FAIRFIELD – The Fairfield Community School Board learned the ins and outs of taxes from a special guest during its meeting Tuesday, Jan. 16.

Matthew Gillaspie, the Managing Director of Education for Piper Sandler Companies, appeared before the board to provide an overview of the rules governing school levies. He talked about the constitutional limitations placed on levies and how they’re calculated, how much cash the school should keep on hand, how property taxes affect residents differently depending on how their property is classified, and many other issues dealing with taxes and school budgets.

Gillaspie told the board about the debt limitation it must observe if it were to bond for a big project like a new school building. He said all governmental bodies in the state – whether cities, counties or school districts – are constitutionally prohibited from taking out debt greater than 5 percent of the assessed valuation of the property in their jurisdiction. For the Fairfield school district, this means they can take out no more than about $86 million in debt.

The Fairfield school district currently has about $3.4 million in debt left from a sales tax bond, and one payment left to make on a Physical Plant and Equipment Levy note.

Gillaspie said that, though $86 million sounds like a lot, there are some school districts in the state that have borrowed up to their limit.

“The reason we want to talk about it with the Fairfield school board is just to give them the knowledge that there is a maximum, and that it’s not a free-for-all,” Gillaspie said. “Some people think they could borrow to build a $500 million building and just tax them for it, but that’s not correct. For a lot of communities, it’s comforting to know there is a limit. Citizens want to know that.”

Gillaspie reminded the board that, when discussing levies that have to go up for a vote, there’s a different level of support needed to pass a bond compared to say, the Physical Plant and Equipment Levy that Fairfield voters will decide on March 5. The PPEL requires only a simple majority to pass, while passing a general obligation bond requires 60 percent approval.

On the subject of how much money a school district should keep on hand, Gillaspie said the School Board Association recommends keeping between 7-17 percent of a district’s budget as cash in the bank. He said Fairfield is doing well on that point since it’s already in that window.

“You need money sitting there to weather a storm,” Gillaspie said. “The school could have a lot of students show up who were not expected. For instance, the board is doing the budget now for next school year, but families could move to town between March and August and there’s nothing the school can do about it. You have to take those kids. A lot of times, schools will add 10-15 kids after their budget is done.”

Gillaspie talked about how property taxes are different for the various classes of property. For instance, residential property owners pay taxes on 46 percent of the assessed value of their property. Ag property owners pay taxes on 10 percent of the assessed value of their property. Commercial property owners are a bit different, because they pay taxes on 46 percent of their property up until $150,000 in assessed value, and then they must pay taxes on 90 percent of the property beyond $150,000 in value.

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