School Taxes: a 1-page summary

Responding to readers' requests, VersagiVoice asked School Superintendent, Dr. Thomas Moline, for a 1-page summary of "hold harmless." From John Schwartz, Executive Director, Business Services & Personnel, came the following document which explains "hold harmless" and fits that millage into overall school finances. 

School District of the City of Royal Oak

                         School Funding Summary

*    Each school district in the State of Michigan is funded based upon two (2) components: the number of students enrolled and the per pupil foundation allowance.  The per pupil foundation allowance is the amount of revenue that each district can generate for each enrolled student.  Each school district in the State of Michigan has a different per pupil foundation allowance that was established in 1995 and is adjusted annually as approved by the State of Michigan.

*    The per pupil foundation allowance is generated through a combination of local property taxes and State funding.  However, in no case can the combination of property tax revenue and State funding exceed the allowed per pupil foundation allowance.

 *      The Royal Oak School District’s per pupil foundation allowance for 2005-06 is $9,026.  A significant portion of this foundation allowance is derived from two (2) property tax sources:

Source 1 - Hold Harmless Millage: levied on homeowners. This millage generates $851 per student and is levied on homeowners only.  As the District’s enrollment declines, the amount of revenue generated from this millage must also decline. This occurs through a required millage rate reduction for homeowners to ensure that the per pupil revenue generated from this millage does not exceed $851.  This annual millage rate is further reduced through increased homestead valuation within the City of Royal Oak. The hold harmless millage is voter approved and expires on June 30, 2006. Because of declining enrollment and increasing property values, this millage rate has been reduced from the voter authorized rate of 7.5075 mills to the current levied rate of 3.5030 mills. This millage generates approximately $5,000,000 of operating revenue for the District.

Source 2 – Non-homestead Millage: levied on non-homestead property (commercial, industrial, personal).  Homeowners do not pay this millage on their primary residence. This rate is capped at 18.0 mills.  The revenue generated from this millage makes up a portion of our District’s per pupil revenue. Currently, this millage generates approximately $12,600,000 of operating revenue for the District. This millage is also voter approved and expires on June 30, 2006.

It should be noted that without voter approval of the hold harmless and non-homestead millages, the District will not receive the approximate $17,600,000 in tax revenues. This represents approximately 28% of the District’s operating revenue and renewal of this millage is vital to maintain our instructional, support and co-curricular program offerings.

Readers can reach the School District at 248-435-8400.