Opinion ID: 1384601
Heading Depth: 2
Heading Rank: 1

Heading: Locally-Generated Revenue

Text: The greatest local sources of revenue for financing public education are various ad valorem taxes levied on the real and personal property within the school districts. Each county must levy a tax of four mills on the dollar valuation of all taxable property in the county for school purposes. Unless a different method is provided by law, the proceeds of this levy must be apportioned among the county school districts based upon the legal average daily attendance [ADA] for the preceding school year. [5] The school districts themselves also can levy taxes. Upon certification of need by the board of education any school district may levy an additional tax of fifteen mills on the dollar valuation of all taxable property in the district. [6] Upon the voters' approval, a district also may make an emergency levy of up to five mills and a local support levy of up to ten mills. The emergency and local levies may only provide sufficient additional revenue to meet the district's needs for the fiscal year as determined by the local board. [7] Thus, the maximum ad valorem tax levy allowed by law for a school district's general operating fund is thirty-five mills on the value of the taxable property within the district. Additional ad valorem taxes also may be approved by the district's voters for education-related purposes. Article 10 § 10 of the Oklahoma Constitution allows a levy of up to five mills for a building fund, which may be used for erecting or repairing school buildings and for purchasing furniture. Article 10 § 26 permits a school district to incur in any one year an indebtedness in an amount, including existing indebtedness, of up to five percent of the valuation of the taxable property of the district for all purposes. If there is an absolute need, a district may increase such indebtedness to ten percent for the purpose of acquiring or improving school sites, constructing, repairing, remodeling or equipping buildings, or acquiring school furniture or equipment. Small local sources of revenue for financing public schools include certain dedicated taxes and fees, tuition and transfer fees, and proceeds from the sale or rental of property. Because local sources of revenue are derived primarily from ad valorem taxes, the amount of that revenue varies greatly among the school districts. This variation may be caused by several factors, including differences in assessment ratios and in the methods employed to establish property values. The greatest factor is the difference in property wealth, upon which the tax is based, among the districts. These differences greatly affect the amount of revenue per pupil which each district can raise for the support of its schools. This variation in property wealth can be seen by comparing the assessed valuation of property per ADA among the districts. [8] For 1978-79, the assessed valuation per ADA for all school districts in the state was $11,264.42. In contrast, all but five of the plaintiff school districts had assessed valuations per ADA below the state average; and the average among the plaintiff districts was only $7,780.40. The effect of these differences in property wealth among the districts becomes more apparent by comparing the amount of local revenue per pupil in ADA which is available to the districts. All of the plaintiff school districts levy the full thirty-five mills allowed by law; yet they still cannot raise as much revenue per pupil as can the wealthier districts, some of which levy at a lower rate. In addition, when this action was commenced, all of the plaintiff districts were levying the full five mills allowed by law for a building fund, and all but two levied a tax for a sinking fund. In contrast, thirty-eight of the remaining districts either had no tax, or were levying less than five mills, for a building fund, and one hundred seventy-four districts levied no tax for a sinking fund. Twenty school districts had no tax for either a building fund or a sinking fund. The level of property wealth within a district also affects the amount of indebtedness which the district may incur for acquiring and improving school sites, constructing and equipping school buildings, and acquiring school furniture and equipment. As stated above, the state constitution prevents a district from becoming indebted beyond a certain level, even though the district's voters may be willing to tax themselves at greater rates to satisfy such indebtedness. This limitation obviously affects all school districts of the State; but it has a greater impact upon the less wealthy ones, whose maximum levels of indebtedness naturally are much smaller.