Opinion ID: 1355183
Heading Depth: 2
Heading Rank: 4

Heading: Did School District collect substantially the same revenues as budgeted?

Text: Whether School District's 2001 tax levy rate generated substantially the same revenues as School District's budgeted needs depends on whether a collection of $1,055,220 in excess revenues complies with the nearly, almost, essentially, virtually standard. The budgeting process for school districts in Missouri is an inexact practice. Southwestern Bell Tel. Co., Inc. v. Mahn, 766 S.W.2d 443, 445 (Mo. banc 1989); Salisbury R-IV Sch. Dist. v. Westran R-I Sch. Dist., 686 S.W.2d 491, 496 (Mo.App.1984). In Salisbury , the court noted: The school district budget process is an inexact practice.... because neither the revenues nor the expenditures can be predicted with certainty. The revenues derive from local county, state and federal sources. The local revenues are from the school district levy, and comprise the most significant component of anticipated income. The local revenues also include income from ... miscellaneous sources. Other significant income derives from the short-term investment of tax receipts, but that fluctuates with the current interest rate. The school district budget extends from July 1 to June 30. The estimated budget must be approved by the board of education before July 1 of the year, and the Estimate of Required Local Taxes [for the local revenue component of the budget] must be submitted  along with the rate of levy to be extended against the assessed property in the district  to the county clerk by July 15 of the year. The preponderant portion of the taxes, however, are paid to the schools during the early months of the calendar year .... [which] compounds the uncertainty of the budget process. 686 S.W.2d at 496. School District's 2001-2002 budget is a 99-page document, which Treasurer testified was prepared in a yearlong budgeting process. School District presented evidence of some of the uncertainties it faced in formulating its budget at the time it was presented for approval at the June 11, 2001, School Board meeting: (1) Assessed valuation figures for property within School District were merely preliminary and subject to later adjustment. [16] (2) School District did not know what the proration factor would be for allocation of basic state aid under the state foundation formula. (3) School District had not received the worksheets from the State Auditor for use in calculating permissible tax rates for 2001. (4) School District had not yet received from the Missouri Department of Elementary and Secondary Education the projections on the amount of proposition C sales tax revenues, cigarette tax revenues, and free textbook revenues it would receive in 2001-2002. (5) The amount of funds it would receive from taxes on state-assessed utilities was not yet known. Expert testified at trial that the budgeting process for schools in Missouri is a moving target. He stated: Statutes said that you're supposed to have a budget adopted before the beginning of the fiscal year. To do that you don't even have the assessed valuation figures which don't allow you to even calculate your final tax rate. Anybody who says they can develop a final school budget prior to beginning the fiscal year is, you can't do that. That's why the budget statutes allow for boards of education to amend their budgets..... The biggest single thing in Missouri school finance is the tax rate. Not only does it determine your local revenues, but .... [it] determines your state revenues. And to have any kind of final budget adopted before you can set your tax rate is just nuts. You can't do it. You've got to come back and change it after you have that information. Immediately before giving this testimony Expert was asked: [I]f the projected funds coming in from local tax revenues ... exceeded by two percent the budgeted amount, you would not consider that to be substantial? Expert opined that it was not a substantial deviation. This Court agrees. In light of the uncertainties at issue in the school budgeting process, a deviation of 1.88 percent in this case does not violate section 67.110.2. The intent of the legislature's substantially the same language in section 67.110.2 is to prevent tax windfalls, and holding taxing entities to the nearly, almost, essentially, virtually standard accomplishes this purpose. Because establishing a school budget is an inexact process, it will produce inexact results. The nearly, almost, essentially, virtually standard should not be read to require that revenues produced from a school district's levy match exactly the district's budgeted needs. The statute does not require the same revenues, but merely substantially the same revenues. School District's levy rate produced 1.88 percent more taxes than budgeted, but it permitted School District to meet its budgeted needs without a windfall collection of tax monies. Given this, the trial court did not err in finding that School District's 2001 tax levy rate did not violate section 67.110.2. [17]