What is Phantom Revenue?

 

The “phantom revenue” effect occurs when the state attributes income to school districts which they do not actually receive.  There are several types of phantom revenue in the school funding system.  One is called “charge-off.”

 

Districts only have to levy 20 mills locally to receive state aid.  Currently, 350 Districts are at this level, including Bethel-Tate, with more than 90 additional districts approaching.  Unfortunately, the state foundation program deducts 23 mills of local revenue as the local share of the basic cost of an education.  This difference between the 20 mills of revenue actually received locally and the 23 mills of revenue which the state charges off is “phantom revenue.”

 

This charge-off occurs again with H.B. 920.  When a district has a reassessment or update year for property taxes, inflation may have caused property values to increase.  The state counts this entire increase when it calculates the local 23 mills.  However, H.B. 920 limits the amount of the increase which a school can actually receive.  Therefore, the difference between what the school receives and what the state charges off is again more “phantom revenue.”

 

How does this effect Bethel-Tate?  Because we are on the 20 mill floor, H.B. 920 cannot reduce our millage any further.  Therefore, we are able to receive additional revenue every three years through inflation during reassessment and update years.  Furthermore, H.B. 94 allowed for a three year phase in of the increased valuation due to reassessment and update which reduces the impact of the 3 mills difference between what we actually receive and what the state charges off.

 

Our current valuation for Bethel-Tate is $136,054,649,  which we collect 20 mills on.  A mill produces $1 for every $1,000 of assessed valuation.  Real estate property assessed valuation is 35% of the value of your property as determined by the county.  Therefore, the District collects approx. $2.7 million locally to operate a $13 million budget.  This shows you how dependent we as a District are on the state.