School District Tax Levy

A property tax levy is the legal process by which a school district requests for a certain amount of funds to be raised by a property tax to fund the school district. This is separate from what the district receives.

Although the Illinois constitution says that the “State has the primary responsibility for financing the system of public education,” the State of Illinois only provides less than 10% of total school district funding. Property taxes are the primary funding source for school districts, including Barrington 220, for which property taxes account for 80% of funding. 
 

Just as you may experience cost of living increases each year in areas such as food and housing, the district also experiences increased costs in areas such as transportation, food services, salaries and benefits, insurance, and educational materials. Annual increases in the levy help pay for these increasing costs.

The tax levy formula is established by State law and is codified in the Illinois School Code. It is created by a calculation that considers the previous year’s tax rate and the current Consumer Price Index (CPI). The calculation results in a property tax limiting rate which gets applied to the equalized assessed value (EAV) of the properties within the district’s boundaries to determine the total levy amount. 

The annual maximum increase to the levy is restricted by the Property Tax Extension Limitation Law, often referred to as the tax cap law, which limits any increase in property tax extensions to 5% or the Consumer Price Index, whichever is lower. 

The only exception to the tax cap limiting rate is new construction. Taxes for any new construction in the Barrington 220 boundary area can be added to the levy. This ensures that new property tax owners contribute fairly to the overall operations of the school district. Typically, the exact amount of new construction is not known at the time the levy is adopted (December), so the tax levy increase is larger than the expected amount based on the limiting rate, to ensure that the taxes associated with new construction are collected. 

The tax levy the Board of Education approves is not a final figure. It is a request based on estimations of the items in the tax levy calculation above. Since the final figures for equalized assessed value of properties and new growth are not known until the spring of the year following the Board approved tax levy, a school district must estimate what it believes the final figures will be.

A school district can only receive a tax levy based on the final figures released by the counties. If the school district establishes a levy that is higher than the final figures, the district will only receive what is allowable by law, which is the final calculation based on the actual numbers as established by the counties. For example, if a district sets a tax levy at a 5% increase, but the county numbers that are released the following spring equate to an increase of 4%, the district will only receive a 4% increase in its extension.

County clerks generate tax bills that proportion the final figures associated with the tax levy to all property owners based on their property value percentage of the total property value in the district. Property values are determined by township or county assessors. Changes in assessed values and changes in property tax exemptions can play a large role in determining final property tax bills. Some property owners may see a smaller increase or a decrease in their tax bill, while others may see a larger increase depending on each homeowner’s property value relative to all other property values.