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Glossary

Assessed valuation - The percentage of valuation that is subject to taxation. For example, Class I and Class II property are assessed at 35% and public utility property at either 25% or 88%, depending on the type of utility.

Average daily attendance (ADA) - Student membership calculated based on a district’s average attendance, as opposed to the number of students enrolled.

Average daily membership (ADM) - Number of students enrolled in a school district who are either in attendance or have an excused absence the first full week in October and the first full week of February.

Base formula amount - Dollar figure assigned by the General Assembly that represents what the state believes it costs to adequately educate one child with no special needs for one year. (Also known as the “per-pupil allotment,” “foundation figure” or “state aid figure.”)

Biennium - Any two-year period, used mostly in school funding to refer to the two fiscal years that make up each state budget.

Bond levy - Property tax levies used to provide the local revenue for construction purposes. Proceeds from the levy are used to pay the principal and interest on construction bonds. Offered for a specified amount and a specified period of time.

Bonds - Long-term indebtedness approved by voters in a particular taxing district.

Categorical expenditures - expenditures required by school districts beyond the base formula amount. Examples of categorical expenditures include special education, vocational education, gifted education, PBA and transportation.

Continuing levy - Levy proposed millage rate or school district income tax that is assessed indefinitely, unless the tax is revoked by the voters or the school board instructs the county auditor not to assess it.

Dual-purpose levy - Single ballot issue for both a permanent improvement levy or a bond issue combined with an operating levy. It may be continuing or limited. The ballot issue must state how much of the levy will be used for each purpose. A permanent improvement operating levy may be either a property tax or a school district income tax, but a bond/operating levy must be a property tax.

Effective mills - The actual rate of taxation realized when the tax reduction factor reduces the taxes charged by a voted levy. It equals the taxes charged divided by the taxable value of the class of property against which they apply. Effective tax rate or effective millage: This is the tax rate you actually pay. It reflects gross millage less reduction factors. This figure is shown in mills, not dollars. You can follow the calculations on the left side of your tax bill that shows the millage converted to dollar amounts. The Tax Distribution section lists the taxing entities receiving real estate tax revenue from you.

Emergency levy - Limited levy proposed up to five years for a specific dollar amount. The millage rate required to produce the dollar amount changes on all types of property if property values change. Emergency levies may be renewed for the dollar amount originally requested.

Exempt property – Real property not subject to taxation. Typically, exempt property is owned by federal, state or local branches of government, and religious or educational institutions.

Fiscal Year - The school district fiscal year runs from July 1 of each year thru June 30 of the following calendar year.

Floor - Rate below which voted mills will not be reduced under the property tax reduction factor. Established by the General Assembly. Currently set at 20 mills.

Formula ADM (average daily membership) - Adjustment to ADM used in school foundation formula representing students in first to 12th grades, one-half of the students in kindergarten and one-fifth of the students in the district attending a JVS. Basic ADM is calculated on a three-year average, so districts with declining ADM get the average rather than the current ADM.

Foundation Formula - Method of funding schools through a combination of state and local aid. Based on the ability of school districts to raise tax revenues as well as the state determined minimum amount necessary per student to provide an adequate education.

Full Tax Rate - The Full Tax Rate reflects the sum total of all property tax millage approved by the voters due for your home, including general county, city and village funds plus special levies for schools, emergency services, senior services, children’s services, etc. This figure is shown in mills, not dollars.

Guarantee - Alternative calculation of state funding that insulates school districts from the effects of dramatic changes in school funding factors, such as property valuation or ADM. Guarantees are also often politically necessary when changes in state policy have disproportionate effects on different types of school districts.

Homestead (reduction) - Credit is given to residential property owners who meet certain age, income and other requirements. Homeowners may apply for the credit between the first Monday in January and the first Monday in June of each year. For more information visit www.hamiltoncountyauditor.org.

Homestead property - Property where the owner occupies the property as a residence such property qualifies for the additional 2.5% rollback. This term should not be confused with the homestead exemption that provides specific property tax relief to elderly (65 or older) or disabled homeowners.

Incremental property tax levy - Limited levy, with a maximum of 10 years that imposes additional millage, or a dollar amount or percentage increase, on a regular schedule throughout the life of the levy. Increments are imposed as the full voted millage, not as effective millage, giving a limited amount of growth in the levy. Up to five changes may be proposed during the life of the levy.

Inside mills - Millage imposed by local governments without voter approval. Inside mills are not subject to the property tax reduction factor. Inside mills are referred to as “unvoted” mills. The school district shares 10 inside mills with other taxing entities. The school districts inside mills are 5.33.

Limited levy - Levy proposing a millage rate or school district income tax that is assessed for a specified period of time. A limited levy is eligible for renewal or replacement. Market Value: The market value of a property is determined by periodic reappraisals done by the County Auditor. The reappraisals are usually completed every 3 years. It is not necessarily the most recent sale price of a home.

Mill - A mill is $1 for each $1,000 of assessed value or one-tenth of a cent (0.1)

Millage - Factor applied to the assessed, a.k.a., taxable valuation of real and personal tangible property to produce tax revenue.

Operating levy - Levy used primarily for district operating purposes. Can be either continuing or limited.

Outside mills - Millage approved by voters. Outside mills are subject to the property tax reduction factor. Sometimes referred to as “voted mills.”

Parcel Number - is an identifier of an area of land, of any size, that is capable of being conveyed by a single legal description in one ownership.

Per Pupil Expenditure - Computation derived by dividing a district's costs associated with educating a student by the Average Daily Membership (daily attendance).

Per Pupil Valuation - Computation derived by dividing a district’s Average Daily Membership (daily attendance) into the district’s assessed valuation.

Permanent improvement levy - Limited or continuing levy used for maintenance and repair of school property, and, in some limited circumstances, for renovation and building projects. Can be a property tax or an income tax.

Personal Property - Includes property of every kind, both tangible and intangible, not included in the term "real estate."

Property tax reduction factor - Sometimes referred to as the “HB 920″ effect. An adjustment by which the taxes charged by voted mills on Class I and Class II real property are reduced to yield the same amount as those mills yielded in the preceding year, exclusive of new construction. The reduction factor does not apply to inside mills or to voted mills charged against general and public utility personal property.

Property tax rollback - A percentage reduction in the taxes charged against Class I (residential and agricultural) real property. The percentage equals 10% for all real property and an additional 2.5% for owner-occupied residential property. The state reimburses schools and other local governments for the full amount of the rollback. The rollback applies after the reduction in taxes charged against real property as determined by the tax reduction factor.

Public utility property - Tangible personal property used in the operations of a public utility company.

Real property - Land and improvements to land such as structures or buildings. In Ohio, real property is divided into two classes: Class I (residential and agricultural property) and Class II (commercial, industrial, and all other real property).

Reappraisal phantom revenue - Term used to describe the interaction between the state foundation formula and the tax reduction factor. The state formula works as though each increase in a school district’s real property value results in more local revenue and reduces the district’s state aid accordingly. The property tax reduction factor prevents most growth in valuation from yielding additional revenue. Thus, the “phantom” revenue refers to the money that the stat formula credits as local revenue, but that the tax reduction factor ensures the district will never collect in taxes.

Reappraisal - Appraisal by the county auditor of the value of real property for tax purposes. It occurs every sixth year. Three years after each reappraisal, the county auditor adjusts appraised values based on recent sales of property in that county. This adjustment is referred to as the triennial “update.”

Reduction Factor - To keep a level amount of money coming in from a tax levy, local governments use formulas to reduce the “gross” millage to an “effective” millage. Reduction factors are calculated by county auditor’s offices and can vary among communities. Full Tax Millage (Gross millage) for schools is reduced as property values increase meaning the only mechanism for schools to receive cost of living increases is by going back to voters periodically.

Renewal levy - Voter approval to extend the term of a limited levy when it expires. The renewal levy must state the same purpose as the original levy. The effective rate of the renewal begins from the point where the original levy ends. A renewal levy proposal can combine with a proposal to raise additional millage.

Replacement levy - Like a renewal levy in that it seeks voter approval to extend the term of a limited levy when it expires. Replacement levies differ from renewal levies because the replacement begins with an effective rate equal to the original effective rate of the levy which it replaces. In this way, a replacement levy allows a district to obtain the benefit of growth in the real property tax since the approval of the replaced levy. Replacement levies cannot be used for an emergency levy and cannot be combined with other changes in millage in a single proposed levy.

School district income tax (SDIT) - Limited or continuing levy proposed as a percentage rate on the income of district residents as reported for state income tax purposes. SDIT can be proposed in combination with a reduction in property tax. Because the SDIT taxes income, not property, there is no reduction factor involved, allowing unlimited growth in the proceeds. School district income taxes apply only to personal income and do not apply to the net profits of corporations. School districts have the option to levy an income tax just on ‘earned income’ which exempts certain incomes such as pensions and retirement benefits.

School district purpose - Legally defined reason for seeking a levy. Currently includes operating expenses; specific permanent improvements and/or class of improvements; general, ongoing improvements; recreational purposes; community centers; support for public libraries or community centers; and the purchase of educational technology.

Tangible personal property - Machinery, inventory and equipment used in the manufacture and/or sale of products that is subject to taxation under a property tax rate. This is also referred to as business tangible property. The inventory portion of the tax on this property is being eliminated by a phase out program. In the phase out period the State is reimbursing the school districts.

Unit funding - Method of funding programs for gifted and talented students, and preschool special education. Units must be in accordance with established guidelines and approved by the state. Funding is based on the state minimum salary schedule enacted by the legislature, a fringe benefit reimbursement of 1.15% times the state salary schedule and a supplemental unit allowance of a fixed amount per pupil.

Valuation of a school district - Taxable value of all Class I and II real property, general tangible personal property and public utility personal property in a district.

Valuation per pupil - Computation derived by dividing a district’s ADM into the district’s assessed valuation.

Weighted funding - Method of funding certain categorical programs. Under this approach, pupils with special needs count as some additional multiple of one in the computation of the cost of an adequate education. The weight assigned to each pupil with a special need corresponds to an estimate of the additional cost associated with providing pupils with that special need an adequate education.