6,000 Solar Acres increase Schools Total Revenue $26,000

6,000 Solar Acres will increase Mason County Schools Total Revenue by approximately $26,000, Mr Ritter of the Kentucky Department of Education helped calculate how higher property values impact SEEK dollars and the school district’s total revenue.

This discussion started when a group of concerned citizens attended the Mason County Board of Education on July 12, 2021. Here is a recording of part of the meeting captured on an iPhone.

Mason County School Board meeting

You can see the text of Mr. Marshall’s presentation at bottom of this page. Mr. Ross’s response stats at the 11:30 point of the recording. His contention about SEEK funding was that higher property values would reduce the total funds the Mason County Schools receive. To support his position. hr challenged Mr. Marshall to contact Mr. Ritter of the Kentucky Department of Education.

Here is the exchange that followed. (Note pdf of original message are included at bottom of page.

From Marshall to Ritter

Here in Mason County, we are discussing a new enterprise for rural land.  If it goes live, it will raise the rural land where it exists from an assessed value of approximately $795 /  acre to roughly $9200 / per acre. (see https://solarformasoncounty.com/detailed-tax-calculations/ for details).
Suppose 6000 acres adopt this new enterprise, while tax rates remain unchanged and everything else is constant. In that case, this property value raise will increase property tax payments to Mason County School District by $270,000 per year. I understood that the KY SEEK payment will, in that case, decrease by $270,000.  However, some quote you as saying that increase property values REDUCE the school’s net income per student.  Would you please help me understand how the KY Department of Education incentivizes school districts to take action to reduce local property values?   If this is the case, what part of the process causes schools to lose income per student when their community increases the value of their land?
Do the laws that govern Ky Education Department oppose new commercial growth?

From Ritter to Marshall

Mr. Marshall,

Thank you for your questions. First, it is important to understand that the formula which determines funding for each of Kentucky’s 171 school districts is based on statutory or regulatory language as passed by the General Assembly. As part of the funding formula, the local property assessment-which include real, tangible, and motor vehicle property assessments, helps determine the level of state funding each district receives. Further, each district is required, by law, to levy a minimum equivalent tax rate of 30 cents per $100 in assessed property. This is known as ’30 cent local effort’. As property assessments increase, so does the 30 cent local effort which is then reduced from the overall funding. Property assessments may also impact facilities funding equalization, as well. You may read more about the formula in this study.

That being said, based on your scenario below, we added an additional $50,430,000 in property assessments to Mason County School’s current funding formula. When comparing this hypothetical calculation to their current funding, it results in an overall net decrease of $251,569 in state funding.  This includes general funds as well as funds which are restricted for facilities related expenditures. This scenario is based on the assumption that no other data components change other than the assessed property values. I have attached the scenario as well as the current funding formula snapshot for Mason County Schools.

SEEK calculation with current property values
SEEK calculation with increased property values of 6,000 acres of Solar

From Marshall to Ritter

Let me see if I understand.

If we use the  additional $50,430,000 you mention.  Mason County’s school tax rate is 0.546 per $100. My calculations indicate Mason County schools tax revenue will receive $278,155 but that will be partially ofset by a decrease of $251,569 in state funding. 

If my calculations ae correct the school district will have a net increase of $26,586. 

Do you see an mistake in these calculations?

Again Thanks`

From Ritter to Marshall

Your local tax revenue amount may be off but not by much. It’s difficult to tell how much of the assessment would be classified real property or tangible property. Those rates are different for Mason County Schools but not by much.

From Marshall to Ritter

Thank you for your help In this case while tangible will also increase all of this value increase is to real estate value.

Here is PDF version of email exchange

Initial Question Marshall to Ritter

Ritter’s Response to Marshall

Marshall’s Response to Ritter

Ritter’s Response to Marshall

Marshall’s Response to Ritter

Marshall’s July 12, 2021 School Board speech