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NKY schools may benefit from a reduction in property values

Northern Kentucky has experienced fluctuations in property values ​​that play a role in school financing. Retiring Ludlow Superintendent Mike Borchers has seen the impact in his independent school district.

“At the last (assessment) we generated a turnover of 4% and still reduced our tax rate by 12 points,” Borchers told LINK nky. “The real estate value increased so much that we were only allowed to generate 4% more income, and no 4% new taxes. Over the past four to five years, we have seen a lot of fluctuations. If the value of your property increases by 30%, your rate will decrease. The district can only get 4% more income from this.”

One problem is the state’s SEEK formula, the primary funding formula for Kentucky public schools. The state pays a portion of SEEK, and school districts pay a portion. The more taxable property a school district has, the more it pays – with the state paying a smaller share.

Then comes House Bill 6, the state’s new two-year budget that could bring some local relief to districts in NKY and elsewhere.

The budget includes a “Property Assessment Growth Assistance” – a provision that could allow school districts experiencing real estate growth to make an additional local adjustment and potentially avoid a cut in state funding through SEEK.

School districts where cumulative estimated real estate growth exceeds 14.4% would have a chance to qualify for aid in 2024-2025, with a new chance to qualify the following year, Chay Ritter, chief financial officer, told IPS. Kentucky Department of Education, to public school superintendents during a May 14 webcast .

“So if you were at 16.2%, (the department) would adjust that amount above 14.4%,” Ritter said during the webcast. “Your local effort specific to that property comes back to you in the form of an adjustment” or payment. Local effort refers to the local SEEK share, which is 30 cents for every $100 of taxable property in the district.

Participating districts must also have qualified for a 4% property tax adjustment under current law and imposed a tax rate of 4% or higher.

Here are details for district qualification, according to the department:

To qualify for the 2024-2025 school year, districts must:

  • Must have been eligible for the 4% adjusted assessment in 2023-2024 and 2024-2025;
  • Must impose the tax rate of 4% or higher in 2024-2025; And
  • Must have experienced a cumulative growth in property valuations of more than 14.4% from financial year 2022-2023 to 2024-2025. KDE will adjust local efforts specifically for real estate for growth above 14.4%.

For the 2025-2026 school year, the districts are:

  • Must have been eligible for the 4% adjusted assessment in 2024-2025 and 2025-2026;
  • Must impose the tax rate of 4% or higher in 2025-2026; And
  • Must have experienced a cumulative growth in property valuations of more than 25.8% from financial year 2022-2023 to 2025-2026. KDE will adjust local efforts specifically for real estate for growth above 25.8%.

Payments will ultimately depend on available funding at the state level, Ritter said. If there isn’t enough funding or if property assessments don’t keep pace, districts that have experienced growth to date could lose out.

Ritter said the department won’t know how much money will be available for the new adjustment until it calculates final SEEK funding (around March 1 of each fiscal year).

“The good news is that we usually have basic SEEK (funds) and other pots of money in stock. If there is money left across the board, we can generally access those funds to finance these types of adjustments,” he said.

More good news? State lawmakers increased state SEEK funding in the next budget, just as they did in the current budget passed by the Kentucky General Assembly in 2022. Borchers calls this “a big help”, especially when it comes to salaries for teachers and other staff.

“It has allowed us to put more money into our salaries,” he told LINK. “Northern Kentucky will always have the challenge of competing with Ohio, it’s a higher start for their teachers. That’s why we work very hard for ours.”