News & Press: IASBO News

SCHOOL TRANSPORTATION & BUS REPLACEMENT EXCESS LEVY APPEALS

Friday, July 24, 2020  

SCHOOL TRANSPORTATION & BUS REPLACEMENT EXCESS LEVY APPEALS

Fred Van Dorf, DLGF Budget Division Director, has sent the following to IASBO:

The purpose of this memorandum is to outline the school corporation operations fund levy appeals found in IC 20-46-8-3. 

Levy Increase Due to Transportation Costs

Pursuant to IC 20-46-8-3(1), a school corporation may appeal to the Department of Local Government Finance (“Department”) before October 20 for an increase to its operations fund maximum levy.

To be granted an increase by the Department, a school corporation must establish that the increase is necessary because of a transportation operating cost increase of at least 10% over the preceding year as a result of at least one of the following:

1. A fuel expense increase.

2. A significant increase in the number of students enrolled in the school corporation that needs transportation or a significant increase in the mileage traveled by the school corporation’s buses compared with the previous year.

3. A significant increase in the number of students enrolled in special education who need transportation or a significant increase in the mileage traveled by the school corporation’s buses due to students enrolled in special education as compared with the previous year.

4. Increased transportation costs due to compliance with a court-ordered desegregation plan.

5. The closure of a school building within the school corporation that results in a significant increase in the distances that students must be transported to attend another school building.

6. A cost increase due to restructuring or redesigning transportation services due to a need for additional, expanded, consolidated, or modified routes.

7. A labor cost increase due to a labor shortage affecting the school corporation’s ability to hire qualified transportation employees.

In addition, before the Department may grant a maximum levy increase, the school corporation must establish that the school corporation will be unable to provide transportation services without an increase. The Department may grant an excess levy that is less than the increase requested by the school corporation.

The Department can only approve a levy (including an excess levy) in an amount that does not exceed that which was initially advertised and adopted by the school corporation. A levy increase resulting from a successful appeal is a permanent increase to the school corporation’s operations maximum levy.

Levy Increase Due to Bus Replacement Plan

Pursuant to IC 20-46-8-3(2), a school corporation may appeal to the Department for an adjustment to its maximum operations levy to reflect the school corporation’s bus replacement plan as adopted or as amended. 

The school corporation may request a specific amount to increase the levy by, but the Department may modify the increase to the levy to reflect the bus replacement plan. The Department will not consider any bus replacement plan that has only been proposed. In previous years, the Department has authorized an increase for bus replacement as a one-time temporary adjustment, a one-time permanent adjustment, or as a one-time permanent adjustment that was apportioned over the life of the plan. Starting with appeals for the 2020 budget year, the Department grants approvals only as a one-time permanent adjustment apportioned over the life of the plan. 

Pension Debt Neutralization

Finally, the Department emphasizes that IC 20-48-1-2 prescribes that each year a debt service levy is needed for purposes of funding retirement or severance liabilities, a school corporation must reduce the total property tax levy for the school corporation’s operations fund in an amount equal to the property tax levy needed for the debt service multiplied by an adjustment percentage. The Department cannot approve a proposed transportation appeal or bus replacement increase that has been padded or artificially increased in contravention of IC 20-48-1-2.

Procedures for Filing an Appeal

1. The school corporation (or appropriate fiscal body) must include the total amount of the excess levy appeal within the maximum estimated levy and on the excess levy appeal line of the Notice to Taxpayers (Budget Form 3). The appeal amount must be included on both the excess levy appeal line and the estimated operations fund levy line. Failure to include the appeal levy in both places may result in denial of the appeal.  

2. The school corporation (or appropriate fiscal body) adopts the school corporation’s budgets, rates, and levies for the following year on or before November 1 as required by IC 6-1.1-17-5, and after compliance with all notice and other procedural requirements. 

3. Appeal petitions must be sent directly to the unit’s Department Budget Field Representative before October 20. Petitions may be emailed. Whether the school corporation is requesting an increase based on transportation costs or a bus replacement plan, or both, only one (1) petition should be submitted.

4. The Department will review the appeal and make a final decision. The school corporation will be notified of the Department’s final action.

School corporation officials must file the following information with the appeal:  

1. A copy of Budget Form 3 (Notice to Taxpayers) for the ensuing budget year;

2. the school board resolution authorizing the appeal;

3. a completed appeal application (see the attached templates);

4. any other information supporting the appeal.

Questions may be directed to the Department’s Budget Field Representative Team.