A school district budget includes revenue from many sources. Most of those sources are relatively small in amount and serve special purposes — school meals money, rentals, income from school activities, insurance proceeds, and interest are some examples. The major source of local revenue for public schools is the property tax. The property tax consists of:
• Real estate tax, which is a tax on the real property of homeowners and businesses. This tax represents the largest single source of revenue for Illinois public schools. It is collected by the county and distributed to taxing bodies. • Corporate Personal Property Replacement Tax (CPPRT), which is the tax on businesses and utilities that takes the place of the abandoned tax on personal property. This revenue is significant for some school districts but not for others, depending upon the amount of local business and industry. It is collected by the state and distributed to school districts and other taxing bodies.
The tax on real property also funds a variety of local services, including county and municipal governments, libraries, parks, and others. On a statewide average, more than half of the typical property tax bill goes to public schools. The amount of money a school district can realize from the tax on real property is determined by two factors:
• The total assessed value of all taxable property in the district and
• The school district’s authorized tax rate. For example, if property values total $10 million and the authorized tax rate is 3.5%, the district can expect to receive up to $350,000.
The amount of assessed property value is determined by the elected assessor, who acts in accordance with state law. The law requires that property in all Illinois counties except Cook be assessed at one-third of its fair market value. Cook County may establish various classes of property, each with its own assessment factor. In Cook County, residential property is assessed at 10% of market value and commercial property is assessed at 25%.
The amount of the school district’s tax rate is determined by the total amount of taxes levied by the board of education. However, the tax rate cannot exceed the maximum rate established by law unless that maximum is increased by voters at a referendum.
In addition, for school districts in Cook, five collar counties and 33 other counties that have adopted the “tax cap,” a state law limits property taxes extended to a maximum percentage increase over the prior year’s extension — regardless of what might happen to school enrollments or school costs.
Stated briefly, the school board adopts a tax levy once each year based on its approved budget. The levy states the amount of property tax income needed to balance the budget. The county clerk then applies the levy against the district’s total assessed property value to determine whether it falls within the authorized tax rate. (For example, a tax levy of $350,000 applied against a total property assessment of $10 million would produce a tax rate of 3.5%.) The county clerk reduces the school board’s levy if it produces a tax rate that is above the authorized rate.
The property tax bill received by the individual taxpayer typically states:
a. the assessed value of property owned by the taxpayer, minus
b. any homestead exemptions, multiplied by
c. the combined tax rates of all local governments and services, equals
d. the total amount of taxes due.
Your tax bill will list the amount of taxes owed to each government entity or taxing district, including any local school districts and related pension costs.
School districts in Illinois can access the revenue source provided by the County School Facility Occupation Tax. Money generated through the sales tax can only be used for school facility purposes and school security personnel. The tax, which can be levied at quarter-cent intervals up to one penny on the dollar, is collected by the State Department of Revenue and distributed to the regional superintendent, who in turn issues the money to any school district in a county that adopts the tax, based on its percentage of students in that county. This tax gives school boards an additional option to the local property tax, but it is for limited purposes — school facilities, school resource officers, and mental health professionals — and must be kept in a specific, separate account designated for that purpose. As of this writing, 57 of Illinois’ 102 counties have approved the County School Facility Occupation Tax.
