Financial Services

District Financial News

Important Information for Tucson Unified School District's Homeowners Concerning their 2012 Property Taxes

We want to make you aware of an increase in the tax rate for property owners living in the boundaries of Tucson Unified School District (TUSD). It's important for you to know how the tax impacts our community and that the rates are determined by Pima County.

We encourage you to review the following information, which highlights the significant points of this increase.

Here's what you should know:

School districts' tax rates are determined in August of each fiscal year. The following factors affect the tax rate:

  • School District Budget: Budgets are determined by a formula (the equalization formula) that is established by the Arizona State Legislature.
  • Qualifying Levy Rate: This is a rate that is determined by the state for the purpose of funding the state aid portion of the district budget.
  • Assessed Valuation: The property valuation is determined by the Pima County Assessor's Office. Declining property values (such as home values) means that local governments have to increase tax rates to collect the same amount of money.
  • State Aid Funding: The state controls state aid funding in two ways: the first is by increasing the qualifying rate, which causes a decrease in state aid; the second is by imposing state aid reductions to school districts. TUSD's state aid was reduced as a result of both.

Why did TUSD's taxes go up?

The State Legislature increased the Qualifying Levy Rates by 11% from 3.5364 in FY2012 to 3.9170 in FY2013. This increase caused a shift of funding, an 11% increase, from the state to local taxpayers. This action reduces state aid funding to our district and increases tax levies to local taxpayers.

The qualifying levy and the tax rate have a direct relationship. When one goes up the other one goes up.

Graph of tax rate vs. quarter

Source: TUSD Financial Services analysis

The value of homes in Tucson continues to decline, which reduces the assessed valuations within our district boundaries. Because of this decline in property values, the tax rate must go up to levy the same amount in taxes. For example, the primary assessed valuations for FY2012 was $3,388,422,554 compared to $3,215,914,415 for FY2013. That is a decrease of about 3%.

Graph of property valuation

Source: TUSD Financial Services analysis

What was the increase in the tax rate?

Even though the State Legislature increased the qualifying levies by 11%, TUSD's tax rate was increased by only 5%. TUSD's tax rate went up from 6.9480 to 7.3187.

How does TUSD compare to other districts?

Many of the school districts surrounding TUSD, and around the state, had their tax rate increased due to actions by the state to increase the qualifying levies. Some districts had their tax rate increased between 3% and 25%.

What does all this mean?

Property owners may naturally assume that the school districts have control over these tax changes. This is not true. School district funding is driven by a formula set by state law. The amount of money contributed by the state determines the amount that needs to be levied from local taxpayers. By increasing the qualifying levies, the state reduces state aid and, consequently, increases the amount of levies from the local taxpayers.

Property owners may be under the impression that the district's budget benefited from the tax increase. This is also not true. Even though local taxes will increase due to the State Legislature's actions, TUSD will not receive more funding. In fact, TUSD will have a significantly lower budget than the previous year.

Graph of State Aid vs. Budget

Source: TUSD Financial Services analysis