Ending TIF would reduce NPS' state funding

NPS Superintendent Nick Migliorino speaks to teachers during new teacher training earlier this year at Norman North High School. Migliorino said ending the University North park TIF early would have a major impact on the district’s state funding allocation.

Kyle Phillips / The Transcript

NORMAN — With the University North Park TIF closing in on its project funding mark of $54.8 million, the idea of closing the TIF early is gathering steam among the TIF’s philosophical opponents. But while doing so would mean an immediate boost to city coffers, to the tune of roughly $6 million annually and growing, it could mean a big hit for Norman Public Schools.

Part of the complex algorithm that determines state funding for each school district is based on how much ad valorem — primarily property tax — a city collects. Put simply, there’s an inverse, dollar-to-dollar relationship between local ad valorem tax collections and state funding for schools.

Those taxes are still collected within the UNP TIF, but when they’re collected in a TIF, they don’t factor into the formula. That means with the TIF in place, Norman Public Schools reaped an additional $680,000 from the state this year that it would not have without it.

“If the TIF ended, we would see that $680,000 as a reduction in our state aid formula,” NPS Chief Financial Officer Brenda Burkett said. “That is local money that is coming into Norman Public Schools that is currently outside of the state funding formula.

"If the TIF ended, that $680,000 would still be coming into Norman Public Schools’ operations as local money, but the offset is that the $680,000 would be going into the state aid formula and would be a reduction in our state funding.”

According to the Oklahoma Department of Education, NPS’ state budget allocation for Fiscal Year 2018 is about $35.4 million. If NPS were to lose out on $680,000, it would represent a 1.92 percent drop in state funding.

That’s enough to pay for about 15 teachers, benefits and retirement included, Burkett said.

“Our teachers are the faces of our district,” she said. “Our teachers in the classroom make the difference for our kiddos and our community. So, I think it’s a good representation of what $680,000 means to our district. Salaries and benefits are about 91 percent of our total $100 million general fund budget.”

Norman Public Schools Superintendent Nick Migliorino said the district supports the TIF and ending it early would have a major impact on funding.

“The current TIF with the UNP has definitely benefited the district financially, especially in these times,” he said.

Migliorino, who serves on the University North Park TIF advisory committee, said the group has put off discussing an early exit strategy until September, when it will again assess the possibility of paying off $14 million in principal and interest on a 2013 loan, which was used primarily to fund the construction of Legacy Park and improvements to Rock Creek Road.

“Part of the reason they put it off was my recommendation that we cannot absorb that right now,” he said. “If it was paid off today and we didn’t get that for the next year, you know how state education funding is right now, that would be a huge impact to our operational budget.”

Migliorino also expressed support for the OU Foundation’s new TIF proposal, an entertainment district that, according to a development plan unveiled last month, would include an expo center, multi-and single-family housing, office and business space, parks and a 10,000-seat arena.

He said another revenue TIF wouldn’t just benefit NPS financially, but the proposed development also would give Norman the opportunity to host large tournaments, either there or at Lloyd Noble Center, and a spectacular venue for graduation and other school events.

Many details of the project remain in question, like how much the development would cost and how much public funding would be used to incentivize development, but last month, the committee unanimously voted to recommend the project to the city council.

Mayor Lynne Miller said last month that the city council needs time to study the plan before committing public money to the project. She estimated it would be several months before the council would vote on it.

In the meantime, Migliorino said NPS is looking at long-term plans for the future.

Prior to the UNP TIF’s creation in 2006, the 585-acre tract roughly bounded by I-35, Westheimer Airport, and Robinson and Tecumseh streets was undeveloped due to federal regulations that were loosened in the '90s.

When the TIF ends, those ad valorem tax numbers will mean a big swing in NPS’ state aid formula.

“Now that we know that that is on the board, absolutely we’re going to have to take a look at the what-if and start planning in that direction,” he said. “But until we have more direct, concrete information on the direction the city council decides to go in regard to paying off the TIF or looking at expanding it into the other piece, we’re kind of working in the unknown, but we will be putting together a plan for either direction.

“Obviously if another TIF is put in place, and it’s a revenue-generating TIF, then absolutely it could help us. But it’s that down time in between … unless there’s an overlap, there is going to be a down time and that would be a significant hit to our operational budget. I’m just glad that the city is allowing the district to have a seat at the table so when the decision is made we can all plan for what the best thing is for Norman as a city.”

Deputy Superintendent of Finance & Federal Programs for the state Matt Holder said high ad valorem districts receive less state aid per student than districts with very low ad valorem support, the premise being that a student in a poor district is entitled to the same education as a student in a wealthy district.

Oklahoma Department of Education spokesperson Renee McWaters said 38 school districts are currently not on the formula because they bring in too much money from local taxes to qualify.

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