Ed Management Services

Capital Exclusions

Q. We do not need the exclusion in order to be under the limit, so should we bother to calculate it either year?   Is the capital exclusion optional or are we required to calculate it and put it in the form?
A. Based on the tax cap legislation, school districts must calculate the capital exclusion regardless of whether or not they will levy the amount the exclusion allows them.

Q. If you use a capital exclusion of a lower amount than you have calculated is that unacceptable? For example, you calculate a capital exclusion of $1,000,000 but you only record an exclusion of $500,000 and still stay within the cap, is that okay?
A. School districts are required to make their best estimates for the upcoming school year. If they have done so and then circumstances materially change regarding their capital spending, it [will] should be reflected in the next year’s tax cap calculation and the prior year’s calculation by requesting OSC put the form in resubmit so the school district may edit the form to start[ing] from the lower, actual prior year capital expenditure in the base calculation. School districts will be required to go back and change the capital levy amount in the prior year’s calculation and should ascertain that the change will not adversely affect the prior year’s calculation. If upon making the change the school district finds that a reserve in the prior year would be necessary, it can either a.) Calculate the coming year as if the reserve had been created or b.) Leave the form as it was prior to requesting resubmit.  If auditors decide that the initial estimate was unsupported by facts or documentation at the time the tax cap calculation was made and submitted, the usual administrative and/or legal remedies should be pursued.

Last Updated: June 22, 2015