REVENUE LIMIT EXEMPTION FOR ENERGY EFFICIENCIES
Section 121.91 (4) (o) Wisconsin Statutes
THE PURPOSE OF THIS PAGE IS TO:
1. Provide information about the revenue limit exemption which can be found below.
2. Provide districts with the procedure to report their resolutions and energy savings evaluations to the department. Click here to proceed to the reporting instructions.
3. Provide public access to the resolutions and energy savings evaluations reported by school districts. Click here to view resolution/evaluation information submitted by school districts.
REVENUE LIMIT EXEMPTION BACKGROUND: 2009 Wisconsin Act 28, the 2009-11 biennial budget bill, created a revenue limit exemption that allows a school district to increase its revenue limit by the amount spent by the school district in that school year on energy efficiency measures, and renewable energy products, that result in the avoidance of, or reduction in, energy costs.
2011 Wisconsin Act 32, modified this law.
Under current law, a district may adopt a resolution to increase its revenue limit by the amount spent by the school district in that school year on a project to implement energy efficiency measures or to purchase energy efficiency projects, including the payment of debt service on bonds or notes issued to finance the project if:
1. The project results in the avoidance of, or reduction in, energy costs or operational costs;
2. The project is governed by a performance contract entered into under s. 66.0133; and
3. The bonds or notes issued to finance the project, if any are issued for periods not exceeding 20 years.
The department promulgated administrative rule (PI Chapter 15) at http://legis.wisconsin.gov/rsb/code/pi/pi015.pdf in March, 2010. Except for references in PI 15 to the previous definition of what expenses are permitted to be used to calculate the exemption, all remaining portions of PI 15 are still in effect.
Below is an outline of the requirements school districts must follow in order to use this exemption to the revenue limit. To assist districts in drafting resolutions to use this exemption, a Sample Resolution is available at http://legis.wisconsin.gov/rsb/code/pi/pi015_app_a.pdf .
School boards of the school districts are required to:
- Identify the specific new expenditures.
- Identify the performance indicators to measure the cost savings that will occur as a result of the expenditures. A cost savings analysis is required.
- Identify the period of time in which the expenditure will be recovered by the cost savings.
- Identify the performance contract entered into under Wis. Stat. sec. 66.0133.
- Where debt service is included in the exemption, identify the bond, note or State Trust Fund Loan and ensure that it does not exceed 20 years.
- Pass a resolution with specified information between July 1 and November 1 in the school year in which a tax is to be levied for the expenditure.
- Submit a copy of the resolution to the department within two weeks of passage. This is done by going into your Financial Data Home in the SAFR Reporting Portal, choosing Referenda and adding a "New Referendum/Resolution." The type of referendum/resolution would be "Board Resolution to Exceed Revenue Cap for Energy Efficiencies – Non-Recurring." Enter the complete board resolution in the "Purpose" text box. This will include certifying compliance with §66.0133, the performance contracting requirement.
- Add the amount of the proposed levy to line 10C of the Revenue Limit worksheet.
- Levy the amount specified in the resolution when establishing its tax levies.
- Incur the expenditure authorized in its resolution.
- At the end of the school year, prepare an addendum to the following year's budget summary that reports the results of the energy savings incurred as a result of the expenditure. (ex: At the end of the 2013-14 school year, prepare an addendum to the 2014-15 budget summary)
- No later than two weeks following the date of the school district's budget hearing, submit to the department the contents of the addendum to the school district's published budget summary. Districts will need to return to their Referenda Home in the SAFR Reporting Portal and enter the 65.90 energy savings addendum contents in the "Actual Wording" text box of the original resolution.
- Reduce the school district's following year's revenue limit by the amount of any additional revenue received as a result of the exemption and by the amount levied for which there is not a documented energy expenditure, if applicable.
In addition, the department is required to:
- Post on its website all the resolutions received by school districts. Resolutions can be found under “Referendum Information” on the left hand scan bar of the SFS website, or directly at: sfs_referendum
- Adjust a school district's revenue limit to include the levy amount specified in the resolution.
- Post on its website the addendum contents received from school districts.
- Reduce a school district's revenue limit for the following year by the amount of any additional revenue received as a result of the exemption.
- Reduce the school district's revenue limit for the following year by an amount the school district levied for which there is not a documented expenditure authorized under the exemption, if applicable.
$1,000,000 Non-Referendum Debt Limit
- Debt issued pursuant to the energy efficiency exemption is subject to the $1,000,000 limit on non-referendum approved debt. Districts may exceed this limit only by following the procedures for exceeding this limit, via a petition period. For more information, see: dpi.wi.gov/sfs/bonding
Annual Resolutions Required
- Districts wishing to utilize the revenue limit energy efficiency exemption for the purpose of making debt service payments on a qualifying project must pass a resolution for the exemption each year. School boards may not pass one resolution to cover multiple years.
Calendar Year vs. Fiscal Year
- Prior to 2013 Wisconsin Act 20, the energy efficiency revenue limit exemption was based on fiscal year payments, whether the project involved an outlay of expenditures for just one year of the projected was financed over multiple years. Act 20 modified the requirements for the energy efficiency exemption such that:
- For districts that borrow to finance an energy efficiency project for which they claim the revenue limit exemption, the amount of the exemption to be entered onto line 10.C. of the revenue limit worksheet shall be based on the district's upcoming calendar year debt service payment and therefore, should be equal to the non-referendum debt service (Fund 38) levy (also a calendar year basis). For example, a 2013-14 exemption would be equal to the 2014 calendar year debt service payment.
- For districts that use the energy efficiency exemption on a one-year basis to pay for an energy project in that year, the amount of the exemption to be entered onto line 10.C. of the revenue limit worksheet shall be based on the anticipated expenditures that will occur in that fiscal year. If a district's auditor determines that a district has not fully expended the amount claimed as an exemption for energy efficiency project purposes, a penalty will be assessed against the district's subsequent year revenue limit base. The penalty will equal the unspent portion of the energy efficency exemption amount.
Reducing Debt Service Payments by Measurable Utility Cost Savinsg
- 2013 Wisconsin Act 20 also created a new provision in state law that affects district that borrow to finance an energy efficiency project over multiple years:
121.91(4)(o)3. If a school district issues a bond or note or obtains a state trust fund loan to finance a project described in subd. 1. and the school district's utility costs are measurably reduced as a result of the project, the school board shall use the savings to retire the bond, note, or state trust fund loan.
The SFS Team is currently working to revise the Administrative Rules on the Energy Efficiency Exemption to reflect these changes in state law.
- DPI does not have information related to meeting performance contracting requirements specified in Wis.Stats. §66.0133. Districts should consult their legal counsel to ensure they are in, and can certify to DPI, compliance with this requirement.
Carey Bradley, School Finance Consultant
Gene Fornecker, School Finance Auditor