Indiana operations fund assessed value growth quotient: growth helps

Beginning with the 2020 budget cycle (Jan. 1 – Dec. 31, 2020) in accordance with all school corporations will have an annual unit-specific Assessed Value Growth Quotient (“AVGQ”) that is calculated for the Operations Fund max levy.  The AVGQ calculation, which is referred to as the “alternate AVGQ”, is compared to the Indiana State Budget Agency-annually-determined “certified AVGQ.” 

The certified AVGQ, is based upon a six-year non-farm personal income growth average that is released every summer for proceeding year budget cycles.  For the 2020 budget cycle, the certified AVGQ, released in July, was 1.035 or 3.5%.

The alternate AVGQ formula, as provided by the Indiana Department of Local Government Finance, is a five-step calculation.  The formula factors in three years of certified net assessed value (CNAV) growth.  For 2020, the 2017-2019 CNAV is used to determine the alternate AVGQ. For 2021, the 2018-2020 CNAV will be used. 

2020 Theoretical Example:

If the alternate AVGQ is greater than the certified AVGQ, school corporations can increase annual Operations Fund max levy by the alternate AVGQ amount, or in the case of the example, 1.042 for 2020.

School corporations that are eligible for the alternate AVGQ may benefit with an increase in gross levy from the Operations Fund, which may decrease the amount needed from the Education Fund.  Still, eligible school corporations should be aware of the overall financial impact the alternate AVGQ may have on the total net levy, circuit breaker and overlapping local governmental entities. 

School corporations that are not eligible for the alternate AVGQ will receive the certified AVGQ for 2020, which is 1.035.  In addition, these school corporations have the opportunity to study the characteristics of the community’s assessed value to foster conversations regarding economic development. 

If you would like additional information or assistance with the alternate AVGQ calculation, assessed value characteristics or long-term planning, please contact us.

Brock J. Bowsher
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