NLR schools ask assessor to file claim on tax slip up

The North Little Rock School Board approved Thursday night a letter asking the Pulaski County assessor's office to file a nearly $900,000 insurance claim for a tax-billing error that led to more than $1 million being sent to the wrong school district.

This spring, the North Little Rock School District learned that $1.1 million it had received in property taxes since 2009 should have instead gone to the Pulaski County Special School District. The error resulted when 400 recently annexed properties were assessed the wrong school district's millage rate.

In August, officials from the two districts agreed that the North Little Rock district would pay the Pulaski County Special district the $1.1 million over the next five years. It made the first payment of $128,000 on Dec. 1.

But the district has since determined that $883,830.74 of the $1.1 million could be attributed to extra expenditures the district never would have made if it hadn't believed it had the money, Chief Financial Officer Denise Drennan said. Those expenditures include raises and extended contract days for teachers.

The board approved sending the "demand letter" -- a legal document stating an entity's claim and requesting restitution -- to the Pulaski County assessor's office on a voice vote with no audible dissent after no discussion.

In the letter, the district is asking the assessor's office to file a claim with its insurer, Central Arkansas Risk Management Association, for $883,830.74 to mitigate the financial impact on the district.

Drennan compared the tax error to a car accident in which the county assessor's office was at fault and the district was asking the office's insurance to pay for repairs.

"We were harmed by that error," she said.

Joe Thompson, the Pulaski County assessor's office's chief administrator, said the district had mentioned several months ago that it would potentially ask the office to file a claim.

"I think it's perfectly reasonable for them to ask," he said, adding that a decision on payment will be up to the insurer.

"If there was a car accident and somebody's calling me and saying, 'I want to fix something,' ... I'm going to call my insurance company and my insurance company will decide if I'm liable," he said.

Drennan said the district doesn't have a backup plan if the claim is rejected.

The tax error also resulted in an immediate budget shortfall in the North Little Rock School District of $330,000, which has resulted in cuts to services, such as the loss of driver's education classes last summer.

Compounded with a forthcoming loss of $6 million in state desegregation payments, the shortfall resulting from the error could lead to personnel cuts, Superintendent Kelly Rodgers said.

The district has been holding budget workshops to figure out how to mitigate the losses while it continues districtwide construction projects to replace or remodel nearly every building.

"Nobody knew that deseg was going to go away so fast," Drennan said of the state's payments in the long-running Pulaski County desegregation case that until this year involved all three county school systems -- the Little Rock School District, the North Little Rock School District and the Pulaski County Special School District. Only Pulaski County Special remains under court supervision.

Drennan said the district is hoping the $330,000 shortfall won't be as high in the coming years, as assessed property values in the district might increase.

The collection error started in 2009, when taxes were collected for 2008.

From 2008 to 2011, the North Little Rock School District millage rate was 40.9, and the Pulaski County Special School District millage rate was 40.7. But in 2012, North Little Rock School District voters raised its millage rate to 48.3, making 2013 the year in which the vast majority of over-collections occurred -- about $135,000.

A mill is one-tenth of 1 cent. Millage rates vary depending on the area of each county. To determine how much is collected in tax dollars, 20 percent of a property's assessed value is multiplied by that area's millage rate.

While the districts have worked out an agreement to settle payments for every year collections were incorrect, taxpayers can only legally reclaim the cash they overpaid in taxes dating back three years, meaning they won't be able to recover payments from 2009 and 2010.

Thompson said in May that the amount overpaid in those years was about $3,500 total for the 400 properties affected.

A section on 12/19/2014

Upcoming Events