LM summer 2023

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In May, the Illinois Department of Revenue released a memo that indicated school districts, and other government bodies, would see a reduction in Corporate Personal Property Replacement Tax funding. On the IASA Podcast, we spoke to Dr. Vic Zimmerman, IASA Field Services Director, about this announcement and what it means for school districts trying to budget for FY 24. The following is a condensed and edited version of that conversation.

CPPRT Uncertainty FY2024 Why Less Funding is Anticipated • Advice for Budgeting

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Can you share a quick history on why Illinois has CPPRT? Back in the 1970s, EAV was made up of real property, which is buildings and land, and personal property, which is the things inside. For example, if you had a big factory, the building was part What is your personal history with CPPRT? When I was hired as superintendent in Monticello in 2007, I noticed the district received a very significant amount of CPPRT funds. In fact, about 40 percent of our budget came from CPPRT funds, so I figured I better learn more about it.

of EAV but also all the equipment inside. It became very difficult to do a calculation on the personal property, so the legislature, through the Constitution of Illinois, made a change to eliminate personal property as one of the valuation factors that school districts were levying upon. Since a lot of governmental entities across the state had a significant portion of personal property as part of their EAV, they couldn’t just crank up their tax rates on the real property. That’s when the legislature came up with a replacement tax for those districts. The way it works is all corporations pay an additional 2.5 percent on their income tax statements. That money goes into the Corporate Personal Property Replacement Tax bucket for the entire state and then those dollars are distributed out to governmental bodies and school districts based on what percentage of personal property valuations they had back in the 1970s.

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4 LM Summer 2023