Okaloosa County School Board members and Chief Financial Officer Julie Perry used a Monday workshop to detail how the district’s three categories of property tax millage are set, explaining that each is either dictated or capped by the state.

• The discussion came as the board authorized advertising its proposed preliminary and tentative budget and millage rate for fiscal year 2026-2027.

“I want to tell everyone that this board cannot raise the millage past what the law has given us right now,” Board Member Brett Hinely said.

The required local effort (RLE) is set each year by the state as part of the Florida Education Finance Program. According to the district, the rate is currently projected at 3.079 mills, a decrease of 0.050 from fiscal year 2025-2026. The district said the rate has been on a downward trajectory for 31 years, dropping from 6.530 in fiscal year 1995-1996 to the projected 3.079 for fiscal year 2026-2027, with small increases periodically in the mix.

Perry said the district has no choice in the rate it charges.

• “We have to charge what the state tells us to charge,” Perry said.

Perry said declining to levy the state-mandated rate would cost the district an estimated $145.5 million in FEFP funding. Board Member Lamar White said the penalty was roughly $86 million the last time he checked.

“So there’s no real choice there,” White said.

The discretionary operating millage is set at 0.748 mills, which Perry said is the maximum allowed by law. She said the state expects all districts to levy the full amount and includes it in FEFP funding calculations.

The capital improvement millage is set at 1.5 mills, also the maximum allowed, according to Perry. She said it generates roughly $47 million for the district annually. Without it, Perry said the state would provide only about $1 million in capital funding.

Hinely said that structure is what separates the school board from other local taxing authorities. He said most local governments can use a rollback rate, lowering their millage when property values rise to collect the same revenue as the prior year. The school board cannot do so, he said.

“Our hands are tied, because the state gives their rate,” Hinely said. “That’s the big difference between the school board and the other taxing authorities throughout the county.”

Despite the expected rate decrease, the district is required by law to advertise a “proposed tax increase.” Perry said that is because new construction and rising property values will generate more total revenue even at a lower rate.

• “If there had been no new construction, if property values had not changed, our taxes would be going down,” Perry said. “But because there’s new construction and increased property, even though the millage rate went down … the revenue that we generate will go up a little bit, which is why it’s called a proposed tax increase.”

Superintendent Marcus Chambers said the advertising requirement can create confusion.

“When property values go up, even though the tax rate goes down, statutorily we are required to say it’s a tax increase, even though truly it’s not a tax increase in terms of the millage,” Chambers said.

Board member Tim Bryant asked who assesses property values. Perry said it is the county, not the school district.

Hinely said the capital improvement millage was once set at 2.0 mills before the state reduced it to 1.5, with a promise to restore it.

“We’ve never seen it since then,” Hinely said. “That’s why the half-cent sales tax is so important.”

Perry said the district no longer receives significant state capital funding beyond what the millage generates.

The board approved the item on consent during its regular meeting Monday evening. The required advertisements will be posted to the district’s website at okaloosaschools.com/page/public-notices on July 24.

A public hearing to tentatively adopt the millage rate and budget is scheduled for 5:15 p.m. July 27, according to the agenda item.