Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Act 1 andMulti-County School

District Issues

Thursday, March 15, 20071:00- 2:00 PM

Pennsylvania Association of School Business Officials

2Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Presenters

• Susan F. Elder

Director of Research, PASBO

• William L. McGill, PRSBA

Director of Technical Assistance, PASBO

3Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

So You Came Here

for

ALL the Answers???

4Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

The Bar is OPEN !!!!!!

5Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

• § 672.1 of the School Code

• Provides several options for adjusting millage rates currently levied in each county by the change in relationship of market values in each county before adding new millage.

6Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

• Method 1

• Based upon the percentage or ratio of STEB’s most recent property (market) values

• Most Widely Used

7Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

• Method 2

• Market value equals assessed value / ratio of assessed value to market value in the municipality as determined by STEB– Ratio varies by municipality – Ratio is aggregate of all municipalities– Selection the lower of the ratios– Condition: Home rule county, Ratio ≤ 75%

8Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

• Method 3

• Condition: If counties are assessed at 100% of market value AND using the same base year

• Uniform millage rate

• Limited Usage

9Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

• PDE-2028

• Hold harmless for base mills subject to Index

10Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

• Sample PDE-2028

• East Stroudsburg Area School District

• Method 1 § 672.1 (1)

11Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

• Sample PDE-2028

• Warrior Run School District

• Method 1 § 672.1 (1)

12Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

• Sample PDE-2028

• Warrior Run School District

• Method 1 § 672.1 (1)

• REVISED Calculation to come within Index

13Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

Original Tax Revenue = $4,796,178

Revised Tax Revenue = 4,787,613

Loss of Revenue = $ 8,565

14Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

• Sample PDE-2028

• Norwin School District

• Method 1 § 672.1 (1)

15Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Rebalancing

• Sample PDE-2028

• Corry Area School District

• Method 2 § 672.1 (2)

16Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Homestead/Farmstead Calculations

• Act 50 of 1998 requires use of Common Level Ratio (CLR)

• § 8583 (b) “the exclusion established … for each county portion of the political subdivision shall be uniform after adjustment for the common level ratios in the respective counties.”

17Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Homestead/Farmstead Calculations

• § 8583 (a) requires a homestead exclusion to be a fixed dollar amount

18Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Homestead/Farmstead Definitions

• Common Level Ratio – the ratio of assessed value to current market value used generally in the county as last determined by the State Tax Equalization Board (STEB)

19Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Homestead/Farmstead Definitions

• Established Predetermined Ratio – the ratio of assessed value to market value established by the Board of County Commissioners and uniformly applied in determining assessed value in any year

20Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Homestead/Farmstead Definitions

• Farmstead- All buildings and structures on a farm- Not less than 10 contiguous acres- Not exempt from real property taxation- Not qualified for other abatement- Produce/store farm product- House farm animals, equipment, or machinery

21Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Homestead/Farmstead Definitions

• Farmstead Property – A farmstead for which an application has been submitted and approved

22Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Homestead/Farmstead Definitions

• Median Assessed Value – the value which is the middle point in the sequential distribution of assessed values, above and below which exist an equal number of assessed values

23Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

PASBO Act 1 Worksheet

• w/an Earned Income Tax

• Minimum and Maximum Exclusion

• Variable EIT Rate Calculator

• Multiple Counties – Using STEB

Common Level Ratio

24Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

PDE Ballot and Homestead Exclusion Calculators

(Posted February 23, 2007)

• EIT / PIT Calculator for May 2007 Ballot

- uses median assessed value to determine the minimum and maximum homestead exclusions

- to determine the corresponding EIT or PIT rates to fund the minimum or maximum

25Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

PDE Ballot and Homestead Exclusion Calculators

• “This data will be helpful in determining that the dollar value of the homestead exclusion on the proposed ballot question for the May 2007 primary is within the boundaries of the minimum and maximum.”

26Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

PDE Ballot and Homestead Exclusion Calculators

• Homestead Exclusion Calculator

- determines “the dollar value of the homestead exclusion and the assessed value reduction for each county if the voters approve the May 2007 ballot question establishing a new or additional EIT or PIT to fund homestead exclusions.”

27Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Act 1 Multi-County School District Issues

Questionsand

Answers

(Well, maybe not ALL the answers!)

28Pennsylvania Association of School Business OfficialsTaking care of the business of schools…everyday.

Act 1 Multi-County School District Issues

This Concludes Our Presentation!

THANK YOU!THANK YOU!