Pennsylvania Association of School Business Officials Act 1

Pennsylvania Association of School Business Officials Act 1 and Multi-County School District Issues Thursday, March 15, 2007 1: 00 - 2: 00 PM Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday.

Presenters • Susan F. Elder Director of Research, PASBO • William L. Mc. Gill, PRSBA Director of Technical Assistance, PASBO Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 1

So You Came Here for ALL the Answers? ? ? Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 2

The Bar is OPEN !!!!!! Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 3

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

Rebalancing • Method 1 • Based upon the percentage or ratio of STEB’s most recent property (market) values • Most Widely Used Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 5

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% Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 6

Rebalancing • Method 3 • Condition: If counties are assessed at 100% of market value AND using the same base year • Uniform millage rate • Limited Usage Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 7

Rebalancing • PDE-2028 • Hold harmless for base mills subject to Index Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 8

Rebalancing • Sample PDE-2028 • East Stroudsburg Area School District • Method 1 § 672. 1 (1) Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 9

Rebalancing • Sample PDE-2028 • Warrior Run School District • Method 1 § 672. 1 (1) Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 10

Rebalancing • • Sample PDE-2028 Warrior Run School District Method 1 § 672. 1 (1) REVISED Calculation to come within Index Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 11

Rebalancing Original Tax Revenue = $4, 796, 178 Revised Tax Revenue = 4, 787, 613 Loss of Revenue = Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. $ 8, 565 12

Rebalancing • Sample PDE-2028 • Norwin School District • Method 1 § 672. 1 (1) Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 13

Rebalancing • Sample PDE-2028 • Corry Area School District • Method 2 § 672. 1 (2) Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 14

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. ” Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 15

Homestead/Farmstead Calculations • § 8583 (a) requires a homestead exclusion to be a fixed dollar amount Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 16

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) Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 17

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

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

Homestead/Farmstead Definitions • Farmstead Property – A farmstead for which an application has been submitted and approved Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 20

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

PASBO Act 1 Worksheet • • w/an Earned Income Tax Minimum and Maximum Exclusion Variable EIT Rate Calculator Multiple Counties – Using STEB Common Level Ratio Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 22

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

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. ” Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 24

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. ” Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 25

Act 1 Multi-County School District Issues Questions and Answers (Well, maybe not ALL the answers!) Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 26

Act 1 Multi-County School District Issues This Concludes Our Presentation! THANK YOU! Pennsylvania Association of School Business Officials Taking care of the business of schools…everyday. 27