Ken's Project Blog

January 22, 2011

School Tax Apportionment

Filed under: Education,Politics,Taxation — Ken @ 9:00 am

My local weekly newspaper had a posting announcing a meeting to discuss School Tax Apportionment – I felt it was a fairly simple topic, so I responded to the article so that anyone that couldn’t make the meeting could understand the issue.

The back story is kind of interesting, so let me set this up – I live in a township that has inside its borders two boroughs. All three municipalities send children to the local school district (and ONLY these three municipalities), so these three areas need to pay their “fair” share of the school budget. Sounds simple right? Well, how to calculate what is “fair”?

There are two formulas – either “per head” or “property value assessment” – either you divide the number of students the municipality sends to the school district by the total number of students in the district and the result defines that municipality’s “fair” share of school budget. Or, you take the total assessed value of all the homes in the municipality and divide it by the total value of all homes in the district.

The local debate is that one of the boroughs saw it’s “fair” share of the school budget increase at a rate greater than the other two, so they called “foul” and want to make their taxes “fair.” What they don’t realize is that if we abandon the current property value assessment method and adopt the per student assessment method their school taxes would increase dramatically, to the benefit of the township residents (like me ;^). What’s funny to me is that if the boroughs want to keep complaining about their “unfair” increases, sooner or later the residents of the township will realize they are subsidizing the cost of educating the borough’s children and the township residents will move to cut over to the “per student” model. Their refusal to understand the current situation will cost them dearly.

Anyway, here’s my comment to the paper:

Wow, I can’t believe tax apportionment is still a confusing topic to anyone in the valley, but if you can’t make it to the meeting, here’s a quick overview:

There are two options – percentage of student body or assessed value.

For percentage of student body apportionment you divide the number of students the municipality sends to the district by the total number of students in the district, the resulting fraction is the fraction of the approved school budget that municipality is responsible for paying.

For assessed vale apportionment you take the assessed value of the taxable residences in the municipality and divide it by the total assessed value in all sending municipalities, the resulting fraction is the fraction of the approved school budget that municipality is responsible for paying.

In both cases you divide the fraction of the budget the municipality is responsible for (in dollars) divided by the assessed value of the taxable properties in the municipality and that gives you your tax rate.

Here in Hopewell Valley, we currently use the assessed value method, and this results in Hopewell Township paying a disproportionate share of the school budget based on the percentage of children Hopewell Township sends to the district. Pennington and Hopewell Borough are being subsidized by the township, but one in the boroughs obsess about their tax rate growing faster than the township tax rate and feel they are being taken advantage of. The reality is that in comparison homes in the borough held their value better than township homes, making the boroughs share of the total assessed value slightly larger.

If we were to change to the student percentage model (something the residents would have to vote on), the boroughs would see their shook taxes increase dramatically, and we would have to wait five years before we could return to the current apportionment method – but good luck getting the township residents to approve raising their school taxes for the sole purpose of subsidizing the taxes the homeowners in the two boroughs pay – and the number of registered voters in the township dwarfs that of both boroughs.

My advice to residents of the two boroughs is stop talking about changing the apportionment method, or you might see your taxes increase dramatically, with almost no recourse.

Put another way, be careful what you wish for – you just might get it!

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