Tag Archives: CLR

Assessment appeals and their role in tax issues

At the risk of creating more controversy that has nothing to do with solutions —I responded to a post on Community….Matters from John Peterson who denounced the “GOP” lead school board driven by GOP issues. I will stand by each and every budget decision made during my time on the board, and I can assure you that the largest component of tax increases related to staffing were a direct result of a community study we undertook in response to KIDS COUNT, an extremely well-funded group that pushed for and achieved class size targets well below anything we had ever experienced. During times of lucrative transfer tax revenues, and new development with a rising tax base, these costs were absorbed. Kevin Grewell was elected to the board as a Republican after switching parties to get the TTRC endorsement, presumably because there was no organized process for running as a democrat. In defeating an incumbent Republican for the seat (Rick Zagol), Kevin ran on a platform of spending more for smaller class sizes. MUCH smaller in some cases. There were several board members who had previously been associated with the Democratic party but switched to Republican registration absent any benefit to a Democratic affiliation.

There was a claim made on the blog comments that TESD services since 1996-2000 have been degraded, with lost of activity ….the size of the population has simply grown exponentially. And the cost of housing in this community has risen to levels that new residents who choose to purchase here come with many, many expectations.
Can we please talk about the realities and not the theories. The issues on the table absolutely were predictable. The health care increases are easy to point to — but it has happened before and is the reason the district has a fund balance. $4M of fund balance right now is designated for “retirement obligations” which means severance and other issues for sitting and retired administrators. When I attempted last year to look at the contracts of these people, I was met with anger and changes in policy as to how to look at these numbers.

It’s fine to understand the reasons behind the increase, but not okay to suggest that they were surprises. Assessment appeals are quite typical in a down market. Countywide reassessment was done in 1998 — the CLR since that time has gone from the goal of 100 (meaning market value would equal assessed value) down to 53. Actually 2008 showed a rise to 53 from earlier levels — but since the CLR reflects the percentage of market value that the assessment should reflect, a steadily decreasing value ultimately predicts that the effort of reassessment is now worthwhile as the outcome would be significant enough to undertake it.

1998 93.4
1999 89.8
2000 85.2
2001 80.5
2002 74.0
2003 68.0
2004 60.8
2005 54.9
2006 51.8
2007 51.7
2008 53.0

I apologize that these are not “sound bite” comments, but as you know from previous postings, I have a great deal of information to share and would like us to all understand the implications of our current tax level.

One other response, however, is that the teachers’ contracts rarely try to work around economic predictions — and the PSEA (if you read their website right now) advocate for growing the starting salary so that there is a shorter time to reach “career” earnings (the top step) and less “percentage increase” required per year….the local salary schedules reflect a competitive look at neighboring districts along with a formidable staff of PSEA staff running numbers and making offers or responding to district offers — all the while knowing that the elephant in the room is a strike. Board members know the damages of a strike — so the abililty to influence the outcome is severely limited and is only likely to come out less in the union’s favor with a willingness not to blink. Where would the community come down if our schools were closed for two weeks? (I have referred to this before, but due to some legal conclusions reached at the state level, teachers do not lose any salary or benefits during a strike…I can explain if you have any questions about it).

Thanks.

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Buy a house for $500,000 What else do you pay?

I am a numbers person and have been for as long as I was associated with the school board. Earlier I posted the revenue per student in several neighboring districts — but that left a gaping hole in the information because some expressed the reality that commercial/residential mix affects enrollment numbers so tax revenue per student could be misleading. We agreed to disagree. But I do have some other figures to contribute here to keep the discussion focused on what seems to be the consensus primary issue: Yes, we can find some ways to reduce costs in the district, and I wholeheartedly agree that the salary schedule has lost its way under the direction of a local union that takes its marching orders from Harrisburg — but I truly believe that TESD cannot and should not attempt to redesign its curriculum and the program of studies to respond to this. We need to look at the truly BIG picture of living in this community — and our local effort to producing the educational program which clearly plays a role in property values in this community.

Here’s some information on property values and taxes that gives you (hopefully) a clearer understanding of our level of taxes for schools:
Let’s buy a $500,000 house — in any of several neighboring districts. When we buy that house in Tredyffrin, the school district gets 1/2 % and the township gets 1% (most townships, including Easttown, only get 1/2 %). That income is the epitome of variable revenues — it only comes in when properties change hands.

Now — the State Tax Equalization board annually reviews assessed values relating to market values in every tax community (county based for the most part) and standarizes the values statistically. They produce a ratio known as the CLR – common level ratio — that reflects the percentage that your equitably assessed value is of the market value. Assessment appeals use this number in decision making.

Without bogging down here, you can go to the steb website to see these CLRs. They are done by county. Chester County’s CLR is 53. 0 Delaware County is 61.3 Montgomery County is 54.0 and Bucks County is 9.7 . In each case, the predetermined ratio for these jurisdictions is 100 — which means they would like to think assessments are at full value. The CLR fixes that annually to be sure new properties are assessed correctly.

So, our house that has a fair market value (sells for) $500,000 in the above four counties would be assessed as follows: (fair market value x CLR%)

TE, Great Valley, Unionville — $265,000
Radnor – $306,500
Lower Merion, Upper Merion $270,000
Council Rock, Central Bucks – $48,500

Knowing these assessed values on our $500,000 purchase house, (make it new construction for the sake of understanding how the assessed value is reached), school taxes on this house based on this fair assessment would be as follows:

TE – 17.47 mills – $4,629.55
GV – 18.22 mills $4,828.30
Radnor – 20.2731 mills $6,213.71
Lower Merion 21.4015 mills $5,778.41
West Chester 17.85 mills $4,730.25 plus EIT
Council Rock 107.96 mills $5,236.06 plus EIT
Upper Merion 15.24 mills $4,114.80

The mills I use come from the most recent (2009) county tax roles. If you find an error, please advise as I am relying on the information publicly available.

So — you can ignore any effort at comparing revenue and mills and revenue per student. These figures are the school property taxes paid by a resident in a $500,000 market value house across these districts. If you bought your house a long time ago, thedifficult fact is that the economy may have given you lots of equity, but not necessarily income to support your property’s value. You made a good investment but you may not be able to keep it unless you are willing to tap into your equity.

TE can and will make cuts, but families moving here are  investing in homes here to send kids to our schoolsare thinking about educating kids today and into the future. You have been rewarded for the district’s achievements in the value of your home. We need to find a balance between income (which has nothing to do with the way we tax for schools locally) and the value of your property. The issues of teacher compensation are a state wide issue — collective bargaining when combined with the power to strike (and teachers do not lose one dollar of income if they strike) does not serve an ideal purpose. PA has the highest percentages of teachers strikes in the country. Many states do not allow teachers to shut down an education system.
So, let us continue.I apologize for being long-winded, but it’s a fairly complicated topic and deserves more than sounds bites. In 3 terms on the school board, the only budget hearing that ever had a crowd was when we discussed the options of an income tax — presuming that income reflects more reliably a resident’s ability to afford schools — and we all know how those studies end up. NO MORE TAXES is a general rant — how we generate those taxes isn’t even open for debate because the immediate presumption was always to fear any additional source of revenue (income) because it would open another pocket to governmental seizure.  Maybe now with all the comments about what people can afford, there will be some discussion about using income as ONE of the ways we determine how to fund our schools. 

More on the sources and options later.  In the meantime, TESD is going quietly about changing programs to fix budget problems.  My kids are graduated — one lifer from our schools even went to Harvard without any athletic ability — so I don’t want to see the system taken apart on the altar of fiscal conservativism.  I don’t think our schools are expensive — though I do believe the teachers will need to pay for health care in future contracts.  Until they do, they will never understand that they are health care consumers — not benefit recipients.