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Budget Information
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Q & A - The Methacton School District Budget General Budget Questions
2011-2012 Budget Preparations Property Tax
PSERS A: The Methacton School District Board of School Directors voted to adopt a proposed budget for the 2012-2013 school year during the Board's regularly scheduled meeting on May 15, 2015. The proposed budget includes a 1.95% tax increase, which equates to an increase of .51 mills, resulting in a proposed millage rate of 26.83. Click to read more about the status of budget preparations.Q: What is the “Act 1 Index?” A: Under Act 1 of 2006, the Pennsylvania Taxpayer Relief Act a tax rate increase is limited to an annual statewide index. The Act 1 index for the 2012-2013 tax year is 1.7% for the Methacton School District. A: A school district that adopts a preliminary budget with real estate taxes that exceed its index may seek approval for referendum exceptions to increase tax rates by more than its adjusted index. Section 333 of the Taxpayer Relief Act, as amended by Act 25 of 2011, provides for four exceptions that require approval by the Pennsylvania Department of Education (PDE). Detailed information about each referendum exception submitted to PDE and related submission procedures for the 2012-2013 budget year are contained in the following document. Referendum Exception Guidelines for 2012-2013 The Board authorized the District to file the necessary applications with the Commonwealth of Pennsylvania for the Retirement Contribution Exception, for which Methacton School District qualifies under Act 1. A: Like all 501 school districts in Pennsylvania, Methacton School District (MSD) receives revenue from four primary sources: local, state and federal, and “other revenues.” What makes funding Methacton, and other districts with similar demographics particularly challenging, is the extremely low percentage of our budget that comes from state and federal contributions. According to the National Center for Education Statistics, on average, Pennsylvania public school districts receive about 39% of their revenues in state subsidies. Comparatively, MSD receives less than 17% of its revenue from the state. The administration and school board is extremely mindful of the fact that for every dollar the district spends, more than 80% comes from local taxes. Q: Why is state funding to Methacton School District so low? A: Many of the state subsidies received by the district are determined, at least in part, by a formula called the Market Value/Personal Income Aid Ratio (MV/PI AR). This ratio, adjusted annually by the state, is used to allocate funding to school districts throughout the state. Methacton's 2011-2012 aid ratio is .2261; only 27 of the state's 501 school districts have a lower aid ratio, and the district's aid ratio is lower than ten of the 21 school districts in Montgomery County. A: Pennsylvania has a constitutional requirement for uniformity of taxation. Counties are the governmental unit principally responsible for assessments. They typically meet the uniformity requirement by adopting a "base year" market value. Montgomery County's base year is 1999. A: A mill is 1/10 of one cent or $.001 (one thousandth of a dollar). A mill levy is the number of dollars a taxpayer must pay for every $1,000 of assessed value. Q: How does a millage rate and an assessment come together in the form of a tax bill? A: You can easily calculate your school tax bill by multiplying the millage rate included in the proposed budget approved by the Board in May – 26.83 mills – by the assessed value of your home. So a property assessed at $154,011 (the average assessment in Lower Providence Township) would receive an annual school tax bill of $4,132.12 or .02683 (millage) multiplied by 154,011. A house assessed at $235,615 (the average assessment in Worcester Township) would have a tax bill of $6,321.55. Q: Does a mill raise the same amount of money for every school district? A: No. Every district has a unique tax base and the effect of a mill levy is, therefore, different. In Methacton School District, each mill in property tax levied raises about $2.4 million for the school district – not that different than Souderton Area School District, where a mill generates about $2.74 million. A mill in North Penn School District on the other hand, generates about $6.92 million in revenue. Q: So how can I compare my tax bill to others in the area?
Q: Given the other things going on in the economy, couldn't the Board simply choose not to raise taxes at all this year? A: Just like the basic expenses in your household budget are going up, so too are ours. Freezing all of the district's expenditures would require measures that would directly and negatively impact our students and jeopardize the progress of our entire educational program. Methacton School District strives to be a model for public education. That extends beyond top-notch instruction and facilities to our fiscal management on behalf of taxpayers. The district does not like to raise taxes, but we have an obligation to budget wisely, fighting inflation but preserving educational excellence. For the last several years, the district's administration and school board have adopted a philosophy of implementing a series of regular, but small tax increases; that allow us to provide the programs our constituents have come to expect and deserve, while avoiding large tax hikes. A: A school district is subject to the same economic forces that any organization is faced with – salary increases, health care cost increases, property insurance, energy costs, and maintaining buildings and equipment. In addition, school districts are subject to other costs that are unique to education. Pennsylvania school districts are mandated by the state to provide free public education to their residents from the earliest admission age for the district's kindergarten program until graduation from high school or the end of the school term in which a student reaches the age of twenty-one (21) years, whichever occurs first. One major contributing factor to the increase in the district's costs is the dramatic increase in the mandated Pennsylvania State Employees Retirement System contribution rate. The contribution rate has been increased to 12.36% in 2012-2013, up from 8.65% in 2011-2012. The anticipated 2013-2014 rate is 16.69%. A: PSERS, the Public School Employees Retirement System is the pension system that covers public school employees in Pennsylvania. Q: How does the PSERS contribution factor into the budget? A: A total of $5,662,821 has been included in the 2012-2013 preliminary budget approved by the Board. This is a $1,856,744 increase over the 2011-2012 contribution. Q: Does PSERS cover all school employees? A: PSERS covers full-time employees that work five hours or more per day or five days a week or its equivalent (25 or more hours per week) and who are required by law to become members of PSERS. Part-time salaried, part-time hourly and part-time per diem employees are also eligible for membership in PSERS, depending on how many hours or days they work. Independent contractors, persons compensated on a fee basis and school crossing guards are not eligible for membership in PSERS. A: PSERS is funded with employer (school employer and state) contributions, employee contributions and investment earnings. Q: How are the employer and employee contribution rates set? A: The employer contribution rate is set each December by the PSERS Board of Directors and is calculated by the system's actuaries to be the contribution needed to pay for its unfunded liability when combined with the employee contributions. The employee contribution is set by law. Q: Why is the employer contribution rate scheduled to increase by so much? A: There are several factors that have contributed to the projected increase in employer contribution rate. First, the stock market, from which PSERS receives the bulk of its investment revenue, has performed very poorly over the last two years. The rate of return on PSERS investments was -26.54% for the fiscal year ended June 30, 2009 (FY 2009) and -2.82% for the fiscal year ended June 30, 2008 (FY 2008) resulting in a devaluation of PSERS assets. Second, legislation approved during the previous decade that increased employee benefits and subsequent legislation, which re-amortized the system's liabilities had the effect of pushing off liability to the future in exchange for providing fiscal relief to school employers and the commonwealth during recessions at the time. These liabilities are now becoming due. Q. Can you depend on the other sources of local revenues instead of my property taxes? A. In addition to real estate property taxes, local revenues are generated through earned income tax, real estate transfer tax, per capita tax and occupational privilege tax, investment earnings and other miscellaneous revenues. Earned income tax collections, real estate transfer taxes and investment earnings are directly related to a robust economy and cannot be depended on to produce the needed consistent revenue. Commercial property taxes can be subject to assessment appeals through the Montgomery County Court system. |
