Certainties in Life…

Death and school tax increases? About a quarter of the school districts in Allegheny County have applied for an exception to possibly exceed their Act 1 index that determines the degree to which school taxes can rise in a given year (both the Education Department’s spokesman and a business manager of a western PA school district made the point that even though a district is granted an exception it may choose not to use it) but this year is when new assessments have gone into effect, so homeowners who live in those districts where revenue neutral rollbacks by the County and the municipality may have minimized the tax bill bite may see that disappear. Know too that tax increases could be coming in districts that did not apply for an exception because Act 1 allows for increases up to the cap without a separate action.

The Department of Education has data on school tax rates going back to the 2002-03 school year (all districts in Allegheny County run on a July-June fiscal year except Pittsburgh) and, after tossing out a few districts that straddle the County line and Clairton, which has separate rates for land and buildings, the median tax rate that year was 18.45. Wilkinsburg had the highest millage rate at 32, South Allegheny had the lowest at 13.83. By the 2011-12 school year, the median rate had risen to 23.27 (a 26% increase, the Pittsburgh area CPI increased 33% from 2002 to 2012, so the growth was slower than inflation) and Wilkinsburg still topped the list (at a higher 35 mills) and Pittsburgh was the lowest at 13.92.

If we look at the years prior to when the Act 1 index took effect (2002-03 through 2006-07) the median millage rate for the County’s school districts rose 16%; since then, under the Act 1 provisions (2007-08 to 2011-12), school taxes have climbed 8%. Note that the pre Act 1 years from 02-02 to 03-04 and 03-04 to 04-05 saw some very big jumps (4.8% and 5.5% respectively) and that, outside of those years, the percentage change in the median school tax rate in the County does not look much different before or after Act 1. The median rate did fall in 2011-12 by 0.7% from where it stood in 2010-11, however.

That’s little consolation to taxpayers whose district may have increased taxes year after year or intends to use an exception this year, but overall the degree of increase overall has slowed over the past few years.

Excessively Easy Exemption Criteria for Tax Hikes

The Department of Education just granted 199 Pennsylvania school districts an exemption enabling them to raise taxes by more than the "index" calculated by the Department would otherwise allow.

Under current law, exemptions are granted for three reasons; to pay down construction debt, fund special education costs or cover pension funding. Well, isn’t that nice. Since money is fungible, revenue insufficient to cover total planned spending under current allowable tax rates can be said to represent a threat to one of the three exempted budget items. Thus, an exemption is almost automatically approved by the state. As a result, the only real constraint on school districts raising taxes beyond "index" allowed limits is the painfully skimpy sympathy school boards have for taxpayers.

School boards serve too many masters and unfortunately taxpayers are at the bottom of the list after teacher unions and parents of students who always demand top tier amenities for their students and who show excessive deference to and sympathy for teachers at contract time-don’t want any strikes you know.

So, given the state law that does not allow teacher layoffs for economic reasons and union intransigence in making concessions to help financially strapped districts, the natural inclination of school boards to avoid looking for spending cuts so as not to anger any of their preferred constituencies, it is an easy way out for them to ask for an exemption to their tax rate limitation and claim the additional funds are needed for one of the three exempted items. Mere child’s play. No real spending cuts ever need to be contemplated and taxpayers get the bill.