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PDE’s Role and Responsibilities Under Act 72 of 2004

PDE’s Role and Responsibilities Under Act 72 of 2004. __________________________________ I. Opting In to Property Tax Relief Program II. Index Calculation III. Preliminary Budget Adoption IV. Backend Referendum Exceptions V. Final Budget Adoption. I. Opting In to Act 72 of 2004.

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PDE’s Role and Responsibilities Under Act 72 of 2004

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  1. PDE’s Role and Responsibilities Under Act 72 of 2004 __________________________________ I. Opting In to Property Tax Relief Program II. Index Calculation III. Preliminary Budget Adoption IV. Backend Referendum Exceptions V. Final Budget Adoption

  2. I. Opting In to Act 72 of 2004 How to opt in to Act 72 • Resolution by May 30, 2005, must do one of the following: • Levy and assess additional 0.1% EIT 2. Ballot question in November 2005 3. Ballot question in November 2007 (non-EIT districts only)

  3. I. Opting In to Act 72 of 2004 • SD must notify PDE of action taken within 5 days of passage • Form available at PDE website: • www.pde.state.pa.us/proptax

  4. I. Opting In to Act 72 of 2004 (top half of form)

  5. II. Index Calculation • Used to determine maximum budgetary tax increases for each tax levied by SD (without PDE/Court/voter approval) • How will PDE calculate • Average of statewide average weekly wage and employment cost index • For SD with MVPI AR greater than .4000, value is base index multiplied by sum of .75 and MVPI AR

  6. II. Index Calculation • What the base index has been: • 2005-06: 3.1% 2004-05: 3.6% • 2003-04: 2.9% 2002-03: 3.5% • 2001-02: 3.5% 2000-01: 3.8% • Example of SD with .6000 MVPI AR for 2005-06 • Base index: 3.1% • 3.1% * (.75 + .6000) = 3.1% * 1.3500 = 4.2%

  7. II. Index Calculation Districts in Multiple Counties • Application of index (proposal not finalized) • Rebalance last year’s real estate tax rates based on current year market value • Apply index to rebalanced tax rates to determine allowable tax rates • PDE will develop a worksheet for SDs to use

  8. II. Index Calculation • When and where will it be published • Annually by September 1 • Pennsylvania Bulletin (base index only) • PDE website (calculated for all SDs)

  9. III. 2006-2007 General Fund Budget(Preliminary) • SD will use standard PDE-2028 package downloaded from website • www.pde.state.pa.us/PDE-2028 • Available early December 2005 • New page/form in package used to summarize required information for purposes of PDE approval of tax increases • Submission procedures same as final budget

  10. III. 2006-2007 General Fund Budget(Preliminary) 2006 Timeline • January 26: Deadline to have available for public inspection • February 5: Deadline for public notice of intent to adopt • February 15: Deadline to adopt (90 days prior to Primary election) • February 20: Deadline to submit preliminary budget and proposed tax increases to PDE

  11. III. 2006-2007 General Fund Budget(Preliminary) PDE Review • PDE will compare % tax increases to index • PDE will inform SD within 10 days whether the rate increases are <= index • If any of the proposed tax increases exceed index, PDE will notify SD that: • Tax increase must be reduced to index OR • Tax increase must be approved by voters OR • Exception must be sought

  12. IV. Backend Referendum Exceptions • For tax rate increases above index without voter approval • Must satisfy both of the following: • Revenue raised by allowable increase is insufficient to balance budget • Revenue generated by tax rate increase more than index must be used ONLY for items on exception list

  13. IV. Backend Referendum Exceptions • Approval sought from Court of Common Pleas or PDE • March 2, 2006: Deadline for submission of exception (no later than 75 days prior to Primary election) • March 22, 2006: Decision on exception request made (no later than 55 days prior to Primary election)

  14. IV. Backend Referendum Exceptions • Approval by Court of Common Pleas in judicial district in which administrative office of SD is located: • (i) costs incurred responding to or recovering from an emergency or disaster as declared by the Governor • (ii) costs to implement a court order or an administrative order from Fed/State agency – as long as tax increase is rescinded upon fulfillment of order • (iv) costs to respond to conditions which pose an immediate threat to students, staff or residents of SD – only until conditions resolved

  15. IV. Backend Referendum Exceptions • Approval by PDE: • Four exceptions require use of AFR data • (v) increase in costs incurred in providing special education programs and services greater than 10% (PDE will define programs & services) • (vi) costs incurred for implementation of a School Improvement plan that were not offset by a State allocation • (vii) costs to maintain per-student local tax revenue (if 3-yr ADM increase >7.5%) or AIE per ADM (if < index) • (viii) maintenance of revenues from local/state sources where the % increase is less than the index

  16. IV. Backend Referendum Exceptions • School year data to be used is latest year for which ALL districts submitted AFR • Timely submission by SDs is CRITICAL • Local audit completion is key; contracts with CPA firms should require a completion date prior to October 31 submission deadline • PDE deadline to notify school districts of AFR year for exceptions (December 27, 2005)

  17. IV. Backend Referendum Exceptions • Remaining three PDE exceptions • (iii) costs to pay interest/principal on the following: debt incurred prior to Act 72 effective date; electoral debt; up to 60% of construction cost average if various conditions met • (ix) costs incurred for providing health care-related benefits attributable to a collective bargaining agreement in effect on Act 72 effective date • (n) if PSERS payments between current year and upcoming year is greater than 7.5% • PDE shall approve exception(s) if SD qualifies and sum of dollar amounts of qualified exceptions is sufficient to balance budget

  18. IV. Backend Referendum Exceptions • If approved, Court/PDE will determine: • Expenditure amount for exception granted • Tax rate increase required to fund exception • Appropriate duration of tax rate increase • If exception is denied, SD may submit referendum for voter approval

  19. V. 2006-2007 General Fund Budget(Final) • June 10: Deadline to have available for public inspection • June 20: Deadline for public notice of intent to adopt • June 30: Deadline to adopt • July 15: Deadline for PDE to receive

  20. Non-Act 72 Reminder Starting with the 2005-06 General Fund Budget, Act 48 of 2003 requires SDs to have an Ending Unreserved Undesignated Fund Balance within the allowed range:

  21. Information www.pde.state.pa.us/proptax ra-propertytax@state.pa.us

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