Issue: Tax Reform, Act 1 of 2006

When new legislation passes, PSBA is seen as the leader in analyzing it and helping members make sense of it.

Act 1 NEWSLETTER
 Vol. 1, No. 5, August 25, 2006

IN THIS ISSUE: This issue is a follow-up on the concerns and questions surrounding the Local Tax Study Commission and the index.

SUMMARY : PSBA has been receiving numerous calls, particularly regarding the board's responsibilities in appointing the Local Tax Study Commission. Almost all the calls, from urban, rural, and suburban school districts reference difficulties the board is having in getting volunteers to serve on the Local Tax Study Commission. There have also been calls asking if boards can "appoint" a committee despite not having the requisite minimum number of commissioners.

Finally, we want to pass along information regarding the 2007-08 index.

ANALYSIS: PSBA's advice to school boards that are having difficulty finding volunteers to serve on the LTSC is as follows. First, because the act allows boards to appoint commissions of 5, 7 or 9 members, choose the smallest number allowed (5). Appointing someone from the board reduces the number of individuals you need to apply to 4. If 4 volunteers can't be found, the board will have to become proactive in its recruitment efforts. Using any and all contacts you have with various community organizations, simply ask if anyone from those organizations is willing to serve. Make sure they know the responsibilities and what you are asking of them and make sure they know that their "service" will only last 90 days from the time of their official appointment. At the same time, ensure, to the greatest extent possible, that the organizations you solicit have members who are representative of your community. Also be aware that Act 1 states: that the commission ". shall reflect the socioeconomic, age and occupational diversity of the school district to the extent possible " (emphasis added). PSBA interprets that to require the board to make reasonable efforts and use reasonable measures to seek qualified candidates. If the board has advertised and otherwise used its contacts within communities, it has probably satisfied the letter of the law.

Finally, the Act does not contemplate a commission whose membership numbers anything other than 5, 7 or 9. There does not seem to be any advantage for a board to appoint fewer than the required 5 members in one instance and additional members later. The statutory deadline for a commission to make its recommendation is 90 days from appointment. Using a bifurcated appointment process may raise questions about when the 90-day clock starts ticking.

2007-08 INDEX
On August 15, PDE calculated the 2007-08 index to be 3.4%. Any proposed increase in 2007-08 school district taxes of more than 3.4% must be submitted to the voters at the 2007 primary election. The index must be applied to the rate of taxation, i.e. a millage rate or percentage, rather than to the revenues generated. PDE must make this announcement official by publishing the index in the Pennsylvania Bulletin by Sept. 1. Districts that had a 2006-07 aid ratio of 0.400 or above will be allowed an adjustment to this index. The adjustment is calculated by multiplying 3.4 by the sum of 0.75 and the school district's 2006-07 aid ratio. Thus, a school district with a 2006-07 aid ratio of 0.550 would perform the calculation as follows:

0. 75 + .55 = 1.32
1.32. X 3.4 = 4.488

The school district in this example would have a 2007-08 index of 4.488. PDE must inform each school district of their individual index by Sept. 30.

UPCOMING ACT 1 DEADLINES AND TRAINING OPPORTUNITIES

  • September 1 -- Deadline for PDE to publish index in the Pennsylvania Bulletin .
  • September 6-28 -- PSBA seminars on Act 1. Check times and locations (see Programs and Events).
  • September 14 -- Deadline for boards to appoint Local Tax Study Commission.
  • September 21 -- PSBA Web conference on duties and responsibilities of LTSC (7 p.m.)
  • September 29 -- PSBA Web conference on duties and responsibilities of LTSC (9 a.m.)
  • September 30 -- PSBA Web conference on duties and responsibilities of LTSC (9 a.m.), deadline for PDE to inform all school districts of their 2007-08 index.
  • December 13 -- Deadline for LTSC to make recommendation to board
  • December 15 -- Deadline for boards to certify to PDE the total amount of tax credits due pursuant to the Sterling Act