1 INDIANA SCHOOL FINANCE SOURCES AND TIMING OF REVENUE AND PURPOSE OF EACH BUDGET FUND BACKGROUND INFORMATION TO SUPPORT THE ANALYSIS OF TAX IMPACT ON SCHOOL CONSOLIDATION SCHEMES IN LA PORTE COUNTY, INDIANA Prepared by: Dr. Robert L Boyd Indiana State University June, 2010 2 INDIANA SCHOOL FINANCE SOURCES AND TIMING OF REVENUE AND PURPOSE OF EACH BUDGET FUND BACKGROUND INFORMATION TO SUPPORT THE ANALYSIS OF TAX IMPACT ON SCHOOL CONSOLIDATION SCHEMES IN LA PORTE COUNTY, INDIANA Practically all public school revenues are derived directly or indirectly from some taxing vehicle. State support to local Indiana public schools is appropriated by the Indiana General Assembly from the General Fund of the state of Indiana. Revenues to the state's General Fund include, among other things, dollars generated by sales and use taxes, the individual income tax, the corporate income tax, and revenue from the gaming industry. These four revenue sources account for over 85 percent of the total revenue to the state's General Fund. Locally, various forms of taxation are utilized to generate dollars for schools and other civil units of government. The local taxes are charged, collected, and provided to the governmental unit in a more direct way than state revenues. Examples of local taxes include, but are not limited to, property tax, local option income tax, license excise tax, bank and building and loan association tax, and special, county equalizing school taxes in Lake and Dearborn counties. Other sources of income are non-tax items and include receipts from transfer tuition, property sales, gifts, contributions, and interest on investments. The Property Tax: The property tax represents the largest local revenue generator for governmental units. The tax is charged against real property (land and improvements) and personal property. Inherent in the property tax structure is the need to value property. By statute, all real property in Indiana is to be assessed at Fair Market Value. The tax is charged against the property itself and not against the owner; the property is taxed by the governmental unit within which it is located and the tax is applied at a uniform rate across all parcels within the governmental unit. No local referendum is required for any tax levy, except an excessive property tax levy. All budgets for county taxing units are reviewed by the County Tax Adjustment Board if one is formed in the county and the State Department of Local Government Finance prior to final adoption. Local school boards must advertise proposed budgets, hold public hearings and adopt budgets in public session prior to submitting budgets to the county and state auditor's offices for review. A 1985 law permits counties to abolish the County Tax Adjustment Board. If this is done, the review is conducted only by the Department of Local Government Finance. Property Tax Levy Limitations: In 2007 the Indiana General Assembly enacted legislation which removed all school property tax levies from the General Fund. School corporation General Funds are for wages and benefits for all employees, fixed charges for utilities, and operational expenses for most supplies, equipment and materials. Except for the General Fund, school corporations may have property tax levies for the Debt Service Fund, Capital Projects Fund, Transportation Operating Fund, and School Bus Replacement Fund. A school corporation is authorized a Debt Service Fund levy to meet annual debt service obligations including, lease rental, bond retirement, civil bond obligations, and Veterans' Memorial and Common School Fund repayments. The Debt Service Fund levy and rate must provide enough revenue to meet the annual debt payments of a school corporation. The transportation fund was established by the 1979 General Assembly as a separate fund having taxing authority. This fund is to bear all operating costs related to pupil transportation, plus the purchase of school buses through a separate School Bus Replacement Fund. A five 3 percent per year increase in tax levy for the Transportation Operating Fund is imposed on the school corporation. The Capital Projects Fund (CPF) was also established as a separate fund having taxing authority. The fund is a revision of the purposes provided for under the former Cumulative Building Fund allocating money for specific projects in the future. The Capital Projects Fund had a $1.25 tax rate limit per year but is adjusted for corporation wealth factors as a result of reassessment. The school corporation must file a three-year plan for revenue and expenditures from this fund on an annual basis. The adjustment in the CPF tax rate was made at the time of Indiana’s statewide property reassessment program in 2002. It is intended that revenue will be raised and expended in the year of the requested tax levy. However, school corporations may set aside revenue for future building needs if a future plan has been approved by the state of Indiana. Indiana school finance, and especially the source of revenue for the General Fund of school corporations was dramatically altered in the 2008 session of the Indiana General Assembly. In the future all revenue to support the General Fund will be determined by the Indiana General Assembly and will be funded through state revenue sources. No longer will local property tax revenues be used to fund a school corporation’s General or Pre-school Special Education Fund. In addition, while the Debt Service Fund, that fund used to finance facility enhancement programs, will continue to be funded by local property tax, projects may be subject to a referendum vote of the citizens of the school corporation. /----------------- BUDGET FUND----------------/ Budget General Debt Capital Transportation Bus Pre-School Characteristic Fund Service Projects Fund Replacement Special Fund Fund Fund Education Fund Yes No No No No Yes State Funds Property Tax No Yes Yes Yes Yes Part of General Fund CAPS Yes No Yes Yes Yes Yes Type of CAP General No Tax Rate Appropriation 10% of Fleet General Assembly Per Year Assembly Funds Received Monthly Property Property Property Tax on Property Tax on Monthly Tax on Tax on June June 30, Dec. June 30, Dec. June 30, 30, Dec. 31 31 31 Dec. 31 Salaries, X X Benefits, Fixed Costs, Retire Capital X Debt Facility Updates X and Technology Operations X Fleet X Replacement 4 This analysis now turns to the property tax impact on Prairie Township property tax payers if the township were to consolidate school functions with the South Central Community School Corporation (SCCSC) or with Dewey Township Schools. It must be understood that La Porte County has not completed its property tax reassessment process and thus does not have certified assessed value and tax rate data for 2008, 2009 and 2010. Thus, this analysis will use the 2007 data as its baseline data. Most likely when the reassessment process is completed and up to date the total assessed values will be higher than those used here, while the tax rate data will be lower than those projected here. Indiana has seen a dramatic shift in the funding process for public education in the last three years. Historically, going back to 1973, on average across the state of Indiana some 60% of school General Fund revenue came from local property taxes. Beginning in 1973 Indiana began shifting the revenue sources for schools to state tax sources primarily from sales, personal income, corporate income, and gaming taxes. In 2002 Indiana ordered that property be assessed at its “True Market Value” minimizing the extent of underassessment that was prevalent across the state. This lead to a major decrease in property tax rates across the state. By 2008 the state had assumed 100% of the funding of the General Fund for public school corporations leading to a dramatic decrease in local property tax levies. Thus, in recent years both property tax rates and property tax bills of property owners have declined significantly. As shown in Table 1 below, the total assessed value (taxable wealth for property tax purposes) changed from $93,599,959 to $97,732,310 from 2004 to 2007 for Cass Township, $54,857,729 to $49,465,560 in Dewey Township, $19,543,119 to $19,989,180 in Prairie Township and $203,478,588 to $212,853,510 in the three townships that make up the South Central Community School Corporation. That is an increase in all townships except for Dewey Township. Table 1 Assessed Value for 2004-2007 for SCCSC, Dewey, Prairie, and Cass Townships Assessed Value SCCSC DEWEY TWP PRAIRIE TWP CASS TWP Assessed Value 2004 $203,478,588 $54,857,729 $19,543,119 $93,599,959 Assessed Value 2005 $51,602,595 $19,543,119 $93,022,844 Assessed Value 2006 $196,161,880 $49,612,710 $19,231,750 $90,301,690 Assessed Value 2007 $212,853,510 $49,465,560 $19,989,180 $97,732,310 The tax rate comparison between 2004 and 2007 as shown below in Table 2 indicates the total tax rate increased from $0.8554 to $0.9042 in Cass Township between 2004 and 2007, while declining in Dewey from $2.0855 to $1.4764. The tax rate increase from 2004 to 2007 in Prairie Township was $0.2658 to $0.2990 while in SCCSC the increase was from $1.4299 to $1.4370. These variations were a result of both changes in total levy as well as adjustments in assessed value resulting from reassessment. For our purposes here it is important to understand that: tax rate multiplied times each $100 of assessed value, less credits and exemptions, equals your property tax bill. 5 Table 2 Tax Rates by Fund for 2004 and 2007 for Cass, Dewey and Prairie Townships and SCCSC 2004 Spec General Debt Capital Transportation Bus Pension Total Ed Service Projects Replacement Bonds Rate Cass .0019 0.6310 0.1726 0.0279 0.0220 0.8554 Dewey .0016 1.0217 0.9620 0.1002 2.0855 Prairie .0019 0.0549 0.2090 0.2658 SCCSC .0019 0.6406 0.3642 0.2286 0.1606 0.0340 1.4299 2007 Spec General Debt Capital Transportation Bus Pension Total Ed Service Projects Replacement Bonds Rate Cass .0017 0.6841 0.1781 0.0309 0.0094 0.9042 Dewey .0016 1.0841 0.2032 0.1267 0.0608 1.4764 Prairie .0018 0.0662 0.2310 0.2990 SCCSC .0017 0.5992 0.3290 0.2654 0.1830 0.0186 0.0401 1.4370 Using the assessed value figures presented in Table 1 for 2007, and considering the elimination of local property tax from the Pre-school Special Education and General Fund of the school corporations, if SCCSC and Prairie Township were to join together, the total assessed value of the newly configured school corporation would be $232,842,690 ($212,853,510 plus $19,989,180). This represents an approximately 9.4% increase in the total assessed value for a combined SCCSC and Prairie Township corporation. If tax levies remain constant for Debt Service, Capital Project, and the two transportation funds, the total school property tax rate would decrease by 9.4% in the SCCSC or from $0.8361 to $0.7575. As shown in Table 3 this would create an increase in total school property tax rate for Prairie Township’s tax payers from $0.2310 to $0.7575 or $0.5265 over current estimates for 2007. Table 3 Estimated Tax Rate Change as a Result of the State of Indiana Assuming All Pre- school Special Education and General Fund Revenue ESTIMATE Spec General Debt Capital Transportation Bus Pension Total Rate 2009 Ed Service Projects Replacement Bonds Rate Change from 2007 Cass X X 0.1781 0.0309 0.0094 0.2184 -0.6858 Dewey X X 0.2032 0.1267 0.0608 0.3907 -1.0857 Prairie X X 0.2310 0.2310 -0.0680 SCCSC X X 0.3290 0.2654 0.1830 0.0186 0.0401* 0.8361 -0.6009 *Includes Pension Bond Payments Using the assessed value figures presented in Table 1 for 2007, and considering the elimination of local property tax from the Pre-school Special Education and General Fund of the school corporations, if Prairie Township and Dewey Township were to join together, the total assessed value of the newly configured school corporation would be $69,454,740 ($49,465,560 plus $19,989,180). This represents an approximately 40.4% increase in the total assessed value for a combined Prairie and Dewey Township corporation. If tax levies remain constant for Debt Service, Capital Project, and the two transportation funds, the total school property tax rate would decrease by 40.4% in Dewey Township from $0.3907 to $0.2329. As shown in Table 3 6 this would create an increase in total school property tax rate for Prairie Township’s tax payers from $0.2310 to $0.2329 or $0.0019 over current estimates for 2007. Beginning with the 2009 calendar year budgets for Indiana school corporations there is no longer local property tax support for the Pre-School Special Education and School General Funds. All revenue for these funds now comes from state revenue sources through the Annual Budget of the State of Indiana. Thus, a dramatic decrease in property tax levies and thus property tax rates and bills has been significant for Indiana tax payers. The necessity for securing more funds for education, be it from state revenue sources or local revenue sources, will continue as long as any or all of the following occur: 1. Inflation continues. 2. Pupil population increases. 3. School building costs continue to increase. 4. Educational program demands increase. 5. Teachers become more experienced and add to their education. 6. Student drop-out rates decrease. 7. Increased length of school year. 8. Support services increase. 9. Fixed costs of utilities continue to rise. 10. Continued improvement in public school productivity. Thus, the projections presented above reflect the present based on old 2007 data and suggest nothing about the educational needs of students in the future. While a consolidation of SCCSC and Prairie Township reflects a nearly 53 cent increase in tax rates for Prairie Township tax payers, a consolidation with Dewey reflects less than a 1 cent increase in tax rates for Prairie Township. However, neither projection reflects future considerations. This analysis will now turn to those considerations. CURRENT DEBT OBLIGATIONS: Table 4 presents the outstanding principal debt of Dewey Township and the SCCSC as of January 1, 2011. Dewey Township has just $500,000 capital debt outstanding that will retire in 2020, while the SCCSC has three issues outstanding totaling $7,885,000 that do not retire completely until 2028. This includes some $925,000 in outstanding Pension Bonds not connected with capital debt. Table 4 Current Principal Debt Outstanding As of January, 2011 DEBT SERVICE PRINCIPAL DEBT DATE OF PAYOFF OBLIGATION OUTSTANDING 1/30/11 Dewey Township $500,000 2020 SCCSC $740,000 2017 $6,220,000 2028 $925,000 2027 SCCSC TOTAL $7,885,000 Source: School Corporation Records 7 Across Indiana a capital debt to assessed value relationship of 10 to 15 percent is considered financially manageable for property tax payers. With current capital debt to assessed value ratio of 3.7%, the SCCSC has considerable debt leeway to accommodate planning for the future of educational facilities. In other words, they are not heavily in debt for facilities. To be sure any school corporation will need to proceed with careful planning to meet the educational facility needs of the corporation in the most effective and efficient manner possible given current economic conditions. Most communities expect quality education and equity in terms of educational facilities. Continued student population stability to slight decline seems to be certain in the districts considered here, but facilities will require modernizing and providing additional school facilities into the future. COMMUNITY POPULATION CHANGES AND PROJECTED STUDENT ENROLLMENTS: Table 5 presents the total population of La Porte County for 1970 to 2000 with total population estimate for 2009. Student population in a corporation is more critical now that school General Fund revenues are largely determined by number of students served. Table 5 Total Population for La Porte County, 1970-2000 with Estimate for 2009 Year 1970 1980 1990 2000 Estimate 2009 Population 105,342 108,632 107,066 110,106 111,063 Source: U.S. Census Bureau The population of La Porte County has increased from 105,342 in 1970 to 110,106 in 2000 for an increase of 4,764 people or 4.5%, while Indiana was growing by 17.0%. La Porte County continues to decline in its relative population relationship with the other 91 counties in Indiana. In 1990 La Porte County was the 13th largest county in Indiana. In 2009 La Porte County was the 15th largest in Indiana in terms of total population and continues on a slight declining curve such that the 2025 projection of total population projects it to fall to the 16th largest in the state. Projected population by age cohort in La Porte County is presented in Table 6. Table 6 Projected Population by Age Cohorts, 2005-2025 for La Porte County YEAR AGE AGE AGE AGE AGE AGE 65+ TOTAL 0-4 5-19 20-24 25-44 45-64 2005 6,776 22,161 7,140 30,494 28,890 15,051 110,512 2010 6,644 20,997 6,524 29,802 30,450 15,567 109,984 2015 6,483 19,929 6,474 29,334 30,177 17,433 109,830 2020 6,522 19,209 6,116 29,829 28,879 20,101 110,656 2025 6,629 19,001 5,766 29,171 28,193 22,747 111,507 County % -2.2% -14.3% -19.2% -4.3% -2.4% 51.1% 0.9% Change State % 7.3% -0.3% -1.3% 2.3% 6.2% 59.1% 9.8% Change Source: Indiana Business Research Center The Indiana Business Research Center projects La Porte County will grow very slightly 8 from 110,512 to 111,507 or by just 995 people or 0.9% during the first two and one-half decades of the 21st Century, while their projection for growth for all of Indiana is 9.8%. Table 6 shows the projected growth by age cohort for La Porte County for 2005, 2010, 2015, 2020 and 2025. It is noted that while the total population is projected to increase from 110,512 in 2005 to 111,507 in 2025, an increase of 0.9%, the age 5- 19 school age cohort is expect to decrease by 14.3% while the pre-school 0-4 age cohort is projected to decrease by 2.2%. This compares to a statewide projected increase of 7.3% for the 0-4 cohort and a decline of 0.3% for the 5-19 age cohort. The age 65 and older group is projected to increase by 51.1% in La Porte County from 2005 to 2025 while the statewide increase in this age cohort is projected to increase 59.1%. Clearly the older age cohorts will increase in number more dramatically than the younger cohorts in future decades. The median age in La Porte County in 2005 was 38.0. The median age for the county is projected to be 39.0 in 2010, 39.8 in 2015, 40.8 in 2020 and 41.9 by 2025. All of this points to smaller student populations in the future for the total county and each of the school districts examined in this study. Table 7 presents the total population of the political subdivisions of La Porte County for 1970 through 2000 with number and percent of change since 1970. From Table 7 it is noted that Clinton, Hanna and Noble townships, those that make up the SCCSC increased by 1,009 people from 1970 to 2000 while Cass Township grew by 204, Dewey declined by 183 and Prairie Township declined by 11 people during the period. Michigan Township in the county experienced major decline in total population during the period dropping a significant10,809 people or 26.9% of its population. Table 7 Total Population of Political Subdivisions of La Porte County for 1970-2000 with Number and Percent of Change since 1970 and Population Estimates for 2008 Township 1970 1980 1990 2000 Number Percentage 2008 Change Change Cass 1,473 1,772 1,690 1,677 204 13.8 1,865 Center 24,437 22,763 23,438 24,405 -32 -0.1 23,878 Clinton 890 969 1,034 1,359 469 52.7 1,522 Cool Spring 10,654 14,679 14,492 14,910 4,256 39.9 14,776 Dewey 1,153 1,260 1,179 970 -183 -15.9 1,101 Galena 1,148 1,553 1,543 1,710 562 49.0 1,777 Hanna 755 858 930 993 238 31.5 1,103 Hudson 1,538 1,682 2,151 1,909 371 24.1 1,910 Johnson 233 228 229 221 -12 -5.2 304 Kankakee 2,662 3,483 3,361 4,307 1,645 61.8 4,440 Lincoln 1,596 1,739 1,862 1,835 239 15.0 1,893 Michigan 40,135 34,653 31,196 29,326 -10,809 -26.9 28,861 New Durham 4,234 4,413 6,695 7,202 2,968 70.1 7,306 Noble 1,261 1,350 1,333 1,563 302 23.9 1,685 Pleasant 2,330 3,770 2,897 3,125 795 34.1 3,226 Prairie 192 194 224 181 -11 -5.7 283 Scipio 2,453 3,336 3,490 4,269 1,816 74.0 4,396 Springfield 4,182 4,968 4,600 4,742 560 13.4 4,831 Union 2,255 2,757 2,505 2,484 229 10.2 2,543 Washington 847 942 826 1,103 256 30.2 1,231 Wills 914 1,263 1,291 1,827 913 99.9 1,957 Totals 105,342 108,632 107,066 110,106 4,764 4.5 110,888 The student enrollment impact of this general population change in La Porte County is 9 demonstrated in Table 8. Table 8 presents the student population of the seven La Porte County school corporations for 1998-99, 2003-04 and 2008-09 school years. Table 8 rank orders the seven school corporations by percent of student population increase over the past five years (far left column) and provides the rank order of the corporations for percent of student population increase over the past five years (far right column). The fifth column shows the number and percentage change for the full ten-year period. Fastest growing among the seven school corporations was MSD New Durham Township at 237 students or 36.0% over the ten years and 116 students or 14.9% over the past five years. New Prairie United gained 343 students or 14.3% over the past five years. Michigan City Area Schools lost 243 students over the ten year period but regained 77 students over the past five years. Table 8 La Porte County School Corporations Student Enrollment 1998, 2003 and 2008, Rank Ordered by Percent of Change from 2003-04 to 2008-09 with Number and Percentage Change the Past Five and Past Ten Years SCHOOL STUDENTS STUDENTS STUDENTS NUMBER NUMBER AND % CORPORATION 1998-1999 2003-2004 2008-2009 AND % CHANGE 2003- RANKED ORDERED BY CHANGE 2008 AND PERCENTAGE 1998-2008 RANKORDER GROWTH 2003-2008 LAST FIVE YEARS 1. MSDNDT 658 779 895 237 36.0% 116 14.9% 2. New Prairie United 2,545 2,404 2,747 202 7.9% 343 14.3% 3. Dewey Township 199 149 168 -31 -15.6% 19 12.8% 4. South Central CS 885 830 855 -30 -3.4% 25 3.0% 5. La Porte Community 6,361 6,301 6,455 94 1.5% 154 2.4% 6. Cass Township Schools 229 243 247 18 7.9% 4 1.6% 7. Michigan City Schools 7,170 6,761 6,927 -243 -3.4% -166 -2.5% Area Totals 18,047 17,467 18,294 247 1.4% 827 4.7% State Totals 988,114 1,010,659 1,046,263 58,149 5.9% 35,604 3.5% Area as % of State 1.8% 1.7% 1.7% 0.4% 2.3% Enrollments for the past five years are presented in Table 9 below for Cass, Dewey, and Prairie townships and the SCCSC. Table 9 Student Population 2005-2009 for Cass, Dewey, Prairie Townships and SCCSC. School District 2005 2006 2007 2008 2009 Change 2005-09 Cass Township 292 287 299 310 298 +6 Dewey Township 142 146 134 126 119 -23 Prairie Township 29 30 35 37 37 +8 South Central Community School Corporation 894 880 860 855 873 -21 Totals 1,357 1,343 1,328 1,328 1,327 -30 The districts have lost a total of 30 students during the period studied which is consistent with the countywide demographic data presented above. In addition it is noted that resident live births in La Porte County have decreased from an average of 1,500 per year in the early 1990’s to approximately 1,350 per year during recent years, a decrease of about 10% per year. Given the fact that future school funding from the state of Indiana will be based on number of students enrolled, the declining student population together with the likelihood of continued student population declines will have financial and program implications in the future for the school districts studied. 10 STATE TUITION SUPPORT: The state of Indiana supports the General Fund of each school corporation through a State Tuition Support formula adopted bi-annually by the Indiana General Assembly. That formula is based primarily on the number and nature of students to be served, the measure of local wealth of the district, past revenues received, and the complexity of the student population in terms of socio-economic factors and educational needs. Table 10 presents the State Tuition Support revenues for each of the districts in this study for the 2010 calendar year. Table 10 Total State Tuition Support for Cass, Dewey, Prairie Townships and SCCSC Calendar Year 2010 Tuition Support Category Cass Twp Dewey Twp Prairie Twp SCCSC Basic Tuition Support $1,535,854 $1,174,162 $450,415 $4,033,850 Academic Honors Grant -0- $9,000 -0- $17,100 Special Education Grant $82,738 $47,026 $16,611 $269,941 Vocational Grant $1,500 $19,950 -0- $47,900 Prime Time Grant $19,397 $19,642 -0- $125,746 Restoration Grant $57,440 $104,960 $35,543 $139,913 Small Schools Grant $27,073 $10,829 -0- -0- Total State Tuition Support $1,724,002 $1,385,568 $502,569 $4,634,450 Number of Students 298 119 37 873 Total State Tuition Support Per Student $5,785 $11,643 $13,583 $5,309 Given the economic demographics of the districts examined, the manner the state uses in the calculation of total state tuition support, and the public policy direction of the state of Indiana to decrease the expense of supporting small school districts, it is likely that the students of Prairie Township will initially generate about the same numbers of total state tuition support per student as is being received currently by that school district. That is to say about $5,309 for SCCSC and $11,643 for Dewey Township. However, the likelihood that the state tuition support formula will be amended in the future stands the chance that the $11,643 per student in Dewey Township will be reduced. The SCCSC has been accepting transfer tuition on Prairie Township students for a number of years. Those tuition charges have been $4,859 in 2008, $4,963 in 2007, $4,435 in 2006, $4,984 in 2005 and $5,112 in 2004. If Prairie Township consolidates with an adjoining school district, the students in Prairie Township are to have a choice in school attendance and the provision that their tuition would be paid and they will be transported to the school of choice. TRANSPORTATION: Current transportation costs for Cass, Dewey, Prairie townships and SCCSC are shown in Table 11 below. If Prairie Township consolidates with an adjoining school district, the students in Prairie Township are to have a choice in school attendance and the provision that they will be transported to the school of choice. 11 Table 11 Transportation Cost per Mile and Annual Transportation Expenditure School Corporation Calculated Cost Per Mile Total Annual Expenditure Cass Township $3.28 / mile $125,793 Dewey Township $2.49 / mile $ 99,230 Prairie Township $2.11 / mile $ 41,704 SCCSC $4.22 / mile $423,038 Source: School Corporation Data SCHOOL TAX BILL IMPACT ON PRAIRIE TOWNSHIP: The tax rate projections generated by this study suggest a $0.5265 tax rate increase in Prairie Township in a consolidation with SCCSC and just a $0.0019 tax rate increase in a consolidation with Dewey Township. Thus, the tax levy, or tax bill, impact in a consolidation with SCCSC is much more substantial than a consolidation with Dewey Township as demonstrated below. According to the 2000 census, the total population of Prairie Township in 2000 was 181 people occupying 72 households with a median home value of $102,500 compared with a medium home value of $94,300 statewide. 48.4% of the homes were valued under $100,000, 32.3% were valued between $100,000 and $150,000 while just six homes were valued over $150,000. Some 68% of the households were family households with approximately 35% including children under the age of 18, nearly the same as found across the state of Indiana. 81% of the Prairie Township households were owner-occupied compared to 71.4% statewide. The occupations of the residents of Prairie Township reflect 27.8% employed in management and professionally related occupations, 23.5% in construction, 20.9% in production, 13.0% in sales and office, 10.4% in service, and 4.3% in farming. Some 92.4% of the population over age 25 has a high school diploma compared with 82% of the population statewide. The median family income in Prairie Township was $51,667 compared with $41,567 statewide, $10,100 greater than the statewide median. Thus, the Prairie Township population is better educated, more family oriented, making more money and living in more expensive homes than is typical across the state of Indiana. This study projects a tax rate increase of $0.5265 cents per $100 of assessed value if Prairie Township consolidates with SCCSC and a $0 .0019 cent increase with Dewey Township. The following calculator of the property tax increase in Prairie Township of consolidation with SCCSC is based on a home valued at “True Market Value” for property tax purposes of $100,000 and follows the State Assessment Report Form 53569 which you receive with your tax bill. It assumes only Homestead and Supplemental Standard Deductions. Column four provides for the calculation of your projected tax bill based on your latest assessment for homes, farms and/or business property. 12 Table 12 SCHOOL PROPERTY TAX IMPACT OF CONSOLIDATION OF PRAIRIE TOWNSHIP AND SCCSC LINE from Calculate Your State Form Prairie Twp Home Tax Bill 53569 Assessment/Deduction Category Valued at $100,000 Increase LINE 2 Total Gross Assessed Value of Property $100,000 LINE 2a Minus deductions for: Homestead Deduction $45,000 Mortgage Deduction Blind/Disabled Geothermal Over 65 Veterans Abatement Enterprise Zone Investment LINE 2b Supplemental Standard Deduction $35,000 LINE 3 Sub-total Net Assessed Value of Property $20,000 (Line 2 minus Lines 2a and 2b) LINE 3a Tax Rate Increase for Prairie Township $0.5265* $0.5265 per $100 ( Estimated per $100 of Assessed Value) LINE 5 Additional Property Tax Liability $105.30 (Line 3 X Line 3a divided by 100) *Based on Combined Net Assessed Value of SCCSC and Prairie Township of $232,842,690. **Each additional $25,000 on Line 3 adds $131.63 to the annual property tax bill. The impact on a home valued for property tax purposes at $100,000, with the Homestead and State Supplemental Standard Deduction would be $105.30 with an additional $131.63 for each $25,000 of assessed value over $100,000 in a consolidation with SCCSC. The impact in a consolidation with Dewey Township would be $0.38. A total of 31 farms are included in the property tax assessment process in Prairie Township. It is reported that a medium to large farm in Prairie Township would include an average of 234 acres valued for property tax purposes at an average of $841 dollars per acre. The range for total acreage is 181 acres to 452 acres with taxable values ranging from $761 per acre to $878 per acre in assessed value. That would total an average of $196,794 of assessed value for property tax purposes. If the increase in tax rate, as estimated in this study, is $0.5265 per $100 of assessed value in a consolidated Prairie Township and SCCSC, the increase in the property tax bill for an average farm in the township would be approximately $1,035 per year. Using the fourth column in the calculator above would yield the estimated tax increase for each of the 31 farms in the township.
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