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                    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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