MSD Holds Public Tax Rate Meetings

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By Terry Rogers

On Thursday, June 8, Milford School District held the first of three meetings to provide information to taxpayers regarding the 2017-18 district tax rate. The second meeting was held Monday, June 12 and the third will be held on Saturday, June 17 at 9 AM in the Milford High School cafeteria . The meetings were designed to provide more transparency regarding how the tax rate is broken down and potential adjustments that could occur in the next school year.

“There is still a lot of uncertainty as far as the state is concerned,” Superintendent Kevin Dickerson said. “We believe the state budget will not be set until July 10, the same day as our board meeting that month. It is at that meeting that we will vote to approve the tax rate because the information must be sent to each county by July 13. We had hoped to have more answers by June 5, but the state has given us no answers.”

 

According to Sara Croce, Chief Financial Officer at Milford School District, the district could lose as much as $1 million in funding if the State budget remains like it is.  She presented a slide presentation that described each portion of the tax rate. School taxes are broken down into four portions. Current expenses are used to pay operating costs at the district such as the district share of teacher salaries, books, supplies and building operations. Tuition is used to pay out-of-district fees for students who have special needs. Debt Service is used to pay down bond debt that is incurred as a result of borrowed money used to build or expand schools. Match tax is used for specific costs and is broken down into Minor Capital Improvements, Technology and Educational Specialists. Currently, Milford only charges residents a match tax for Minor Capital Improvements as that is required in order for the State to pay their share of expenses that qualify. Current expenses cannot be changed without referendum, but the district can adjust the tuition, match tax and how debt service is paid without referendum.

In 2016, due to unexpected costs for students who were receiving out-of-district services, the District significantly increased the tuition tax rate, upsetting many property owners who were not made aware of the increase. Since there was also a referendum that passed in October 2015, many felt deceived about how much their taxes would rise. Dr. Dickerson and Ms. Croce explained that the district could not have known about the increased cost prior to the bills arriving at the end of the year.

“The schools that provide special placements for students with special needs set the rates,” Ms. Croce explained. “They are permitted to increase them by ten percent without requesting permission from the legislature. Anything above 10 percent must be approved by the Department of Education. In several cases, we saw costs from these schools rise between 23 and 32 percent last year. In addition, the special needs schools are permitted to go back and increase rates retroactively, which means we received bills that not only adjusted our costs for 2016 but also for years before that, adding to the unexpected costs.”

There was a suggestion from the audience that the old Middle School building, which is sitting vacant, be converted to a special needs school in order to reduce the number of children being sent to out-of-district schools. Dr. Dickerson said that he was planning to put a committee together of community members, district staff and parents to review whether the Middle School could be renovated for that purpose. It was pointed out to Dr. Dickerson that the public was told that the school could not be renovated as the State felt it had deteriorated to the point they would not pay the state share for maintaining it any longer and that was why the district went to referendum to build a new school. A referendum to build a new school on the Middle School property and another to build a new high school on property across from Redner’s on Route 113 both failed.

“Maybe I am just too stubborn to believe that,” Dr. Dickerson said. “I think it is worth looking into. I do know that the renovations will be extensive should we decide to go that route. But, we have an empty building and we need to do everything we can to lower our tuition costs. If this is feasible, I think it is a good option.” Ms. Croce said that the district had worked harder over the 2016-17 school year to provide more services to students within the district in order to lower costs.

During the breakdown of each school tax portion, Ms. Croce provided information on the rate that is being proposed for 2017-2018. If adopted, rates will be lower for the upcoming school year than they were in 2016-17. The current expense portion will remain the same at $3.2188 per $1,000 of assessed value in Sussex County and $1.1390 in Kent County. The tuition rate will be lowered to $1.116 in Kent County and $0.4110 in Kent County, down from $1.4519 and $0.5137 respectively. The Match Tax for Minor Capital Improvements will lower to $0.0805 in Sussex but rise slightly to $0.0825 in Kent.

“The board has decided to take an aggressive approach to debt service,” Ms. Croce explained. “We have been accumulating Kent County Impact Fees and we will use them to help lower the property rate. It will not allow us to pay down the debt faster, but will help us provide property owners with a lower tax rate for debt service.” The debt service rate for school tax will lower to $0.5290 in Sussex and $0.1872 in Kent.

Ms. Croce said that these rates could mean that residents would see lower school taxes in their next property tax bill, but that it all depended on what the State did. The State has proposed that transportation costs, which are currently paid 90 percent by the State and 10 percent by the district, could change to an 80/20 split. This would increase the amount the District has to pay by $277,212 for transportation. In addition, the State has proposed reducing Education Sustainment funding which will add $678,458 to district expenses. To offset these increases, the State proposes allowing districts to add a match tax for those costs.

“We could only enough in match taxes to cover the $678,458 and $277,212 that will be added to the budget,” Ms. Croce said. “Right now, we can’t tell anyone how much that could increase taxes. We hope that even if we have to add the match taxes, it will not be a significant amount, but there is no way we can know that until the budget is finalized at the state level.”

Judy Passwaters, a member of the audience, asked why the district no longer charged a capitation tax. “We used to have a capitation tax,” Ms. Passwaters, who retired from the district, said. “It was very difficult to collect and a lot of people complained about it. But it was a way for non-property owners to pay for schools. Anyone over 18 had to pay $10, although it may have gone up to $18 at one point, even if you did not own property tax.” Dr. Dickerson explained that the capitation tax was eliminated in 2009 as part of a referendum. To add the capitation tax, the district would have to go out for referendum to replace it. Ms. Croce explained that it was not an easy tax to collect and it was difficult to get the names of people who were not property owners. This could lead those who owned more than one property to get multiple tax bills for capitation. She said that the collection problems and the concern that one person could be charged a double tax rate was one of the reasons the district chose to eliminate it.

Ms. Croce said that there was currently no plan to add the technology or specialist match taxes to the tax rate, but the district may not have a choice when it comes to education sustainment or transportation due to the significant increase that could make it difficult to balance the budget.

See the FULL presentation at FY18 Board-Public Tax Presentation 6-5-17 – Final 6-12-17.

 

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