School tax components explained

Terry RogersEducation, Milford Headline Story

In preparation for discussion about school tax rates for the upcoming year, Dr. Sara Croce provided the Milford School District Board of Education with details on the main components that make up school taxes. Each rate is determined separately and provides funding for different district needs.

“We are still waiting through the state budget year process, so the final operating bill has not been completed, nor has the final bond bill which affected a couple of components here,” Dr. Croce said. “The current expense tax rate is the tax rate that provides us our local operating revenue. It covers things like teaching materials, technology, insurance, athletic programs, and also our local salary expenditures. We had a current expense referendum on October 6, 2015. And that rate will remain until there is an additional referendum for current expense. So that will remain unchanged this year.

Croce stated that the current tax rate for Sussex County was $3.218 per $100 of assessed value while Kent County property owners paid $1.139. The difference in the two rates is due to an equalization formula used by the state so property owners in each county pay the same in taxes on a home of the same value. Kent County has assessed property more recently than Sussex which is why their values are lower.

“Our debt service tax rate provides revenue and interest to pay principal and interest payments on our bonds. So, we are in the middle of our first bond sale in quite some time, but as we discussed during the referendum process, we also have one expiring, so I anticipate that that rate will be going down just slightly though we have sold our first bond for just over a million dollars,” Dr. Croce explained.

The bond sales are to be used for the current Milford Middle School renovation project which was approved by referendum in October 2021.

“The match tax component has several possibilities to match,” Dr. Croce said. “Right now our district is only matching the minor capital improvement tax and that provides us funding for buildings and grounds, repairs and things throughout the district. There is discussion at the state level about increasing the allocation for minor capital improvements and the various uses of those funds. So, we’re keeping a close eye on that and hoping that we can get additional funding in that way.  And then finally, the tuition tax covers costs for the Milford school districts, especially students with special needs, whether they be in our district or in placements outside of the district. They’ve gone through that process with the State of Delaware. And then once again we’re not assessing the capitation tax.”

School Board Member David Vezmar asked if the increase in funding for minor cap, since it was a match tax, would result in the district having to increase that tax in order to get funding from the state.

“Potentially but there’s also a partner bill that is requesting that,” Dr. Croce said. “So, right now the minor capital improvement match is 60% state 40% local for all districts on it. Subsequently, there’s also an equalized formula for debt service. So right now, state pays 75% of our construction projects and we only pay 25%. So, there is a partner Bill, that is suggesting that they equalize the minor capital improvement match as well. So instead of 40%, we would only match 25% and still receive our 75% from the state. So again, all moving parts here as we go through the end of the legislative process.”

Tax rates for the district are usually approved in June as they must be submitted to Kent and Sussex County in time for property tax billing.


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