From Bob Erb
To the editor:
Recent assessment notices for Monroe residents have some asking questions about how this might affect taxes for municipalities and schools.
For schools, budgets are based on equalized property value, not assessed value. Municipalities provide an estimate of equalized value to the Department of Revenue (DOR), which then assigns equalized value to each municipality based on the relative value of its property compared to the rest of the state. The DOR, in the end, sets these values.
Each school sets its tax levy based on the number of students in the district and is allowed an amount of revenue per pupil for each student. So, regardless of assessments, enrollment drives the formula.
Schools divvy up their tax levy to municipalities based on their share of equalized value, not assessed value. The main reason school districts do this is to prevent a municipality from ‘dodging’ its fair share of taxes by purposely undervaluing property, causing towns acting honestly to pay more taxes as a result.
Assessments have nothing to do with how a school’s tax levy is determined—this is set by a state formula based on enrollment. Equalized values, not assessed values, are used to split the tax levy across the various municipalities. A referendum can add additional levies if approved by the public, but higher assessments don’t automatically mean higher taxes for schools.
Where assessed values matter is when a municipality takes its share of a district’s taxes and assigns it to its taxpayers. If, for example, in Monroe, everyone’s assessment went up 20 percent, the mill rate, or tax per $1,000 of assessed property value, would drop 20 percent and the net tax effect would be zero. However, if only two people lived in the city and one person’s assessment went up 20 percent and the others didn’t change, then the first person would see an increase in their tax bill and the second person a decrease.
To say this is complicated is an understatement, and after dealing with these formulas for 12 years on the Monroe School Board, I hope this helps shed some light on how school funding works.