Note that some people were provided a link that was somewhat incorrect. To get the current and full blog page including newer postings, please go to http://www.swingingsammy.com/schools/page1/page1.php.

Now that the school year has started, let's take a look ahead to next year's 2008-2009 Cheltenham School District Budget from the perspectives of state funding and Pennsylvania imposed limits on public school related local tax increases.

In terms of Pennsylvania funding, a key basis upon which the PA Department of Education calculates the amount of state funding assistance to school districts is through the use of three ratios as follows. More information on these ratios is available at www.pde.state.pa.us/k12_finances/lib/k12_finances/AR_Calc_Methodology.pdf.

Market Value Aid Ratio (MV AR). The Market Value (MV) is the value of taxable real estate as certified by the State Tax Equalization Board. The MV AR is a ratio that compares a school district's market value to that of the state's by dividing a weighted average daily membership (students) figure into a school district's market value, and the entire state's market value. A higher MV AR would indicate more state aid on a per student basis. For 2007-2008 the Cheltenham School District had the 454th lowest MV AR of the 501 school districts in Pennsylvania. For purposes of the MV AR calculation, the Cheltenham School District derives a benefit from the high amount of non-taxable real estate (i.e. properties comprised largely by non-profit ownership), as these properties are not figured into the calculation, resulting in a lower MV total and a higher MV AR number than if those properties had been included in the MV AR calculation. A lower MV AR indicates a higher amount of per capita market value on a weighted per student basis.

Personal Income Aid Ratio (PI AR). The Personal Income (PI): is the value of personal income, excluding out-of-state income, as reported on PA-40 income tax form. The PI AR is a ratio that compares a school district's personal income value to that of the state's by dividing a weighted average daily membership (students) figure into a school district's personal income value, and the entire state's personal income value. A higher PI AR would lead to more state aid on a per student basis. For 2007-2008 the Cheltenham School District had the 442nd lowest MV AR of the 501 school districts in Pennsylvania. A lower PI AR indicates a higher amount of per capita personal income on a weighted per student basis.

Market Value/Personal Income Aid Ratio (MV/PI AR). The Market Value/Personal Income Aid Ratio (MV/PI AR) reflects a combined weighted market value at (0.6) and a weighted personal income value at (0.4) for a school district. A higher MV/PI AR would lead to more state aid on a per student basis. For 2007-2008 the Cheltenham School District had the 464th lowest MV AR of the 501 school districts in Pennsylvania. A lower MV/PI AR indicates a higher amount of per capita market value/personal income on a weighted per student basis.

The amount of state funds for the Cheltenham School District will not be known for some time as Pennsylvania still needs to approve a budget for 2008-2009 and allocate funds to the various school districts.

Pennsylvania also calculates a base index for school district budget increases based on the MV/PI AR. As noted on http://www.pde.state.pa.us/proptax/cwp/view.asp?a=3&q=111849 for 2008-2009 the figure is 4.4 percent for most school districts including the Cheltenham School District. The 4.4 percent figure is the amount property taxes or other school taxes can increase from the 2007-2008 budget except for 10 exception areas that allow for potentially greater increases above the 4.4 percent amount. The 10 exception areas in part include:

• Debt on an existing school construction projects.
• Special education costs that increase by more than the index.
• Health care benefits that rise faster than the index in contracts in effect on January 1, 2006.
• Increases in retirement payments that rise faster than the index.

More details on exceptions is available at http://www.pde.state.pa.us/proptax/lib/proptax/FAQ_Act1_Taxpayers_11-15-06.pdf . If property tax rates or other school taxes need to increase by more than 4.4 percent for the 2007-2008 budget (except as allowed in greater amounts per approved exceptions), a district referendum would need to be approved by voters.

What does all of this mean? It is likely that the Cheltenham School District taxes will increase by 4.4 percent for 2008-2009 plus an additional amount under any referendum exceptions approved by the PA Department of Education. For 2007-2008, 210 school districts out of 501 total state-wide sought and were given referendum exceptions by the PA Department of Education. This included $3,629,340 worth of referendum exceptions for the Cheltenham School District an amount equal to 1.9841 mills. The final adopted budget included a total 8.49 percent Cheltenham School District real estate tax increase comprised of the index rate for 3.4 percent, and the value of exceptions. The $3,629,340 in exceptions were for:

• School Construction Grandfathered Debt $1,067,316
• Special Education Expenditures $1,522,844
• Health Care-Related Benefits $873,182
• Pension Obligations $165,998.

Based on the 2007-2008 Cheltenham School District budget and the impact of the approved referendum exceptions, and the likelihood for the same or greater increases in budget areas that received received referendum exceptions during 2007-2008, in the 2008-2009 budget it would appear that the Cheltenham School District could have an increase of over 8 percent (4.4 percent in the state index rate, and potential exceptions), unless significant savings are identified in the budget for 2008-2009.

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