Mount Carmel Area School District - Real Estate Taxes - Act 1 Index

Act 1 Index

The Act 1 of 2006 Index regulates the rates at which each school district can raise property taxes in Pennsylvania. Districts are not allowed to raise taxes above that index unless they allow voters to vote by referendum, or they seek an exception from the state Department of Education. The base index for the 2011–2012 school year is 1.4 percent, but it can be adjusted higher, depending on a number of factors, such as property values and the personal income of district residents. Act 1 included 10 exceptions: increasing pension costs, increases in special education costs, a catastrophe like a fire or flood, increasing rising health care costs for contracts in effect in 2006 or declining local tax bases. The base index is the average of the percentage increase in the statewide average weekly wage, as determined by the PA Department of Labor and Industry, for the preceding calendar year and the percentage increase in the Employment Cost Index for Elementary and Secondary Schools, as determined by the Bureau of Labor Statistics in the U.S. Department of Labor, for the previous 12-month period ending June 30. For a school district with a market value/personal income aid ratio (MV/PI AR) greater than 0.4000, its index equals the base index multiplied by the sum of .75 and its MV/PI AR for the current year. With the 2011 state education budget, the General Assembly voted to end most of the Act 1 exceptions leaving only special education costs and pension costs. The cost of construction projects will go to the voters for approval via ballot referendum.

The School District Adjusted Index for the Shamokin Area School District 2006–2007 through 2011–2012.

• 2006–07 – 5.7%, Base 3.9%
• 2007–08 – 5.0%, Base 3.4%
• 2008–09 – 6.5%, Base 4.4%
• 2009–10 – 6.1%, Base 4.1%
• 2010–11 – 4.3%, Base 2.9%
• 2011–12 – 2.1%, Base 1.4%
• 2012-13 - 2.6%, Base - 1.7%
• 2013-14 - 2.6%, Base - 1.7%

For the 2012-13 budget year, Mount Carmel Area School Board did not apply for exceptions to exceed the Act 1 Index. For 2012-2013, 274 school districts adopted a resolution certifying that tax rates would not be increased above their index; 223 school districts adopted a preliminary budget leaving open the option of exceeded the Index limit. For the exception for pension costs, 194 school districts received approval to exceed the Index. For special education costs, 129 districts received approval to exceed the tax limit. For the exception for pension costs, 194 school districts received approval to exceed the Index. For special education costs, 129 districts received approval to exceed the tax limit.

For the 2011-12 school year, the Mount Carmel Area School Board applied for 2 exceptions to exceed the Act 1 Index: pension costs and special education costs. Each year the Mount Carmel Area School Board has the option of adopting either 1) a resolution in January certifying they will not increase taxes above their index or 2) a preliminary budget in February. A school district adopting the resolution may not apply for referendum exceptions or ask voters for a tax increase above the inflation index. A specific timeline for these decisions is publisher each year by the Pennsylvania Department of Education.

According to a state report, for the 2011-2012 school year budgets, 247 school districts adopted a resolution certifying that tax rates would not be increased above their index; 250 school districts adopted a preliminary budget. Of the 250 school districts that adopted a preliminary budget, 231 adopted real estate tax rates that exceeded their index. Tax rate increases in the other 19 school districts that adopted a preliminary budget did not exceed the school district’s index. Of the districts who sought exceptions 221 used the pension costs exemption and 171 sought a Special Education costs exemption. Only 1 school district sought an exemption for Nonacademic School Construction Project, while 1 sought an exception for Electoral debt for school construction.

Mount Carmel Area School Board did not apply for exceptions to exceed the Act 1 index for the budgets in 2009-10, nor in 2010-11.

In the Spring of 2010, 135 Pennsylvania school boards asked to exceed their adjusted index. Approval was granted to 133 of them and 128 sought an exception for pension costs increases.