The effect of public school districts' property values on state educational funds

The researcher examines the processes of local taxation and state equalization funding in New York State. The investigator will search for causal relationships behind substantial and recurrent increases in the property value tax base, year after year. It is suspected there are causal factors at work that artificially inflate the community's real property tax base and result in an inequitable spiraling of school taxes, district by district. The researcher focuses on the effect that tax increases may have on the state allocation system for equitable statewide distribution of non-property tax revenue. When local school districts do not obtain their expected share of state subsidy, they must authorize an increase in local funding or alternatively eliminate certain educational services. Other political alternatives can remedy some school district shortfalls. Nevertheless, budget shortfalls can only be funded by either directly increasing the tax rate that is applied to the tax base of current assessed values of local real estate or by indirectly increasing the assessed value base or any combination of rate and base change. In New York State, the assessed value tax base is comprised of residential and commercial property, and it is the community's most viable source of revenue, aside from statewide subsidies. Historically, using property tax to fund education has been a controversial issue because many state supreme courts have ruled that school funding from property tax is inadequate and sometimes inequitable under current conditions. There are wide-ranging opponents and proponents using the property tax system for education. Moreover, there is a vast amount of literature relating to problematic issues involving inequities inherent in numerous schemes that purport to reduce local taxes, as well as increase, reallocate, or both, the tax burden of local communities. To explore the inequities inherent in numerous schemes, it is necessary to decompose school district tax increases and isolate tax increases caused by mill levy increases, as well as tax increases allocable to the changes in the tax base.