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Introduced Version House Concurrent Resolution 136 History

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HOUSE CONCURRENT RESOLUTION NO. 136

(By Delegates M. Poling, Paxton, Barill, D. Campbell, Craig, Lawrence, Moye, Perry, Pethtel, Shaver, Smith, Duke, Sumner, Ellington, Gearheart, Pasdon, Rowan, Savilla and Sigler)

 

[Originating in the Committee on Education]

(March 9, 2012)

 

 

Requesting the Joint Committee on Government and Finance to study the effects of the provisions enacted at the 2007 regular legislative session that use assumed values for the calculation of the Public School Support Plan calculation of local share and that may impose a reduction in state aid on school systems based on the results of an assessment to sales ratio study for the county.

    Whereas, The fundamental principle underlying West Virginia’s Public School Support Plan is to employ a series of calculations to estimate the full costs of providing for the delivery of the required educational program in each county school system, and then apportion the responsibility for funding them between the state and the county board. The county board’s share, called local share in the Public School Support Plan, has been calculated for many years on the basis of each county’s certificates of valuation and these provisions are set forth in WV Code §18-9A-11(a). The state’s share, called basic state aid, is the amount remaining for each county board after deducting its local share; and

    Whereas, This approach to financing public schools has resulted in West Virginia’s Public School Support Plan being rated for many years as one of the most equitable in the nation because it accounts fully for the differences in property wealth among the different county school systems, using the actual certificates of valuation to determine the amount of money that a county board of education is capable of raising as its required contribution to funding its schools, with the state contributing basic state aid to fund the balance that the county board is not capable of raising; and

    Whereas, It is extremely important under this approach that the assessed valuations of a county’s property accurately reflect 60% of the true market vale of property in the county because when they are too low, the state share of funding for education is higher than it would otherwise need to be; and

    Whereas, Effective July 1, 2013, the provisions for calculating each county’s local share will no longer use the assessor’s certificates of valuation of each county, but will use an assumed value for local share determined in accordance with WV Code §11-1C-5b, enacted at the 2007 regular legislative session, and these assumed values for each county will be reported to the State Board on or before December 1 of each year and will be the county’s local share; and

    Whereas, Among the provisions of §11-1C-5b are provisions requiring the Tax Commissioner to use an assessment to sales ratio study based on information submitted by the county’s assessor as the sole indicator of whether the assessments of property are within 10% of the constitutionally required 60%, and if the results of this sole study indicate that a county’s assessed valuations are more than 10% below 60%, to increase them to what they would be assumed to be at 60% based on the study for the purposes of the local share calculation. This assumed amount would be the county’s local share even though it may not accurately reflect the amount of money that the county is capable of raising for the funding of its schools; and

    Whereas, The 2007 legislation also enacted WV Code §18-9A-2a, which provides for an 8% increase in the local share responsibility of a county board at any time when the median ratio of the assessed values to actual selling prices in the assessment ratio study applicable to the preceding fiscal year indicates that the county is not assessing property at least at 54% of market value, and an 8% increase in local share means a corresponding 8% decrease in basic state aid; and

    Whereas, The several effects of eliminating the use of actual certificates of valuation for calculating the local share responsibility of county boards and, instead, using assumed values and, in some cases, also imposing a penalty solely on the basis of the results of an assessment to sales ratio study may include the following:

    (1) Unlike the method presently in effect of using an estimate of local share in preparing the executive budget and then recalculating local share based on the certificates of valuation when they become available on or before March 3rd each year, the use of assumed local share values calculated on December 1 each year will not ensure that each county’s local share accurately reflects the amount of money it is capable of contributing to funding its schools. For example, if a county’s assumed local share is higher than its certificates of valuation, it will not be able to raise the money for its schools that is assumed to be its local share and its state aid will also be lower. Or in the alternative, if a county board’s assumed local share is lower than its certificates of valuation, it is capable of raising more than that and its state aid will also be higher than needed;

    (2) The impact of this imprecision in the calculation of local share is to create inequities from year to year as different counties are winners or losers depending on how close their assumed local share is to their actual ability to raise the funds. Being a winner or a loser in different years can cause instability in the board’s ability to predict future budgets. Further, when the state total of assumed local share is too low, the loss of routine reconciliation of a December budget estimate with the actual certificates of valuation on March 3rd, eliminates the ability of the state to redirect any unneeded state aid to other uses; and

    (3) The assessment to sales ratio study, although a useful tool for the Tax Commissioner to gauge the assessment practices, is only one of several tools used to do so and, because it relies on self reported data and depends upon the number of representative sales in a county, is not a reliable sole measure. The use of this instrument to, first increase a county board’s assumed local share as may be indicated by the study’s results, and then to impose an additional 8% increase in its local share calculation causing an 8% decrease in state aid, has the potential of putting a school system in serious financial stress based on governmental functions over which it has no control or ability to affect. These adjustments and penalties could be the result of an occasional variance in a single study in a single year or it could be a consequence of the small numbers of property sales in a county that makes reliable assessment to sales studies difficult to produce over a number of years; therefore, be it

    Resolved by the Legislature of West Virginia:

    That the Joint Committee on Government and Finance is hereby requested to study the effects of the provisions enacted at the 2007 regular legislative session that use assumed values for the calculation of the Public School Support Plan calculation of local share and impose a reduction in state aid on school systems based on the results of an assessment to sales ratio study for the county; and be it

    Further Resolved, That included in the study on the effects of these provisions should be the effects on the efficient use of state funding for school systems from using assumed values for local share rather than the actual certificates of valuation of the assessors, the effects on funding equity among the counties from using assumed values for local share rather than the actual certificates of valuation of the assessors, the effects on the stability of budgeting for county boards of education from using assumed values for local share rather than the actual certificates of valuation of the assessors, and the effects of imposing a financial penalty on county boards of education based on a single measure of the performance of other governmental functions over which they have no control; and be it

    Further Resolved, That the Joint Committee on Government and Finance is requested to report to the regular session of the Legislature, 2013, on its findings, conclusions and recommendations, together with drafts of any legislation necessary to effectuate its recommendations; and be it

    Further Resolved, That the expenses necessary to conduct this study, to prepare a report and draft necessary legislation are requested to be paid from legislative appropriations to the Joint Committee on Government and Finance.

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