North Penn Could Change Real Estate Rebate Level

Dan Sokil | The Reporter•

Budget season means what’s become a tradition in the North Penn School District: talks about the district’s real estate tax rebate program.

School board members heard an update last week about recent changes in Harrisburg on a similar rebate, and how much those changes could cost North Penn.

"The primary problem is, the total payments by the state. We are now entering into year one of a new calculation by the state,” said district CFO Steve Skrocki.

"The objective of the program six years ago remains the same today, and that is to provide tax relief to those with the greatest need in the community, by piggybacking off of the Pennsylvania Property Tax and Rent Rebate program,” said Skrocki.

"This is one opportunity where the school board, at a local level, is able to provide that tax relief. Although it might be small for some individuals , greater for other individuals, at least it provides some tax relief for those that need it the most,” he said.

New this year

During the board’s finance committee meeting on March 12, Skrocki outlined the rebate criteria, income levels, and the expansion of the state’s rebate program approved in summer 2023 in Harrisburg to increase the number of those who can apply. He then gave an update on what the board will need to decide this year, and how their calculations have changed: the state no longer differentiates between types of taxpayers, and the state’s rebate program is based on an income limit that is scheduled to increase starting July 1.

"Not only did it raise the total rebate amount, from $650 maximum to $1,000 maximum, there’s no longer a delineation between renters and homeowners. They are now together,” he said.

After six full years of the rebate program, North Penn now offers 90 percent of the state’s rebate amount as a discount off of local district taxes, for those eligible, up from only 25 percent in the first year. Over that same timespan, from 201018-19, the rebate participants have fluctuated from 453 in the first year, to a peak of 570 in the second, and a total of 425 who have taken part for the current schoolyear with roughly three months left, Skrocki told the board. The district has presented the rebate program at recent senior-focused events, and based on state data the district rebate recipients have held steady at roughly one-third of those who take the state rebate.

Looking at total dollars, the program expenditures for the district have grown from just under $36,000 in the first year, to just over $60,000 in the second, then peaked at $294,000 in the last full year of 2022-23, with just under $174,000 in rebates issued so far for 2023-24, all just a fraction of the $300-plus-million annual district budget now being discussed. In comparison to the annual tax increases approved by the school board over the same span, the average rebate has exceeded the amount of the average tax increase every year since 2019-20, with 2023-24 figures yielding an average rebate of $411 for those who qualify, compared to a $173 tax increase over the prior year.

Of the applicants for 2023-24, roughly 77 percent were property owners, 12 percent renters, and 11 percent a hybrid option, and total rebates issued have only exceeded 50 percent of the budgeted amount in one year, 2022-23, due to the sudden state increase.

Each year, Skrocki told the board, his office calculates a rebate budget by multiplying the total rebate payments from the state to district residents, multiplied by a 50 percent participation rate, multiplied again by the reimbursement percentage that was raised to 90 percent last year.

"There’s a couple of problems moving forward with this formula,” Skrocki said: with the state’s rebate dollar amount and income thresholds now changed, "we really have no idea what to expect next year,” about the rebates the state will issue, but know it will be some sort of increase, thus the discussion needed by the board.

Cost to district?

He then showed several projections, each assuming a 50 percent participate rate and based on last year’s data after the increase. If the district offers 90 percent of the state rebate, total rebates issued are projected to cost roughly $565,000, with those figures decreasing to $502,000 at 80 percent, increasing to $596,000 at 95 percent, and $628,000 at a full 100 percent district match of the state rebate, roughly three times the amount issued last year.

"For every five percentage points we go down from 90 percent, it’s about $32,000. I bring this up because it’s somewhat of a dilemma, for establishing the percentage for next year,” Skrocki said. "If we stay at that 90 percent, we are increasing the budget by well over two times.”

Finance committee chairman Christian Fusco asked if the actual participation level had increased or stayed level in recent years, and Skrocki said it would likely hit one-third this year, and reducing the assumed participation rate could then decease the amount the district would need to budget.

‘Set off some headlines’

"I get the sense that if we reduced (the rebate amount), that would be the best way to promote the fact that we have the program — it would probably set off some headlines, and some emails to us,” Fusco said.

Board member Juliane Ramic said she’s heard feedback about the rebates from residents who are 65 or over, but work for the district part-time, as bus drivers or in extended school care programs.

"They’ve always said ‘Hey, I value that you do this, I just wish that I qualified, it would really help me out.’ I think we may have a new outreach opportunity in being able to engage information around this program, with those individuals who are also district employees,” she said.

Board member Jonathan Kassa asked if Skrocki could modify the projections to show an expected tax increase for 2024-25 and a reduced participation rate, and Skrocki said he could, and would report those numbers back at the board’s March 21 meeting ahead of any formal action.

"We’ll come back with more data on the 21st, and if the board is in a position to act that night, great. If not, we’ll have further discussion at the April finance committee meeting,” Skrocki said.

North Penn’s school board next meets at 7 p.m. on March 21 and the finance committee next meets at 6 p.m. on march 19 and Aril 8; for more information visit www.NPenn.org.

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