Those expenditures include: (1) a response to an emergency or disaster declared by the governor, (2) implementation of a court order or administrative order from a federal or state agency, (3) a response to conditions that pose an immediate threat of serious harm or injury, (4) school construction, (5) special education expenditures, (6) a school improvement plan required by No Child Left Behind, (7) maintenance of local tax revenue or actual instruction expense per average daily membership, (8) maintenance of selected revenue sources, (9) health care related benefits, and (10) retirement contributions. If approved by the Pennsylvania Department of Education or a court of common pleas, a school district may, without seeking voter approval, increase the tax rate by more than the base Act 1 index if the revenue raised by the allowable base index is insufficient to balance the proposed budget due to one or more of ten (10) specified expenditures. For the year 2016-2017, the base Act 1 index was calculated to be 2.4 percent, meaning that the school district could increase taxes by only 2.4 percent, unless, that is, it qualified for an upward adjustment, received an exception from the Pennsylvania Department of Education, or had voter approval to do so. The Act 1 index is calculated by averaging the percent increase in the Pennsylvania statewide average weekly wage and the federal employment cost index for elementary/secondary schools. The “Act 1 index” is used to determine the maximum percentage tax increase that may be levied by a school district. He found that the district “deliberately engaged in a course of conduct” that allowed it to raise taxes without going to a voter referendum.Īs background, Pennsylvania’s Act 1 establishes the procedures by which school districts in the Commonwealth may increase taxes. Smyth ruled that the district could increase taxes by only 2.4 percent for the 2016-17 school year. “Lower Merion School District Tax Increase Litigation Puts Act 1 in the Spotlight” blog post photo.Ī Court of Common Pleas judge recently issued an injunction, ordering the school district to revoke its latest tax increase and finding that the district misled taxpayers by projecting a large deficit to justify raising taxes by 4.4 percent.
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