School funding formula faces tax snag
CHARLESTON, W.Va. -- Critics called on legislators Tuesday to repeal or modify a law, scheduled to take effect on July 1, that would cut funding to county school systems if the county's property tax assessments are too low.
"We ... call it the "punish-the-assessor, punish-the-school-board bill," Patti Hamilton, executive director of the West Virginia Association of Counties, said of the new law. "A school board would be punished for actions of an assessor over which they have no control."
Under the law, county boards of education will receive an 8 percent cut in state funding under the state School Aid Formula any time the county's property tax assessments fall below 54 percent of fair market value.
J.P. Mowery, business manager for Pendleton County Schools, called the law troubling, since school boards have no oversight over the actions of county assessors.
"From a school board's perspective, we can't control the valuations of property," Mowery told an interim Committee on Finance. "School boards could be penalized for something we have no control over."
Jerry Knight, a property tax consultant, said the law is flawed because it treats a statistical figure as a literal number.
He said that, even at the highest confidence level, a median assessed value can have a 10 percent variance from the actual value, meaning a county could be penalized for falling below 54 percent when the actual figure could be as high as 58 percent.
Under state law, property is to be assessed at 60 percent of fair market value for tax purposes.
Knight agreed that the law is unfair because it punishes school systems for errors or omissions made by county assessors.
"They receive a penalty in their budget if someone else doesn't do their job," he said.
He said such a penalty could be challenged in court, under the Recht decision, which requires the equalization of school funding statewide.
But House Finance Chairman Harry Keith White, D-Mingo, said he would be reluctant to repeal the law, given that certain counties in the state have a history of consistently undervaluing property.
"We have certain counties that have come in undervalued on their local share and we have had to do supplementals and backfill their education budgets," he said.
During the 2012 regular session, the House passed a bill to repeal the penalty provision, but it died in the Senate Education Committee.
Knight suggested that if the law is not repealed, the law should be amended to give county assessors a one- to two-year grace period to correct assessments when they fall below the 54 percent threshold.
"Absent that, I think it's a very harsh penalty for the school boards," Knight said.
"If there's anything we can do to tweak it, we'll take a look at it," White responded.
Reach Phil Kabler at firstname.lastname@example.org or 304-348-1220.