Last updated: February 17. 2013 7:33AM - 79 Views

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State restrictions on school property tax increases will remain tight in the 2013-14 school year, with local districts limited to tax hikes ranging from 2 percent in Dallas to 2.5 percent in Greater Nanticoke Area.

Districts can exceed the limits only through voter referendum in the spring primary election or state exemptions granted for a narrow list of reasons.

The limit on tax increases was created by the 2006 law known as Act 1, which promised to use money from legalized gambling to lower school property taxes. The law also created the "Act 1 Index," using a complicated formula to annually set the tax increase limits, connecting the limits to average wages, school costs, property market values and personal income.

The limits vary from district to district and from year to year. In Luzerne County, the index for the county's 11 school districts averaged 5.1 percent in 2006-07, peaked at 5.9 percent in 2008-09, and hit its lowest at 1.9 percent in 2011-12. The average index locally this year and next is 2.3 percent.

Many districts routinely exceeded their index without a referendum by seeking and winning exemptions from the state. But the administration of Gov. Tom Corbett pushed reforms that eliminated many exemptions and made the approval process more stringent.

The string of low index rates came as Corbett made steep cuts in state money for public schools. The low limits and lost state funding have left many districts scrambling to save money, resulting in cuts in programs and staff and increases in class sizes.

A new report released this week by the Pennsylvania Association of School Business Officials and the Pennsylvania Association of School Administrators used data gained through district surveys to estimate total cuts statewide.

The report estimates that, in the two years since nearly $1 billion was cut from the state education budget, districts statewide have shed 18,790 jobs.

The report notes 10 percent of the state's 500 districts reduced or eliminated pre-kindergarten programs in the last two years. Class sizes rose in 70 percent last year and in 51 percent of districts this year. Tutoring programs were reduced or eliminated in 35 percent of districts last year and in 32 percent this year.

At Dallas School District, with the tightest tax hike restriction in Luzerne County, Business Manager Grant Palfey said that, as long as no unexpected expenses come up, next year's budget should be able to stay at or below the state tax increase limit.

Palfey said the district negotiated many staff contracts that tie raises directly to the Act 1 index. The district also refinanced 2008 debt to save roughly $250,000 with lower debt payments in each of the next four years. And the district recently lowered health-care costs by seeking and receiving lower bids for providers of health insurance services.

"Our goal is always – especially in this economy – to stick at or below the state index." Palfey said.

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