UPDATED: 9 Questions (and Answers) about Property Reassessment in Delaware

UPDATED: March 22, 2021

1. What is the status of the “county track” of the Delawareans for Educational Opportunity v. Carney?

As of February 25, Kent county has agreed to full property reassessment by 2024 as part of the funding lawsuit. The Kent County agreement is similar to New Castle County’s agreement announced in early February.

Previously, on February 1, 2021, New Castle County has agreed to conduct a reassessment of properties by July 2023. If completed, this would be the first time in 40 years that a reassessment of property for tax purposes would take place in New Castle County. While this is a step in the right direction, much is to be decided like who will conduct the reassessment and who will cover the cost. Governor Carney did not include money for reassessment in his budget proposal for next year. New Castle County sent out a request for proposals and hopes to decide on a vendor by end of May. Sussex County has yet to announce a settlement in the lawsuit.

And, on May 8, 2020, Vice Chancellor Laster ruled that Delaware’s property tax system is unconstitutional and called on the plaintiffs and counties to submit a timetable to the court for the next phase of the court case–remedying the problem. In his opinion, Laster wrote: “The effects of the pandemic likely will introduce additional and significant considerations for the remedial calculus, particularly regarding the timing of a remedy.” Penalties for not paying property taxes are currently suspended under the Governor’s emergency order in response to the coronavirus pandemic.

2. What case is being made in the lawsuit about property reassessment in Delaware?

“The state has designed a school funding system that relies in part on local taxes, but it limits the ability of school districts to raise sufficient local funds by disregarding the lack of a regular property reassessment. This means that local education taxes are based on property values determined as if it were still 1986 in Kent County and earlier in the other counties. Because school taxes do not accurately reflect current property values and are locked in at artificially low levels, local districts must regularly expend time and resources asking district residents to approve an increase in the tax rate, just to keep up with inflation and expanding enrollment.”

Excerpt from ACLU Delaware School Funding Complaint Summary, 1/12/2018

3. What does property reassessment have to do with education?

About 27 percent of all public education funding in Delaware comes from property taxes. Three-quarters of those property taxes collected go directly to districts, which have the flexibility to spend these dollars on new buildings, teachers, and educational materials. Many of these resources are used to keep up with increasing enrollment and costs of operations, salaries, and programs.

Property taxes are levied based on a percentage of the most recently assessed value of the property.

4. What is the impact of outdated property reassessments?

Property values—including home prices—are obviously not static. We know that market values can fluctuate widely over time. Without regular reassessments, the burden of taxation may be unequally distributed.

For example, in Sussex County, property taxes haven’t been reassessed since 1974. At that time Seaford had significant industry and some wealth, while the beaches were not the destination they are today. The unevenness hits taxpayers and schools alike.

As it relates to education, Judge Laster’s May 8, 2020 ruling adds:

  • Inability to keep up with inflation: “The counties’ failure to update their assessments to reflect present fair market value means that year after year, the value of a school district’s tax base remains flat. The amount of money that the static tax base generates at the prevailing tax rate likewise remains flat. The cost of running a school district, however, does not remain flat.” Each year, inflation erodes the purchasing power of the school district’s budget, requiring more dollars to achieve the same results. Even if a school district did not introduce any new initiatives and just maintained the status quo, the absence of regular and systematic assessments inevitably generates a funding gap”
  • Increased need for referenda: “By not assessing properties at their present fair market values, the counties force school districts to call referendums more often….. The burden of calling referendums is not trivial. School districts, school personnel, and parent volunteers must devote time and effort to pursuing referendums that they otherwise could devote to educational purposes
  • Negative impact on Equalization Funding: “The counties’ failure to assess property at its present fair market value thus deprives school districts of their fair share of Equalization Funding. The Equalization Committee concluded that accurate property assessments were necessary to “provide more reliable data on a district[’]s wealth, ensure equity among taxpayers, and allow for the equalization model to function as intended.”

5. When were the most recent property reassessments in Delaware?

6. What is the law regarding property reassessment?

State law requires that tax assessments be based on the actual value of property and charges the counties with inspecting property to adjust valuation. (Delaware Code Title 9, Chapter 83), but there is no state policy in Delaware establishing how often reassessments must take place.

7. How do we compare nationally?

As of 2010, Delaware was one of nine states that did not have state provisions for when reassessments take place. Most states follow an annual to five-year schedule.

8. What solutions has been proposed in Delaware?

Many groups in Delaware over the years have proposed rolling statewide reassessments, such as the Vision Coalition, Wilmington Education Improvement Commission, and LEAD Committee.

The Fair and Efficient Funding core area of Student Success 2025 says:

The 2008 Legislative Task Force on Property Tax Reassessment put forward detailed recommendations for how to implement consistent, rolling reassessment. They recommend a 10 percent cap on annual revenue increases that is consistent with the current language in Title 14 of the Delaware Code.

9. What have been the barriers to change?

Political will has been cited throughout the years as a barrier. With updated, accurate property tax rates, some homeowners could wind up paying more—though others could pay less or experience no change—and few politicians want to be on the hook for raising their constituents’ taxes.

Additionally, the cost associated with training and manpower needed to reassess properties could land anywhere between $20 million to $40 million according to a 2007 New Journal article.

However, in other states, legal action has successfully catalyzed change.

For more information:

Opportunity Funding 101

Money matters in education, as national research shows us. But how money is spent matters just as how much—as long as the how is driven by local context and needs. Now that the school year is underway and next year’s budget cycle is about to begin, let’s check in on the status of the state’s Opportunity Funding investment and put this progress into the broader context of school funding efforts to provide resources for low-income and English leaner students.

What is Opportunity Funding?

This year Governor John Carney proposed, and the legislature passed, a three-year, $60 million Opportunity Funding investment of targeted resources toward Delaware’s most disadvantaged students. This funding is an evolution of the administration’s previous Opportunity Grants initiative.

It marked Delaware’s first foray into some kind of per-pupil “weighted funding” mechanism to help schools better support students that data show need extra help, like low-income and English learner students. Through Opportunity Funding, every district will receive a per-pupil appropriation of $300 for every low-income student and $500 for every English learner student that they can spend as they choose (according to plans approved by the Department of Education).

The funding will run through the Office of Management and Budget to every Local Education Agency (LEA) across the state (districts and charters), which will receive a lump sum based on a per-pupil allocation reflecting its prior year’s EL and low-income student count. If student is low income and EL they get both amounts.

An additional $15 million of Opportunity Funding will specifically go to elementary schools with high concentrations of low-income and/or English learner students to support mental health and reading specialists.

Delaware’s regional neighbors invest 30-99% more in their low-income and EL students. And research suggests systems should 100% to 200% more for these subgroups.

How do these dollars compare?

According to data shared by the Education Trust and Education Resource Strategies at a recent Vision Coalition event, Delaware’s regional neighbors invest 30-99% more in their low-income and EL students.And research suggests systems should 100% to 200% more for these subgroups. With Opportunity Funding, the $500 and $300 per-pupil additions work out to about 2-3% more than the base per-pupil number.

What comes next?

Gov. Carney will develop a new budget this fall to recommend to the legislature in January. It’s highly likely that Opportunity Funding will be included in that draft budget, which the Legislature will need to pass again.

Meanwhile, a ruling on Delawareans for Educational Opportunity v. Carney is expected November 2020, which may prescribe additional solutions to the challenge provide adequate educational opportunities for disadvantaged students unless policymakers act sooner.

What “next steps” do advocates call for?  

Generally speaking, advocates are calling this a good “first step.” Additional allocations that take into account the needs of students is indeed a step in the right direction, considering Delaware’s decades-old “unit count” funding system that largely treats all students the same (except for special education students) and provides only limited local flexibility.

To compare, Student Success 2025, the 10-year educational roadmap from the Vision Coalition recommends: “Increase funding system equity by factoring student needs into funding allocations, and update the system so that funding follows each student, enabling them to take courses from a variety of approved providers (e.g., other district and charter schools, distance learning, higher education organizations).”

Education Equity Delaware, a coalition of 31 organizations, agrees that “additional resources for students with greater needs” is a priority, and supports a gradual transition away from the unit system to a foundation formula.

However, “We can’t we fix these problems by simply adding more money to the current system,” the group warns. “Simply layering money on top of the current system will not address the fact that allocating units leads to funding disparities not only between districts, but within districts.”

What can I do?

Ask your district or charter leader how they are spending Opportunity Funds. Better yet, ask your local school principal what they need to support ELs and low-income students. Want to stay plugged into Delaware school funding news? Here are some ideas from Education Equity Delaware.

9 Questions about Property Reassessment in Delaware

9

Earlier this year, civil rights groups sued Delaware over education funding for low-income, disadvantaged students. In this blog, we’ll break down what you need to know about property reassessment in Delaware.

1. What does property reassessment have to do with education?

About 27 percent of all public education funding in Delaware comes from property taxes. Three-quarters of those property taxes collected go directly to districts, which have the flexibility to spend these dollars on new buildings, teachers, and educational materials. Many of these resources are used to keep up with increasing enrollment and costs of operations, salaries, and programs.

Property taxes are levied based on a percentage of the most recently assessed value of the property.

2. What is the impact of outdated property reassessments?

Property values—including home prices—are obviously not static. We know that market values can fluctuate widely over time. Without regular reassessments, the burden of taxation may be unequally distributed.

For example, in Sussex County, property taxes haven’t been reassessed since 1974. At that time Seaford had significant industry and some wealth, while the beaches were not the destination they are today. The unevenness hits taxpayers and schools alike.

3. When were the most recent property reassessments in Delaware?

4. What is the law regarding property reassessment?

State law requires that tax assessments be based on the actual value of property and charges the counties with inspecting property to adjust valuation. (Delaware Code Title 9, Chapter 83), but there is no state policy in Delaware establishing how often reassessments must take place.

5. How do we compare nationally?

As of 2010, Delaware was one of nine states that did not have state provisions for when reassessments take place. Most states follow an annual to five-year schedule.

6. What solutions has been proposed in Delaware?

Many groups in Delaware over the years have proposed rolling statewide reassessments, such as the Vision Coalition, Wilmington Education Improvement Commission, and LEAD Committee.

The Fair and Efficient Funding core area of Student Success 2025 says:

The 2008 Legislative Task Force on Property Tax Reassessment put forward detailed recommendations for how to implement consistent, rolling reassessment. They recommend a 10 percent cap on annual revenue increases that is consistent with the current language in Title 14 of the Delaware Code.

7. So what have been the barriers to change?

Political will has been cited throughout the years as a barrier. With updated, accurate property tax rates, some homeowners could wind up paying more—though others could pay less or experience no change—and few politicians want to be on the hook for raising their constituents’ taxes.

Additionally, the cost associated with training and manpower needed to reassess properties could land anywhere between $20 million to $40 million according to a 2007 New Journal article.

However, in other states, legal action has successfully catalyzed change.

For more information:

Lawsuit background regarding property reassessment:

8. What case is being made in the lawsuit about property reassessment in Delaware?

“The state has designed a school funding system that relies in part on local taxes, but it limits the ability of school districts to raise sufficient local funds by disregarding the lack of a regular property reassessment. This means that local education taxes are based on property values determined as if it were still 1986 in Kent County and earlier in the other counties. Because school taxes do not accurately reflect current property values and are locked in at artificially low levels, local districts must regularly expend time and resources asking district residents to approve an increase in the tax rate, just to keep up with inflation and expanding enrollment.”

Excerpt from ACLU Delaware School Funding Complaint Summary, 1/12/2018

9. What is the status?

According to the ACLU website, “On October 5, 2018, the Court of Chancery decided that part of our case should proceed on its merits and struck down the defendants’ motion to dismiss. A decision has not yet been made about the other portions of the lawsuit. See additional news coverage here and here. Recently, the City of Wilmington asked to join as a plaintiff on the lawsuit. The next expected step would be for the court to make a decision on the City of Wilmington’s request, and to establish a schedule for the remaining steps leading to a final decision.

11 Key Quotes from Education Funding Lawsuit Opinion

Last week, Vice Chancellor Travis Laster rejected the state’s motion to dismiss a lawsuit claiming the state’s current school funding formula is unconstitutional. In addition to explaining why the court has legal authority to rule on the case under the Education Clause of the state constitution, Judge Laster also had lots to say about Delaware’s education funding system in general.

 

Didn’t read the 135-page opinion? Here are 11 quotes from Judge Laster that jumped out to me:

 

On why this is a systemic problem:

  1. “The plaintiffs assert that the ‘system of public schools’ is failing Disadvantaged Students, not the hardworking and well-intentioned professionals who do their best within the constraints that the system imposes.”
  2. “In Delaware…the educational funding system generally provides more support for more privileged children than it provides for impoverished children. Put differently, schools with more Disadvantaged Students receive less financial support from the State than schools with fewer Disadvantaged Students. Likewise, school districts with poorer tax bases receive less funding from the State than school districts with wealthier tax bases.”

 

Put differently, schools with more Disadvantaged Students receive less financial support from the State than schools with fewer Disadvantaged Students. Vice Chancellor J. Travis Laster

 

On how this effects low income students, for example:

  1. “For many of Delaware’s public schools, an inverse relationship exists between the number of low-income students in a school and the amount of funding that goes to the school: The more low-income students in a school, the less State funding the school receives.”
  2. “Given the incremental needs of low-income students relative to their wealthier peers, schools that predominantly serve low-income students logically should receive more resources than schools that do not.”
  3. “Unlike thirty-five other states, Delaware does not provide any additional funding for low-income students. The unit funding approach that Delaware uses does not take low-income status into account.”

 

On English learners:

  1. “Precisely because these students are learning English, they need more resources and support to succeed. Schools who serve larger numbers of students who are learning English as a second language logically should reserve more resources than schools that do not. Delaware does not provide any additional funding for educating students who are learning English as a second language. Delaware is one of only four states that does not allocate any additional funding to serve the unique needs of these students.”

 

Given the incremental needs of low-income students relative to their wealthier peers, schools that predominantly serve low-income students logically should receive more resources than schools that do not.Vice Chancellor J. Travis Laster

 

On the inequities baked into the unit system:

  1. To counter the effects of poverty, one might expect that Delaware would provide more funding to school districts with less valuable tax bases. To its credit, Delaware offers Division III funding to offset the financial advantage possessed by wealthier districts. But the effects of Division III funding are swamped by the far larger effect of the Division I funds that pay personnel costs.
  2. Under the existing system, Delaware provides more funding to districts with wealthier tax bases than it does to poorer districts. In 2013–14, for example, the tax basis in the Brandywine School District was 1.5 times more valuable per student than the tax base in the Woodbridge School District. Yet the State provided funding to the Brandywine School District that was equivalent to $1,694 more per pupil than the funding it provided to the Woodbridge School District. During the same year, the value of the tax base in the Appoquinimink School District exceeded the value of the tax base in the Caesar Rodney School District by more than $100,000 per student, yet the State allocated funding to the Appoquinimink School District that was equivalent to $450 more per pupil than it provided to the Caesar Rodney School District.

 

On the prescriptiveness of the unit system:

  1. “With limited exceptions, the “unit funding” approach treats all students as if they were the same. If a High-Need School wishes to hire reading specialists or counselors, it has less unit funding to pay for teachers and other personnel. To make the numbers work, High-Need Schools must find the money by cutting elsewhere.”
  2. “If school districts had greater flexibility in deploying funds, they could shift money within districts to support their High-Need Schools. State law effectively forecloses that option by requiring that 98% of the funding generated by a school’s units be used at the school accounting for the units.”

 

On the “state-level consensus” and years of commission and task force recommendations:

  1. “The various reports exhibit a remarkable consensus about the key steps that the State needs to take to address the problems with Delaware’s public schools and improve educational outcomes for Disadvantaged Students. Foremost among the recommendations is to restructure how Delaware funds its public schools.”

 

For more on the suit brought by Delawareans for Educational Opportunity and the Delaware NAACP, read on here.