Examining Property Value as an Indicator of Household Income

An issue re-emerging in the school finance context is whether property value per se is the best indicator of local school district, and its households, ability to pay.

The concern is two fold.

  • The first is the high property tax burden placed on low income households who live in high property wealth per pupil districts, such as second home or resort communities.
  • The second is whether all things being equal (including the access to raise property taxes via guaranteed tax base programs), household income still gives higher income districts an advantage in raising local funds for schools (which research finds it does).

The policy resolutions include both adding an income factor to the property wealth per pupil measure by multiplying property wealth by the ratio of the district’s average income measure to that of the state, as well as expanding state “circuit breaker” programs of property tax relief that limit property taxes as a percent of household income (by providing income tax credits or rebates when property taxes exceed a set percentage).

Early in his career, Odden identified this as an important school finance issue , it is the subject of a policy option paper our firm wrote for our 2013 Maine project, and it is the subject of a policy brief just issued by the Education Commission of the States, which references both Odden’s earlier work and our Maine policy paper.

One response to “Examining Property Value as an Indicator of Household Income

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