Volume 5 - Opinions of Counsel SBEA No. 121
School districts (tax apportionment) (use of equalization rate) - Real Property Tax Law, § 1314:
School taxes are apportioned among the towns or parts thereof located in a school district in direct proportion to the percentage of the school district’s total full valuation which is located in each town or portion thereof. The full value of each town or part thereof located in a school district is determined by dividing its assessed valuation by the equalization rate established by the State Board.
We have received an inquiry regarding the method of establishing the percentage of true valuation which is used to calculate school taxes.
Pursuant to section 1314 of the Real Property Tax Law, school taxes are apportioned among the towns or parts thereof located in a school district in direct proportion to the percentage of the school district’s total full valuation which is located in each town or portion thereof. The full value of each town is determined by dividing its assessed valuation by the equalization rate established by this Board. The equalization rate represents the percentage of full value at which property is being assessed in an assessing unit. If only a portion of a town is located in a school district, the assessed valuation of that portion is divided by the equalization rate. A special rate may be obtained where it is demonstrated that the equalization rate for the town as a whole is not representative of the portion of the town located in the district. Therefore, if half of the school district’s full value is located in a town, half of the amount to be raised by real property taxation will be collected in that town.
Section 1200 of the Real Property Tax Law requires the State Board, at least once every five years, to sample the ratio of assessments to market value for each major type of real property in each city, town and village in the State. Section 1202 requires the State Board to establish equalization rates annually for each city, town and village.
The annual state equalization rate is based upon one or more surveys with an adjustment being made for any change in level of assessment since the survey dates.
The surveys consist of bona fide sales of real property and appraisals of randomly selected properties. The sales and appraisal values are compared with the assessments of the same properties, and an average percentage at which such property is assessed is determined. Each assessing unit is notified of its tentative equalization rate and is afforded an opportunity to examine the data upon which it is determined and to offer any evidence which it may have to prove that the tentative rate does not reflect the percentage of full value at which property is being assessed.
The purpose for apportioning school taxes on the basis of full value can best be illustrated by the following example:
| Town | Assessed Value | Equalization Rate | Full Value |
|---|---|---|---|
| A | 10,000,000 | 80% | 12,500,000 |
| B | 10,000,000 | 25% | 40,000,000 |
| Part of | |||
| C | 5,000,000 | 50% | 10,000,000 |
| D | 6,250,000 | 50% | 12,500,000 |
| Total Full Value in School District | 75,000,000 | ||
Sixteen and two-thirds (16-2/3) percent of the school district’s full valuation is located in Town A and 16-2/3 of the amount to be raised by real property taxation will be collected in Town A; 53-1/3 of the district’s full value is located in Town B and 53-1/3 of the amount to be raised will be collected in Town B; 13-1/3 of the district’s full value is located in the part of Town C located in the district and 13-1/3 percent of the amount to be raised will be collected therefrom; 16-2/3 percent of the district’s full value is located in Town D and 16-2/3 percent of the amount to be raised will be collected therefrom.
If the amount to be raised is $2,000,000, $333,200 will be collected in Town A and the tax rate (amount to be raised divided by the assessed valuation) would be $33.32 per thousand; $1,066,600 will be collected in Town B and the tax rate would be $106.66 per thousand; $266,600 will be collected in the part of Town C located in the district and the tax rate would be $53.20; $333,200 will be collected in Town D and the tax rate would be $53.31.
Note that although Towns A and B have the same assessed valuation, Town B assesses property at 25% of full value whereas Town A assesses property at 80% of full value. It would obviously be unfair to require Town A to contribute the same amount as Town B which has a much larger full value.
Also note that although Towns A and D have the same full value, their assessed valuations are not the same because Town A assesses at 80% of full value whereas Town D assesses at 50% of full value. Again, it would obviously be unfair to collect more from Town A than Town D since each of these towns should contribute the same amount. If a uniform tax rate we established for the entire district by dividing the amount to be raised by the total assessed valuation, the tax rate would be $64 per thousand which would result in the following tax on a parcel of property whose full value is $10,000:
| Town | Assessed Value | Tax Rate | Total Tax |
|---|---|---|---|
| A | 8,000 | 64 | $512.00 |
| B | 2,500 | 64 | $160.00 |
| Part of | |||
| C | 5,000 | 64 | $320.00 |
| D | 5,000 | 64 | $320.00 |
By apportioning the tax burden on the basis of full value, the following results:
| Town | Assessed Value | Tax Rate | Total Tax |
|---|---|---|---|
| A | 8,000 | 33.32 | $266.56 |
| B | 2,500 | 106.66 | $266.65 |
| Part of | |||
| C | 5,000 | 53.20 | $266.00 |
| D | 5,000 | 53.31 | $266.55 |
Although the tax rates vary, the tax burden is shared equitably among the property owners. It must be emphasized that this example assumes that the assessors in any given town are assessing all properties at the same percentage of full value. However, if a town assesses one type of property at a higher percentage of full value than other types of property, the total amount to be collected in the town will remain the same but the distribution of the burden within the town will change with one type of property within the town paying more than its fair share and other types of property paying less than their fair share. This would apply not only to school taxes but to all taxes collected within the town and the owner of the type property adversely affected is afforded administrative and judicial remedies pursuant to Articles 5 and 7 of the Real Property Tax Law.
October 8, 1969
