Some Background Having tangled with some unscrupulous local attorneys, I have become aware of a tactic that they use, often successfully, to try to get things by Lower Saucon Township and the Saucon Valley School District. They tell a lie right up front and quickly load up all kinds of legalisms right behind it that sound all official and everything so the lie goes by unnoticed and then becomes accepted without question. The cost of development is kind of like that because it's based on a misconception that almost everyone has about new housing: "The tax base grows and therefore more revenue comes into the school district."
Revenue vs. Expenses The question is: How many new homes generate enough tax revenue for their school district to actually pay for the education of the students living in the home? What are those asterisks in the preceding paragraph? What does is really cost to educate a student in the Saucon Valley School District? The bad news doesn't end there.
You probably linked here from The Great Pennsylvania Property Tax Calamity
Page so you already know something about Pennsylvania's inequitable property tax assessment conditions. The purpose of this page is to dispel some misconceptions about residential development and its impact on existing property owners in the school district where it occurs. I am presenting this information as a result of my own experience, but it shouldn't take much for you to realize that your situation is most likely quite similar.
It's true that the tax base grows and therefore more revenue comes into the school district, but it's also true that the cost base grows far more than the tax base. This is something rarely discussed by anyone and NEVER discussed by residential developers. For example, Lower Saucon School District officials say that it costs about $6700* to educate one student per year. Of the $9000 in property taxes that I pay for my over-assessed property, about $6500 goes to the school district, approximately enough to educate one student*. (I have three children.) But guess what? The average property in the Saucon Valley School District pays about $2500* to the district. If every property in the district had only one child living in it, the shortfall to the district would be about $4200* a property, a fiscal nightmare especially since Lower Saucon Township basically has no industry in its tax base. Of course, there are many properties where no students reside, and it is the owners of those properties who make up the difference.
The answer is: Almost none. The reality is that for every new home with children, the additional burden to educate those children is placed on the property owners already living in the district. So when you see that tract housing going in, don't cheer, brace yourself!
It's time for another amazing revelation about how things are done in Pennsylvania. The $6700 average cost per student in the Saucon Valley School District isn't really the average actual cost. The people in Harrisburg allegedly responsible for educating our children cooked up a formula which school districts must use to tell people what it costs to educate a student. The rationale behind the formula is for the purpose of comparing school districts to each other, not for calculating the real cost. That's done so when someone wants to send their child to a district other than the one in which they reside, the new district can give them a figure which the student's guardians must pay to the district. Since every reasonable person thinks "the annual cost to educate a student" is the annual cost to educate a student, the real cost is never discussed and the devastating consequences of residential development reality are rarely known.
This is a no brainer really, but until you have school district residents closely examining the district's finances, it doesn't come to light. The real annual cost to educate a child in the Saucon Valley School District is about $12,000, or 79% more than the answer you get when you go into the offices of the administration to ask. The Saucon Valley administrators aren't trying to deceive you, they're only doing what Harrisburg has told them to do. And here's how you come up with the real cost, you can certainly do the same thing in your school district, this is information they must tell you by law. You divide the annual school budget by the number of students. Period. No fancy formulas, constants, fudge factors, deviations, equalization multipliers or bureaucratic doublespeak. In my case that's $26,000,000 divided by 2200 students = $11818 each year per student. Harrisburg, in their effort to equalize things between districts doesn't take into consideration some administrative costs, building costs, etc.
In case you're questioning the above, remember that The Common Man is presently devoted to Pennsylvania's bogus property assessment system that favors the expensive properties. Consider how the facts in the table below enter into the taxation tyranny of this state:
| Annual Student Cost | $11818 |
| School District Tax Rate (Millage) | $37.53 per $1000 of assessment |
| Assessment needed to generate $11818 | $11818 / $37.53 x 1000 = $314,895 |
| Assessment Percentage of alleged valuation | 50 |
| Valuation needed to generate $11818 | Assessment x 2 = $629,790 |
| Assessment "discount" given to a $629,790 property | About 32% yielding a taxable value of $428,257 |
| Valuation with 32% discount needed for $11818 revenue | $926,161 |
| But the assessment "discount" given to a $926,161 property is | about 50% yielding a taxable value of $463,081 |
| Actual "discounted" sale price required for $11818 in revenue? | $1,852,322 |
| Properties sold for at least $1,852,322 last three years? | 2 |
| Properties in Saucon Valley School District | About 9000 |
You can see from the table above that very very few homes generate enough revenue for the Saucon Valley School District to educate just one student. What of the much less expensive homes that four or six children live in? What of the 4 bedroom homes that are being built all over the state? Who is going to pay for the education of the children who live in them? You are, the property owner who is already paying property taxes in your district.
A thought
Perhaps you have heard of a "connection fee". This is the cost to connect the plumbing in a new home to a water distribution system, be it public or private. This is also a fee that a homeowner who has decided to stop using his well sometimes pays when he wants to connect to a municipal water supply. Often this "connection fee" is thousands of dollars even though the actual labor and materials required to make the connection are far less. Why is that? It's because a water distribution system is very expensive to build and very expensive to maintain especially with ever more stringent DEP testing and maintenance requirements. Look at it this way: You move into a new home, not even one in a development, and you connect to the water system. You immediately get the benefits of all the construction and maintenance that have been done for decades. If you only paid for the contractors to physically connect the pipes for you, your cost might be $500-$800. But the residents in the area have been paying water bills to build the system and its improvements and maintain it for years. So, in order to make you pay for those years of water bills to at least some extent, you are charged a connection fee.
Why is a school district any different? Why should the property owners who move into a new development be able to take advantage of the school district's resources without ever having contributed one cent toward them? Why should a family of 4 who moves into a new tract home that cost them $300,000 use the schools when the cost to the school district for those two children is about $24,000? If a "connection fee" is legitimately recognized for water systems, why isn't say a "bedroom fee" applied to new housing? (It's because the wealthy developers have attorneys who won't let it happen.)
What about that "bedroom fee"? Again, it's just a thought, but what if developers were charged a "bedroom fee" for every bedroom more than one in each of the homes they built? Suppose it was $10,000 a bedroom and was paid, upon approval of the municipality in which it was being built, immediately and directly to the school district in which the home was to be built? This would of course raise the cost of all the homes in the municipality thereby making it more difficult for developers especially since these fees would be up front and out of pocket, but hey, when was the last time you saw a developer driving a beat up car? When was the last time you saw a developer driving an expensive brand new car? Think about it.
Even if it was $10,000 per bedroom, as outrageous as any developer who reads this thinks it sounds, the chances are that the $10,000 fee would only cover the cost to educate the child who would study in that bedroom for the first year. Amazing, isn't it?
Welcome to the high cost of education and the myth that residential development is financially a good idea for any community!
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