THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY SIMMONS, METCALFE, BLOOM AND CALTAGIRONE, APRIL 30, 2012

REFERRED TO COMMITTEE ON FINANCE, APRIL 30, 2012  

AN ACT

Amending the act of June 27, 2006 (1st Sp.Sess., P.L.1873,

No.1), entitled "An act providing for taxation by school

districts, for the State funds formula, for tax relief in

first class cities, for school district choice and voter

participation, for other school district options and for a

task force on school cost reduction; making an appropriation;

prohibiting prior authorized taxation; providing for

installment payment of taxes; restricting the power of

certain school districts to levy, assess and collect taxes;

and making related repeals," further providing for adoption

of preliminary budget proposals and for public referendum

requirements for increasing certain taxes.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 311(d)(3) and (4) of the act of June 27,

2006 (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer

Relief Act, are amended to read:

Section 311.  Adoption of preliminary budget proposals.

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(d)  Resolution.--

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[(3)  A board of school directors that adopts a

resolution under this section shall not be eligible to seek

referendum exceptions under section 333(f), and section

333(e) shall not apply.]

(4)  Upon receipt of the information required under

paragraph (2)(ii), the department shall compare the proposed

percentage increase in the rate of the tax with the index.

Within ten days of the receipt of the information required

under this subsection, the department shall inform the school

district whether the proposed tax rate increase is less than

or equal to the index. If the department determines that the

proposed percentage increase in the rate of the tax exceeds

the index, the school district shall be subject to

subsections (a) and (c), and [paragraphs (2)(i) and (3)]

paragraph (2)(i) shall not apply. The department's

determination under this paragraph shall not constitute an

adjudication.

Section 2.  Section 333(b) introductory paragraph, (c)(3),

(e), (f), (g), (h), (j), (n) and (o) of the act, amended June

30, 2011 (P.L.148, No.25), are amended and the section is

amended by adding a subsection to read:

Section 333.  Public referendum requirements for increasing

certain taxes.

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(b)  Prohibitions.--[Except as set forth in subsection (j),

unless] Unless there is compliance with subsection (c), a board

of school directors may not do any of the following:

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(c)  Referendum.--

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(3)  [Except as set forth in subsection (j), a] A school

district acting pursuant to this subsection shall submit the

referendum question required under this section to the

election officials of each county in which it is situate no

later than 60 days prior to the election immediately

preceding the fiscal year in which the tax increase would

take effect.

* * *

(e)  Tax rate submissions.--A school district that has

adopted a preliminary budget proposal under section 311 that

includes an increase in the rate of any tax levied for the

support of public schools shall submit information on the

increase to the department on a uniform form prepared by the

department. The school district shall submit such information no

later than 85 days prior to the date of the election immediately

preceding the beginning of the school district's fiscal year.

The department shall compare the proposed percentage increase in

the rate of any tax with the index. Within ten days of the

receipt of the information required under this subsection but no

later than 75 days prior to the date of the election immediately

preceding the beginning of the school district's fiscal year,

the department shall inform the school district whether the

proposed tax rate increase is less than or equal to the index.

If the department determines that the proposed percentage

increase in the rate of the tax exceeds the index, the

department shall notify the school district that:

(1)  the proposed tax increase must be reduced to an

amount less than or equal to the index; or

(2)  the proposed tax increase must be approved by the

electorate under subsection (c)(1)[; or

(3)  an exception must be sought under subsection (j)].

[(f)  Referendum exceptions.--A school district may, without

seeking voter approval under subsection (c), increase the rate

of a tax levied for the support of the public schools by more

than the index if all of the following apply:

(1)  The revenue raised by the allowable increase under

the index is insufficient to balance the proposed budget due

to one or more of the expenditures listed in paragraph (2).

(2)  The revenue generated by increasing the rate of a

tax by more than the index will be used to pay for any of the

following:

(iii)  Costs associated with the following:

(A)  For a board of school directors that elected

to participate in the former act of July 5, 2004

(P.L.654, No.72), known as the Homeowner Tax Relief

Act, to pay interest and principal on any

indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt.

B (relating to indebtedness and borrowing) prior to

September 4, 2004. In no case may the school district

incur additional debt under this clause except for

the refinancing of existing debt, including the

payment of costs and expenses related to such

refinancing and the establishment of funding of

appropriate debt service reserves. An increase under

this clause shall be rescinded following the final

payment of interest and principal.

(A.1)  For a board of school directors that did

not elect to participate in the former act of July 5,

2004 (P.L.654, No.72), known as the Homeowner Tax

Relief Act, to pay interest and principal on any

indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt.

B prior to the effective date of this act. In no case

may the school district incur additional debt under

this clause except for the refinancing of existing

debt, including the payment of costs and expenses

related to such refinancing and the establishment of

funding of appropriate debt service reserves. An

increase under this clause shall be rescinded

following the final payment of interest and

principal.

(B)  To pay interest and principal on any

electoral debt incurred under 53 Pa.C.S. Pt. VII

Subpt. B. An increase under this clause shall be

rescinded following the final payment of interest and

principal.

(E)  For purposes of this subparagraph, electoral

debt includes the refunding or refinancing of

electoral debt for which an exception is permitted

under clause (B) as long as the refunding or

refinancing incurs no additional debt other than for:

(I)  costs and expenses related to the

refunding or refinancing; and

(II)  funding of appropriate debt service

reserves.

(F)  For purposes of this subparagraph,

indebtedness includes the refunding or refinancing of

indebtedness for which an exception is permitted

under clauses (A) and (A.1) as long as the refunding

or refinancing incurs no additional debt other than

for:

(I)  costs and expenses related to the

refunding or refinancing; and

(II)  funding of appropriate debt service

reserves.

(v)  Costs incurred in providing special education

programs and services to students with disabilities if

the increase in expenditures on special education

programs and services, net of State special education

payments, was greater than the index. The dollar amount

of this exception shall be equal to the portion of the

increase that exceeds the index.

(g)  Revenue derived from increase.--Any revenue derived from

an increase in the rate of any tax allowed pursuant to

subsection (f)(2)(iii) shall not exceed the anticipated dollar

amount of the expenditure.

(h)  Limitation on tax rate.--The increase in the rate of any

tax allowed pursuant to an exception under subsection (f)(2)(v) 

or (n) shall not exceed the rate increase required as determined

by the department pursuant to subsection (j).

(j)  Department approval.--

(1)  A school district that seeks to increase the rate of

tax due to an expenditure under subsection (f)(2)(iii) or (v)

or (n) shall obtain the approval of the department before

imposing the tax increase. The department shall establish

procedures for administering the provisions of this

subsection, which may include an administrative hearing on

the school district's submission.

(2)  A school district proceeding under the provisions of

this subsection shall publish in a newspaper of general

circulation and on the district's publicly accessible

Internet site, if one is maintained, notice of its intent to

seek department approval at least one week prior to

submitting its request for approval to the department. If the

department schedules a hearing on the school district's

request, the school district shall publish notice of the

hearing in a newspaper of general circulation and on the

district's publicly accessible Internet site, if one is

maintained, immediately upon receiving the information from

the department. The notice shall include the date, time and

place of the hearing.

(3)  The department shall approve a school district's

request under this subsection if a review of the data under

paragraph (4) demonstrates that:

(i)  the school district qualifies for one or more

exceptions under subsection (f)(2)(iii) or (v) or (n);

and

(ii)  the sum of the dollar amounts of the exceptions

for which the school district qualifies makes the school

district eligible under subsection (f)(1).

(4)  For the purpose of determining the eligibility of a

school district for an exception under subsection (f)(2)(v),

the department shall utilize data from the most recent school

years for which annual financial report data required under

section 2553 of the Public School Code of 1949 has been

received. The department shall inform school districts of the

school years determined under this subsection no later than

30 days prior to the date on which public inspection of

proposed school budgets is required under section 311(c).

(5)  (i)  The department shall rule on the school

district's request and shall inform the school district

of its decision no later than 55 days prior to the date

of the election immediately preceding the beginning of

the school district's fiscal year.

(ii)  If the department approves the request, the

department shall determine the dollar amount of the

expenditure for which the exception is sought and the tax

rate increase required to fund the exception.

(iii)  If the department denies the request, the

school district may submit a referendum question under

subsection (c)(1). The question must be submitted to the

election officials no later than 50 days prior to the

date of the election immediately preceding the beginning

of the school district's fiscal year.

(6)  Within 30 days of the deadline under paragraph (5)

(i), the department shall submit a report to the President

pro tempore of the Senate, the Minority Leader of the Senate,

the Speaker of the House of Representatives and the Minority

Leader of the House of Representatives enumerating the school

districts which sought an exception under this subsection.

The department shall also publish the report on its publicly

accessible Internet site. The report shall include:

(i)  The name of each school district making a

request under this subsection.

(ii)  The specific exceptions requested by each

school district and the dollar amount of the expenditure

for each exception.

(iii)  The department's ruling on the request for the

exception.

(iv)  If the exception was approved, the dollar

amount of the expenditure for which the exception was

sought and the tax rate increase required to fund the

exception.

(v)  A statistical summary of the information in

subparagraphs (ii), (iii) and (iv).]

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[(n)  Treatment of certain required payments.--

(1)  The provisions of subsections (f) and (j) shall

apply to a school district's share of payments to the Public

School Employees' Retirement System as required under 24

Pa.C.S. § 8327 (relating to payments by employers) if the

increase in estimated payments between the current year and

the upcoming year, as determined by the department under this

section, is greater than the index.

(2)  For purposes of this subsection, the following

apply:

(i)  The school district's share of payments as

required by 24 Pa.C.S. § 8327 for the current year shall

be determined by the department using:

(A)  The lesser of the school district's total

compensation for the current year or the school

district's total compensation for the 2011-2012

school year.

(B)  The employer contribution rate under 24

Pa.C.S. § 8328 (relating to actuarial cost method)

for the current year.

(C)  A State retirement subsidy calculation based

on the school district's total compensation under

clause (A) and the employer contribution rate under

clause (B).

(ii)  The school district's share of payments as

required by 24 Pa.C.S. § 8327 for the upcoming year shall

be determined by the department using all of the

following:

(A)  The lesser of the school district's:

(I)  estimated total compensation for the

upcoming year; or

(II)  total compensation for the 2011-2012

school year.

(B)  The employer contribution rate under 24

Pa.C.S. § 8328 for the upcoming year.

(C)  A State retirement subsidy calculation based

on the school district's total compensation under

clause (A) and the employer contribution rate under

clause (B).

(3)  The dollar amount to which subsection (f) applies

shall be determined as follows:

(i)  Multiply:

(A)  the index; by

(B)  the school district's share of payments for

the current year, as determined by the department

under this subsection.

(ii)  Subtract:

(A)  the product under subparagraph (i); from

(B)  the amount of increase, as determined by the

department under this subsection, in the school

district's share of payments between:

(I)  the current year; and

(II)  the upcoming year. 

(4)  As used in this subsection, the term "compensation"

has the meaning ascribed in 24 Pa.C.S. § 8102 (relating to

definitions).

(o)  Rescission.--

(1)  Any increase in a rate of a tax levied for support

of the public schools imposed prior to or during the

2011-2012 school year under a referendum exception granted,

prior to the effective date of this subsection, under

subsection (f)(2)(i), (ii) or (iii)(C) and (D) shall be

rescinded:

(i)  immediately following fulfillment of the court

order or administrative order that was the basis for the

referendum exception;

(ii)  immediately following the payment of costs to

resolve a condition which posed an immediate threat of

serious physical harm or injury to the students, staff or

residents of the school district that was the basis for

the referendum exception; or

(iii)  following the final payment of interest and

principal related to the indebtedness.

(2)  For the purposes of this subsection, the term "final

payment of interest and principal" does not include a school

district's payment of debt as a result of refunding or

refinancing the debt.]

(p)  Rescission.--

(1)  Any increase in a rate of a tax levied for support

of the public schools imposed prior to or during the

2012-2013 school year under a referendum exception granted

under this section or section 333 of the former Homeowner Tax

Relief Act shall be rescinded:

(i)  immediately following fulfillment of the court

order or administrative order that was the basis for the

referendum exception;

(ii)  immediately following the payment of costs to

resolve a condition which posed an immediate threat of

serious physical harm or injury to the students, staff or

residents of the school district that was the basis for

the referendum exception; or

(iii)  following the final payment of interest and

principal related to the indebtedness.

(2)  For the purposes of this subsection, the term "final

payment of interest and principal" shall not include a school

district's payment of debt as a result of refunding or

refinancing the debt unless the original debt has been fully

paid.

Section 3.  The amendment of section 333 of the act shall

apply to any proposed tax increase that takes effect in a fiscal

year beginning after December 31, 2012.

Section 4.  This act shall take effect July 1, 2012, or

immediately, whichever is later.