Consider a state with two school districts. District 1 has a property tax base of 250,000 per student and taxes itself at 1.5%. District 2 has a property tax base of 750,000 and taxes itself at 1%. Assume District 2 declines all state aid. What value for the guaranteed tax base (V*) would equalize total per pupil spending in District 1 to that of District 2 assuming each district maintains its current tax rate?
First to understand this question, we must understand Guraranteed tax base, whichis GTB programs assure that each locality can work as if all school districts had an equal per pupil property tax base. The state decides its part of disbursement for the total cost of education.
The calculation is as below:
District 1 $250000=1.5 %x$250000=$3750
District 2 $750000=1%x$$750000=$7500
Equalize spending = $3750(different between the two taxes which is $7500-$3750=$3750).
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