Colonial School District CFO outlines tax-rate reset, warns half-billion in assessed value at risk

Emily Falcon, chief operating financial officer for the Colonial School District, told the board at its June meeting that Delaware law requires the district to reset its tax rate after county reassessments and recommended the board set a new rate at its July meeting.

Falcon said the statutory reset must be done so a district— oes not realize more than a 10% increase in revenue from the previous year. "Delaware law requires that when there is a reassessment, we reset our rate in a way that will generate no more at its maximum as and this that's a quote from the statute, at its maximum would realize no more than a 10% increase in actual revenue from the previous year," she said.

The nut graf: Falcon said New Castle County provided a data file with new assessed values but the formal appeals process and exemption adjustments remain incomplete, leaving a large, uncertain portion of the new base potentially reducible. She said, based on current assumptions, "about a half a billion dollars of assessed value that is at risk." That uncertainty will shape recommendations the CFO will present in July and constrain the board's ability to calculate precise taxpayer impacts now.

Most important facts first: Falcon summarized how the district's tax rate is composed (operating, debt service, match/tuition components) and explained the reset is charged per $100 of assessed value. She said New Castle and Sussex County reassessments take effect July 1 and that, because values rose sharply, the district must choose a rate that adheres to the statutory limit on revenue change.

Falcon listed the main unknowns: ongoing formal appeals to New Castle County (many appeals did not include a requested value), county exemptions for seniors and residents with disabilities that have not yet been reindexed to the new base, and properties that came online after last year's base and are not included in the provided file. On the appeals file, she said, "of the appeals that did have a requested value associated with them, the parcel owner was asking for roughly a 34% reduction in the assessed value," and that figure was used to model risk for parcels without a stated requested value.

Board members pressed for numbers and scenarios. One board member asked whether the appeals process would be complete before the July vote; Falcon said it would not and that she would bring a menu of options to the board next month: conservative, moderate and aggressive rate recommendations along with projected impacts. Falcon also said some colleagues in New Castle County are planning to treat the entire at-risk value as potentially uncollectible, which would reduce the district's new taxable base substantially if adopted.

Falcon gave an order-of-magnitude example to show how the reassessment changes the base and complicates comparisons to prior rates: the district's FY25 collected base was roughly $3.159 billion, while the new base is several times larger, creating the need to reset the rate so the district does not automatically take in a large, unintended revenue increase.

Why this matters: the board must set a new rate in July that balances the statutory reset, the operating referendum revenue the district is already collecting, and the board's discretion to retain up to 10% of additional revenue from reassessment. Falcon told the board that using discretionary authority could extend referendum funding several years but also warned that insufficiently conservative choices could leave the district with less revenue than expected if appeals succeed.

Falcon closed by asking the board what numbers and scenarios they wanted to see at the July meeting; she said the board will receive the materials seven days before the vote when the board packet is posted. She committed to presenting specific projections and worst-case scenarios next month.

Ending: The board did not take a formal vote on a rate at the meeting. The CFO will return in July with numerical scenarios and recommendations so the board can set a proof rate for New Castle County to include on property tax bills.