The Joint Fiscal Office briefed the Senate Finance Committee on the fiscal mechanics of Act 73 on Thursday, emphasizing that many elements are contingently effective and depend on follow‑up work.

"The established foundation formula in Act 73 set a base of 15,033 per student," a JFO presenter said, and explained the formula applies weights for pre‑K, tiered English learners, special education categories and economically disadvantaged students. The presenter said the base is adjusted annually for inflation and that, if contingencies are met, the new foundation formula would replace the state’s existing education funding structure.

The JFO described supplemental district spending (SDS) as a voter‑approved option allowing districts to spend above the foundation formula. If a district asks voters to approve SDS, "a school district decides it wants to spend up to 5% of its long term membership multiplied by the base amount," the analyst said; the resulting SDS tax would be raised through a local property tax equalized statewide, with amounts raised above the lowest‑wealth district’s yield recaptured at the state level into a reserve intended to lower future property taxes.

On property classifications, the JFO said Act 73 splits the former nonhomestead category into "nonhomestead residential" (examples given: second homes and short‑term rentals) and "nonhomestead nonresidential" (all other taxable property). The Department of Taxes has published a property classification report linked in JFO materials and the presenter said some technical cleanup may be necessary to clarify mixed‑use buildings and other edge cases.

The office also explained the homestead exemption that replaces the current income‑based property tax credit: the exemption applies as a percentage against the first $425,000 of equalized house site value and is tiered by household income so that lower‑income households receive larger exemptions. The presenter noted the statutory exemption parameters and many of the modeling inputs are indexed to inflation.

JFO emphasized that the modeling underpinning these estimates relies on assumptions (the office said it used FY2025 data and other simplifying assumptions) and that several funding changes in Act 73 are “contingently effective” pending completion of a cost‑function report and adjustments to school district boundaries. JFO listed three transition mechanisms included in the act: an education opportunity payment transition (phased by 80%/60%/40%/20%), an SDS cap that starts higher and phases to 5% by FY2038, and a phased homestead tax rate transition through FY2033.

The committee asked JFO and the Agency of Education for additional district‑level numbers and analysis to show how these mechanics and transition timelines would affect local budgets and tax rates. The JFO presenter left supporting slides and data on the committee page for members to review.

The presentation concluded with the committee scheduling follow‑up sessions to review Agency of Education forecasts and State Board of Education recommendations before further action.