Delaware Court Says Outdated Property Values Hurt Schools

DOVER, Del. (CN) — In a 150-page opinion Friday, a Delaware chancellor rapped state officials for skimping on public school funding by relying on property tax values that are more than 30 years old.

In Delaware, one-third of the funding for public schools comes from local taxes, which are levied using the assessment rolls prepared by Delaware’s three counties.

“It is undisputed that when preparing their annual assessment rolls, the counties use valuations from three and four decades ago,” Vice Chancellor J. Travis Laster wrote for the Court of Chancery on Friday. “Sussex County uses valuations that became effective in 1974. New Castle County uses valuations that became effective in 1983. Kent County uses valuations that became effective in 1987.”

Laster ruled that the state officials who engaged in these property tax assessment schemes violated the rule that all property be assessed at “its true value in money.”

This method also violates a provision of the Delaware Constitution that mandates uniform taxation of property owners, the court found.

“Owners whose properties have appreciated more pay a lower effective rate than owners whose properties have appreciated less,” Laster wrote. “The counties' outdated assessments conceal a reality of non-uniformity beneath a cloak of uniformity.”

Noting that schools and counties are both dependent on tax assessments for financing, Laster said that remedying the issue will require additional proceedings. 

“It could cause significant disruption to important public services if the administration of that system was suddenly brought to a halt,” he wrote. “Any remedial calculus must take into account a range of equities and considerations.”

Friday’s ruling came five months after the court heard arguments — a delay Laster attributed to the emergence of the Covid-19 pandemic. He said a bigger consequence of the crisis has been the new financial strain on “many households, businesses, and local and state governments.”

“While the effects of the pandemic do not mean that the counties can continue indefinitely to operate a local tax system that violates the Delaware Constitution and the Delaware Code, the effects of the pandemic likely will introduce additional and significant considerations for the remedial calculus, particularly regarding the timing of a remedy,” the opinion emphasizes. “Evaluating those and other issues must await the remedial phase.”

The American Civil Liberties Union, which brought the underlying suit with a state chapter of the NAACP and a group called the Delawareans for Educational Opportunity, applauded the ruling Friday. 

“Fixing the counties’ inequitable and outdated system of property tax assessment is an important step toward ensuring that education funding in Delaware is fair and adequate,” Mike Brickner, executive director of ACLU of Delaware, said in a statement. “Any new funding system must be designed to meet the needs of all of Delaware's children, especially those who have historically been marginalized and underserved.” 

After this lawsuit was filed, Delaware Governor John Carney and state lawmakers set aside $75 million over three years for low-come and students who are learning English as a second language.

The challengers have termed this sum appreciated but not sufficient. A separate trial in which state officials are named as defendants remains pending. Laster refused to dismiss the suit last year, citing allegations about how the state has allocated funds and allowed educational resources to become resegregated by race and class.

In their court filings, the ACLU quotes state testing data showing that 64% of low-income students, 85% of ESL students and 86% of students with disabilities did not meet the state standards in grades three through eight for English language arts.

In those grades, 74% of low-income students, 81% of ESL students and 89% of students with disabilities were below the state’s math standards.

The percentages moved higher for high school students.

The Delaware Attorney General’s Office did not respond to a request for comment.

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