Budget Development and Planning - Property Valuation

Background Information

Property value is the dollar-value placed on land and buildings for the purposes of administering property taxes.

The two commonly-used methods of valuing property in Wisconsin are "assessed" and "equalized." Assessed valuation is property value as determined by the local municipal assessor on January 1 in any given year. Equalized valuation results when the Department of Revenue (DOR) applies an adjustment factor to the assessed value. The adjustment factor incorporates, among other elements, actual property sales in the municipality during the past year and is meant to ensure each type of property has comparable value regardless of local assessment practices. Most state computations use equalized value, otherwise known as "fair market" value. Fair market value can be further defined as the value that would be agreed upon between a willing buyer and a willing seller in an "arm's length" transaction where neither is required to act.

The first time school districts receive the new-year information in an official value certification is in October. The October 1 Tax Apportionment Value Certification is used to apportion levies and determine municipal tax bills. After October 1, the Department of Revenue may refine this same set of numbers until a "final" version is issued the following May (almost 1 1/2 years after the original assessment). This final version is known as the School Aid Value Certification and will be used in the FOLLOWING year's Equalization Aid formula. So, as an example, property value as of January 1, 2007 will eventually be used in the 2008-09 Equalization Aid computation.

It is important that districts understand which values are used for what computations.

Click on Glossary of Finance Terms for further information on property valuation (includes a discussion of the Tax Incremental Finance TIF Increment).

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Tax Apportionment Property Valuation Information Used in Setting the Levy

24-Year History of Property Valuation, Levies, and Tax Rates

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School Aid Property Valuation Used in the Equalization Aid Formula

The amount of Equalization Aid a district receives is generally based on how its value per member (district equalized property value divided by district membership) compares with the state average value per member (all unduplicated equalized value in the state divided by statewide membership). (See Membership Report for an explanation of membership.)

Equalization Aid is distributed in inverse proportion to district value per member - that is, the more value per member a district has, the less Equalization Aid it will receive. The state average value per member is also known as the Tertiary Guarantee, one of 3 state wealth benchmarks in the Equalization Aid formula. (See Equalization Aid for an explanation of the Equalization Aid formula.)

Many factors can affect the level of Equalization Aid a district may receive in any specific year, but it can generally be assumed that if a district's value per member, as a percent of the state average value per member, is increasing over time, the district will be receiving less Equalization Aid over time (and the reverse). The following district-by-district history displays 18 years of district value per member as a percent of the state average value per member. This visual representation will assist viewers in understanding what may be happening to a specific district within the Equalization Aid formula.

18-Year Equalization Aid Value-Per-Member History

Please call a finance consultant if you have further questions.

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For questions about this information, contact dpifin@dpi.wi.gov (608) 267-9114

Last updated on 8/21/2008 1:42:40 PM