In accordance with Section 171 subdivision twenty-fifth of the Tax Law, as amended by Chapter 436 of the Laws of 1997, the Executive Director of the Office of Real Property Services, the Commissioner of Taxation and Finance, and the Commissioner of Education entered into a Memorandum of Agreement which sets forth the procedures to assign school district codes for the purpose of aggregating 2001 personal income data for use in determining state aid for education in the 2003-2004 school year. The agreement also continued an interagency School District Income Verification Liaison Policy Committee to ensure the coordination and timely progress of the program, to prepare a report evaluating the program, and to make recommendations for future improvements.

This report summarizes the ninth year of the program in which 99.4 percent of taxpayer address records were successfully assigned a school code, of those which could be assigned. In addition, the Liaison Committee welcomed the official participation of school and BOCES district representatives, who provided valuable input and feedback on program’s procedures.

This report consists of an executive summary, a description of the program methodology and results, analysis, initiatives, a process flow chart, a glossary of terms, and an appendix containing additional program statistics by individual school district.

We would also like to acknowledge the participation and cooperation of superintendents of schools, District Superintendents, the Chancellor of the City School District of the City of New York, and County Directors of Real Property Tax Services (or their equivalent) throughout the State.

Respectfully submitted,

The following agency staff provided assistance and guidance during the course of the program:

Patricia Cohen - Agency Liaison

Bill Bubniak

Harry Sheevers William Westphal

Willard Van Horne - Agency Liaison

James A. Kadamus Joan Gavrilik

Bob Murphy Linda Papale

Matt Reilly

Joseph Malatino – Agency Liaison

Michael McDermott

Liaison Committee (School District Representation)

Deedrick Bertholf

SECTION  

Acknowledgements

Executive Summary

Program Methodology Description and Results

Phase 1: School District Boundary Review/Correction

Phase 2: Assignment of School District Codes by ORPS

Phase 3: School District Address Review Process

Phase 4: Processing of School District Corrections

Year 10: Further Address Review

Program Results and Analysis

Continuing Quality Improvements

Since 1980, personal income wealth has been used in the calculation of state aid to public school districts. From that time on, income wealth has been attributed to school districts based on the school district codes reported by residents on their personal income tax returns. Concern over the accuracy of taxpayer reported school district codes resulted in the creation of a statewide system for the assignment of school district codes to taxpayer addresses.

First implemented in accordance with Chapter 50 of the Laws of New York State (1993), the statewide School District Income Verification (SDIV) Program has continued to demonstrate that a statewide computerized matching system is an appropriate and cost effective means of assigning school district codes to taxpayer address records. The current system was first authorized by a 1994 amendment to Section 171, subdivision twenty-fifth, paragraph d of the Tax Law, and assigned school district codes to 1995 personal income tax returns for the purpose of aggregating income data to be used in determining state aid for education for the 1997-98 and 1998-99 school years. School district codes assigned to 2001 tax returns will be used for determining state aid for the 2004-2005 school year as required by the Tax Law. As also required by the Tax Law, a Memorandum of Agreement (MOA) governing the program was executed by the Executive Director of the Office of Real Property Services, the Commissioner of Taxation and Finance, and the Commissioner of Education and was approved by the Director of the Budget on September 23, 2002.

The system developed by the Office of Real Property Services (ORPS) under the direction of an interagency Liaison Committee was again able to correct or newly assign school codes to over 750,000 (from Appendix B) taxpayer addresses. As in previous years, districts were provided an opportunity to participate in the review of several categories of address records attributed to their district. This voluntary review was undertaken by 257 New York State school districts in Year 10 whose aid is dependent upon personal income wealth. Any changes recommended by a participating school district as a result of the review were implemented if they were certified by the District Superintendent (DS) of the appropriate Board of Cooperative Educational Services (BOCES). Of the 756,337 address records for which school codes were corrected or newly assigned, 12,168 resulted from this school district address review process. The remaining 744,169 addresses had school codes corrected or newly assigned by one of the automated methods of the program.

A comparison of correction rates over the ten-year period of the SDIV program is illustrated in Figure 1. System corrections refer to instances in which the taxpayer address is attributed to a different school district than the first one reported by the taxpayer. These corrections may be due to computerized assignment methods or to DS corrections described above. These corrections, when divided by the total number of address records processed, yield a "system correction" rate expressed as a percentage. The system correction rate increased from 5.80 percent in Year 1 to 11.82 percent in Year 5, before dropping to 7.69 in Year 6. However, after the relatively flat trend of Year 7 & 8, the system correction rate climbed back to 10.5% and 9.9% in Years 9 and 10, respectively. Improvements in the processing methods have allowed for more records to be corrected by the system techniques. Based upon the system rates of the last two years, these correction rates may have plateaued.

As the figure reveals, since Year 2, when the DS correction rate was 6.89 percent, there has been a steady but slowing reduction in DS error correction rates, which were down to 2.00 in Year 7. It rose slightly in Years 8, 9 and 10 to 2.89, 2.65 and 2.96 percent, respectively. Nevertheless, the continued downward slope in DS correction since Year 2 is evidence of the increased effectiveness of the overall system-wide assignment process.

The taxpayer address information provided by the Department of Taxation and Finance (DTF) was used solely for the purpose of assigning school district codes corresponding to the permanent residential address of taxpayers. The information was divulged only to persons with the need to know in furtherance of this purpose. All persons permitted to inspect the information were required first to sign DTF's "Agreement to Adhere to the Secrecy Provisions of the Tax Law and the Internal Revenue Code" (Form EN-202). This extra measure provides further confidentiality ("secrecy") assurance of taxpayer information. As an aid to understanding the terminology of this report, a glossary appears in Appendix D.

In accordance with Section 171 subdivision twenty-fifth paragraph d of the Tax Law as amended by Chapter 170 of the Laws of 1994, and Chapter 436 of the Laws of 1997, the Executive Director of the Office of Real Property Services (ORPS), the Commissioner of Taxation and Finance (DTF), and the Commissioner of Education (SED) entered into a Memorandum of Agreement which was approved by the Director of the Division of the Budget (DOB) on September 23, 2002. This agreement defined the roles of the participating agencies in implementing a statewide School District Income Verification Process (SDIV), described methodologies, set deadlines for various phases of the program, and continued a Liaison Committee to guide the program.

SDIV staff, under the direction of the Liaison Committee, designed, tested, and implemented a methodology to assign school district codes to tax year 2001 taxpayer address records supplied by the Department of Taxation and Finance.

This section details the procedures, software, data, methods, rationale, and results of the Year 10 SDIV process.

Each of the following steps and their results are described in the following pages:

• School district maps were sent to school districts requesting to participate in the boundary review/correction, the first step of the Year 10 process.
• DTF processed Year 10 (tax year 2001) taxpayer reported personal income tax (PIT) information and transmitted computerized files to ORPS.
• ORPS processed Year 10 PIT address records using various methods to assign school codes.
• The School District Address Review process for Year 10 was conducted.
• ORPS transmitted a final file to DTF. DTF provided aggregated school district income data to the State Education Department and the Division of Budget. SED used these figures to calculate state aid for education.
• A Year 10 Further Address Review process was implemented, permitting districts which participated in the Phase 3 Address Review to submit a request for review following their receipt of the 2000 adjusted gross income results for their district. Compelling evidence of potential errors in the attribution of adjusted gross income to the district had to be provided via a formal written request to the SDIV Liaison Committee.

The SDIV program uses taxpayer supplied address information in concert with digital school district boundaries to assign school district residence codes to these addresses. The first phase of the program allowed districts to review and correct as necessary, their boundaries as shown on ORPS produced maps. In October of 2002, maps were sent to districts for review. Most districts (634), in the ORPS GIS had complete digital tax map (DTM) boundaries, that is, boundaries taken from approved digital or paper real property tax maps. Others (34), have boundaries composed of both DTM and non-DTM portions. While, still others (15 - excluding New York City districts), have boundaries from only non-DTM sources. To correct DTM boundary portions, districts sent ORPS paper or digital tax maps that portrayed the correct boundary portion(s). To correct non-DTM portions, districts manually drew approximate boundary corrections with the written consent of the affected district(s). The following counties did not have complete DTM school boundaries in the ORPS GIS at the time maps were created for review:

DTM boundary portions for districts in these counties will be incorporated into the ORPS GIS as they become available.

DTF performed address "scrubbing" to correct and standardize address components of the 8,103,609 records that made up the tax year 2001 PIT data transmitted to ORPS for Year 10 processing.

In October 2002, DTF prepared address labels for New York State personal income tax forms for the over eight million taxpayers who reported their 2002 income. In order to increase the accuracy of taxpayer school district code reporting, the codes printed on the mailing labels were updated using the corrections made in the Year 9 SDIV program.

As mentioned in the DTF Address Processing section above, DTF supplied ORPS with taxpayer addresses which had been scrubbed by DTF software. ORPS then scrubbed the taxpayer addresses using a different software package in order to delineate address components for various stages of processing.

As a result of the address scrubbing, 7,634,557 address records were identified as ORPS "assignable," i.e., records eligible for assignment of a final school district code unless changed during the school district address review. A total of 469,052 address records were deemed "unassignable" or ineligible for address assignment. These included two categories of unverifiable records and the previous year corrected records (see Appendix B).

The first unverifiable category consists of addresses to which mail is delivered but which are either outside of New York State or are those at which no taxpayer physically resides. This group includes 445,986 out-of-state, post office box, general delivery, and business firms or non-residential addresses. A school district code assigned based on the location of these addresses would not be reliable because persons using these addresses either live out of state or choose to have their mail delivered to these addresses but do not necessarily reside there. These 445,986 address records, whose taxpayer reported school codes were not changed by ORPS processing, were excluded from the Phase 3 School District Address Review.

The second category of unverifiable address records consists of mailing addresses which correspond to actual taxpayer residence addresses, but which are not specific enough to accurately determine their geographic location by automatic processes. This group is made up of rural route and highway contract addresses. Since it is possible for a rural route or highway contract to cross school district boundaries, any school district code assigned to these type of addresses by the current SDIV processing methodology would be unreliable. However, the 23,066 rural route and highway contract addresses identified statewide were eligible for review and correction by school districts participating in the address review on the Unassigned lists.

As part of the address scrubbing process, an address record type code was assigned which provided information about the nature of the address. This was used to identify unverifiable address records. The following table shows the breakdown of ORPS unassignable address records that were identified:

Table 1

All ORPS assignable address records (7,634,557) were candidates to be assigned school district codes by one of four methods: NYC, PIT/TAR, GIS, or GIS/ZIP+4. Based on the reliability of the data sources and procedures used in each method, an order of precedence was established for applying these methods. Methods with higher anticipated reliability were applied first.

The NYC method was the most straightforward of the four methods, requiring a relatively simple translation of the county code attributed to each address record by the scrubbing software, to one of the five New York City borough school districts. It also permitted potential assignment of a large number of address records, thereby removing them from further processing. Accordingly, this method was used first in processing the ORPS assignable records. The success of this method depended chiefly on the quality of PIT address record scrubbing.

The next address matching method applied was the PIT/TAR method. This method matches addresses of properties on the tax assessment roll file with taxpayer reported residence addresses. Where matches are found, the school district to which the school taxes are paid as recorded on the assessment roll, is then attributed to the PIT record. The success of this method was most influenced by the quality of PIT and TAR address scrubbing and the reliability of the TAR address and school code information.

Address records not assigned by either the NYC or PIT/TAR methods, were processed by the GIS method, where address records are assigned latitude and longitude coordinates (geocoded) based on the house number and street name. The geographic coordinates representing a particular address are then "overlaid" onto map surfaces that contain school district boundaries using GIS software. Thus, depending on the spatial location of each geocoded address record on a computerized map surface, a school district assignment will be made. Factors influencing the method's effectiveness were the scrubbing of the PIT address records and the locational accuracy of both the school district boundaries and the geocoded address records.

The final method, the GIS/ZIP+4 method, involved GIS overlay of address records onto the school district boundaries using geocodes based on their ZIP+4 code (less accurate than by house number and street). Only the most reliable ZIP+4 locations were used. This method depended on the accurate assignment of ZIP+4 postal codes to taxpayer addresses, the accuracy of digital school district boundaries, and the accuracy of longitude/latitude points representing ZIP+4 code data.

Addresses that could not be assigned by one of the four methods described above, remained "unassigned" by ORPS. If the address record contained a valid school district code reported by the taxpayer, the code was attributed to that record by ORPS unless corrected in the school district address review. Where no valid code was supplied by the taxpayer, the address record was not attributed to any school district. The results of ORPS processing after the four methods, but prior to the address review and correction, are summarized in the following table:

Table 2

The computerized assignment of school district codes to address records resulted in some address record additions to or deletions from school district assignments, based upon what taxpayers reported. School codes of other address records remained either: unchanged because they were verified as being correct; unverifiable; or unassignable by one of the four methods through which address records were processed. Other records, regardless of what the ORPS assignment would have been using the four methods, were attributed to the previous year match of school districts described earlier, DTF Address Processing.

Each superintendent of schools was given the opportunity to review several categories of the address records attributed to or deleted from their district as a result of ORPS school code assignments or the previous year match code. All reviewable address records were correctable (as described in the list below). To participate in the regular review process, the superintendent had to file a Department of Taxation and Finance secrecy form (EN-202) with the Office of Real Property Services by the required deadline. (Because the confidentiality of information on the PIT files is governed by the New York State Tax Law and the Internal Revenue Code, anyone participating in the review of this information was required to file a secrecy form with DTF.)

Each superintendent of schools electing to participate in the school district address review received up to three lists of addresses as described below:

Additions: A list of all addresses reported by taxpayers as being located in another district, but which were added to the given school district by SDIV processing.

Deletions: A list of all addresses reported by taxpayers as being located in the given district, but which were deleted from that district and assigned to a different district by the SDIV processing.

Unassigned: A list of all addresses for which no school district code was assigned by any of the four SDIV program assignment methods (Processing Order of Precedence). Most address records on the unassigned lists were verifiable. The ORPS unverifiable highway contract and rural route addresses however, were included in this changeable list because the Liaison Committee felt that the superintendents of schools might be able to more reliably assign these addresses.

Each participating superintendent was instructed to review the lists and make any necessary changes to the school codes attributed to the address records shown. These results are then submitted to the District Superintendent of the supervisory district in which the district was located for inter-district review and certification. School Superintendents were allowed to contact other participating districts within the supervisory district to reconcile differences in school code assignment to taxpayer address records. The District Superintendent was then required to indicate whether or not the correction was certified.

Before certifying that addresses would be assigned to another district, the District Superintendent was also required to give the receiving district the opportunity to review the change. If the receiving district was located within that Superintendent's supervisory district, the contact was to be made to the superintendent of the receiving district. If the receiving district was not located within the District Superintendent's supervisory district, the contact was to be made to the District Superintendent where the school district was located. The Chancellor of the New York City School District acted in both capacities for changes which involved New York City addresses.

Of the 688 school districts in Year 10, 257 districts elected to participate in the school district address review process. A total of 12,168 valid school district code corrections (2.96 percent of all address records), from the three changeable list types described above, were certified by District Superintendents. Changes had to be both designated by the school superintendent and certified by a District Superintendent to be made by ORPS. ORPS processed the corrected codes as the final assigned code for the appropriate address records.

Final codes for all other records were either the previous year corrected code or those reported by the taxpayer, if unassigned. If the address record were a previous year corrected code but contained an unchangeable address type, the taxpayer reported school code, if valid, was used as the final assigned code. If the taxpayer code was invalid or missing, the previous year corrected code was used.

ORPS prepared the files in accordance with the September 23, 2002 Memorandum of Agreement and delivered them to DTF by August 8, 2003. DTF aggregated income by school district based on the final assigned codes and then delivered their results to SED which calculated State Aid based on the aggregate income figures.

Year 10 Further Address Review

In November of 2003, Phase 3 participants were mailed a Request Review Form together with a notification of the 2001 adjusted gross income figures. Only three districts did request a review, but following analysis by the SDIV Liaison Committee, none of the requests were authorized for additional review.

The following results are highlights of the Year 10 program:

• The 8.1 million address records furnished by DTF were processed within both the program time constraints and as specified in the interagency Memorandum of Agreement.
• Corrections to address assignments made in Year 9 were used in Year 10 where the taxpayer address and taxpayer identification remained constant.
• Procedures for correction of district boundaries were greatly simplified and made voluntary for school districts.
• Non-DTM portions of district boundaries could be corrected by mutual agreement with the affected district(s).

NYC

Address records could be finally assigned by one of the four ORPS assignment methods (NYC, PIT/TAR, GIS, GIS/ZIP+4), or by superintendents of schools and certified by District Superintendents in the school district address review process (DS Corrections). These corrections were either: (1) originally assigned by one of the four assignment methods; (2), unassigned by the four methods and appeared on "Unassigned" lists; or (3), were previous year corrected records.