October 1, 2014

Return On Investment

My Germantown Schools has developed a very simple “Return on Investment” analysis.  This analysis compares the cost of a municipal school district with the impact such a district might have on property values.

From the cost side, a municipal district providing SCS levels of service will add about $112 per year to the tax burden or the average Germantown household.

  • The median value of a Germantown home is $300,000
  • A $0.15 increase in property taxes would result in a $112.50 increase in annual property taxes on the median home
  • The proposed 0.50% increase in sales tax will raise approximately the same amount of revenue as a $0.15 increase in property taxes

Our analysis assumes that the typicalGermantownhousehold invests that $112 per year in bank CD’s rather than funding a municipal school district.  After 10 years, that $112 annual investment would be worth $1,182.

We compare the “NO” option to a scenario where residents approve a municipal school district.  In this option, we assume that the formation of a municipal school district will add 4% to the value of Germantown homes.  According to business report done by Essay Tigers, a 4% increase in home value represents $12,000 to the median Germantown homeowner.

We believe that municipal schools will offer a return on investment of at least 1,000% over the next 10 years.  Residents would need an investment opportunity offering a 49% annual interest rate to match the value delivered by a municipal school district.