Equalization Factors 2006-2019
Illinois Department of Revenue - Publication 136 - Property Assessment & Equalization
WHAT IS EQUALIZATION?
- Equalizationis the adjustment of the median level of assessment up or down so that the tax burden is "equalized" among taxing districts.
- State law requires equalization in order to bring assessments to the level required by state law, which is 33.33% of fair cash value.
- Equalization is accomplished by the use of an Equalization Factor, which is a factor applied to all non-farm assessments.
- Equalization factors can occur at four levels:
- Neighborhood level, as applied by the Township Assessor.
- Township level, as applied by the Supervisor of Assessments.
- Township level, as applied by the Board of Review.
- County level, as applied by the Illinois Department of Revenue.
WHAT EQUALIZATION FACTORS ARE NOT OPTIONAL:
- To quote the state law: -35ILCS 200/9-210
- With the ratio determined for each township or assessment district, the supervisor of assessments shall then determine the percentage to be added to or deducted from the aggregate assessments in each township . . . in order to produce a ratio of assessed value to fair cash value of 33 1/3%. That percentage shall be issued as an equalization factor for each township or assessment district within each county served by the chief county assessment officer. The assessment officer shall then change the assessment of each parcel of property by application of the equalization factor.
- Equalization is not a measure of change in property values themselves.
- They reflect the difference between sale prices and the legal level of assessment.
- Equalization Factors are NOT arbitrary.
- They must be calculated according to procedures prescribed and taught by the Department of Revenue
- The process involves the analysis of thousands of "arm's length" sales
- An Equalization Factor is not a reflection of the accuracy of a Township Assessor.
- (Township Assessors are responsible to "revise and correct" assessments in non-General Assessment years; equalization is a post-correction change to bring those assessments in line with other townships in the County).
- A school district has a tax rate of $4.8411 per $100 of valuation. The district is partially in Township A (33.33% median level of assessment) and partially in Township B (29.48%).
- Without equalization, the owner of a house in Township A pays more property tax than the owner of a similar house in Township B:
$300,000 x 33.33%=$99,990 x 4.8411%=$4,841
$300,000 x 29.48%=$88,440 x 4.8411%=$4,281
Total Paid: $9,122
- But after equalization, the tax burden is uniform. Township B has been equalized with a factor of 1.1306, bringing the median level of assessments to 33.33%.
- The change in aggregate EAV will lower the tax rate (to 4.5615 in this example). This results in the following tax bills:
$99,990 x 4.5615%=$4,561
$88,440 x 1.1306=$99,990 x 4.5615%=$4,561
Total Paid: $9,122
STEPS IN CALCULATING TOWNSHIP EQUALIZATION FACTOR
- Gather the Data
- Real Estate Transfer Declarations from 2016, 2017, and 2018 (from form PTAX-203)
- Assessment Data from 2015, 2016 and 2017 (from Board of Review's Equalized Assessed Values)
- 2018 Assessment Books (from Board of Review's Certified Assessment Roll)
- 2019 Assessment Books (from Township Assessor)
- Conduct a Three-Year Sales Ratio Study
- Compare 2016 sales to 2015 Assessed Values
- Compare 2017 sales to 2016 Assessed Values
- Compare 2018 sales to 2017 Assessed Values
- Calculate the median level (the point at which half of the data is greater, and half is lesser after trimming outliers) of assessment for each year
- Calculate the Projected Equalization Factors
- Adjust each year's median sales ratio to reflect the changes made in the level of assessments (for each township)
- For this example, the 2016 ratio was 30.91%; the 2017 ratio was 31.21%, and the 2018 ratio was 32.67%
- The level of assessment (33.33%) is divided by the average of the adjusted ratios to establish the 2019 Projected Township Equalization Factor
2016 Adjustment is 30.91% x 1.0279 = 31.77%
2017 Adjustment is 31.21% x 1.0279 = 32.08%
2018 Adjustment is 32.67% x 1.0279 = 33.58%
Sum of the Adjusted Factors is 97.43%
33.33% ÷ 32.48% = the Township Factor: 1.0262
- Apply the Equalization Factors
- This process is conducted for each of the 14 townships in Winnebago County
- The assessments in each township are adjusted by that township's equalization factor to provide an Equalized Assessed Value (EAV) for each parcel.
- The equalized assessments are then certified to the Board of Review
A property in the township used in this illustration with an assessed valuation of $100,000 would have an equalized assessed valuation of $102,620.
($100,000 x 1.0262 = $102,620)
EQUALIZATION BY THE STATE
- It is the job of the Illinois Department of Revenue to conduct the same Sales Ratio Studies for each of Illinois' 101 counties and equalize valuations across County lines within the State.
- If individual townships are not successfully equalized to 33.33 (the statutory level), the State of Illinois will apply one uniform State Equalization Factor to the entire county.
- The Winnebago County State equalization factor over the years has generally been a 1.0000.
- By comparison, Cook County's 2008 equalization factor was 2.9786, up from 2.8439 in 2007.