Monday, March 31, 2008

Overreliance on property taxes? Always!

William Phillis of the Ohio Coalition for Equity and Adequacy of School Funding -- the group of over 500 Ohio school districts fighting for more state tax revenue -- loves to bring up the "overreliance on property taxes" issue. Yet, given the insatiable appetite for spending of public school districts, increases in the reliance on local property taxes will always exceed increases in state formula aid. Why is that so?

Consider this: Even if the state resets its funding formula so that the split between state and local revenue becomes 60%/40%, the state share would quickly reduce over time. You see, the state increases its share at a rate that is close to inflation while local districts tend to increase their costs at a rate that is close to twice inflation.

So, in five years, the split becomes 52%/48% since school districts refuse to address rising costs. And, because local districts would likely, given an influx of new state dollars, allow their costs to increase by an even higher rate, the split would tilt closer to the current 50%/50%.

The only means to slow the rise of public education in Ohio is at levy time. Giving districts more state aid will lead to quickly rising local costs. This will result in the need for new local tax dollars as costs quickly exceed the additional state aid.

So, you get stuck twice: from the state through increased statewide taxes; and, from the district through increased local property taxes. Not much of a solution, is it?

To: Superintendents, Principals and Treasurers & others
From: William L. Phillis
Re: No change in reliance on property tax

In DeRolph I (1997), the Ohio Supreme Court stated, “Emphasis of Ohio’s school funding system on property tax is a factor that contributes to the unworkability of the system and must be eliminated”. Three years after the first DeRolph decision, the Ohio Supreme Court opined, “The most glaring weakness in the state’s attempt to put in place a thorough and efficient system of education is the failure to specifically address the overreliance on property taxes. If this problem is not rectified, it will be virtually impossible for the revised school-funding system to be characterized as thorough and efficient.”

Reliance on property tax has not diminished since 1997. In fact, from FY 1997 to FY 2007 total state revenue for public K-12 schools increased 158% while local revenue increased 166%; thus, there has been no appreciable change. Therefore, the “glaring weakness” continues.

With the State GRF Budget shortfall looming in FY 2009, the overreliance on property taxes will worsen. The school funding amendment crafted by the major education organizations is the solution to the school-funding problem. Send completed petitions to E & A Coalition, 100 S. 3rd Street, Columbus, OH 43215 or OSBA, 8050 N. High Street, Columbus, OH 43235.

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