Thursday, March 04, 2004

About that Statewide Property Tax . . .

A Statewide property tax is being sought for schools, according to todays ProJo. Yikes! was my first reaction, right along with "here we go again." However, after quelling my knee-jerk, yet well-earned, cynical reaction to the news of another tax idea being floated around the state house, I proceeded to read the article. Below are the highlights (in italic) with my comments:

Seven municipal leaders have joined forces with a nonprofit public policy research organization to put forth a new way of paying for public education that they say would not only control costs but reduce spending gaps between rich and poor communities.

The plan, which wouldn't take effect until 2008, would do two things: create a state property tax that would apply equally to all 39 cities and towns, and establish the same minimum per-pupil spending level. The existing portion of the local property tax earmarked for education would be eliminated.


The goal is admirable, we need to figure out a better way to fund education in this state. That much seems obvious. If this was any other state, the idea of a state propery tax would seem to be an option I'd consider, especially given that the current local taxes earmarked for education would be eliminated. But this is Rhode Island. The Legislature in this state simply can't be trusted with our tax dollars as it is, and now we are to believe that we should send our local tax dollars earmarked for education to the State House for statewide dispersement? I'm suspicious.

The group is asking for a constitutional amendment that would require the legislature to guarantee "an equitable, adequate and meaningful education to each child." Under current law, the legislature must only "promote public schools"; there is no mention of providing equal education to every child in Rhode Island.

According to the coalition, the current method of financing public education is broken because school districts never know in advance how much state aid they will receive, which wreaks havoc with the annual budget process.


I don't have even close to a "legal mind," so I don't know if a consititutional amendment is necessary. Regardless, to me it sounds like flowery, feel good language. Equitable seems to be easily maintainable, but how does one judge what is adequate and meaningful. Vague, very vague.

Meanwhile, the cost of public education continues to climb. During the past 10 years, state and local spending on education has almost doubled, to $1.8 billion, according to RIPEC [Rhode Island Public Expenditure Council ], a business-backed organization.

And as the cost of education has soared, so has the burden on the local taxpayer. In Rhode Island, 65 percent of the total dollars spent on education comes from the property tax, compared with 45 percent nationally. In Rhode Island, the rest comes from the state's general revenue including income tax, sales tax and gambling proceeds.

Under the existing system, those districts with the neediest children -- Providence or Woonsocket -- are often the least able to pay for the extra services those students need.


The last point is an old, and recognized, problem. How to pay for the education of urban students, soley based on local property taxes. I don't think I need to delve into this old argument too much here. As for the soaring cost of public education, no mention is made of the state being in the top 10 of teacher salaries and benefits. It seems the focus is on how to pay for a ballooning education bill without looking into the root causes of the expansion. Classic financial liberalism.

RIPEC says the new funding formula would address all three issues by distributing education dollars fairly, establishing a predictable funding formula and reducing dependence on the property tax to fund education.

First, the legislation would address the following question: What should we as a state spend to educate a child?

The plan would guarantee that each district receive a minimum per-pupil spending level, or "foundation level." The coalition has not, however, decided what that number would be. The number would be established by municipal leaders, educators and members of the legislature. They would then identify the ingredients that contribute to a quality education, such as the cost of textbooks, new technology or early childhood education.

"The goal is to make sure that a child living in North Providence has the same resources as a child living in East Greenwich," said RIPEC's policy director, Peter Marino.


It's obvious that a lot of hashing out will have to be done, but the goal seems admirable and "fair." A minimum spending level seems logical and the point made by Peter Marino is as concise as need be.

Under the formula, a district would receive extra credit or "weighting" for a child who needs additional help and therefore costs more to educate -- the special-needs child, the child living in poverty, the child with limited English skills. The formula recognizes that it costs more to educate a child who has a signficant learning disability or who speaks very little English.

The goal, Marino says, is to send more dollars to those districts with large numbers of children in need.

Again, the coalition hasn't decided what the categories or definitions of weighted students will be or what weight would be assigned to each of those students.


Now we're really getting into the murky waters. Can anyone else see the possibility that school districts will suddenly report explosions in the number of Learning Disabled, Dislexic, or ADD kids, fully realizing that this means more dollars? I certainly can. As far as the students who speak little English, their should be a cap on the number of years that a school is qualified to ask for extra dollars on a per student basis. I think that 4 years of education in an English speaking environment should be more than enough. School districts can't be allowed to report a child in this category for an entire 12 year scholastic "career." By putting a cap on the number of allowable years per student, and probably some sort of English testing with say a "performance" bonus for the district based on the number of students who pass the English test, perhaps the State can provide enough incentives to actually get these kids up to par in the language of their country. (As politically incorrect as that may sound).

But the proposal would take the guessing out of the annual budget-setting process. A district would set its budget like this: each district would take its total student enrollment, including the additional number of students it gets through the weighted formula, and multiply that total by the state's per-pupil spending figure.

"The budget is predetermined," Marino said. "That's how towns will be able to control costs."

RIPEC offered the following example:

A district has 100 students. Each district gets $1,000 for each student under the state minimum per pupil formula. Of that total enrollment, 50 children also have special needs. Each special-needs student is counted as another "child."

Therefore, under the "weighted" formula, the district could claim funding for 150 students, which means it would receive $150,000 instead of $100,000.

The way local aid works now, the governor proposes one figure and then, in May or June, the General Assembly usually throws additional money into the local aid pot.

The new formula would establish how much money cities and towns get in advance, making it impossible for the legislature to tinker with the numbers at the last minute.

However, the legislature does have the authority to adjust the per-pupil spending figure as well as the state property tax, if, for example, the state is facing a deficit. But, under the new formula, any change would be borneequally by all districts.


This is all pretty self explanatory. Good, clear example! It also shows what a mess the current system is.

The legislation also establishes a state property tax for education, something that has been done in 35 states. Currently, each city and town sets its own property tax rate, but the proposal would create one statewide rate. Again, RIPEC hasn't determined what that rate would be, but the rate would depend on what portion of education costs local communities would absorb. Cities and towns would still set a tax rate for the municipal side of government including services such as police, fire and garbage pickup.

A community with a strong tax base would be able to cover most of its school budget from revenue generated by the state property tax. However, in communities such as Providence or West Warwick, the state would have to contribute a larger share.

How would the state pay its share of public education? From the same sources it does now, Marino said.

The devil, however, is in the details. The legislature, working with other interest groups, will have to balance the need to generate enough revenue to pay for the state's share of education against the need to hold the line on property taxes.


Sounds like the taxpayer would see little difference. The money would go to the state instead of the local community. 35 other states do it. But their not Rhode Island and don't have a similar history of Legislative malfeasance. I'm still very suspicious of putting even more money into the hands of the House on the Hill. Never mind trusting them to hold the line on property taxes!

There is one final twist. A district may want to augment what it spends on education. For example, Barrington might want to finance a gifted and talented program or East Greenwich might want to add another foreign language to its high school curriculum.

This proposal would give those communities the option to spend more than the state's per-pupil minimum. Any increase would have an annual cap to prevent wealthier districts from outspending its less fortunate neighbors, which would lead to the kind of spending disparities that currently exist between rich and poor communities.


Ah yes, there always is a twist isn't there? A spending cap?! Why should the state want to or be able to tell any community that it can't spend as much as it wants on education? It really is a communist-style idea. This is what conservatives mean when we speak of how we see the liberal state attempting to lower the bar to satisfy some perverted conception of equality. Instead, they should look to raise the bar. This is a case of subtle class warfare. The rich towns of Barrington or East Greenwich won't be allowed to provide for additional programs at their own expense? What right does the Legislature have to limit local spending in any area? I have a hard time believing that this concept is Constitutional.

It is this final twist that should start the warning bells ringing. Even with the mere floating of a proposal, members of Rhode Island State Government can't wait to dictate to localities what they can and can't do. How long before the Legislature, with full control over not just the budgeting, but now the actual money, will begin witholding money from programs it decides aren't spending said money "the right way?" Perhaps the best way to prevent such oppresive "oversight" would be to give communities the opportunity to opt out. But then towns, like East Greenwich or Barrington couldn't be compelled to send their tax dollars to a general education fund, which in turn would be sent to needier communities like Providence and Woonsocket.

The concept seems good, but I wouldn't trust this Legislature with my paper route money, much less the property tax revenue of the entire state. Regardless, should this plan move forward, the one crucial element that must be removed is the spending cap. It is not proper for the State to limit local spending to such a degree on the basis of "fairness."






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