Friday, February 2, 2007

Superintendent McVey's Support of Amendment Proposal is Misguided

The January 31, 2007 edition of the Hilliard Northwest News ran an article titled "McVey: Amend state constitution"

In this article, the Superindentent again states his support for the proposed school funding amendment, which is not surprising since he is currently serving as the Chairman of the Alliance for Adequate School Funding, one of the lobbying groups who has endorsed and helped shape the proposal.

I have great respect for Dale McVey as an educator, but he is wrong in thinking this amendment in its current form is a good thing for the Hilliard community, much less the rest of Ohio. I'm a little concerned whether he and Treasurer Brian Wilson even understand the amendment and all its nuances (not saying I do either!).

In the Northwest News article, Mr. Wilson is quoted as saying that the amendment calls for property taxes to be rolled back from our current 33.8 mills to 20 mills, or 41%.

Sounds good so far, but it's not quite the whole truth. The amendment says that the required component of the total funding from local property taxes is limited to 20 mills. This simply means the first 20 mills of funding must be collected by each school district from its own local funding base.

For the rural areas of Ohio, the primary problem with a property-tax dependent funding system is that farm land is taxed at very low rates. For example, there is a 92 acre farm field near my home for which the annual property tax is $494, or $5.37 per acre at our current 42 mill property tax rate (the difference between the 33.8 mill Mr. Wilson quoted and the 42 mill tax rate I refer to here is the millage collected to pay off the building construction and maintenance levies). At 20 mills, the taxes on this field would be around half these amount, or about $2.50 per acre.

For a school district comprised primarily of farms, neither 20 mills nor 40 mills generate much revenue. Those are the districts this amendment is designed to subsidize. However, the current funding system also subsidizes rural districts in much the same way. The intention of this new amendment is to take more money from those of us in the suburbs and send it to these rural schools.

Compare the revenue from a farm field with a typical 120' x 70' (1/5th acre) suburban lot in Hilliard containing a $275,000 house: the taxes are currently about $5,700 per year, or nearly $30,000 per acre. While an acre of farmland has no kids in school, an acre of suburbia will be home to 4-5 kids on average. In suburbia, our root problem is that a $275,000 house might generate $5,700 in school tax, but it costs $10,000 to educate the kid that lives there. Go here if you want to understand suburban funding better. Our situation is substantially different than the rural or the urban districts, the main beneficiaries of this proposed amendment.

For the current 33.8 mills to drop all the way to 20 mills, yet have our school funding remain constant, Mr. McVey is apparently assuming that the other 13.8 mills we now pay locally will instead come from additional state funding. Since about one third of our current funding comes from the state, and two thirds or so from local property taxes, a 40% reduction in local property tax revenue would mean the state funding would need to increase over $30,000,000, or 70% per year to keep the total income for our school district the same as it is now.

I am very skeptical that that anyone at the State level intends to send us the nearly $40 million we get now plus $30 million/yr more. In fact, I believe that paragraph (E)(1) is aimed right at suburban districts like Hilliard. It says, in a fairly convoluted way, that when a district has high property values (as does ours) causing the 20 mill local contribution to generate a lot of money, the State will cap its contribution to make sure the state funding a school district receives doesn't "exceed the amount necessary." This is effectively a cap on state funding for suburban districts. Supporters of the levy say only a 'few districts' are affected. I'm pretty sure ours will be one.

What if that happens? Paragraph (H) says that a school district can continue to levy local property taxes to fund "Additional Opportunities." In other words, the required 20 mill local contribution will almost certainly need to be augmented by additional local millage if we want to continue running our schools as we do today. Mr. McVey is quoted in the article as saying, "School districts would still need to ask property owners for tax increases... It won't eliminate the need to be on the ballot."

Supporters of the proposed amendment say that the goal is to relieve Ohio residents and businesses of the burden of property taxes, and to turn school funding over to the State of Ohio. They make it sound like the State of Ohio gets its money from someone else. The simple fact is that to spend more money, the State of Ohio needs to collect more taxes. Who do you suppose pays those? Right -- the residents and businesses of Ohio!

My belief is that this proposed amendment will raise our state income taxes substantially, yet little of that new tax money will find its way to Hilliard. Meanwhile, we'll end up with nearly the same property taxes as now. Net-net, we'll be taxed more but have no more to spend in our district.

There's one way to overcome my concerns: School leadership -- Put some real numbers on the table. Tell all of us:

  • How much our state taxes are going to go up;
  • How much our property taxes will go down.

That shouldn't be hard if you've really thought this through.