Sunday, May 10, 2009

Property Taxes are NOT the Problem

Rick Gibbs of Worthington wrote a letter which was published by The Columbus Dispatch on May 9, 2009. He repeated a tired old refrain:

"The real problem is that in Ohio there is too much reliance on property taxes to run our schools and, district to district, 1 mill of taxation may bring in dramatically different amounts of money."

However he fails to describe what he proposes should replace property taxes as a funding source. That's because the real problem he and the many others who say this have is something else altogether.

Mr. Gibbs makes the point that 1 mill of taxation produces differing amounts of revenue from one district to another. But let's say that instead of property taxes, Ohio law required that public schools be funded solely with income taxes. Wouldn't it also be true that 1% of income tax would collect differing amounts of revenue, district to district? Expensive homes are generally owned by people who have a lot of income. Homes with low values are typically owned or occupied by folks on the lower end of the income scale. So how would basing the school tax on incomes produce a result any different than property taxes?

Well, there is one key difference. Our senior citizens often find themselves in a situation where they have a high value piece of property – often fully paid for – yet not nearly the income they enjoyed before retiring. Nor do these folks have school age children, yet many have been paying property taxes for decades after the kids left home. So it is particularly onerous that these folks end up paying ever increasing local property taxes. But there's a simple solution to this situation – enhance the property tax exemptions available to senior citizens.

So what are the real objections to property taxes as a funding source?

First, it's the fact that property taxes are one of the few taxes that are voted on directly by citizens. The professional education community hates the fact that they have to periodically 'sell' the people of their community on the value of paying more money to operate the schools. Since 90% of the operating costs are the compensation and benefits of the teachers, administrators and staff, it's like they have to justify their own pay to the public. Imagine that.

Local voter control puts the educators on the wrong side of the power equation. By far, they prefer to have their compensation and benefits determined by politicians who can be influenced with substantial campaign contributions. The National Education Association, the national-level organization of state and local teachers' unions, has been the 7th largest political contributor over the past ten years (data from

Secondly, it's not so much the form of the tax that's the problem – it's the way the revenue gets redistributed. What they really want is for schools to be funded by a state-level income tax that allows the money to be redistributed according to rules set up by the Governor and the General Assembly, the very politicians who receive all those campaign contributions from the teachers' union. That puts the educators in the power seat, not the voters.

But Governor Strickland's new "Evidence Based Model" isn't making them happy either. It turns out that the districts that have been performing badly have also been losing students, so the EBM system, which is heavily driven by student population, is sending money right back to growing districts, which also happen to be some of the most affluent, such as Hilliard. The various parties are now negotiating how to tweak the system such that in the end, money will go where they want it - not according to what the 'evidence' says.

By the way, the current state funding system is designed to make allowances for the local resources available to districts with high property values. The higher the property value in a district, the less Foundation Aid funding they receive on a per-student basis. But remember, districts with high property values generally have high personal incomes as well, and it is largely the state income taxes on this personal income which funds the Foundation Aid. So wealthy districts get to keep more of their property taxes, but less of their income taxes. The Governor's EBM system won't change that.

Proponents of a new school funding system want us to think the outcome in terms of taxes collected and spending allocations will be drastically different than what we have today. It simply can't be. Money will flow from high income areas to low income areas, regardless of the form of taxation used.

The battle is over who makes the decisions, and the educators don't want it to be us taxpayers.

Note: I believe the central problem is that there are public school districts. I invite you to read Food Stamps to stimulate thinking about other possible ways to educate our kids.


  1. The Olentangy school board won the "prestigious" Brick Wall Award from the Central Ohio Chapter of the Society of Professional Journalists for being the worst offender of any public office in the region in obstructing access to public records.

    The secret superintendent search is cited as the basis for them winning the award, but they routinely deny a board member financial data--to the point that she had to retain her own attorney and threaten to sue them.

    Now it came to light in an email recently discovered that board member Dimon McFerson had secretly met with a levy campaign consultant at least once--but we'll never know how much involvment he had with these consultants. Where does it end?

    It ends when you ensure that you elect good people to the board.

    This is the kind of stuff we see in our corrupt district.


  2. Thanks JT (or is it TJ?):

    Reading through the post on Jim Fedako's site was deja vu. Particularly the comment from the consultant about funding the survey with private donations to avoid triggering provisions of the Sunshine Laws.

    The Hilliard school board has this frame of mind as well, as I found in a long and frustration dialog with Denise Bobbitt three years ago.

    Part of the problem with doing these surveys with private money is that you need a lot of it - tens of thousands of dollars. Were does that come from?

    The Hilliard Board has in the past engaged in questionable arrangements with its suppliers and contractors to raise the money.

    To be fair, they did things better in July 2008, when they ran a survey with public money. But it was as much a campaign call as a survey, as the questions were designed to color your thinking, asking things that sounded like: "Which do you think is better, to pass a levy and allow our schools to continue to excel, or defeat a levy and let them decline into utter failure?"

    Wouldn't it be refreshing if the Board treated the public like people they desired to have participate in the decision-making process from an informed position? But that's a lot of work. You have to both educate with the community, and communcate effectively the situation.

    Our district leadership should know how to get that done. After all, they have hundreds of professionals trained in the art and science of education on the payroll.

    It's a lot easier to scheme and manipulate I guess.


  3. Paul:

    Much to my surprise, the raw data behind a survey that was commissioned with taxpayer dollars is not public record. As I recall, it is considered to be a trade secret of the survey company. Of course, any details given to district officials would be public record, but so long as the raw data never changes hands, it is not considered a public record.

  4. Thanks Marc - interesting distiction.

    That being said, I've never asked for raw data - only a copy of whatever it was that was presented to the school board. Our school board seems to have concluded that as long as the information is presented orally, there is no "public document" created, and therefore nothing which they are required to disclose.

    I think I'd like to hear a court weigh in on this, but I certainly am not willing to foot the bill.

    Unfortunately, that's generally the way things are set up - if officeholders are suspected of wrongdoing, the process must start with a lawsuit initiated by an interested party. Ohio's Sunshine Laws do allow the party who initiates the suit to recover legal costs from the public entity, but only if they win the case.

    I understand the reasoning that this is a protection from frivolous lawsuits, but it also has the effect of squelching legitimate questioning.


  5. Paul--TJ here (dyslexia kicking in, in my old age perhaps...)

    Good points. Our OFK (Olentangy For Kids) raised $80,000--most of it from our suppliers. And Dimon shook the corporate trees for thousands of it. No doubt our fleet insurance is with Nationwide...

    Anyway, it's just another example of everthing that is wrong with our school districts. I am convinced that administrations cannot be reformed, but rather school boards need to be crushed and rebuilt with the right folks who are focused on the right things, so that they can apply relentless and prolonged scrutiny to at least make school administrations stay on the straight and narrow.

    McFerson is by far the most deliterious influence on that board.

  6. McFerson undoubtedly replicates the behavior that gave him so much success at Nationwide. Unfortunately, it's that very behavior which screwed up corporate America as well.

    What I'm talking about is the chummy nature than often develops between the governing Board, who are supposed to represent the shareholders, and the management, who is supposed to work for the Board.

    What often happens is the reverse - a successful CEO gains enough influence to control the Board, and the Board for all intents and purposes becomes subordinate to the CEO. This amplified when Board members started awarding themselves big stock options, putting them in the same game as the CEO.

    While serving on a school board isn't a role that brings big monetary rewards (although I'm sure there have been corrupt school boards at various times in various places), most school boards in these parts seems to fall in line behind the Superintendent, naively accepting whatever s/he says.

    What we need are some school board members who are wise enough to yell "BS" when necessary, and to truly speak for the community - all the community.

    Of course it starts with the community itself caring enough to pay attention to the school governance matters, including putting appropriate candidates on the school board.


  7. TJ says: I am convinced that administrations cannot be reformed, but rather school boards need to be crushed and rebuilt with the right folks who are focused on the right things...I tend to agree but that seems incredibly hard to accomplish given that:

    a) the question of whether there are enough "right folks focused on the right things" will run as candidates and

    b) that a mostly apathetic public will take an interest school board race.

    I'm wondering what linkage, if any, there is between voting down levies (which is far easier than a & b above) and creating a new school board. Perhaps if the levies are voted down it will rouse the interest to reform the board.

    This may be too micro a view though. Perhaps the root problem is, as Paul wrote, that there are public school districts.

  8. Eire:

    "a) the question of whether there are enough "right folks focused on the right things" will run as candidates and"

    That's simple--not easy, but simple: Paul gets another like-minded candidate and the two run as a ticket on a reform platform (provided there are two seats up in November). Two voices get items on the agenda for discussion. Watch the nonsense disappear overnight as board members would then have to justify their ridiculous votes and explain their nonsense.

    Then, when a third seat opens up Paul and other member will have been able to make a favorable impression on the community and his/other member's support of a third like-minded candidate will get them to the Magic Three required to make real change.

    "b) that a mostly apathetic public will take an interest school board race." See "a)"

    "I'm wondering what linkage, if any, there is between voting down levies (which is far easier than a & b above) and creating a new school board. Perhaps if the levies are voted down it will rouse the interest to reform the board."

    None. The first is driven by a rejection of paying higher taxes based on principle or financial necessity; the second is a decision based on knowledge and understanding of the issues--which you'll be hard pressed to find many in your community who have that.

    "This may be too micro a view though. Perhaps the root problem is, as Paul wrote, that there are public school districts."

    Crushing, burning, and driving a stake through the heart of your board is the only way to sanitize your district of that which does little other than rubber stamp the garbage the district puts in front of it. You and your kids deserve better. Your district hasn't done right by your kids, possibly ever. They think they do; they tell you that they do. But the stats--objective and infallable--tell a much different story.