Saturday, October 11, 2008

Sixty-two percent requires greater accountability.

Good economic modeling relies upon the effective evaluation of extremes to help establish the impact of trends and consequences. In reviewing the tax obligations of community property owners, a troubling problem becomes very clear. More than 62% of our property tax goes to support our local schools and there have been no adjustments for plummeting enrollment.

It would make sense to identify an ideal number of students for our district and then allow our property tax obligations to float with enrollment. As student populations surpass the established range of capacity, our community obligation should drift slightly upward. Conversely, as enrollment drops, the obligation should shift downward.

Such an approach would be consistent with Impact Fees assessed on new developments in our community. If a builder seeks to construct a number of homes within a school district having limited school capacity (identified through the Capital Facilities Plan), the developer must pay an impact fee equal to a set figure multiplied by the number of dwelling units under construction.

Some claim that an impact fee is unfair because it penalizes developers that construct while available capacity is low and offers a windfall for developers that build during periods of excess classroom capacity. I am not suggesting an elimination of the impact fee but rather the application of such a philosophy to the entire community - not just developers.

Imagine what would happen to a school district's general fund as enrollment approaches 0. There would be more property tax revenue available for fewer students.

Imagine what would happen if you added the effect of an increased property tax assessment. There would be even more money available for these fewer students.

Some may quickly argue that communities naturally grow and that over time, student populations increase in size. Well, housing stock also increases over time and these new houses are assessed new property tax obligations.

The Office of Financial Management has been using the figure of 14.6% to describe the proportion of K-12 students in our state's population. This figure has proven to be totally unreliable with prevailing demographic trends. In the year the figure was established, it was fairly accurate. However, over time, people have been having fewer children and the proportion is now under evaluation.

Imagine a scenario where district administration adopts a policy of forcing children out of their school district. Property tax levels would remain fixed while enrollment would shrink. More funding would be available for fewer students. Greater funding means higher wages for administration positions, since teacher's salaries are somewhat dependent upon teacher's salaries across the region - the use of midpoints, for example. An increase in administrative salaries may not be immediate for individuals, but the ranks of administrators could swell over time - creating a greater burden on taxpayers.

Fun Factoid: Owning my primary residence, in the City of Edmonds, requires a direct payment to the Edmonds School District of $228 every month. That is more than I spend for electricity, water, sewer, telephone and television combined. It is within a few dollars of my average monthly expenditure for heating. It also warrants mentioning that the City of Edmonds is muddling through serious budget problems for the coming year. No doubt there will be additional taxes to cover.

Image is from The Edmonds Beacon. Click here to read their article.


Anonymous said...

I enjoyed seeing the colorful dollar bill on the front page of the Beacon this week. It clearly shows where taxpayer's money goes. I was thinking of adding this image to my campaign literature when I run for a certain School Board position. said...

The blog formally endorses "Anonymous".

Anonymous said...

Wow! My first endorsement!!! Too bad nobody knows my name. Maybe it's more exciting that way!! PS Do you really pal around with terrorists?

Anonymous said...

Mark -

Unfortunately, I think this article may be a bit misleading. State funding is received based on average annual FTE (full time equivalent) students. Of course, there are other funding sources, but the majority is based on enrollment.

Additionally, the state's enrollment projections for individual school districts are totally unreliable; that is why it's important to have quality staff within the district, or at least a reliable demographer with a background in statistics. said...

State funding is only part of the equation.

It is clear that property tax supports a portion of district activities and the point I was making is the lack of direct connectivity between enrollment and our property tax obligations. said...

I would have to run for office on the Democratic ticket before the Republicans would be kind enough to point out past affiliations.

I have mingled with members of the African National Congress. They were designated a terrorist organization by an even more toxic terrorist organization - South Africa's National Party.

Anonymous said...

The general fund budget is $180 million.

The number of students in the district is roughly 20,000.

That would be $9,000 per student and the state doesn't fund at that rate.

This excludes the capital bonds and levies which are entirely from property tax.

Anonymous said...

I KNOW where my property taxes go! NOT to the Edmonds School District! After being forced into early retirement by "the District", I am at the POVERTY level. I applied to the Snohomish County Assessor's office and am exemmpt from paying for schools and school levies!