School Funding Decision Prompts Reform Proposal

Judge Erlick's ruling that the state was not living up to its responsibility to fully fund basic education prompted Sen. Joe Zarelli, R-Ridgefield, to release another Budget Tidbit. Yesterday, Zarelli suggested significant changes in the way the state funds the public schools.

Here's how he describes the proposal:

In a combination of two steps, a portion of the current school district local levy is converted into a state property tax....Specifically, SB 6858 reduces all school districts' local levy authority by 12% and increases the state property tax levy by an equivalent amount.  Most districts have a 24% levy lid, so this functionally removes half of their levy authority.  However, the state property tax levy is increased by 88 cents in 2011, generating an estimated $828 million a year – although, as noted above, local levy authority is reduced by anequivalent amount.  Proceeds from the state levy are dedicated to the support of common schools.

I've not seen an independent review of the proposal and it's unlikely that anything will come of it this session. These effects are calculated by Zarelli:

School Districts 

o Almost 2/3rds of school districts receive more funds under this approach.   Overall,

there are 196 school districts estimated to receive more funding.  
 
o The other 1/3rd are held harmless via state appropriations.  This is estimated to cost about $84 million in the first year.   

  Impact to Taxpayers
 
o  A majority of school district taxpayers will pay less in property taxes.  The estimate is
that taxpayers in 156 school districts will pay less.

 These districts representing 661,680 pupils (or 67% of pupils in state).

 o It is estimated that taxpayers in 139 school districts will pay more.  These mainly
comprise two groups:

 Property-wealthy districts.  By shifting from a local financing model where they finance services at a low millage rate, these districts end up paying higher taxes when a uniform statewide rate is assessed. 

Districts with less than a 12% levy.  If a district imposes less than a 12% levy,

the reduction of a district's levy authority by 12% does not benefit taxpayers. These taxpayers consequently pay more if the 88-cent state levy is imposed. 

Like most things legislative, then, there are winners and losers. Congratulations to Zarelli for coming up with a quick and thoughtful response to a court ruling that will likely shape the debate over the next several legislative sessions.

Coverage of the proposal on the TVW blog here.