Using Property Taxes to Fund Public Schools Prompts Inequities
Photo 91751165 © Vadim Ginzburg - Dreamstime.com

Commentary

Using Property Taxes to Fund Public Schools Prompts Inequities

The most glaring problem with relying on property tax revenues to fund schools is that a child’s ZIP code can determine a school's resources.

It’s been nearly 40 years since Californians revolted against runaway taxation by voting for Proposition 13, which reduced property taxes. But today California still has the 10th highest burden in the country when property tax revenues are compared to median household incomes, the Register reported. The real estate comeback and rising property values have driven inflation-adjusted property taxes from $788 per person after Prop. 13 took effect in 1978, to about $1,430 in 2014.

One reason that politicians continue to look for ways to get around Prop. 13 and to raise property taxes is that they send a significant amount of funding to public schools. The tie between property taxes and public education is an artifact of colonial days. While California is less reliant on property taxes than many other states, local revenues, including property taxes, still provide the funding for about 30 percent of the state’s K-12 budget. The most glaring problem with relying on property tax revenues to fund schools is that a child’s ZIP code can determine how many resources their schools have. For example, in 2016-17, Laguna Beach Unified School District generated $16,941 per student while for Garden Grove Unified had $10,719 per pupil – a significant difference of more than $6,200 per child in two school districts located near one another.

California has two types of school districts for funding purposes. Select “basic aid” school districts are property wealthy and can raise their own revenues, usually via property taxes, that allow the districts to raise money well beyond the state-guaranteed funding levels. In contrast, “state aid” school districts, which make up about 90 percent of districts across the state, don’t have access to wealthy property owners and property taxes, and thus rely on state aid.

California’s Local Control Funding Formula, signed into law in 2013, has made progress in increasing both funding equity and transparency in the state’s school districts. But to modernize the school finance system and fully transition from district-centered to student-centered funding, the state should abolish the antiquated link between property taxes and a child’s education. This might seem like a lofty goal, but such a shift currently has traction in Pennsylvania where there’s a bipartisan proposal to eliminate property tax revenue from the education funding formula and replace lost revenues with reformed state-level sales and income taxes. The plan has broad support. Democrats like that it provides the foundation to create a truly equitable education funding system. Republicans view it as a way toward maximizing parental autonomy since local revenues often get in the way of funding school choice programs such as charters and education savings accounts.

Fully embracing school choice by eliminating its reliance on local revenues would help California improve educational outcomes. The concept of backpack funding, where per pupil student funding follows the student to whichever school they choose to attend, is designed, in part, to give low-income students the chance to escape failing schools.

It’s time to discard the idea that local funding, through property taxes, provides local control. Bureaucrats at the district and state level still wield the power. So the push for local control may need to be shifted to a push for funding mechanisms that maximize school choice and make it easier for students, and their per pupil funding, to move to the schools that best serve their needs.

This column first appeared in the Orange County Register.