School taxes going up, again?
School administrators and School Boards across the county are preparing their 2019-2020 school budgets. A property tax increase for each of our school districts is the likely outcome along with cries from concerned citizens regarding the burden such an increase will put on property owners. What are the factors that drive these increases? Budgets come down to two primary factors: revenue and expenditures. A look at both of these factors will provide some of the answers to this question.
The greatest source of revenue, and the only one controlled by school boards, is the local property tax. The next greatest source is reimbursements from the state for general and special education as well as education-related expenditures, such as transportation and construction. These two sources account for over 90% of a district’s revenue. Federal funds might contribute 1%-2% of funding, with other minor sources making up the difference.
Federal funding over the last 20 years has not kept pace with the cost of programs it supports. State reimbursements barely keep up with inflation, and they took a major hit in 2010, putting many district in distress. Costs, however, increase steadily due to inflation and additional government mandates. With the local property tax as the only revenue source controlled by school directors and other revenue sources essentially stagnate, increasing local property taxes is the only means school districts have to cover increasing costs.
The logical response, then, is to decrease spending to either reduce or eliminate costs; but just how much control do local school boards have over spending? School district spending falls into nine broad categories:
“Purchased Professional Services” and “Purchased Property Services” - Services for special needs students, solicitor costs, audit expenses, costs for outside consultants, maintenance, repairs, rental expenses and utilities. Most of these expenses are either government mandated services or fixed costs that school boards have little ability to control.
“Other Purchased Services” - Includes student transportation, field trips/travel, cyber school tuition, insurance, and meeting advertisements. Many of these expenditures are required, except tor field trips/travel. School district have drastically cut funding for field trips and shifted that expense to parent groups. Cyber school tuitions are formula-driven, and districts must honor enrollments in these schools.
“Supplies” - The things our teachers need to educate your children. These costs are less than 5% of the total budget. Drastic cuts in this category have a huge effect on instruction with little impact on total expenditures.
“Equipment and Property”- Expenditures for fixed assets including technology equipment. At 2%-3% of the total budget, big cuts here are “penny wise and pound foolish.”
“Interest, Dues, and Fees” and “Principle on Debt” -- costs associated with previous financial borrowing. Boards can consider refinancing, but that may mean extending the time needed to repay the debt. Acquiring new debt, however, is certainly under a Board’s control.
That brings us to “Salaries” and “Benefits:” Administrative, Professional and Support - School Boards have a lot of control over how many positions they will fund, how much they will pay their employees, and what benefits they will offer to those employees, but there are limitations.
For example, in Special Education, the number of students assigned to a teacher is limited, based on the type of disability. Also, some special needs students require an assistant that must be paid for by the school district.
Core Curriculum must be taught by certified professional staff. Once a position has been established, there are only certain circumstances under which that position can be eliminated. Therefore, School Boards cannot just drop programs and cut staff at will.
School Boards can “freeze” salaries to limit expenditures. However, market pressures and union contracts make that nearly impossible to sustain for more that a year or two.
Increases in benefit costs are mostly due to escalating pension contributions and health insurance costs. Pension contributions are mandated by the state - no cuts there. Teachers and administrators have agreed to pay a percentage of premiums and accept higher deductibles. However, it is tough to settle a contract when wage increases don’t cover the higher premiums and deductibles.
The only other place to turn to reduce expenses is support staff and extra curricular activities. Support staff can be cut only so far. Children must be fed, facilities and grounds must be maintained, and offices need to run efficiently. And imagine the outrage when the School Board votes to cut the Football Team or the Marching Band program?
So why are your taxes going to go up? Because there are very few easy ways to cut expenditures, and property taxes are the only revenue source your local school board can use to cover cost increases--especially when the State and Federal governments won’t provide adequate additional funding for education and services they require the schools to provide.
Who wants to run for school board?
Dennis Cope is a retired administrator of the Upper Adams School District and a member of the Gettysburg DFA Education Task Force.