Sunday, March 25, 2007

Area school districts favor property tax "freeze" proposal

Chris Casey, ccasey@greeleytrib.com

March 25, 2007

Windsor would get an additional $140 per student, while Johnstown/Milliken would gain about $20.

That's what a couple area school districts stand to gain under a legislative measure that -- by freezing current mill levies -- nudges up the share of school funding from local property taxes. It's not a permanent fix to school funding problems, local school officials say, but a move in the right direction.
The Colorado Constitution requires our school system to be "uniform" across the state. To do that, we use the School Finance Act to make sure each school district spends an equivalent amount of money on each student.

But there's a quirk in the Finance Act that has left a few districts behind as overall funding has increased over the years.; If we can stabilize the local share, we'd like to use some of the money to help these "floor" districts.

With four of the state's lowest-funded schools on a per-pupil basis located in northern Colorado, school officials are watching the measure, which quickly sparked opposition in the statehouse. The amendment to the school finance bill is sponsored by Sen. Sue Windels, D-Arvada, and Rep. Jack Pommer, D-Boulder.

Most of the estimated $84 million provided by the amendment would go to kindergarten and preschool programs, but an estimated $6.3 million would go to 11 school districts now at the funding floor.
Most of the money from stabilizing the local share would ultimately go toward preserving the State Education Fund. Without help it will bust in 2010 or 2011. But we'd also like to use some of the money for kindergarten and helping the floor districts.
Johnstown/Milliken Re-5J District is near that floor with per-pupil funding of $6,001. If the amendment passes, it would provide about $20 more in per-pupil funds to the district, said Superintendent Marty Foster.

Johnstown/Milliken ends up on the low end due to factors such as growing enrollment, lower-than-average at-risk student population, and moderate cost-of-living and personnel costs.

The efficiencies that come with a growing enrollment -- "the bigger the pot is the less it costs an individual in property taxes because it's spread around more" -- are helpful in Johnstown/Milliken's case, Foster said. Nonetheless, he believes equity is lacking in the school finance formula.

"Why should we receive less money than a district right next door to us?" Foster said. "There's really no rhyme or reason other than how they set their categories up" and how the funding formula works.

The current school finance system is a complex tangle of constitutional amendments and laws. Much of it limits how much local property taxes can go to school districts -- the Gallagher Amendment limits the amount of burden that can put on residential property owners -- leaving the state to make up for the lowered local share. The tax rates are set to decrease next year in most of the state's 178 school districts, in accordance with the 1994 school finance law.

Before Gallagher passed in 1982, Greeley-Evans residents funded roughly 60 percent of the Greeley-Evans School District 6 budget through property taxes, said Marlene Schuman, current school board member. Now the local share of the district's annual budget is about 30 percent, while the state kicks in 70 percent.

"So when we talk about local control, we don't have the dollars attached," Schuman said. "Local control is really at the state level. They can tell us what to do."

This is an interesting and important point. It's not why we're trying to stabilize the local share (it's already dropped too far to reverse the shift toward state funding and state control), but it's one of the long-term reasons why the state has taken so much control of local school districts.
Districts got some relief with the passage of Amendment 23 in 2000, which requires the state to increase K-12 spending 1 percent annually along with catch-ups for inflation. Meanwhile, the Gallagher Amendment and the Taxpayer's Bill of Rights serve to ratchet down the share of local property taxes to schools.

Some school officials say an overhaul of the funding formula is needed.

Windsor Re-4 District is currently the state's lowest-funded district at $5,869 per pupil, said Superintendent Karen Trusler.

"The funding gap is getting wider, and these funds (from the property tax proposal) would help keep the gap from increasing," Trusler said. "However, a full review of the finance formula and the factors needs to be considered."
This is true, but unlikely. The School Finance Act is so complicated, and money is so tight, that we haven't been able to make any significant changes. I've been planning to write a blog entry on this, but haven't gotten around to it yet.
Jerry Wilson, superintendent of Poudre School District in Fort Collins, said Poudre would receive about $252,228, less than two-tenths of a percent of its general fund budget, under the proposal.

Poudre is also among the 11 floor-funded districts -- joining Windsor, Johnstown/Milliken and Thompson R2-J in Loveland as regional members of the list. With per-pupil funding of $6,237, Greeley-Evans School District 6 is not in that group.

"While the district will effectively utilize any increases in revenues, the hope for our district is that further equalization will take place over time," Wilson said.

The property tax measure was recently unveiled at a press conference hosted by Gov. Bill Ritter, who views it as a way to fulfill a key campaign pledge -- to cut the state dropout rate in half within 10 years -- and to prevent the state school fund from becoming insolvent by 2011.

The measure faces long odds, though, because it manipulates property taxes. It was voted down Wednesday as an amendment to the school finance bill in the Senate, and Sen. Abel Tapia, chairman of the Joint Budget Committee, said most Democrats view the proposal as "too hot" to support.

While Ritter called the measure a mill levy "freeze," many lawmakers were quick to assert that tax bills will go up if property values rise in future assessments.

At least one northern Colorado lawmaker sees the proposal as a burden to property owners.

"Under Gallagher, any increase in local property tax support for K-12 really hits small businesses hard," said Sen. Steve Johnson, R-Fort Collins. "Plus, I think this should go to a vote of the people to keep faith with TABOR."
Steve brings up a good point, but it's a bigger issue than this. Stabilizing the local share doesn't increase property tax rates; by preventing the TABOR refunds, it would bring in more money by keeping the tax rate from going down. This article helpfully includes some sample mill levies at the end. Take a look at them and remember that the School Finance Act was originally based on a statewide school levy of about 40 mills. Some poorer areas in the state are still paying close to 40 mills. It's the more affluent areas that have had their mill levy pushed down. As far as TABOR goes, this proposal only applies to districts where the voters have already voted to take themselves out of TABOR's revenue limitation -- a local school district version of what Referendum C did statewide for sales and income taxes.
Foster said that, as a homeowner, he can understand concerns about the proposal.

"But I'm also pro-education," he said. "It does mean more back to the local share of funding vs. what the state is paying. I would be in favor of that."

BREAKOUT CHART:

Current mill levy rates for school general funds and per-pupil funding amounts for some area school districts:

* Windsor Re-4 District: 27.323 mill levy, $5,869 per pupil.

* Thompson R2-J School District, Loveland: 22.360 mill levy, $5,988 per pupil.

* Poudre School District, Fort Collins: 27.704 mill levy, $5,990 per pupil.

* Johnstown/Milliken Re-5J District: 18.414 mill levy, $6,001 per pupil.

* Greeley-Evans School District 6: 29.788 mill levy, $6,237 per pupil.

* Denver Public Schools: 25.541 mill levy, $6,794 per pupil.

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