Looking for school funding ideas

Friday, September 12, 2003

For years, Missouri's public school administrators and the boards they report to have looked for alternatives to current funding, which relies heavily on local property taxes. While the topic has been widely discussed, there have been few concrete proposals offered. Legislators have been less than enthusiastic about tackling an overhaul of education funding.

Those who would like to replace local levies with other funding sources can list many reasons for wanting to change. Among them is the fact that voters have a tolerance threshold for tax increases that many districts already have reached. Another is the notion that property values vary widely across the state, which means a dollar of tax levy in one district won't generate as much revenue as the same levy in another district that has a higher assessed valuation.

One goal is equity

The last major changes in state funding for schools were made with the Outstanding Schools Act of 1993. With a huge statewide tax increase, the state's goal was to more fairly distribute money to schools so that students in poorer districts would have access to the same quality of teachers and classes as students in richer districts.

Such efforts have had only modest success in other states faced with the same disparities between rich and poor districts. Some states have taken the approach that all tax revenue for schools -- from local and state sources -- should go into one big pot and be redistributed to districts on a per-pupil basis. Only one state -- Hawaii -- has taken the approach of one statewide school district funded entirely by state resources.

Same goal in other states

Other states have, like Missouri, come up with plans for making public-school funding "equitable." But budget crunches in the past two or three years have made equity a tough goal to grasp. Missouri school district now complain that the state funding formula adopted 10 years ago doesn't work any more. Other states have reached the same conclusions.

If shifting the burden of school funding to something other than local property taxes is really a good idea, there must be a practical and workable alternative. But no one seems to know what it is. There are some ideas being considered, and one of those has been developed by a retired University of Missouri economist.

An economist's plan

It's too early to tell if Dr. Ed Robb's ideas could possibly be turned into reality. Doing so would require a rigorous legislative commitment and enough voters statewide to change the Missouri Constitution. But Robb's scheme goes well beyond the "we ought to do something" line of thinking and proposes some concrete ways to move away from local property taxes and increase total revenue for schools.

Basically, Robb's plan would be a boon to businesses by eliminating the corporate income and franchise taxes. Owners of real and personal property would also benefit by the elimination or reduction of school tax levies for general operations. New revenue would be generated by a flat tax on income earned by Missourians. Robb estimates as many as two-thirds of the state's 524 districts could repeal their local operating tax levies, and the rest could drastically cut such levies.

Time to get creative

The initial reaction from legislators who listened to a presentation by Robb this week ranged from mild interest to outright opposition. Some of those opposed said his plan is unconstitutional. But Missourians vote almost every year to amend the constitution for one reason or another.

If school funding is to change in a way that benefits students as well as taxpayers, it would be pretty easy to convince Missourians to change their constitution.

More importantly, other ideas for improving school funding methods need to be shared. Anyone with ideas for how to do this should speak up.

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