School Funding 2.0
Our new governor, Deval Patrick, created a buzz about fixing the way Massachusetts pays for public schools. The only thing definite is the governor's opinion about property taxes, which was clearly articulated during the campaign, and repeated at the Mass Association of School Committees annual meeting:
One appeared in the Montague Reporter, entitled Ed Reform Creates a Wrecking Ball for Local Government, by the chair of the Montague finance committee. I concur with much of this article, though I think the author's conclusion that the state's wrecking ball falls hardest on places that already receive the most state aid only captures part of the picture. A couple other points, summarized in my words; the state should assure that its contributions keep up with the real rate of ed inflation, and cost containment should be part of any reform.
Another is an op-ed in the Boston Herald, written by Edward Moscovitch of Cape Ann Economics. I disagree with Moscovitch's headline premise - that a statewide prop tax is the solution, to raise $4.7 billion of new state funds for education. But I respect Moscovitch's credentials, as the author of a study that I've quoted on other blogs before regarding No Child Left Behind and its impossible proficiency goals.
Moscovitch offers a statewide property tax over other taxes available at the state level as being a more effective means of raising the required revenues, offering an exemption on the first $100,000 of valuation to make the tax more progressive, and another exemption for seniors. I think this is dancing around the problem of raising taxes at the state level, and there would be just as much or more revolt against a statewide property tax as against higher income tax rates. Patrick is not likely to be seen as fixing the problem he set out to fix if he replaces local property tax revenue with local property tax revenue collected from other towns. Particularly not in places like Gloucester, with very high property values but a perception that working class incomes are not matching those valuations. I think the only thing going for a statewide property tax is that property tax revenues are more consistent from year to year than the income tax, which is more cyclical. But I think there are other ways to solve that problem.
Moscovitch also touches the subjects of the foundation budget actually reflecting education costs, and the subject of cost control:
As far as my advocacy, I'd like the governor to make sure the existing commitment to equalize aid and burdens, particularly for regional school members, in the form of target share reform, is completed. About 100 towns that are members of regional schools face high property tax burdens for schools primarily because of errors in the existing state formulas, and regulations that propagate those errors into regional school "required minimum" contributions. In terms of the numbers, the state can accelerate the regulatory portion of target share reform, while reducing both the short term and the long term demands on state tax revenues, by focusing effort reduction on required contributions that are truly excessive next year.
For example, if the governor's goal is to increase the foundation budget by 10%, then effort reduction could wipe out ALL excess effort above 110% of the current target local share, in a much more cost-effective way than following next year's proposed effort reduction. And the governor would have 100 more towns where he fixed the problem of excessive property tax burdens.
Our new governor, Deval Patrick, created a buzz about fixing the way Massachusetts pays for public schools. The only thing definite is the governor's opinion about property taxes, which was clearly articulated during the campaign, and repeated at the Mass Association of School Committees annual meeting:
"The property tax is not working."I found a couple of analytic opinion pieces on this subject that are worth a look.
One appeared in the Montague Reporter, entitled Ed Reform Creates a Wrecking Ball for Local Government, by the chair of the Montague finance committee. I concur with much of this article, though I think the author's conclusion that the state's wrecking ball falls hardest on places that already receive the most state aid only captures part of the picture. A couple other points, summarized in my words; the state should assure that its contributions keep up with the real rate of ed inflation, and cost containment should be part of any reform.
Another is an op-ed in the Boston Herald, written by Edward Moscovitch of Cape Ann Economics. I disagree with Moscovitch's headline premise - that a statewide prop tax is the solution, to raise $4.7 billion of new state funds for education. But I respect Moscovitch's credentials, as the author of a study that I've quoted on other blogs before regarding No Child Left Behind and its impossible proficiency goals.
Moscovitch offers a statewide property tax over other taxes available at the state level as being a more effective means of raising the required revenues, offering an exemption on the first $100,000 of valuation to make the tax more progressive, and another exemption for seniors. I think this is dancing around the problem of raising taxes at the state level, and there would be just as much or more revolt against a statewide property tax as against higher income tax rates. Patrick is not likely to be seen as fixing the problem he set out to fix if he replaces local property tax revenue with local property tax revenue collected from other towns. Particularly not in places like Gloucester, with very high property values but a perception that working class incomes are not matching those valuations. I think the only thing going for a statewide property tax is that property tax revenues are more consistent from year to year than the income tax, which is more cyclical. But I think there are other ways to solve that problem.
Moscovitch also touches the subjects of the foundation budget actually reflecting education costs, and the subject of cost control:
We should change the inflation adjustment factor to reflect actual Massachusetts health care and other costs (the current factor is based on national data) and raise the foundation budget to fit more closely what schools actually spend. When the extra costs this implies become a state responsibility, there would be a stronger incentive to address the problem - certainly by making sure that teachers received their health coverage through the more efficient state plan.My two cents on Patrick's likely direction: I suspect he wants to reevaluate the foundation budget, perhaps raising the foundation by about 10% and perhaps doing that in a way that better reflects No Child Left Behind mandates for subgroups; and he'd like to shift funding away from property taxes to state revenues. He's also said the charter school funding formula should be fixed, and presumably a comprehensive plan would include something to reduce the impact on local budgets there, as well.
As far as my advocacy, I'd like the governor to make sure the existing commitment to equalize aid and burdens, particularly for regional school members, in the form of target share reform, is completed. About 100 towns that are members of regional schools face high property tax burdens for schools primarily because of errors in the existing state formulas, and regulations that propagate those errors into regional school "required minimum" contributions. In terms of the numbers, the state can accelerate the regulatory portion of target share reform, while reducing both the short term and the long term demands on state tax revenues, by focusing effort reduction on required contributions that are truly excessive next year.
For example, if the governor's goal is to increase the foundation budget by 10%, then effort reduction could wipe out ALL excess effort above 110% of the current target local share, in a much more cost-effective way than following next year's proposed effort reduction. And the governor would have 100 more towns where he fixed the problem of excessive property tax burdens.
posted by MassParent at 8:13 AM
2 Comments:
My gut response is against a statewide property tax, but I think it's at least a stab at a solution that merits some thought.
Politically, I think a statewide property tax would wrest control over tax rates away from the property owners, and I'm not sure how I see the property taxes going down under that scenario. So, from the perspective of my neighbor in Greenfield, property taxes stay high and he doesn't even get to vote against them at the ballot box. I'm not feeling the warm fuzzy vibes in that scenario.
On the other hand, a dedicated statewide revenue source does sound like a good idea. I guess I'd like to understand more what the politics on this are around the state. Moscovitch says wealthy districts tend to be opponents of the current system and notes their low property tax rates. Out here in Franklin County, most tax rates are high, most towns are not what we would consider wealthy, and I hear a lot of pretty loud dissatisfaction with the current formula.
Here's a link to another Moscovitch op-ed, this one in Framingham . I suspect this piece more accurately reflects Moscovitch's overall position, while the Herald piece is a response to Patrick's overtures.
Now, here's a mismatching data point. Barbara Anderson , saying Ed Moscovitch supports higher income taxes over unfair property taxes.
Moscovitch's bio :
As a consultant to the Massachusetts Business Alliance for Education, Ed was the principal author of the initial drafts of the finance portions of the 1993 Massachusetts Education Reform Law; he continues to do extensive consulting in the area of education finance.
Then there was this April 9th summary of a Boston Herald op-ed:
Last week, the governor came to my town of Gloucester and told the folks what they wanted to hear - that Gloucester's aid was too low because the formula didn't adequately reflect income (as a blue- collar, sea-side town, we have high property values but relatively low average incomes).
The governor left the impression that Gloucester's problems can be solved by juggling funds within the formula - that the formula is broken and he'll fix it. But he'll find that the Legislature last year did a good job of balancing competing interests of cities, suburbs, small towns and coastal towns. Last week's resolution is a polite reminder that any changes will have to be made cooperatively and are unlikely to stray far from the sound course set last year.
I must say, I'm baffled. I suspect Moscovitch was simply covering all the bases. Something like: You want to do this? Here is one of the alternatives. By the way, it would increase property taxes on my own home-town of Gloucester, which already feels the state relies too heavily on property values for local assessments. Local fishermen can tell you that property values do not reflect their, and other working class families, ability to pay."
But I do get the sense that Moscovitch wants to do something, and probably that he feels the change of governor opens a different set of opportunities for discussion.
BTW, for what it's worth, Greenfield is due for additional aid for the next three years, to bring it up to its target share. Greenfield's fair allocation of aid is about $1 million a year more than what it will receive this year. Montague's woe, though, is that the Gill-Montague regional district already receives more than its target share of aid, so further increases cannot be expected to be large without a major change of course.
I think the right course is to move the state towards the national average, which is 57% state funds, compared with the current level of about 40% state funds in Mass. That's a difference of about $1.4 billion. I'd split that - half of it should go towards raising the foundation budget, half towards reducing property taxes - and I'd reduce property taxes by actually dialing back the Prop 2.5 ceiling for every town where required contributions are high enough that they can be reduced. Dialing back the Prop 2.5 ceiling is the most concrete way the governor could fulfill a pledge to actually reduce property taxes. But I have no idea if this creates a strong coalition of support. That's a pretty tricky question, and one I don't think I have any special skills divining.
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