by Howard Stephenson

The Utah Legislature will be providing substantial increases in funding for public education this year, thanks to an improved economy and a renewed commitment by lawmakers. While the increased funding will be significant by any measure, there will be those who say it will not be enough.

Utah is dead last in per student spending, and nearly every discussion regarding taxes and spending in Utah revolves around this issue. While other issues such as tax competition between states and nations, economic development, competitive equity, regressivity, revenue stability, earmarking, compliance and enforcement, are also mentioned, Utah’s lowest-in-the-nation per student spending is always part of the argument.

Individual Income Tax Increases and Increase in Per Student Spending

Utah Per Student Spending as Percent of U.S. Average Required Percent Increase in Utah Individual Income Tax Revenues Impact on $55,000 household with two parents and three children
















Source: Utah Taxpayers Association based on data from Utah State Tax Commission, Utah State Office of Education, and the National

There are several factors which suggest that Utah’s last place ranking is not the whole picture. Utah has only 40 school districts while many other states have thousands of small districts with costly administrative overhead. The overhead costs in these small schools spread throughout the mid-west, for example consume tax dollars and drive up per student spending without increasing the quality of education. These small schools also inadvertently result in lower class sizes which also drive up costs.

Another factor driving up costs in the most populated eastern states is that declining population and age-demographic changes leave many school buildings significantly below capacity, resulting in high overhead costs per student. These additional costs give the appearance of higher school funding per student but this higher spending does nothing to improve student achievement.

Tax Increases

Unless Utah’s average wages increase relative to the national average, increasing Utah’s per student spending as a percent of nation will require massive income tax increases, according to Mike Jerman, Vice President of the Utah Taxpayers Association. Bringing Utah’s per student spending to the national average would require an 80.9% increase in state income taxes, as demonstrated by the accompanying chart.

Utah’s Tax Burden as Percent of Personal Income Ranking, FY2002

Measure Current Ranking Ranking with 80.9% Increase in Individual Income Taxes
Individual Income Tax 15 th 1 st
State/Local Taxes 13 th 2 nd
State/Local Taxes and Fees 3 rd 1 st

Source: Utah Taxpayers Association based on data from Census Bureau and Bureau of Economic Analysis

Mr. Jerman said that in addition to the income tax increases mentioned above, property taxes would also have to be increased. In order to understate taxpayer funding for education, the various groups that support higher taxes do not report capital and debt service costs, just operational costs. By increasing operating costs as a percent of the national average, Utah would hire more teachers. More teachers mean more classrooms, even if some classrooms had more than one teacher. More classrooms mean more school buildings. More school buildings mean higher property taxes.

The impact of such an enormous tax increase would move Utah’s already high tax burden ranking even higher, as the accompanying table demonstrates.