howardnlby Howard Stephenson
A common criticism of the Utah Legislature is that it has refused to implement a “Long Term Funding Plan for Education.” This complaint is often made during the election season to give the impression that public education is not a high priority with legislators.
The criticism often is repeated when the legislature decides not to implement a new soda pop tax or impact fees or a new tax that singles out a particular industry.
The critique usually goes something like this: “Highways are important to lawmakers as demonstrated by their commitment to a long term plan for road improvements and issuing hundreds of millions in bonds to fund highway re-construction projects throughout the state. Why won’t legislators enact a similar long-term funding plan for education?”
The answer is: They have!
The legislature has enacted an extensive permanent funding stream for education that seldom is reported by the news media. As a result, most Utahns are unaware of the plan. The plan is very comprehensive and extremely broad in its scope. It involves several components of direct funding by the legislature, plus autonomy and flexibility of local school boards to make decisions about local property taxes and school fees.
Representative Jim Ferrin has helped communicate the components of this education funding plan. Some of his ideas and others are included here.
Utah’s Plan for Education Funding
1. All Income Taxes Dedicated to Education. The Legislature, with approval of the voters, has enacted a provision dedicating 100% of Utah individual and corporate income taxes for education. Currently, $1.7 billion or 93% from income taxes goes to public education while $127 million or 7% is allocated for higher education, area technical centers, and Tax Commission charges.
2. 54% of Property Taxes Dedicated to Education. The legislature has given local school boards authority to impose various property tax levies as these locally-elected bodies determine they are needed. The specific optional property tax rates include, voted leeway, board leeway, capital outlay, debt service, voted capital outlay, 10% of basic, recreation, transportation, and tort liability. While Utah’s property taxes rank 8th lowest among the fifty states, each of Utah’s 40 school districts has hundreds of millions of dollars of unused property tax authority. A few of these optional tax rates require voter approval, but the only requirement to implement most of them is that the local school board advertise their intent to increase taxes and then hold a public hearing. While the legislature is often criticized for not adopting new and higher taxes for education, local school boards are not criticized when they exercise similar restraint regarding property taxes.
3. Equalized Funding Formula. To avoid the situation of “rich” and “poor” school districts that exist in other states, the legislature has equalized the basic education funding formula through what is known as the Weighted-Pupil-Unit. Utah has been used as a model across the nation for its commitment to “Tax the wealth where it exists to educate the students wherever they live,” regardless of how large or small the property tax base may be in any of the 40 districts. As each district imposes the statewide basic property tax levy they are guaranteed by the legislature to receive a uniform funding amount per-student. Whatever the basic property tax levy does not raise toward that amount, the state fills-in the remaining dollars to bring each district’s per-student amount up to the guarantee.
4. Board & Voted Leeway Equalization. The legislature provides $20 million in equalization funding annually to ensure that the leeway property taxes imposed by local school boards in “poor” districts are guaranteed a minimum funding amount per student. This funding amount is scheduled by statute to be increased over the years.
5. Capital Outlay Equalization. The legislature has also provided an additional $28 million annual funding to assist rapidly growing school districts to construct much-needed school buildings. The legislature is intent on increasing this amount while ensuring that extravagance is not built into Utah school buildings.
6. Sharing the State’s AAA Bond Rating. In the past, many school districts have paid higher costs for borrowing because of their low bond ratings. The Utah legislature has authorized the use of the state’s AAA bond rating for local school districts.
7. State Land Trust & Permanent State School Fund. Following years of mismanagement, the legislature changed the management structure of the State Institutional Trust Lands Administration to enhance the return-on-investment of school trust lands and rebuild the Permanent State School Fund. Additionally, rather than allowing the earnings from this $350 million fund to be lost in the regular school funding formula, the legislature has sent this money directly to local school community councils, bypassing the state and local school boards. This is site-based decision-making at its best.
8. Teacher Supply Money. The legislature has provided for an ongoing annual appropriation of $5 million annually to reimburse teachers for out-of-pocket expenses in purchasing classroom supplies. This is the ultimate in classroom-based decision-making.
9. Funding for Textbooks and Other Critical Needs When presented with evidence of funding shortages in specific areas, the legislature has stepped up and provided the resources to solve the crisis. A recent example of this is the $24 million appropriation to eliminate the textbook shortage.
10. Competitive Teacher Compensation. With the adoption of the statewide strategic plan for education, to ensure an ongoing supply of qualified teachers for Utah, the Governor and legislature set a goal to provide the highest statewide average total compensation for teachers among our neighboring states while adjusting for the cost-of-living in each state. According to the latest study by the Legislative Fiscal Analyst, we have achieved that goal. Utah teacher’s total average compensation is highest among our neighboring states and surpassed only by California and Washington in the West .
11. Promoting Economic Growth to Fund Education. Most economists warn that raising taxes in a state whose taxes already rank 9th highest in the nation could destroy our business climate and cause an economic downward spiral which could take years from which to recover. Consequently, the governor and legislature have undertaken an ongoing, aggressive campaign for economic development. These initiatives most recently include the High Tech Initiative, and a bold effort to focus on tourism following the 2002 Winter Olympics.
The legislature is also pursuing the APPLE initiative under the leadership of House Speaker Marty Stephens, to get the federal government to keep its commitments to the Western states whose lands are largely owned by the federal government — nearly 70% in Utah.
Much has been done to also curtail the use of city redevelopment agencies which currently take $27 million annually from schools and give the money to private developers.
The legislature has also directed the Tax Review Commission to undertake an extensive analysis regarding whether there is justification for government agencies getting into the business of business without incorporating the same school taxes into their rates which their private sector counterparts are required to pay.
The legislature has also placed on the ballot for November a constitutional amendment to empower school districts and other government entities to engage in sale-lease-back contracts to provide millions in federal dollars by capturing federal depreciation tax benefits on fixed assets such as school buildings.
So now you know. The Utah Legislature does have a comprehensive long-term plan for education funding.