Do School Districts have to Raise Property Taxes?
Following Gov. Corbett’s budget, school district officials and the tax-and-spend lobby have cried that cuts to state education spending will force schools to increase property taxes. Yet this ignores several key factors.
For starters, property taxes have skyrocketed, even as state aid has increased and with the “property tax relief” from slot machine gambling. Likewise, school districts have hoarded over $2.5 billion in reserve funds.
A study by the Pennsylvania Institute of Certified Public Accounts suggests four ways school districts could save over one billion dollars while avoiding teacher layoffs or tax increases. Their recommendations include cutting administrative staff in half, establishing a central administrative office for each county and limiting administrative and office costs to 4.3 percent of a school district’s budget—the ratio found in the commonwealth’s most efficient districts.
Additionally, school boards may be soon getting more flexibility from Harrisburg to make ends meet. A package of mandate relief bills introduced by Senate Republicans ranging from allowing economic furloughs to alternative certification of school nurses. Proposals to change the states prevailing wage law, which drives up the cost of construction (the fastest growing category of school spending), are also in the works.
Further, if all 500 school districts agree to freeze teacher pay for one year, the commonwealth could save $400 million dollars, according to the Corbett administration. In an economy where many wish they had a salary to freeze, the request seems reasonable and is especially appropriate considering the desire to protect taxpayers from property tax hikes.
In Lancaster, eight local school districts have started down this path set to enact voluntary pay freezes for 900 administrative and support staff saving over $1 million. But only four of these districts are asking teachers to agree to a one year freeze; teachers are scheduled to receive, on average, a 3.6 percent increase in 2011-12.
In contrast, the Conrad Weiser School Board voted to retroactively hike administrative salaries by four percent, and continue annual salary increases. Gov. Corbett can hardly be blamed for any tax increases there.
Instead, school districts should justify their spending and tax increases to voters, with referendum on property tax increases, another idea Gov. Corbett identified in his budget address. Our friends at the Allegheny Institute, point out Act 1 of 2006 has failed to provide property tax relief with roughly 12 referendums over the last five years (due to exemptions and a very high threshold). In contrast, Pennsylvania Department of Education data shows 133 districts approved for waivers to raise taxes above the set index for FY 2010-11.
It’s time to plug the loopholes in Act 1 and give taxpayers the power to vote on any property tax increase. Such a change would force school officials to demonstrate their need for more tax dollars.