Shortchanging our schools: Part Deux

Many school districts opt out of millions of dollars to educate kids

This from the Herald-Leader:

Last fall, Pike County school board chairman Charles Johnson made a motion for the district to set what's known as a "compensating" tax rate, which means property taxes would be adjusted to produce the same revenue as the year before.

All he heard was silence.

The four other board members — Virgil Osborne, Justin Maynard, Frank Ratliff and Kenneth Biliter — refused to second the motion and killed the vote.

"I think we can manage well enough by saving and conserving," Osborne said. "It was the opinion of everybody."

Mount Vernon Elementary students using iPads

Everybody except Johnson, who had made the same motion the year before and got the same response.

"I was just doing what I thought was right for the school system," said Johnson, who wanted to propose a tax rate that would have increased revenue by 4 percent but knew it would never pass.

Here's the kicker: Pike County property taxes went up slightly anyway, because if a school board fails to approve a property tax rate, the compensating rate is the automatic default. But the county's school board members can still say they didn't vote for a tax increase.

Like Pike County, many Kentucky school boards have chosen not to raise property taxes as much as possible since the economy tanked in 2008, permanently losing out on millions of dollars to help educate their children.
Although school boards are allowed to raise property tax rates enough to produce 4 percent more revenue each year without being subject to recall by voters, fewer districts have done so since the 2007-08 school year, according to a Herald-Leader analysis of state data.

That year, 107 school districts voted for a 4 percent revenue increase, and 27 chose the compensating rate. By 2012-13, just 76 school boards chose the 4 percent, while 66 chose compensating.

As the economy improved last school year, the number of districts taking their maximum property tax bump also increased, to 96, but the number of districts that chose the compensating rate remained nearly double the total for 2007.

Of Kentucky's 173 school districts, 15 never took the 4 percent increase from 2007-08 to 2013-14. Those districts were among the one-third of school boards that took the 4 percent option two or fewer times during those seven years.

Some state education leaders say they're depressed by the recession-era anti-tax fervor that has swept many school boards, particularly as those same leaders beg the General Assembly for more money to fund schools every year.

"Nobody wants to vote for a tax increase, but at least it shows we're doing what we can within the constraints of the law," said Roger Marcum, chairman of the Kentucky Board of Education.

In his opinion, it's difficult to ask for state money when local officials won't do all they can.

'It doesn't look good'

For residents of Pike County, where tax assessments on unmined minerals have dropped as the coal industry cratered, property taxes went from 57.9 cents per $100 of valuation to 63.2 cents this year in order to generate the same $12.8 million for the school system.

On a $100,000 piece of property, taxes will go up about $65, Pike County schools finance director Nancy Grubb said. If the board had approved a 4 percent revenue increase, the bill on a $100,000 piece of property would have gone up $90.

The extra money would have been useful, school officials said. Pike County must pay for a portion of a state-mandated 1 percent teacher raise this year, along with increased costs for health care, utilities and transportation.

Superintendent David Lester said he has put more staff in schools, which has resulted in higher test scores, but budget cuts will end the extra staffing.

"We have moved well up the list of districts as far as test scores, and I hope that will continue, but if we don't have additional monies, we will have to make changes that will affect test scores," he said.

Johnson, who is retiring this year, said his fellow board members might be looking out for voters, but not necessarily for their children.

"We're not getting the federal or state funds we used to, but we're expected to provide the same level of services," he said. "It doesn't look good."

Things are even worse in Muhlenburg County, which hasn't taken the 4 percent revenue increase since 1993. District finance officer Eric Bletzinger said the school system is about to cut 50 non-tenured employees and slash everyone's salary by 8 percent because of a precipitous drop in what's called "in lieu" property tax payments from the Tennessee Valley Authority, which operates the coal-fired Paradise Plant.
If the school district had taken the 4 percent increase once every four years, it would have $10 million more this year, Bletzinger estimated. By not taking the increase for 22 years, the district has lost out on roughly $40 million, he said.

'We don't lack for anything'

In 1979, Kentucky lawmakers wanted a limit on really high property taxes that some school districts were implementing. The 4 percent cap on revenue growth seemed like a good compromise, providing schools with an avenue to combat cost-of-living increases and other fluctuating costs, such as fuel and textbooks. If districts wanted to go higher, they could, but voters could also say no and recall the increase.

"It was a gift," said Wayne Young, executive director of the Kentucky Association of School Administrators. "But over the years, there's been a real retreat from that."

Young said he understands that districts might not want to take the 4 percent every year, but he wonders if it's "good stewardship" to never take it. For one thing, once you give up that money, you lose it over and over again.
For example, the Rockcastle County school board has voted to take the compensating rate for the past seven years.

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25 years after reform, some Kentucky counties get a failing grade in financing schools Read the article.
 

In 2007, Rockcastle gave up about $50,000 by taking the compensating rate, which is not very much in a $28 million budget. But each year, that money would compound, which means that by 2012-13, the school district had missed out on a little over $1 million.

"If I'm sitting on a board and I say we don't need money, to me that begs the question: Are you providing the best service for your students from an instructional standpoint?" asked Kay Kennedy, who heads the division of district support for the Kentucky Department of Education.

 

In Rockcastle County, Superintendent David Pensol said the answer to that question is "absolutely."

The district tries to keep enough staffing for a 22-to-1 ratio of students to teachers and keeps its school buildings well maintained, Pensol said.

The state rates Rockcastle as a "high-progress district" for gains on statewide testing last year, but less than 40 percent of 11th-graders meet state benchmarks in reading and math. That means more than 60 percent of graduates are not ready for college-level work.

At Mount Vernon Elementary, Pensol said the district has bought enough laptop computers and iPads to keep its 700 students up to date with the latest teaching methods.

"We don't lack for anything," principal J.D. Bussell said. "Everybody wants, but as far as need goes, there's not much."

'There's a limit'

Pensol said it's not fair to criticize the school board for choosing to keep revenue from property taxes flat.

"To me that's not even where the conversation ought to be because of the difference in the communities and what a community is able to do," Pensol said. "Our compensating rate may be harder for us to do than someone else's 4 percent."

For example, a school board in an economically depressed county with declining property values might have to increase property taxes to bring in the same amount of revenue, as was the case last year in Pike County. But in a wealthy county with rapidly increasing property values, a school board could choose to increase its revenue by four percent and still see property tax rates decline or remain steady.

"There's a limit to what local communities can do to support their schools, and there's no way to bunch us all together," Pensol said.
Morgan County's school board, for example, usually voted for the 4 percent revenue increase until it literally lost much of its property tax base in 2012, when tornadoes ripped through West Liberty.

This year, there has been a spurt of rebuilding and new construction, so the property tax base is up by $20 million, school board member Marshall Jenkins said, but the community is still hurting. Because the total value of property is up, the school board voted in August to stay with the compensating rate, and it will get $100,000 more than last year because so much new property was put on the tax rolls.

"Nobody likes to raise taxes, but it gets to the point where you have to look at the issue every year and make a decision," he said.

Anti-tax politics

Experts say the reluctance of school boards to vote for the 4 percent revenue increase for education has been influenced by the 2008 recession, but also by anti-tax politics that can affect school board elections.

"There is no question that it was easier a decade ago to have identified needs and take the full 4 percent growth than it is today," said Brad Hughes of the Kentucky School Boards Association.

Sometimes, the only way to get a community to raise property taxes is for a specific project, such as replacing an old building or buying new technology.

The Pike County school board, for example, approved a school construction tax, known as the "facilities nickel," in 2011 to rebuild the decrepit Phelps Elementary. That tax could have been recalled in a referendum, but voters didn't demand a vote.

State school board member David Karem, who was a lawmaker when the four percent revenue cap was created, called the fear of raising property taxes a "fiscal tragedy for the students and the school district."

"The 4 percent was put in place as a cap, almost punitive in essence, to keep school districts from overdoing it financially," he said. "Everyone seems to think it's some wild, crazy amount of money, when the legislature's full intent was to put a lid on it. When you don't take that money, it's out of the base, and in essence never can be recaptured."

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Quick correction: H-L committed more than one reporter to this 3-part series...but they appear to have worked independently. I previously stated it was one reporter. John Cheves did Part 1, Linda Blackford wrote today's installment. Part 3 by...

 

Read more here: http://www.kentucky.com/static/Schooltaxes/index.html#storylink=cpy

Read more here: http://www.kentucky.com/static/Schooltaxes/index.html#storylink=cpy