Today's Landed Gentry

In 1984 General Motors opened its Hydra-Matic plant in Warren, Michigan, began churning out transmissions and drive trains, and secured my high school education.The plant did not give my parents a job or offer me a scholarship. Hydra-Matic changed my life simply by remodeling, retooling, and revitalizing an old factory near my home. The plant pumped $1.8 million in new property tax revenue into the community, and, for the Fitzgerald Public Schools -- my school district -- that money was manna. In the early 1980s, Fitzgerald, faced with a community weary of tax increases, was forced to consider cutting nonessential programs like music, gym, and, most important to me, the school newspaper. But the cuts never happened. Instead, Hydra-Matic moved in, ended FitzgeraldÕs fiscal crisis, and assured steady funding for years to come. Why Fitzgerald got lucky is not the point. The fact that Fitzgerald had to rely on luck is. Luck was a key factor in the education of many Michigan students at the time and still is for students in many other states. Why? Because their primary source of education dollars is local property taxes -- which means large portions of school funding come from local homeowners and businesses. In such a system, one GM plant or affluent enclave can dramatically tip the funding scales and mean the difference between old or new books, large or small classes, or the existence or nonexistence of a school newspaper. A few years ago Michigan decided that luck was not a good way to determine what kind of education a child gets, and it changed its funding system. Now, mostly because of lawsuits, many other states are considering the same thing. More than 20 states throughout the country are in the midst of legal challenges over whether their school funding systems are adequate and equitable. And in 17 of those states, local property taxes are either the primary means of funding education or a very close second. The issue in these cases is this: Why, when education is a right guaranteed by the state constitution, should the money to provide a public education come from localities? Or, basically, why should the amount spent on a childÕs education be determined by where his parents live? Many times state courts provide a simple answer: It shouldnÕt. But in reality, change is not so easy. School funding reforms are often half-hearted, partly successful efforts that end up back in court, because in states where local property taxes rule school funding, a powerful combination of money, politics, and deeply rooted tradition stands in the way. A TAXING SYSTEMAny talk of changing the way the public schools are funded inevitably runs up against Òour grand national tradition of local school control.Ó That we have a national tradition of local funding is inarguable; whether it is grand is subject to question. One could just as easily call our tradition the result of bad historical timing.TodayÕs public schools have their origin in the common school movement of the mid-1800s, before which schools had primarily been reserved for the rich. The movement pushed to make education a right instead of a luxury and, as it gained momentum, the people clamored for schools. They turned to the states, and the states, which did not yet have income or sales taxes as options, turned to the only thing they could, the levy that had existed in some form since colonial times: property taxes. States granted local districts the right to tax their citizens, and the American tradition of local school taxation and control was born. The systemÕs problems were apparent right from the start. In the days before state aid -- and General Motors -- poor districts had nowhere to go for funding help. When poor schools ran out of money, their doors closed and the school year came to an abrupt end. Those drastic funding problems were slowly mended with the rise of state income taxes in the 1910s and state sales taxes in the 1930s, both of which gave the states new revenue streams to tap. Until then, property taxes accounted for 80 percent of all state and local tax collections. But disparities remain. Although on average the states pick up almost half of the cost -- 47 percent -- of public schooling (localities provide 46 percent and the feds 7 percent), some states rely much more heavily on property taxes than others. In New Hampshire, for instance, 89 percent of public school funding comes from local property taxes. But even in states where the figures sound a bit more evenly split, there are often wide disparities in per-pupil funding. New JerseyÕs local/state funding split, 54 percent to 43 percent, sounds fairly even, but the state supreme court says it is not good enough. Why? The towns of Alpine and Closter suggest an explanation. The metro New YorkÐarea cities sit next to each other on New Jersey Route 502. But their public school students get vastly different treatment. A student in Alpine, a small, well-to-do district, will have $13,394 spent on her general education this year. If that studentÕs family suddenly decides to relocate to Closter, that figure drops to $7,889Ña $5,505 difference in a five-mile move.A short cruise down Route 502 makes it clear where that money goes. Lined mostly with good-sized colonials and ranches, Closter is a pleasant upper-middle class community -- a nice place to live and raise a family. The cityÕs two-story red brick Tenakill School is old (built in 1929), but quaint, and undergoing renovations. Most of its classrooms feature single computer stations where old IBM clones or Apple IIeÕs sit. And the student/teacher ratio is a healthy 21-to-1. But from the other side of Anderson Road, where Alpine begins, Closter looks like just another district struggling to keep afloat in an era of property tax revolts. In Alpine, where most homes are more easily measured by the acre than the square foot, property taxes fund 88 percent of school costs. And Alpine School, a sprawling 1960s-era building set back off the road in an idyllic tree-covered nook, features all the extras one might expect. AlpineÕs 180 students are required to take French or Spanish from first grade on up, and each day brings students two English classes -- one for reading and one for writing. Macintoshes are the rule in the classroom and are plentiful. (The superintendent apologized for the one Apple IIe we saw.) Most important is AlpineÕs amazing 7-to-1 student/teacher ratio -- a figure three times better than ClosterÕs. Until recently, Michigan faced the same situation. In 1993, Oakland County had both the stateÕs best-funded district and one that ranked 341st. That year, the Bloomfield Hills School District, in one of metro DetroitÕs swankiest suburbs, spent $11,664 on each childÕs education. BloomfieldÕs students benefitted from a 16-to-1 student/teacher ratio and the option of spending half days or days at the districtÕs Model High School, which featured state-of-the-art computers and communication technology. In addition, parents could opt to send their children to a special extended-school-year program that would have kids in the classroom from August until June.Meanwhile, the Brandon School District, in considerably less posh Ortonville, was limping along at a $4,621-per-pupil clip -- a whopping $7,043-per-pupil gap. BrandonÕs students had a 27-to-1 student/teacher ratio, and the high school had only one computer lab stocked with outdated IBMs. In 1993, largely because taxpayers were balking at high property taxes, MichiganÕs funding system was junked. To their credit, Governor John Engler and the Republicans in the legislature took it upon themselves to create a more equitable system that relied on an increased sales tax, increased ÒsinÓ taxes, and a new state-controlled property tax. Before the change, more than 60 percent of public-school funding came from localities; afterward, about 80 percent came from the state. In large part, MichiganÕs schools now have their budgets set by the state, which is slowly leveling out funding disparities over time. And the voters, who approved the new system by a 70-30 margin, are pleased. Their taxes are down, and their schools have not suffered.PRO STATUS QUOMichiganÕs success should not really be studied so much as it should be marveled at. Usually, any attempt to tamper with the Ògrand national traditionÓ of local school funding is quickly shouted down. And, of course, the ones usually doing the shouting are parents in wealthier towns. Generally, their arguments can be classified into three main themes: Local control is the soul of our public schools; spreading money will mean defunding excellence; and we should be free to spend as much as we want on our children. All these arguments have a ring of high-minded truth to them, but examine them a little harder and they begin to sound hollow. Those who argue from the premise of local control fear changes because of the Ògolden ruleÓ of finances -- he who has the gold makes the rules. Giving the state control over school funding would inevitably lead to more state involvement in spending decisions, they say. Well, maybe, but probably not. All districts -- urban, suburban, or rural -- have different spending priorities, and none of them want the state government telling them what to do. Even local funding opponents like Mike Casserly, executive director of the Council for the Great City Schools, support local control of spending; he calls it Òalive, well, and justified.Ó And state houses, generally well attuned to their constituents, donÕt want a heavy hand to cause a taxpayer revolt. As for Òdefunding excellence,Ó consider the state highway system. A stateÕs highways, like its schoolchildren, have an effect on everyone within the stateÕs borders. Both are critical to commerce and the stateÕs future. What if each community were allowed to spend whatever it wanted on the stretch of highway that ran through it? A rich community might use all the latest technology to make driving smooth and safe. It might, in fact, overspend. Another community might not have the money to pave the highway at all, and its dirt road might lead to numerous traffic fatalities every year. If the state were instead to pool the resources of its communities and create a more uniform system of highways that was safer for all, would it be Òdefunding excellenceÓ or getting rid of dangerous stretches of highway? ItÕs the same with public education. Smoothing out the disparities between districts is better for all in the long run. Better educated youths mean better workers and parents and lower welfare rolls in the future. And eliminating massive disparities doesnÕt have to mean complete equality, just more similarity. Just as some cities will still spend extra on their roads for things like wider shoulders and quicker repair of potholes, some school districts will spend slightly more for better libraries or more powerful computers. But why is this even the statesÕ business? argue the advocates of local financing. This is our money, they say, and we should be able to spend it in any way we like. A compelling argument, perhaps, but its foundation is shaky. ÒLocal control is not written into legislation,Ó says Faith Crampton of the National Conference of State Legislatures. ÒIt is a tradition, a myth. All those taxes are state taxes because all those districts are creations of the state.Ó The states give the local finance systems the right to exist, Crampton says, and that right can be withdrawn any time the state has the political will (and votes) to do so. EVENING THE ODDSSo what is to be done? The most equitable solution would be to have federal financing for schools on a per-pupil basis; that would eliminate inequities not just between districts, but between states as well. Given that thatÕs about as likely right now as a return to the Great Society, there are other solutions. The best move would be to replace local property taxes with a state property tax and redistribute the money to local school districts on a logical per-pupil formula. If possible, it should take into account the specific features of each locality -- factors like the cost of transporting students and the cost of living for teachers. Although a state property tax need not be the only funding source, it would have a lot of benefits. Property taxes do not fluctuate with economic cycles the way sales and income taxes do, and land assets are difficult to hide. Ideally, school districts should have no additional taxing power for education. Parents could donate money to the school for, say, extra computers or a language club, but that would be it. ThatÕs the best way to ensure equal educational resources. But short of that, any new funding system should at least put a cap on local education funding. ÒWithout a cap,Ó says Mary Fulton of the Education Commission of the States, Òyou can narrow the gap for a while, but soon the rich districts spend even more and you are back where you started.Ó New Jersey and Michigan are good examples here. Michigan included a cap in its plan, and it is on the road to better equity. New Jersey tried to reform its system years ago without implementing a cap, and now the state is forced again to deal with the equity issue. A cap would also provide a means by which to hold down teachersÕ salaries and administrative costs in districts where those things have gotten out of control. There comes a time when even someone with a die-hard commitment to education has to ask if it really costs $14,000 a year to educate a child. CasserlyÕs group, the Council of the Great City Schools, is currently working on a model state finance package it hopes to release this fall. That plan will have one key principle, says Casserly: ÒPublic education is not one of those things you should be able to flee from or flee to. It should not have to do with how rich you are or how poor you are.ÓAnd that is the real problem with local school funding. In the states where local property taxes rule, the public schools arenÕt public schools at all. They are, in effect, a series of private community schools with each community deciding not only what a good education is, but how much should be spent on it. That means children receive an education according to their parentsÕ income level, with the money spent usually having an inverse relationship to need. Rich students, who go home every night to computers and educated parents, have the most spent on their education. Poor students, who often head home to uneducated parents and long nights of television viewing, usually end up getting less. The public sector should not compound the inequality.Eliminating local property taxes as a major source of school dollars would go a long way toward removing luck from the equation of a sound education. Children, unlike adults, have no control over where they live. And come graduation day, they should not have to thank their lucky stars -- or General Motors -- for a good education.

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