School funding shift likely

The way taxpayers pay for public schools in Idaho will likely undergo a significant facelift when state lawmakers meet in a special session later this month. And though most school officials in the state aren’t happy about it, school representatives in Kootenai County say they welcome the change.

“If we were to oppose something like that, we would be making the problem worse, and that wouldn’t be good for the kids, either,” said Vern Newby, chairman of the Coeur d’Alene School Board.

Gov. Jim Risch has proposed eliminating the school funding portion of the property tax – about half of the Coeur d’Alene School District’s operating budget – by substituting revenue from a sales tax increase and last year’s surplus. He has called for a one-day special session of the Legislature Aug. 25 to take up the idea.

Supporters say school officials will hardly notice the change and students will be unaffected.

The change will benefit schools substantially down the road, Risch said, as decreased property taxes will make residents more receptive to school funding levies such as the one Coeur d’Alene voters rejected in May.

But state education officials aren’t convinced. They say they’ve had no input on the possible change, one of the most significant that Idaho public schools would have seen. The Idaho Education Association, the Idaho School Boards Association and the Idaho Association of School Administrators stand opposed.

“People are not together on this,” said Marilyn Howard, state superintendent of public instruction. “There’s a very high level of concern.”

Why the concern?

The property tax long has been a source of school funding, but public support for it has been waning. Nationally, property taxes accounted for 29 percent of local government revenue in 2002, compared with 82 percent in 1902, according to the National Conference of State Legislatures. Still, only about eight states don’t use any property tax to fund public schools, according to NCSL.

“A sea change is what this is,” said John Augenblick, an education finance consultant in Colorado who works with state legislatures. “It’s enormous.”

Republican state Sen. John Goedde, of Coeur d’Alene, chair of the Senate Education Committee, said he can’t think of a reason to oppose the plan.

“There’s resistance to anything new, and I think that’s probably where most of the concern is,” said Goedde, a former Coeur d’Alene School Board member.

But opponents say it’s not that simple.

“This one-day special session devoted only to this one idea that doesn’t allow for alternative proposals is very troubling,” said Barbara Crow, president of the Coeur d’Alene Education Association and a fifth-grade teacher at Fernan Elementary School.

The property tax is seen as the most reliable source of funding, said Cliff Green, executive director of the Idaho School Boards Association.

“Our concern is stability,” Green said. “We don’t see the sales tax as a stable part of funding.”

The funding shift will mean that most of a school district’s budget will come from the state, so more money will be allocated through a political process, he said.

“What it does is it puts us in direct competition with (the state departments of) Corrections and Health and Welfare,” Green said.

That already happens, he said, but adding more money to the equation won’t help.

Goedde said he doesn’t understand the concern over getting money through a sales tax versus a property tax. Either way, the state determines how much a district gets. “I guess I just don’t see the difference,” Goedde said.

Sid Armstrong, business manager for the Post Falls School District, said he isn’t concerned about the change.

“I find it pretty hard to believe that they’re going to leave us high and dry,” he said. “If something happens, they’d change it.”

Talking it over

Education officials have long been in dispute with state lawmakers over school funding. A 15-year-old lawsuit filed by 22 school districts contended the state system for funding school construction was inadequate and left poor districts at a disadvantage. It was finally settled in December when the state Supreme Court ruled in favor of the districts.

When a recession hit after the Sept. 11 attacks, Idaho saw a budget shortfall that led then-Gov. Dirk Kempthorne to slash department budgets, including that of the Department of Education. Public schools had their first budget holdback ever in Idaho, losing $23 million that had been promised.

Howard, the state superintendent of public instruction, said schools have not recovered, even with last year’s 3 percent increase in salaries and the $1 billion schools budget – the largest in state history.

Schools partnered well with the state during those difficult times, Howard said. But now she isn’t seeing the support she’d like from the state.

“A lack of confidence in the education dollars going forward makes (schools) very concerned about the future,” she said.

Howard said the governor has not talked to her office or the Idaho School Boards Association about his proposal.

Risch said he’s willing to sit down with anyone, he just hasn’t heard from Howard’s office or any other education official.

“They’re absolutely right – they have made no contact with me whatsoever,” Risch said in a phone interview.

“I think the reason they haven’t asked me about it is because they know I have put together a plan that I know I have sufficient support for and I know is going to fly.”

Protective steps

Under Risch’s plan, the 1-cent increase in the sales tax would cover $210 million of the $260 million the property tax raises for school operations. That means the state has to count on $50 million each year – money it doesn’t need for other expenses – to provide schools with the same funding they get now.

He proposes a $100 million savings account to make sure the money is there.

Howard calls the whole thing “shortsighted.” She said there wouldn’t be nearly enough money for a worst-case scenario in which the economy turns sour and state tax revenues drop significantly.

“The assumption is that good times are going to continue and tax dollars will roll in in sufficient amounts,” Howard said.

Green, of the Idaho School Boards Association, worries the fund could get used for other government needs in bad times. But Goedde says the public needs to have faith that their elected officials will do all it can to fund education adequately.

“There’s no way you can tie the hands of the future legislators,” he said.

Risch said he would never support a plan that didn’t protect education.

“The issues you’ve been talking about have been aired over and over again,” he said. “I guess what they’re saying is, ‘We want to change his mind.’ Well, I’m not there.”