It’s long and doesn’t cover everything I wanted to say, but hopefully this is enough to help with the discussions that will undoubtedly be had on the topic. This proposal touches A LOT of moving parts in the education funding system and
TL:DR; Legislators should sign on to this and get it on the floors of both Chambers for debate. We need change and discussion on how to go about it. The rest of us need to be seriously talking about this idea. Seriously.
- Brings us closer (slightly) to the 21st century in terms of school funding (see PA and MD property taxes)
- Does not shift financial burden from the State to the local property tax payers (despite what Representative Kowalko has stated publicly, and I generally support everything he does but he’s just wrong on this matter). The operating tax is already something property tax payers pay for 100%. Nothing about this proposal changes the revenue source, it only changes when and how the rate may be changed.
- Opens the door for further funding reform so we can seriously talk about the elephant in the room: Property reassessments. Have you read about the Vice Chancellor’s opinion on the Red Clay referendum lawsuit? You should.
- Should spark a bit more interest in School Board elections.
- Should decrease the frequency and asking amounts for Operating Referenda.
- Confers additional taxing authority on school boards during the middle of many members’ terms. Raises similar ethical concerns as Governor Carney’s Match Tax proposal.
- Doesn’t fully remediate the need for the medieval torture device called The Operating Referendum.
- State and District salary schedules seem to hamper the proposed function of this bill.
- This idea has been raised before and poo-pooed away by the General Assembly. It’s back again as a rushed maneuver (it seems) to apply yet another band-aid to the compound-fracture our education funding system sustained long ago (34-year-old property assessments and frozen funding formulas).
Let’s look at Representative Earl Jaques and Senator Dave Sokola’s bill proposal to modify the taxing authority of local school boards of education relating to the operating tax rate (also known as current expense tax rate).
In Delaware, public education is funded jointly by the State government and local school district property owners. On average, the State provides approximately 60% of the revenue to Districts with the remaining 40% generated by local property owners within the District. Delaware’s education funding split is unlike most States in the US in that the primary source of revenue is the State. In most states, the local county or district property taxes generate majority of the revenue needed for public education with the State chipping in a minority share.
The operating tax rate is one of four components that make up a property owner’s school tax bill. It is the only tax rate of the four that cannot be modified by a local school board of education, it requires a special election to be held in the local school district and a majority vote of those district residents voting to increase or decrease. The operating tax rate’s purpose is to generate revenue from property owners to pay for school costs, specifically the salaries of all school based personnel as well as district and school operations, hence the name “Operating Tax”.
In each traditional public school district, employees are paid based on salary scales, indices, and steps that are written into Title 14, chapter 13 of Delaware Code. This chapter defines the State’s obligations to pay portions of the salaries of education employees. In general, as mentioned above, any given school employee’s compensation is approximately 60% state, 40% local funds. Most of the local 40% portion is generated by the Operating Tax Rate in each district which I remind you, may only be adjusted by calling a special election and receiving a majority vote from residents of the school district.
You can see by looking at the salary schedules for teachers, nurses, principals, superintendents, and other administrative and supervisory employees, Title 14, Chapter 13, Section 1305, Paragraph a, that an increase occurs whenever an employee passes certain professional development milestones (obtaining a higher degree, for example) and for each additional year of experience earned. In evaluating the proposed bill from Rep. Jaques and Sen. Sokola and the Operating Tax Referendum process this annual step increase is of primary concern.
Within each category of professional achievement (No Degree, Bachelor’s Degree, Master’s Degree, etc.) the annual State step increase, moving vertically down the schedule, for years of service does not exceed 3% with the exception of the 8th year of service for employees with Masters’ degrees or higher. On average however, from year 1 to year 25, the State affords a ~3% increase with each year of service across all categories of professional achievement.
Recognize, though, that as the State awards step increases for their portion of salary, so must local School Districts. Whereas the State’s salaries and increases are standardized for education employees, Districts’ increases are not. We all recognize the differences in cost of living depending on where in the State (or country for that matter) you live. Salaries for the same jobs vary in the same way. District salary tables reflect this.
The proposed legislation would authorize local school boards to raise their Operating Tax the greater of 3% or the percent change in the CPI-W every two years without a referendum. Any increases beyond that still require referendum. Initially this seems a reasonable proposal given that our neighboring states have long since granted similar authority to Boards of Education, but a problem shows itself when this language is reconciled with State and District salary tables. Take a look at Brandywine School District’s distribution of Teachers by education level:
Now look at Brandywine teachers’ years of experience:
75% of Brandywine’s teachers have at least a master’s degree. 87% of their teachers have been teaching for at least 5 years.
When we look at Brandywine’s salary table for teachers with a Master’s degree, we can see very clearly that as years of experience are earned the percentage increase of district salary can range anywhere from 0.9% to 6.7%, averaging 4.7% per year of experience. Recalling that the State salary increase averages ~3% for each year of experience we can begin to see that over time, the district’s share of a teacher’s total salary grows and the state’s shrinks.
Additionally, once a teacher enters their 16th year of teaching, the State no longer provides salary index increases for additional years of experience at the Master’s degree level. Brandywine (and other districts) award 3 more step increases, one at year 16, one at year 20, and a final one at year 25, further increasing Brandywine’s share of the total salary.
Since the operating tax rate generates most of the revenue for District salary, a 3% increase every two years alone will not be enough to sustain most districts current salary schedules, nor will a CPI-W increase (which currently hovers around 1-1.5%) without changes to District salary tables, which means: operating referenda are here to stay even if this became a bill and was signed into law by Governor Carney. However, I believe they would be needed less frequently and/or would require smaller rate increases each time.
Paragraph (C) allows for Boards of education to elect a one-time increase in the operating tax to ensure districts retain an adequate cash balance to meet state requirements of 1 month’s worth of payroll for October, this is tied to the fact that property taxes are not received by districts until November and Districts balances are at their lowest heading into October. They need enough funds to be able meet October payroll until the first chunk of tax revenue is received in early November. I’m thinking this is here to try and help Districts adjust to a new “cycle” of referenda they would be put on should this bill proposal become law. I need further analysis on that to tell one way or the other for sure.
Now the question becomes, is the situation this proposal creates better, worse, or the same as the current situation Districts and Boards of Education find themselves in for the operating tax rate which is: beg the public for approval to make any change to the rate?
I’m not a finance chief for a district nor am I a legislator, but as a guy who looks at this stuff for “fun”, a taxpayer, and a parent of school-aged children who’s been involved in 3 operating referenda, I would say this is something our legislators should seriously consider passing. Not only does it slowly advance us to 21st century education funding, but it lays the groundwork for future discussions and decisions on education funding reform (i.e., property reassessment, weighted/needs-based funding for low income students and ELL, K-3 basic special ed, etc.).
It does not remove the need for districts to run an Operating Referendum though it may change how often they are run and for how much is asked each time. Taxpayers still will have a chokehold on the Operating Tax rate even with this bill proposal becoming law, though it may now be one-handed instead of two. It is clear though, with 35-45 year old property assessments, frozen and broken funding formulas, change is needed. This is a (small) piece of that change.
Two examples of why this should go nowhere: NJ and PA. Both states do not require referendums and subsequently have some of the highest property taxes around. Now you can say their schools are better, and they are, but constituents are paying private school prices for public school districts. NJ also has yearly school budget elections which require a vote and if they do not pass the budget, they must revise it quickly to then vote again. I see no accommodation for this in Jacques bill.
Are Delaware residents willing to pay double mortgages? Are fixed income residents ready to watch their property taxes go up every two years? Are districts going to be better off asking for a referendum every few years IN ADDITION to the non referendum increases? When districts have passed referendums, has the performance of our TPS’s improved academically or behaviorally? Have the districts validated that increased funding improves the performance of the schools? OR, have we seen our districts increase taxes with no significant improvement to performance? Why do teachers get automatic increases but most other non state employees do not. Since 2008 many non state employees have not seen increases in pay but teachers have, state employees have, state agencies have. So we have a system where the burden to residents is automatic increases but their income increases are not. Why should we add yet another layer of automatic increases or non voted increases to agencies that have not displayed due diligence or fiscal responsibility for services rendered?
Jaques claims residents can always vote the school board members or the legislator out for raising objectionable rates. Yeah because residents are voting in the oh so convenient school board elections we have now. Why not set up elections via electronic voting on the same day as other elections? That way the largest percentage of voters will be available to contribute on the decision to elect a school board member, referendum or representative. Just sayin.
Automatic rate increases are bad for everyone except the agencies which then get a pass on accountability. If the schools were performing as they should, passing referendums would not be that difficult. It ultimately is a question of trust and credibility, both of which are in low supply due our climate of fake news, social redistribution and fake rights.
I type out a point by point rebuttal to your comment, M, but I deleted it because I’d rather ask this:
Since you’re relatively new immigrant from Kilroy’s place and I rarely visited there, what does a revamped Delaware Public Education System look like to you?
Brian, I know this won’t surprise you. I’m opposed for the first “con” I STRONGLY favor this bill as a phase in though, not as a next year thing.
I favor this bill as a first step in a serious look at an antiquated funding system that has had so many band-aids put on it it is broken from that weight. It really is negligent of the GA to not look at property reassessment if indeed those taxes are going to continue to be the backbone of school funding and should they???
Maybe you should do a workshop for board’s and parents etc about school funding. Nobody knows it…
Not as a first step. Please. Agree with M Ryder on all points.
constituents are paying private school prices for public school districts
Maybe if you send one kid to school in PA. But if you are sending multiple kids, you get a pretty darn good school for all of them for the price of a single private school tuition. At least in some places in PA, especially in the counties in PA where it is pretty easy to commute into DE for your job. Which is why families from DE move to PA during their kids’ school years.
The real problem is how screwed up DE Ed funding is. It is largely set up to let those with the right resources hoard even more resources. It is not set up to be responsive to the massively varying needs of all of the students in the state. School operating costs increase every year. If you pay more for gas, so do schools. They are not immune to the same price increases that everyone else is subject to. Pretending that there is witholding of funds via referendum because the schools are mismanaged is an insult — in the main these schools are doing what they need to within the specifically horrible constraints they need to live with. And that includes living with the consequences of the All the Government You Can Eat for Free crowd. Who expect that the inflation they live with doesn’t happen at school systems who are educating more kids than they were last year — who does that without more funding to accommodate that?
I’m with minnehanh here is that we do need a comprehensive look at how education is funded and a structural redo of that system. This may be a step towards that, but given how the local government seems to operate, I’d guess not. Rethink it all and get it implemented.
I totally agree that our legis and bureaucrats have to take comprehensive reform seriously as the first step. Taking this on now without filling in all of the associated factors is NUTS. One thing comes to mind is Dick Cathcart’s law that prohibits local planning councils from considering land use development in terms of school capacity. Let local governments decide on schools and funding and land use planning as a whole if they want carte blanche taxation.
3 Counties make 3 School Districts! Yes, New Castle County would be One School district. That would change up a this system.
Judith, it would change up the system but would it be a better system? I am of the opinion that it would not. Back in the 70s, we had a county-wide District in New Castle County. It lasted 3 years before it was broken up into the 5 districts we have today, partially due to it being a bureaucratic nightmare to administer, it didn’t save money, and there are still teachers teaching today who were a part of that “transition” and speak out vehemently against a county-wide district effort again.
We tried it once and it didn’t work. Why would we try the same failed system again? What would be different this time?
BTW, the Appoquinimink system was never part of the court-mandated merger. The single district was broken into four, not five, districts.
I support this bill. Please help fund public education in Delaware in a responsible and realistic way. Some say look to pa and nj as why we shouldn’t implement. I say that’s the very reason we should. This bill is not the same as pa and no but a blend of our current referendum process but allows for minimal tax hikes that will help districts meet basic budget needs and only go to referendum when absolutely necessary.
“We tried it once and it didn’t work. Why would we try the same failed system again? What would be different this time?”
It didn’t work the first time for lots of reasons, but the biggest one was the shock of northern Delawareans losing their mostly segregated schools. Since the schools are now integrated, the “local control” people claim to love means less.
The only way a county-wide district would work would be if it also eliminated all charter schools, which I would support even if we don’t consolidate school districts. Magnet schools, fine. Charter schools, no.