Idaho Public School Funding – 1980 to 2013

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Idaho Public School Funding – 1980 to 2013
Idaho Center For Fiscal Policy
Idaho Public School Funding – 1980-2013
2 Idaho Public School Funding – 1980-2013
Idaho Public School Funding – 1980 to 2013
is report examines the recent history of public school maintenance and operation1 (M&O) funding in Idaho, with a focus on two key issues:
1) a decline in the relative funding for public school M&O since 2000, and
2) an increase in the reliance on unequalized2 property tax levies to sup- port M&O at the school district level.
While a direct one-to-one linkage between these two phenomena may not be readily apparent, it is readily apparent that without the increased use of prop- erty tax levies by school districts the relative decline in public school funding would have been greater. Both these issues are signi cant because they have important connections to Idaho’s Constitution.
Background – Overall Funding For Idaho Public Schools
Issues related to funding the public school system have long driven Idaho scal policy. Begin- ning with statehood, Article IX, Section 1 of Idaho’s constitution reads (in full):
ity of a republican form of government depending mainly upon
the intelligence of the people, it shall be the duty of the
legislature of Idaho, to establish and maintain a general,
uniform and thorough system of public, free common schools.
is clearly places the responsibility for the state’s public schools on the shoulders of the legislature. Legislators may have delegated the job to 115 local school districts (and more recently, another 35 charter schools that are within but separate from the established school districts), but ultimately the buck stops in the east and west wings of Idaho’s Capitol build- ing.
1. In the 1960’s a major battle was fought over enacting a sales tax in Idaho to help fund public schools – and public schools won. In the 1970’s a major battle was fought over restricting local taxing districts’ ability to use property taxes to fund their operations (the so-called “1% Initiative”) – a property tax limit was imposed, but Idaho’s public schools were not restricted.
2. For several decades (until roughly the late 1990’s) there was an informal rule that Idaho’s public schools should receive one-half of the revenue appropriated from the General Fund. Indeed, over the years Idaho’s public schools have been treated well, during both good times and bad. e following charts provide several perspectives on Idaho public school funding over the past third of a century. Years are scal years; spending data are actuals except for FY 2012 and FY 2013, which are appropriated and Executive Budget-recommended amounts, respectively.
Idaho Public School Funding – 1980-2013 3
Source: FY 1980 to FY 2013 Executive Budgets
Source: FY 1980 to FY 2013 Executive Budgets
Figure 1 presents the annual growth rates in actual total funds spending for public schools and all agencies (including public schools). From 1980 to 1999, growth in public school spending exceeded all agencies spending in 12 of the 20 years (60% of the time). In the 13 years from 2000 to 2012, growth in public school spending exceeded all agencies spending in 3 years (23% of the time).
Table 1 summarizes the growth rates for public schools and all agencies (including public schools) for the intervals shown. During the 1980s and 1990s public school spending growth slightly exceeded the growth in overall spending, i.e. public schools kept pace. In the 2000s and the rst three years of the 2010s two fairly dramatic changes occurred: All Agencies annualized spending growth slowed signi cantly (from 7.4% to 4.9%), and public school annualized spending slowed even further relative to All Agency spending (3.3% vs. 4.9%). Together these two changes led to public schools losing considerable scal support over the last thirteen years.
Idaho Public School Funding – 1980-2013
Source: FY 1980 to FY 2013 Executive Budgets
Figure 2 illustrates the signi cant change in relative funding for public schools in Idaho since FY 2000. During the two decades of the 1980s and 1990s public schools maintained a fairly steady share of total spending, varying between a low of 32.5% in FY 1980 and a high of 35.8% in FY 1982. e average for the two decades was 34.1%.
Since FY 2000 there has been a dramatic reduction in the share of total state spending that goes to public schools. e average over the 13-year period fell 11% from the previous two decades, to 30.4%. e larger change, however, is in the trend. Whereas in the 1980s and 1990s the share held steady, the more recent experience is a very distinct decline. e high share is 33.6% in FY 2000, and the low share is 26.0% in FY 2012. e Executive Budget recommended share in FY 2013 recovers slightly to 26.4%. Over the full 13-year period the decline in share is one-half percentage point per year.
is dramatic change in the funding for public schools naturally leads to the question: Where did the money go? e short answer is tax cuts and the Health & Human Services part of the state budget, which is mostly Medicaid.
e Health & Human Services share of total spending in FY 2000 was 25.1%. By FY 2011 it had grown to 35.1%, and the FY 2013 Executive Budget recommendation has it at 35.7%. at’s a 10.6 percentage point increase, or over seven-tenths per year. Clearly, the increased share going to Health & Human Services has displaced more than just public school spend- ing. But just as clearly, public schools have born the largest displacement.
e increase in the Health & Human Services share of spending explains why public schools’ share declined, but why did overall growth in state spending fall so signi cantly? While there are numerous dimensions to this question, Idaho tax structure changes over both intervals had a signi cant role to play. During the 1980s Idaho increased its spending capacity by rais- ing the sales tax from 3% to 5%, increasing the corporate income tax from 6.5% to 8.0%, and raising the top individual income tax rate from 7.5% to 8.2%.
Idaho Public School Funding – 1980-2013 5
Idaho Public School Funding – 1980-2013
Source: U.S. Department of Labor and Idaho Department of Labor
ese changes were all enacted prior to 1990, and no further tax structure changes occurred during the decade of the 1990s. e revenue generated by these changes clearly contributed to the growth in state spending, including public schools. ese revenue increases enacted during the 1980s did not appear to adversely impact Idaho’s economic performance, as evi- denced by Idaho consistently out-performing the nation in economic terms. Figure 2a shows how Idaho’s employment growth has fared since 1980 in comparison to U.S. employment growth.
Starting in 2000 Idaho’s legislature changed course and began reducing taxes. ese tax structure changes included a reduction in the corporate income tax rate from 8.0% to 7.6%, a reduction in the top individual income tax rate from 8.2% to 7.8%, indexing the indi- vidual income tax brackets for in ation, increasing the income tax grocery credit from $20 to $100 (still being phased in), and swapping a sales tax rate increase (from 5% to 6%) for an elimination of the public school M&O property tax levy (taken together, a $50 million net revenue reduction). Each of these changes reduced the state’s capacity to fund public services and contributed to the slowing of state spending after FY 2000.
Just as the Idaho tax increases of the 1980s did not appear to adversely impact Idaho’s eco- nomic performance of the 1990s, the Idaho tax cuts of the 2000s have not appeared to en- hance Idaho’s economic performance in their wake. Whereas Idaho had some of the strongest economic performance in the nation for well over a decade after the tax increases (see Figure 2a, 1988 to 2001), Idaho has had some of the worst economic performance in the nation
in the years following the tax cuts (see Figure 2a, 2008 to 2011). Idaho went into the Great Recession earlier than most other states, fell farther than most other states, and is recovering more slowly than most other states.
After twenty uninterrupted years of stronger employment growth in Idaho than the nation, the last four years have seen Idaho steadily underperform the nation and most other states. at poor economic performance compounded the negative impact of the tax cuts on the state’s ability to fund public services, including public schools.
Source: U.S. Department of Commerce, Bureau of Economic Analysis and FY 1980 to FY 2013 Executive Budgets
It is very likely the reduced overall funding capacity since FY 2000 played a signi cant role in the “crowding out” that occurred between Health & Human Services and public schools, and the subsequent steeper decline in spending on public schools.
A nal chart wraps up this overall funding section. Figure 3 looks at the overall level of fund- ing e ort Idaho makes to support its public schools. In this chart “e ort” is de ned as the percentage of Idahoans’ Personal Income that is spent on K-12 education. ink of it as the share of our aggregate income invested in our children.
Much like Figure 2, this chart shows that Idaho had a fairly stable level of funding commit- ment to Public Schools in the 1980s and 1990s, but in more recent years that commitment has declined. In FY 1980 public school funding equaled 4.4% of Idaho Personal Income, and the percentage in both FY 1999 and FY 2000 was also 4.4%. e low during that period was 4.2% in FY 1984, and the high was 4.7% in FY 1992.
Since FY 2000 Idaho public school spending has declined from 4.4% of Personal Income to 3.4% of Personal Income in the FY 2013 Executive Budget, a 23% decline. is is a stun- ning reduction in the state’s commitment to public schools.
Background – Property Tax As A Source Of Idaho Public School Funding
e sharp reductions in state support for public schools have coincided with signi cant changes in the property tax component of public schools nance. ese changes include elimination of equalized levies for M&O funding, and increased voter approval of supple- mental override levies for funding M&O.
Idaho Public School Funding – 1980-2013 7
Idaho Public School Funding – 1980-2013
Source: FY 1980 to FY 2013 Executive Budgets and 2003 to 20011 Market Values and Property Taxes
Figure 4 shows the share of public school funding (excluding bond and plant facilities levies)
provided by the property tax.
Over the decades of the 1980s and 1990s, property taxes contributed about a quarter of the funds used to pay for public schools operations. In the early 1980s the share averaged about 25%. By the middle to late 1990s the share had drifted down and averaged about 23%. In the rst few years of the 2000s the share held steady at about 21%, but by 2003 began head- ing back up toward 25%. is increase in the property tax share coincided with the signi – cant decline in overall public school funding that began in FY 2001. en came FY 2007.
FY 2007 began on July 1, 2006. Less than two months later, on August 26th, a special session of the Idaho Legislature raised Idaho’s sales tax one percentage point (from 5% to 6%) and eliminated the M&O property tax levy that was used in the state’s funding formula for pub- lic schools. It was a swap, trading a $260 million property tax reduction for a $210 million sales tax increase. It cut the share of public school M&O funding coming from the property tax by over half. e part that was cut was the only portion of the property tax used to fund M&O that had been equalized. All the remaining M&O levies were not equalized.
e reason public school property taxes didn’t fall further is because there remain signi cant parts of public school operations that are funded by levies that are separate from the equal- ized M&O levy that was eliminated. e largest share of remaining property tax levies are Supplemental Override levies and remnant M&O levies.3 Other M&O levies that remain are Emergency (for unexpected enrollment increases), Tort (legal claims), and COSSA (coopera- tive services). See Figures 5 and 6 for details.
e 2006 reduction in property taxes used to fund public school operations was largely ap- plauded due to the public’s dislike of property taxes in general. Nonetheless, considerable amounts of public school funding are still derived from property taxes, and the relative share is once again increasing (see Figure 4).
Figures 7 and 8 provide a comparison of the level and composition of property tax levies used to fund public school operations in FY 2008 (one year after the swap) and in FY 2012 (the most recent year available).
Source: 2005 Market Values and Property Taxes Source: 2006 Market Values and Property Taxes
Source: 2007 Market Values and Property Taxes Source: 2011 Market Values and Property Taxes
What’s notable in comparing Figure 7 and Figure 8 is the signi cant increase in Supple- mental Override levies. ey are the reason behind the increase in the property tax share of public school funding shown in Figure 4. In FY 2011 total public school funding declined, but property tax funding (excluding Bond and Plant Facilities levies) increased by 9%, driven entirely by a 20% increase in Supplemental Override levies.
3. One remnant M&O levy is a result of the Boise school district’s pre-statehood charter status; four others, so-called Stabi- lization Levies, were implemented along with the property tax/sales tax swap as “hold harmless” provisions associated with Idaho’s four wealthiest districts – Avery, Blaine, McCall-Donnelly, and Swan Valley.
Idaho Public School Funding – 1980-2013 9
Idaho Public School Funding – 1980-2013
Source: 2003 to 20011 Market Values and Property Taxes and unpublished Tax Commission data
Figures 9 and 10 provide a closer look at Supplemental Override levies. ese two charts show that Supplemental Override levies grew at a modest pace from FY 1987 to FY 2007, then took o in FY 2008 through FY 2012. e big jump in the supplemental override share of total property tax levies starting in FY 2007 is entirely due to the sales tax/property tax swap that occurred in that year. Supplemental Override levies only grew by $2 million (2.6%) from FY 2006 to FY 2007, but shot up by $22 million (28.3%) from FY 2007 to FY 2008.
In essence, the doubling in the Supplemental Override share of public school property taxes in FY 2007 had almost nothing to do with Supplemental Override levies, and everything to do with elimination of the equalized M&O levy. e nearly 50% increase in the Supplemen- tal Override share of public school property taxes since FY 2007 has everything to do with big increases in Supplemental Override levies.
Let’s review the facts up to this point. During the 1980s and 1990s Idaho public school fund- ing kept pace with both the economy (Figure 3) and overall state agency funding (Figures 1 and 2, and Table 1). Since FY 2000 Idaho public school funding has steadily eroded. As a share of state spending it’s gone from 34% (average of 1980s and 1990s) to 26% in FY 2012. As a share of Idaho Personal Income it’s gone from a steady 4.4% average in the 1980s and 1990s to just 3.5% in FY 2012, and down further to 3.4% in the FY 2013 Executive Budget.
e property tax share of public school funding held fairly steady during the 1980s and 1990s, drifting downward modestly from about 25% to about 21% (Figure 4, FY 1980 to FY 2002). Once the overall decline in public school funding began in FY 2001, the property tax share began to climb as overall funding support for public schools declined (Figure 4,
FY 2003 to FY 2006). is was interrupted by the sales tax/property tax swap that occurred in FY 2007, when the property tax share dropped from about 24% to about 11% of public school funding. Since FY 2007 the Property Tax share has risen to about 13%, all due to increases in Supplemental Override levies (Figures 9 and 10).
Source: 2003 to 20011 Market Values and Property Taxes and unpublished Tax Commission data
e changes documented in the preceding sections have signi cant implications in relation to two sections of Idaho’s Constitution. e rst you’ve already seen: Article IX, Section 1. Two criteria from that section are highly signi cant: uniform and thorough. It is the legis- lature’s duty (not the trustees, the patrons, or the voters of a school district) to maintain a statewide school system that meets these criteria.
Idaho’s other relevant constitutional provision is Article VII, Section 5, and it reads (in full):
SECTION 5.TAXES TO BE UNIFORM — EXEMPTIONS. All taxes shall be uniform upon the same class of subjects within the ter- ritorial limits, of the authority levying the tax, and shall be levied and collected under general laws, which shall pre- scribe such regulations as shall secure a just valuation for taxation of all property, real and personal: provided, that the legislature may allow such exemptions from taxation from time to time as shall seem necessary and just, and all exist- ing exemptions provided by the laws of the territory, shall continue until changed by the legislature of the state: pro- vided further, that duplicate taxation of property for the same purpose during the same year, is hereby prohibited.
is provision of Idaho’s constitution applies to property taxes and says they shall be uniform, meaning that di erent rates cannot be applied to di erent taxpayers within the same taxing district. As an example, Idaho has 200 cities that are taxing districts, and no city can apply di erent property tax rates to di erent taxpayers within the city’s jurisdiction. It does not mean that di erent cities can’t have di erent property tax rates, it just means a speci c city’s rate must be applied uniformly to all property within its jurisdiction.
Idaho Public School Funding – 1980-2013 11
Idaho Public School Funding – 1980-2013
In the case of public schools the legislature has delegated to Idaho’s 115 school districts the authority to levy property taxes for various purposes, including general operations (referred to in budgeting as M&O, or Maintenance and Operations). Prior to 2007 one key element of public school funding was the equalized M&O levy, a levy that school trustees could impose up to a limit of three-tenths of a percent of taxable value within the district.
at levy was authorized by the legislature, and in the public school funding formula districts were treated as though they had levied the full three-tenths regardless of the actual amount of the levy. It was a use-it-or-lose-it proposition, and in e ect a state-mandated property tax levy. Since it also had the characteristic of being “equalized” across taxing districts, it had a much greater likelihood (as compared to unequalized supplemental override levies) of complying with both Article IX, Section 1 and Article VII, Section 5 of Idaho’s Constitution. Let’s take a closer look at how equalization worked.
In simpli ed terms, equalization in the context of Idaho’s pre-2007 public school funding for- mula meant:
1) school districts were authorized to make an M&O property tax levy of up to 0.3% against the district’s taxable value,
2) the dollar amount associated with each district’s M&O property tax levy at a rate of 0.3% was added to the total amount of statewide M&O funding available (i.e. it was added to the total appropriations from the General Fund, the public school endowment fund, etc.) to come up with the total statewide amount of M&O funding available,
3) the total statewide amount of M&O funding available was divided among the school districts based on their needs (the number of students, the number of classroom units, teacher experience, transportation requirements, etc.),
4) the amount allocated to each district from the total statewide amount of M&O fund- ing available was sent to the district, less the amount the district would have collected in property tax from the 0.3% levy.
To see how this worked in practice, let’s look at a simpli ed example. Assume there are two dis- tricts with di erent taxable value per student. Let’s say one district produces $1,000 in property taxes per student at a levy rate of 0.3%. e other district produces $4,000 per student at a levy rate of 0.3%. Let’s also say the total allocation of M&O funding per student is $6,000. e rst district in this example would be sent $5,000 per student by the state to add to the $1,000 per student it collected (or could have collected) from its local property tax. e second district would be sent $2,000 per student by the state to add to the $4,000 per student it collected (or could have collected) from its local property tax. Both districts end up with $6,000 per student (again, so long as they levy the full 0.3% in property taxes), essentially removing (i.e., equaliz- ing) the large disparity in property tax funding capacity between these public school districts.
is example uses a fairly wide gap (4:1) in funding capacity to illustrate how equalization works. In reality the gap is much wider. Table 2 shows the taxable value per student for selected school districts – the sixteen wealthiest districts, the sixteen poorest districts, and the state’s six largest districts.
is table reveals that a property tax levy in the Snake River district would need to be over 30 times higher than a levy in the McCall-Donnelly district to raise the same dollar amount per stu- dent. A levy of one-tenth percent would raise just $153 per student in the Snake River district, but that same levy rate would raise $4,696 per student in the McCall-Donnelly district (Avery was skipped because it only has 18 students, but the per-student disparity is even greater).
Source: FY 2010 Financial Summaries Idaho School Districts and Charter Schools
Idaho Public School Funding – 1980-2013 13
Idaho Public School Funding – 1980-2013
Source: Tax Levies for School Purposes and unpublished Tax Commission data
is uneven distribution of value in the property tax system makes it di cult to both have
a uniform public education system (Article IX, Section 1) and levy property taxes that are also uniform (Article VII, Section 5) to fund that public education system. Until FY 2006 the state partially circumvented this dilemma by equalizing the property tax portion of the three-tenths M&O levy. A number of other parts of the property tax levies for schools were left unequalized, which led to a lawsuit over the funding of school facilities. Now that the equalized M&O levy was swapped for an extra cent of sales tax, all the remaining levies used for operations purposes are strictly unequalized.
As seen earlier, the fastest growing parts of the property tax used for public schools are un- equalized Supplemental Override levies. In conjunction with the funding declines that have occurred over the past decade, this has some fairly signi cant implications when it comes to equity in public school funding.
e rest of this paper will examine more closely what has been happening in the world of Supplemental Override levies.
Supplemental Override Levies
Supplemental Override levies have long been a part of school nance in Idaho. Unlike the equalized M&O levies (maximum three-tenths, trustee enacted, equalized), Supplemental Override levies must be voter-approved and are not equalized. at presents problems in meeting the dual requirements of Article IX, Section 1 and Article VII, Section 5 of Idaho’s Constitution.
Figure 11 shows that the number of districts using Supplemental Override levies was declin- ing slowly prior to FY 2000, then began increasing to a level that is now over 70 percent of all 115 public school districts.
ere was a small decline from 83 districts with Supplemental Overrides in FY 2011 to 81 districts in FY 2012, but the fact remains that over two-thirds of Idaho’s public school dis- tricts now avail themselves of this unequalized property tax funding source.
Source: 2011 Market Values and Property Taxes and unpublished Tax Commission data
e next two maps show the distribution of Idaho public school districts that used Supple- mental Override levies in FY 1999 and FY 2012. All except 2 of the 41 districts that levied
in FY 1999 also levied in FY 2012, plus an additional 42 districts joined the list for a total of 81 districts with voter-approved overrides in FY 2012. ere were also four districts with non voter-approved levies known as Budget Stabilization levies that were authorized as part of the 2006 elimination of the equalized M&O levies. One (Blaine County) also had a Supplemen- tal Override levy, so the number of school districts with either Supplemental Override and/or Budget Stabilization levies in FY 2012 totaled 84.
is trend of increased use of non-equalized property tax levies for M&O purposes has po- tentially serious implications when examined in light of the two aforementioned provisions of Idaho’s Constitution. Figure 3 presented a picture of dramatic decline in the overall e ort Idahoans makes to fund K-12 education, and it is important to note that decline occurred in spite of the dramatic increase in local e ort vis-à-vis Supplemental Override and Budget Stabilization levies.
Table 2 provided a sample of the wide disparity in property tax funding capacity across Idaho public school districts. e following map presents the information visually for the entire state. e wealthiest district (Avery) has 67 times more value per student than the poorest (Snake River). Even if we disregard Avery due to its having only 18 students, the ratio of McCall-Don- nelly (with 931 students and $4.7 million of taxable value per student) to Snake River (with 1,832 students and $153 thousand of market value per student) is a stunning 30:1.
Idaho Public School Funding – 1980-2013 15
Idaho Public School Funding – 1980-2013
Source: FY 2010 Financial Summaries Idaho School Districts and Charter Schools
As reliance on property tax grows, we also see a considerable disparity in the share of total M&O funding that is derived from unequalized property tax revenue. e next two maps show the school districts that utilized either Supplemental Override or Budget Stabilization levies in FY 2010, and the share of district total M&O funding that came from the major unequalized property tax sources (Supplemental Override and Budget Stabilization levies).
Seventy-three districts relied upon unequalized property tax levies for anywhere from 2.1% to 67.6% of their M&O funding. Comparing Map 5 to Map 3 it is clear that the wealthier districts tend to have a greater reliance on the use of property tax to fund their public schools.
So what is the situation from the perspective of the property taxpayer?
First, if you are in a wealthy district (wealthy in the sense there is high taxable value per stu- dent) it takes a lower levy rate to raise a given amount of funds per student, all other things being equal.
Second, even if the funding capacity between school districts is more or less equal, the amount of the levy rate in a particular district will depend on the willingness of the district’s voters to tax themselves to fund the education of children in the district.
Source: FY 2010 Financial Summaries Idaho School Districts and Charter Schools
Both these situations would appear to violate the aforementioned sections of Idaho’s Consti- tution. e rst situation runs afoul of the uniform taxation provision, and the second situa- tion runs afoul of both the uniform taxation and the uniform education system provisions.
To illustrate this point, Table 3 looks at the three main school districts in the upper Treasure Valley: Boise #1, Meridian #2, and Kuna #3. A similar scenario plays out in many other parts of the state.
Table 3 shows the wide range in funding capacity between these three districts. e ratio
of taxable value per student between Boise and Kuna is almost 3:1; the higher e ort in the poorer district (a 50% higher levy rate in Kuna compared to Boise) has a lower net yield (Kuna receives less than 54% compared to Boise, per student, with a signi cantly higher levy rate). Total funding per student is less equitable as a result. is process plays out repeatedly throughout Idaho as reduced funding from state sources drives more school districts into the utilization of unequalized property taxes to meet their overall funding needs.
Table 4 introduces yet another aspect of Idaho’s school funding system that brings consider- able disparity to district level funding patterns. Seven school districts (Avery, Boise, Blaine, Emmett, Lewiston, McCall-Donnelly, and Swan Valley) are authorized to make substantial unequalized M&O property tax levies without voter approval.
Idaho Public School Funding – 1980-2013 17
Idaho Public School Funding – 1980-2013
Source: FY 2010 Financial Summaries Idaho School Districts and Charter Schools
Source: FY 2010 Financial Summaries Idaho School Districts and Charter Schools
Source: FY 2010 Financial Summaries Idaho School Districts and Charter Schools
ree of these (Boise, Emmett, and Lewiston) derive that levying authority from the dis- trict’s charter status, i.e. the district pre-dates statehood. Only Boise actually uses its charter status. e other four districts were granted Budget Stabilization levy authority as part of the property tax/sales tax swap in 2006. Essentially, these are wealthy districts that would have lost substantial funding resources when their equalized M&O levy authority was removed. Two of the four (Avery and Swan Valley) are relatively small (they impact only 18 and 76 students, respectively). e other two (Blaine and McCall-Donnelly) are large districts with 3,316 and 931 students, respectively.
Table 4 illustrates the implications in the context of the Boise school district:
Boise’s share of funding from the property tax dwarfs the other two upper Treasure Valley school districts when its unequalized, charter-based M&O levy is factored in. It is why per- student spending in the Boise district is over $3,000 higher than either Meridian or Kuna.
e picture is similar in the case of the Blaine and McCall-Donnelly school districts. Here’s Table 5 looking at those two districts in comparison to Boise:
Signi cant changes have occurred in public school funding within Idaho over the last de- cade or so. After a couple of decades of relative funding stability, overall spending on Idaho’s public schools has lost considerable ground when measured by Idahoans’ overall economic resources (see Figure 3). Changes of this nature take time to play out, and are somewhat like the parable of the frog: drop him in a pot of boiling water and he’ll jump out; drop him in a pot of cold water and he’ll swim around as the heat is applied and gradually brings the water to a boil – with the frog still in it.
Public school funding is sometimes thought of as just another program (albeit a large and important one) of Idaho’s state spending programs. However, not many state programs are enshrined in the state’s Constitution, with a clear duty to perform (Article IX, Section 1) placed squarely on the shoulders of Idaho’s elected legislators. “ orough” may not be an eas- ily quanti able concept in the context of public school funding, but actions that drive local school districts into making dramatic increases in the use of local property tax resources (see Figures 9 and 11) raise serious doubt that the legislature is ful lling its Constitutional obliga- tions.
With the removal of the equalized M&O property tax levying authority in 2006, Idaho tax- payers received a modest tax cut ($50 million) with the implied promise the state would take up the funding slack using state-level scal resources. at change left all remaining M&O property tax levies as unequalized, meaning they risked running afoul of another Constitu- tional mandate, that property taxes be assessed and levied uniformly (Article VII, Section 5).
To the extent public school districts are now forced to use unequalized property taxes, with their vast disparities in funding capacity (see Table 2), to meet what amounts to a statewide Constitutional duty of “thoroughness,” it becomes questionable that Idaho’s policymakers are meeting that other Constitutional obligation to assess and levy property taxes uniformly. Idaho’s Constitution doesn’t say the public school system must be uniform and thorough at the school district level. at’s a state level duty.
Idaho didn’t get to its current state of a airs with respect to public school funding overnight. A series of incremental steps (some small, some not so small) have brought us to this point. It is probably not realistic to expect a quick x. It is reasonable to expect an open and honest discussion of the direction of Idaho’s public school funding, and whether it is living up to the duties and responsibilities handed down by Idaho’s founding fathers. Hopefully this report will contribute to that discussion.
is report was produced by Michael Ferguson, Director of the Idaho Center for Fiscal Policy. It was funded in part by the generous support of Idaho Kids Count. Both are programs of the Moun- tain States Group, Inc.
Idaho Public School Funding – 1980-2013 19
Idaho Public School Funding – 1980-2013
e Idaho Center for Fiscal Policy is a non-pro t, non-partisan organization dedicated to providing our state’s citizens and elected o cials with fact-based information and analysis
to help make informed policy decisions that will shape Idaho’s future for generations to come.
e Idaho Center for Fiscal Policy (“ICFP”) is funded by a grant from the Northwest Area Foundation and is housed at Mountain States Group in Boise, Idaho.
Boise, Idaho 83702
(208) 388-1014
© 2014. Material in this document may be reproduced with acknowledgment of the Idaho Center For Fiscal Policy.

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