Position Paper on Education Finance and Reform
For Utah Foundation Forum on September 7, 2006

Submitted by the Legislative Committee of the Utah School Boards Association, the Utah School Superintendents Association, and the Utah Association of School Business Officials

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Proposal:  The fact that the Utah public education funding effort has been reduced over the past decade as is discussed in the Research Report titled “Paradox Lost” by the Utah Foundation is a major concern to the education community.  As a legislative committee comprised of local school board members, district superintendents and school district business officials we propose that legislation be sponsored to deal with the issues of the falling basic tax rate and transfers to the State General Fund to supplant monies that are being used to fund higher education.  This proposal consists of two parts:

• Basic Tax Rate – We recommend that the basic tax rate be held constant for four years at a time after which an evaluation be made as to whether the rate be adjusted.  In other words, the rate would only be adjusted periodically rather than floating down each year. Currently, property is reassessed by the County Assessor every four years.  This proposal would keep the rate constant for the same period as property values remain constant.  Also it would generate additional revenues for public education and increase the overall funding effort.
   
• Higher Education Transfer - The transfer of income tax revenues from public education to higher education has reduced the available revenues for public education.  We recommend that a  statute be implemented that would limit the amount of income tax revenues that could be used to fund higher education to no more than 10% of the total income tax receipts.  This would increase the revenues available to public education by limiting the transfer to higher education.  At the same time this proposal would provide a soft cap that would allow for growth in revenues being transferred to higher education as the total income tax receipts increase.

Rationale:  In Utah State Code Section 53A-17a-102 (2) it states that, “… although the establishment of an educational system is primarily a state function, school districts should be required to participate on a partnership basis in the payment of a reasonable portion of the cost of a minimum program.”  This local effort is accomplished through the minimum tax rate.  The basic rate has continued to fall on an annual basis from .004220 in 1996 to .001515 in 2006.  If this trend continues, the local portion of the state/school district partnership mentioned in the above noted statute will become insignificant.  The additional revenues derived from keeping the rate constant for longer periods of time would make a significant difference in adequately funding public education.

A limit on the transfer of income tax revenues to higher education is appropriate and needed to stop the current trend of supplanting the General Fund with revenues that are required by the State Constitution to fund public education.  The implementation of the two proposals would increase funding for public education and ensure that the funding effort in the state remains at the current levels or higher.