Another Shelby County Board of Commissioners’ budget vote, another shortchanging of public schools in Shelby County.
It all began just over a decade ago with a change in the Shelby County budget resolution that radically changed decades of tradition and fair play in school funding.
Before the change, schools – like county services – were rewarded when property taxes increased. For example, if property taxes grew by three percent, the school budget grew three percent.
The change from that policy, however, meant that instead, schools began to receive a flat amount each year regardless of the growth in county revenues.
As a result, county schools have received millions of dollars less than they would have received under the previous policy, which prevented the seamless planning that could take place with an orderly growth in its budget.
“The change in funding from tax allocations to a definite amount during the Wharton administration was a blatant anti-schools move to keep schools from receiving any growth money from their county revenue sources,” said Jimmie Covington, veteran journalist and expert in school funding. “I believe that commissioners who support setting a definite amount for schools are taking an anti-schools position, whether they understand it or not.”
That said, it’s possible that no commissioner can fully explain or understand school funding, the basis for the number in the county budget for schools, and the impact of the lost revenues on school planning and budgets.
Speaking of lost revenues, the Shelby County Board of Commissioners’ failure to change PILOT policy to make schools whole costs public schools an estimated $10 million a year.
Back to the county budgets for schools, the following commentary was posted at thebesttimes.com and is written by Jimmie Covington, veteran Memphis reporter with lengthy experience covering schools, government, and demographic issues. He is a contributing writer with The Best Times, a monthly news magazine for active people 50 and older.
As I see it: Luttrell’s proposed tax rate ordinance would reduce the tax allocation going to schools
By Jimmie Covington
The proposed property tax rate ordinance presented by Shelby County Mayor Mark Luttrell would reduce the tax allocation going to schools by five cents and the portion going to debt service by seven cents while increasing the county general fund’s part by six cents.
If approved by County Commission members, the net result would be a six-cent reduction in the property tax rate from $4.11 to $4.05.
Luttrell has traditionally presented a proposed tax ordinance and general budget proposal that include school funds although neither state law nor the county charter gives the county mayor any authority to make any recommendation on school funding.
The charter says the charter does not apply to the county school board, the superintendent or school funding for any purpose. The county school board budget goes directly to the County Commission and does not pass through the mayor. State law requires that the suburban municipal school systems receive a share of all funds the county provides for county schools based on average daily attendance.
The parts of county government that the mayor heads are in competition with schools for county funding.
The charter calls for the mayor to present a consolidated budget request covering all areas outside of schools. Nowhere does it say that the mayor also is to present a tax rate proposal. Setting the tax rate is totally in the hands of the commissioners.
To be more specific about what the county mayor’s tax rate proposal does:
It shifts all of the five-cent anti-windfall recapture rate cut to the portion of the tax rate that was allocated to schools last year. None of that five cents cut is applied to the general fund and debt service portions of the tax rate that fall within the county mayor’s responsibility.
Last year’s 69-cent allocation for debt service is reduced to 62 cents in this year’s proposal and the general fund allocation is raised from $1.43 to $1.49, a six-cent increase. That provides the additional one-cent tax cut in Luttrell’s proposal.
A 13-cent appeals allowance was approved for last year’s post-reappraisal certified tax rate. State Board of Equalization officials held that the actual appeals results only required eight cents of the allowance. In effect, the additional five cents provided the government and schools with a reappraisal windfall this past year. Following state law, the state officials approved a five-cent recapture rate cut.
The county does not have to make that cut but it does have to give notice of its intent to exceed the recapture rate and hold a public hearing before it exceeds the recapture rate.
I think it is fair to say that the county mayor is proposing that the portions of county government the mayor heads retain and move into the future with virtually all of the windfall tax increase that was approved last year for those parts of the government.
It seems to me that a fair thing to do would be for county commissioners to reduce last year’s tax rate allocations for the general government, debt service and schools proportionally to cover the five-cent rate cut.
Then the commissioners could consider whatever shift the mayor wants to make from the debt service fund to the general fund allocation. If the county mayor feels a tax increase is needed to fund the county’s general fund, commissioners should consider that increase. Also, commissioners should do what they feel is proper and fair for funding schools without any influence or recommendation from the mayor.
Here’s our post from July 11, 2017: School Funding Takes Direct Hit From County Budget Change.
Here’s Mr. Covington’s post from February 16, 2018: Politics Limits County Government Money For Schools.
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I would love to sit down with Jimmie Covington and dive into this subject matter. I wrote the other day the following regarding a MBJ Editorial – ” Thank you Memphis Business Journal for mentioning the “social contract”. The fact is that Memphis/Shelby County so called “economic developers” have sacrificed their true economic growth engine in safer/paved streets, education and public transit that will attract economic growth for excessive tax incentives resulting in deficient economic development efforts. These decisions have saddled Memphis/Shelby County taxpayers with an estimated $70M in tax revenue shortfalls since 2010. This former estimates assumes the use of responsible tax incentives. And as far as excessive property taxes, the average American annually pays $2,197 and in Shelby County $1960. Using median home values, this results in total annual housing costs with a 30 year mortgage for the average American of $13,549 and for Shelby County $9, 613.” – https://www.bizjournals.com/memphis/news/2018/06/15/editorial-migration-by-the-numbers.html?ana=fbk
This Business Journal piece looks interesting. Since I am not a subscriber, I can’t pull it up online. I’ll try to drop by the library and read it.
County Commission members don’t seem to be able to grasp how they have participated in aiding the county administration is diverting many millions of dollars away from school operations funding over the years. In doing so, budget figures have been manipulated and officials have not been open with the public. If they think I am incorrect about this, they should come forth and show me where I am wrong.
On further thinking about this, it seems to me that this proposed further reduction in the portion of the property tax rate allocated to schools is a further step to ensure that county officials maintain control over the amount of revenue received by schools. Since at least 2007, when A C Wharton was the county mayor, administrations and commissioners have prevented schools from receiving the growth revenue that often occurs when tax sources provide more revenue than estimates. In budgeting, governmental officials tend to estimate expenditures liberally and revenues conservatively. They want to make sure that things come out even at the end of the fiscal year and that the governments end many years with surpluses. Schools must receive all of the revenue from the property tax rate approved for schools regardless of how much that amount may be above the budget estimate. County administrations and commissioners manipulated that figure for several years by having the county trustee hold back any property tax revenue for schools that exceeded the amount that had been placed in the county budget. The excess money was placed in a county fund for use by schools in the following year. For several years wording to that effect was placed in the county tax rate ordinance although if was far from clear that it was proper to do that. (Also, it is not clear that the county trustee had the authority to hold back any of the school revenue from one year to the next.) The hold-back wording was not in the tax rate ordinance last year and it is not in this year’s proposed ordinance. News media reporters and editors did not have the insight to ask why the change and county officials never made any explanation to the public. Also last year, County Commission members decided that all of the wheel tax revenue should go to schools. However, they did not change the total amount schools could receive from the “county education fund.” Overall, it would be better for schools to receive all of their county revenue from the property tax rate, since, despite whatever manipulations county officials carry out, schools in the end must receive all of of the property tax revenue. I could go on about this but it becomes more complicated. Also, I am looking at this from a distance and I may not be entirely correct on all of it, but we are not getting any help from the local news media in informing us about what is actually happening. I do know this: The mayors and county commissioners in office before the 2002 elections were more supportive of schools than mayors and commissioners have been since then. In those days, commissioners allocated revenue sources to schools and schools received all of the revenue from those sources regardless of whatever figures were in the budget. One of those actions was a doubling of the wheel tax will all of the new funding going to school operations. The officials of today will say they did what they have done in order to keep taxes down. However, it is clear that these actions have been costly to schools. School supporters should pin down county mayor and County Commission candidates in the upcoming county elections on whether they are going to continue to treat schools this way.