This is the third posting about school funding and the opinion contained is from Mr Lynam of the Finance Committee. It uses the case of Falmouth as an illustration of why per pupil expenditures can vary widely. Finally it covers the reduction in Chapter 70 money that Dartmouth is likely to see due to a reduction in the target aid percentage of those funds for our district.
Falmouth is a case in point :
I choose Falmouth because their school population of 4,047 is close to our own 4,300 students ..... and their 33,644 residents closely approximates our 31,389. Their tax rate is $5.25 / K .. ours is $6.77 / K. The average single family home pays $ 2,878 in taxes where in Dartmouth the average home would pay $ 2,763 [ the State average being $3,799 ] This is where the similarities end, however.
The average single family house is valued at $408,190 in Dartmouth and $ 548,225 in Falmouth ... AND ... where Dartmouth has 9,532 single family parcels, Falmouth has 17,993. The whole point is that although we are comparable in many ways, the difference in land valuation between Falmouth and Dartmouth is enormous. Dartmouth has a 2004 assessed value of $ 4.3 Bil as opposed to Falmouth’s $ 9.1 Bil. The FY07 levy limit for Dartmouth of $ 38 Mil is dwarfed by Falmouth’s $ 64.7 Mil. It is this giant valuation and taxing ability that earns them a MGR of 7.67 vs our MGR of 6.32.
When this growth rate is plugged into the funding formula year after year it results in a Required Local Contribution number ( $36.8 Mil ) for Falmouth that exceeds the entire Foundation Budget by some $3.2 Mil. Their ‘Target Local Contribution” level [ I’ll get to that later ] , unlike Dartmouth’s, is LOWER than they presently pay so this number is reduced by the formula to $35 Mil ...... still $1.4 mil ABOVE the total foundation budget. Now add in $ 4.6 mil in local Chapter 70 monies and it is easy to see how their local Required Net School Spending reaches $ 37.4 Mil ........119.39% above the Foundation Budget with 85.15 % of it coming right out of their [ considerable ] local tax receipts.
Conclusion :
In answer to the question, “ Why do some communities spend so much more per student than Dartmouth ? “
The answer [ ignoring special needs cases and extraordinary circumstances ] is that they have more apparent valuation and, by extension, theoretically more tax revenue to spend than Dartmouth. The State formula then MAKES them spend it on Education, so the State doesn’t have to, by manipulation of the MRG factor...... Which brings us to the next piece of the funding dilemma.
Target Aid Percentage :
Presently, our Chapter 70 monies cover 28.78% of all our education spending with the remaining 71.22% coming from our general revenues. The aim is to get us up to 79.78% thereby reducing our Chapter 70 support to only 20.22%. This adjustment would cost Dartmouth an additional $3,088,451 ( for FY07 ) from our general revenues ..... in a way, they have already started down this path.
Opinion :
There are two ways to decrease the target aid percentage: Reduce the Chapter 70 aid outright or slow the rate of increase in Chapter 70 monies so that they are eventually overtaken by inflation, MGR adjustments and the fact that a 4.5% rise in the foundation budget is just too little, requiring addition appropriations above required NSS. It is the latter that I believe is happening.
In the last five years the Chapter 70 monies, as a % of actual NSS has been dropping steadily. In 2002 it stood at 28.67% ~ 27.67% ~ 26.93% ~ 25.36% ~ 25.79% in 2006. This represents a reduction of 2.88% in our Local Chapter 70 Education Aid for the period 2002 through 2006 as a percentage of actual NSS. This equates to nearly $1 mil for FY07 alone, across all educational spending. [ $34,255,600 x 2.88% = $986K ]
Chapter 70 monies [ School Funds and State Aid for Public Schools ] are Determined under Chapter 70: Section 12 of the General Laws of Massachusetts. They consist of “State School Aid “ & “Education Improvement Amounts “ . The amounts paid out the previous year are indexed by an inflation number derived from the “Implicit Price Deflator for State Government Services”, published by the US Department of Commerce. This % increase is capped at 4% / yr.
Under Chapter 70: Section 13 [ Allocation of Funds } These monies are then apportioned to the communities such that, after the required local contribution is calculated, the State Aid monies are then used to fund the difference to the foundation budget amount. Any funds left over, or the result of excessive State Aid [ as in the case of Falmouth ] , are then distributed equally among the communities by a formula that is still unclear to me at this time.
All the above is “ Subject to Funding “ at the State level. If there are insufficient monies to go around, everyone’s share is reduced by an equal amount predicated upon the number of students Statewide. The shortfall will, of course, be made up by the communities.
Posts
3 comments:
Strictly as an aside to this discussion but since it has to do with Falmouth and education spending - Falmouth will be asking their taxpayers for an additional $18.6 million in an override this year just to fund cost overruns for their renovation of the High School. They will also be looking at possibly losing another academic year due to construction delays at the school. You want to talk about mismanagement!
My understanding of prop 21/2 is that if our property values were assessed higher, since we can only increase our tax levy by 2 1/2% each year, this would mean a decreased tax rate to take in the same 2 1/2 % increase. If property value/assessment goes down, the tax rate goes up proportionately.
Anonymous #2, You are correct. Tax rate is the result of levy divided by total assessments. You cannot just raise the tax rate to create revenue.
Post a Comment