What one education advocate describes as a 鈥減erfect storm鈥� over school finance is brewing in Georgia, as a top lawmaker pushes to replace local property taxes for education with a statewide sales tax, even as the state gears up to fight a lawsuit from school districts over the current funding formula.
Under Speaker of the House Glenn Richardson鈥檚 proposed constitutional amendment, property taxes that now support schools would be eliminated, and instead, a sales tax of 4 percent would be collected on all services and retail purchases. The state would then distribute revenue back to local school districts, though the detailed formula has not yet been made clear.
But Joseph G. Martin, the executive director of the Consortium for Adequate School Funding in Georgia鈥� a group of 51 low-wealth districts suing the state鈥攕ays the plan represents a power grab by legislative leaders.
鈥淲e know there are problems in property taxes, but we can鈥檛 bring ourselves to support it,鈥� Mr. Martin said of the proposal. 鈥淣ot only would it be a financial disaster, but it would be a huge shift of power.鈥�
Taxes Rising
Nevertheless, the Republican speaker鈥檚 plan is bound to get attention when the legislature鈥檚 2008 session opens in January, as will any proposals for school funding reform yet to be recommended by a task force formed by Gov. Sonny Perdue, also a Republican.
Property taxes in Georgia, Speaker Richardson said in a Nov. 7 press conference, increased by $1.5 billion between 2005 and 2006, bringing them to almost $10 billion. 鈥淭he rising amount of property tax is something our citizens cannot afford to pay,鈥� he said.
Georgia is hardly alone in feeling the squeeze. Escalating property taxes are a nationwide concern, said Michael P. Griffith, a school-finance-policy analyst at the Denver-based Education Commission of the States.
鈥淪ometimes you get the property- tax situation forcing a change in education funding,鈥� he said, and sometimes it鈥檚 the other way around. Property taxes and school finance are 鈥渢wo sides of the same coin,鈥� he said.
In New Jersey, for example, uncertainty continues over the details of Gov. Jon S. Corzine鈥檚 yet-to-be-unveiled school finance formula鈥攁 concern especially among school officials in the so-called Abbott districts, where spending has been mandated by the state supreme court in the education adequacy case Abbott v. Burke.
But Mr. Corzine, a Democrat, also signed legislation last year providing rebates and tax caps for New Jersey homeowners, who pay some of the highest property taxes in the country.
鈥淭he issue [in New Jersey] has always been that when the legislature decided to step back in and rewrite the formula, how would they do that in a way that sustains adequacy?鈥� said David G. Sciarra, the executive director of the Education Law Center, in Newark, N.J., which brought the lawsuit against the state. 鈥淗ow can you do this without substantial revenue?鈥�
In Georgia, the split between state and local responsibility for school funding has stayed at around 60 percent state and federal, and 40 percent local, on average. But those figures vary widely by district, said Laura Reilly, a spokeswoman for the Georgia School Boards Association.
鈥淎t the local level, you鈥檒l hear that [local percentages] are going up, and districts are responsible for more of the funding,鈥� she said.
Even so, the association isn鈥檛 in favor of Speaker Richardson鈥檚 proposal. If approved by at least two-thirds of the Republican-controlled House and Senate during next year鈥檚 session, it would go before the voters next November as a proposed constitutional amendment.
鈥淲e have always felt that the property tax is more stable than a sales tax,鈥� Ms. Reilly said. 鈥淚t鈥檚 not up to the whims of the economy.鈥�
That鈥檚 what lawmakers in Michigan discovered after eliminating all property taxes in 1993 and increasing a variety of other taxes. A year later, they reinstituted some property taxes after the state ended up losing about $2 billion in revenue as a result of the change, according to a report by three Michigan education groups.
Mr. Griffith of the ECS added that he will be surprised if Mr. Richardson鈥檚 plan wins approval.
鈥淚t鈥檚 very difficult to get the political will you will need to make this kind of huge change,鈥� he said, especially since 鈥渨e鈥檙e heading into a really unsure economy.鈥�
Many of Mr. Richardson鈥檚 Republican colleagues in Georgia鈥攊ncluding Gov. Perdue鈥攁ren鈥檛 backing the plan. But neither are they convinced that a lawsuit is the best way to revamp the school finance formula.
The consortium of districts that sued the state in 2004 argues that the current funding model doesn鈥檛 cover what it costs to provide students an adequate education.
All local systems use local money to make up the difference, but some are not able to raise as much tax money as others, leaving them with less for expenses such as materials and staff. The districts want the legislature鈥� or the courts鈥攖o revamp the tax code and the finance formula to address the inequities.
Court Battle Looms
Even though the two sides have repeatedly met in the hope of reaching a settlement, the state is prepared to fight, as shown by its hiring of Sutherland, Asbill, & Brennan, a major law firm in Atlanta, and the same one that has represented New York, Florida, and other states in school finance litigation.
The plaintiff districts are being represented by lawyers from another Atlanta firm, Rogers & Hardin.
The process of collecting depositions in the case, Consortium for Adequate School Funding in Georgia v. The State of Georgia, is now almost complete. A trial is set to begin next fall in Fulton County Superior Court, although it could start earlier if the state doesn鈥檛 ask for summary judgment, meaning that the new judge assigned to the case would issue a ruling without a full trial.
Investing in Excellence
In the midst of trial preparation, Gov. Perdue鈥檚 Education Finance Task Force, which began meeting about the same time the lawsuit was filed, is wrapping up its work and is expected to make recommendations soon.
The group is working to replace the state鈥檚 22-year-old Quality Basic Education formula with a new model鈥攕omething Mr. Perdue is calling Investing in Educational Excellence.
According to Dean Alford, the chairman of the task force, who runs a service company in the utility industry, much of the committee鈥檚 work has focused on redefining the relationship between the state and its school districts. He said that instead of state rules on how money should be spent and accounted for, the task force is moving toward 鈥渃ontracts鈥濃�� a term now used in New York state鈥攎eaning that districts would receive more flexibility in spending and curriculum decisions in exchange for improved student performance.
Rather than falling back on phrases familiar in school finance circles, such as 鈥渃ategorical funding,鈥� or 鈥渟tudent weights,鈥� Mr. Alford came up with the term 鈥渟trategic multiples,鈥� to refer to the additional needs some students have that require more funding, such as a disability, living in poverty, or being gifted.
The task force members, he said, are still 鈥渢weaking鈥� the cost model, which Mr. Alford describes as 鈥渢he amount needed in the classroom to get the job done.鈥�
He added that Mr. Richardson鈥檚 plan has generated conversation among the members, but it hasn鈥檛 affected the task force鈥檚 work. The plan, he said, merely 鈥渃hanges the mechanism of how local dollars are collected.鈥�
The speaker鈥檚 proposal, the impending court case, and the governor鈥檚 task force are all adding up to what Mr. Martin of the consortium of plaintiff districts called 鈥渁 perfect storm鈥� over school finance in the state.
鈥淵ou鈥檝e got these separate things all going on simultaneously,鈥� he said, but added that the task force鈥檚 work makes the lawsuit even more necessary. 鈥淲hat is recommended will not be meaningful if it isn鈥檛 backed up by adequate funding.鈥�
