Tax Caps and Tidal Waves: Now? or Never?

In their clear-headed if ominous essay, “A Warning for All Who Would Listen,” in Stretching the School Dollar, James Guthrie and Arthur Peng point out that the “hundred-year era of perpetual per-pupil fiscal growth” is over. Indeed, our public schools face a “fiscal tsunami” that will change our public education system for years to come.

While Stretching the School Dollar should be a must-read for all education policymakers, over at the Foundation for Education Reform and Accountability, Brian Backstrom is for action.  It’s Now or Never, he says. 

As in many states this year, New Yorkers are at the fiscal cliff, facing a $10 billion – and counting – deficit and education spending will take it in the shins. (See here.) Eighty percent of schools districts in the United States still rely on property taxes for a significant share of their revenues, but the overall funding picture has changed dramatically in the last 50 years (see Guthrie and Peng). New York’s school districts, like most, now rely heavily – 40 to 60 percent of revenues – on state capitals for their revenues.

Thus a limit on the ability of districts to compensate for those losses by capping local property taxes, as Governor-elect Andrew Cuomo is proposing for New York, represents, according to Backstrom, “the most sweeping limits on local education revenue in recent memory” – and will “not just mitigate tax burdens, but will force action on reform issues, including greater accountability, changing counterproductive union work rules, and focusing more limited resources into the classroom.”

Specifically, he says, now is the time for New York to shed itself of laws that require teacher contract extensions even after the expiration of the contract, that require public schools to pay “prevailing wages” for school construction, that make public-employee retirement benefits better than those of their private system counterparts.

It may be the season for giving — many educators won’t have much choice in the matter.

–Peter Meyer

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