Crux of the Problem

Over the last 50 years, schools have moved away from 19th-century educational practices, with the teacher in front of the room talking to children sitting in rows, towards a more modern system emphasizing students as learners, not just sponges, more cooperative learning, more give and take, more emphasis on reasoning and finding answers, more concern with the world around them and, of course, far more use of technology. As we have moved well into the 21st century, 19th-century education practice is being left behind.

So why are schools still dependent on 19th-century funding sources?

A recent report by the U.S. Census Bureau revealed that in 2008, public school districts throughout the nation spent an average of $10,200 per pupil, a 6.1 percent increase over the previous year. The report noted that public education is the single largest category of all state and local government spending.

According to the Census Bureau, public school systems spent $593.2 billion in 2008 of which state governments contributed 48.3 percent and the federal government contributed just 8.1 percent. The balance, 43.7 percent (approximately $260 billion), came from local sources.

Those local taxes are almost always based on the 19th-century concept that land ownership is the best mark of wealth. The family that owned the largest ranch or the most productive farm was obviously wealthier than the day laborers and others who worked on their land. Certainly there were other measures of wealth — merchants, bankers, lawyers, craftsmen and others could earn considerable money — but they used it to buy houses and farms themselves and were taxed accordingly.

Property was the mark of wealth in the 19th century, and it probably made sense to raise funds for local concerns — and especially the schools — by levying a tax on real estate. Landowners made up the community, ran the community and had the resources to pay the community’s bills.

But land is no longer necessarily a reflection of wealth. Millions of people of modest wealth own, or hope to own, their home. As recently as five years ago, the president of the United States declared home ownership a proper goal of all Americans. In other words, everybody — rich or poor — should own a piece of property. But owning a home does not make a person or a family wealthy.

The story of people forced to give up their homes because they cannot afford to pay the local real estate taxes is hardly new. People live longer now than in the 19th Century, and many of us are on fixed incomes. We do not have liquid resources to fall back upon when the taxes on our single real asset go up.

Ask a realtor what the key question is when they’re showing a house and they quickly answer, “What are the taxes?” A potential buyer asks,” If we move into this house, will we be able to stay here when we get older”? In other words, how high are my real estate taxes going to go?

The answer is that they are going to go higher. Why? Depending on your point of view, the reason can be described in two opposing responses:

Response One: Because the schools spend too much, pay teachers too much and don’t do a good enough job! (The same is sometimes also said of other local services but less often about police, fire and sanitation — probably because, unlike the schools, all people use those services.)

That is the sentiment that governors and state legislatures and some portions of the public endorse and often express when they propose putting caps on the rate of growth of real estate taxes or otherwise limit how much money localities and school districts can raise. It’s a simplistic answer to a complicated problem. We need, and most people appreciate, the services (including schools) that we pay for with local taxes, but the average homeowner simply does not have the resources to pay more.

Response Two: Because our local system of taxation is based on 19th-century concepts of wealth, not on 21st-century reality.

That, it seems to me, is the real crux of the problem. Just as we have gotten away from 19th-century teaching, we need to break away from 19th-century funding.

That’s easier said than done. Lots of wealthy and powerful people oppose raising income taxes. But the attack on real estate taxes, and the fact that it is truly an obsolete way to raise local money, is going to leave school districts with little choice. Either they are going to have to continue cutting teachers and services, or they are going to have to help find alternate ways to raise the money they need. How do we get started on that?

About the Author

Paul Abramson is education industry analyst for SP&M and president of Stanton Leggett & Associates, an educational facilities consulting firm based in Mamaroneck, N.Y. He was named CEPFI’s 2008 "Planner of the Year."