Monday, October 31, 2005

Back to School -- An Issue 78 Interlude

Anyone familiar with life at the House of Pho in general or Back to School Monday in particular will be unsurprised that I am supporting Issue 78 (APS school levy). In fact, I am volunteering in the effort in between RON stuff.

On a basic level, I support the levy because Akron Public Schools are doing well and they need the money. The "doing well and need the money" arguments are outlined well enough in the ABJ editorial in favor of 78.

As to why they need the money, if you are a loyal reader you already know. For the rest of you, lets take a stroll through the archives. Here I outlined the basic structure of the state school funding system through 2005. This post discusses H.B. 920, which freezes property tax revenue, and phantom revenue, the baffling interplay of statutes that automatically pushes state aid for a district down every three years.

Here I discussed the 2006-07 budget. In particular, the elimination of part of the school funding formula -- the cost of doing business factor -- that helps urban schools like Akron. When I get to the budget battle in the B2S posts, I will go into greater detail about what a total hosing this turned out to be. I also mention in that post that the new budget included a fix for the phantom revenue problem. I haven't posted that Taft line-item vetoed that provision.

While I have mentioned that part of a school district's local revenue is business personal property tax, I've only mentioned in passing the four-year phase out of that tax. In my first Loretta Haugh post I touch on how charter school flight disrupts school district finances.

Finally, my first TABOR post outlines a problem with the TABOR proposal that touches government budgets even without the TABOR whipsaw in place -- that expenses for running government institutions run higher than consumer price inflation by a factor of three or more.

So put it all together.

-Local revenues are essentially static.
-Local revenues will soon decline due to the loss of personal business property taxes.
-Local revenues automatically decline every three years due to the phantom revenue effect.
-State aid is frozen for two years, then will in all likelihood drop.
-APS's expenses are increasing faster than the rate of inflation.

The wonder of it all is that APS has remained solvent to this point.