December 28, 2005

Comptroller Suggests State Control of School Funding

By Adam Groves

Huge news on the issue of education funding is in today's Commercial Appeal. State Comptroller John Morgan is proposing the state provide complete funding for public schools, leaving local governments with only their construction costs. The state would create new revenue to cover the cost of fully funding school operations by assuming control of the local share of state sales tax and imposing a new state-wide property tax.

Because half of local-option sales taxes -- the tax of up to 2.75 percent that cities and counties can tack onto the state's 7 percent sales tax -- is already dedicated by state law for education, its seizure by the state would be a wash for the 33 counties that levy the maximum 2.75 rate. Local governments that have a lower local option would see a larger share of that revenue seized, unless they raised their tax rates to the 2.75 level. In addition, At the funding level Morgan proposes, a state property tax of about $1.92 per $100 of assessed value would be required.

"Local property taxes in many places could be significantly reduced if the state were funding operations. Some people would pay less; most would pay more probably since total funding would move closer to what other states spend," said Morgan, the state's chief auditor and a key policy adviser to the legislature.

How's that for contradiction. On the one hand, I can see the economies of scale that would come from one entity managing all of the state's schools, rather than having 95 individual systems, especially where our state courts are mandating some degree of equalization, specifically as it relates to pay scales, among the systems. However, this seems like a bad deal for the tax payers, when centralization will add, not subtract layers of bureacracy. For instance, under the plan, the local governments would still be accountable for improving results, which means you would still have all the local school boards, administration, etc.

The fact of the matter is that the Comptroller, by his own admission, concludes that Tennessean tax payers will pay more for this scheme in the long run. If tax payers are paying more, it's hard to reconcile any pitch that includes the notion that governments will save money. How can tax payers end up paying more and the government save money? You don't need more money if you're spending less.