It Takes a Federalist Village: A Revitalized Property Tax as the Linchpin for Stable, Effective K-12 Public Education Funding
Mildred Wigfall Robinson
University of Virginia School of Law
Richmond Journal of Law and Public Interest, Forthcoming
Virginia Public Law and Legal Theory Research Paper No. 2013-32
Undeniable intra-state, inter-district disparities in funding public K-12 education were not explicitly litigated in the federal courts prior to San Antonio v. Rodriguez. The plaintiffs’ attorneys in the Brown cases were quite strategic in presenting the case against the Topeka School Board as lead case; the Topeka public school facility was structurally equal to public schools attended by Linda Brown’s white counterparts. With funding inequities unavailable as an issue, The United States Supreme Court unequivocally declared in that case that “segregated schools are inherently unequal.” It was not until 1973 that disparate funding was addressed directly by the Court. In San Antonio v. Rodriguez, the last federal case explicitly challenging the constitutionality of funding disparities driven by principle reliance on the ad valorem property tax, the Court held that a school-financing system based on local property taxes was not an unconstitutional violation of the Fourteenth Amendment’s equal protection clause. Though the funding disparities between the two school Texas districts were stark, the plaintiffs in that case unsuccessfully argued that education is a fundamental right under the US Constitution and that a school funding system predicated upon local property taxes that impacted lower income groups created a suspect classification subject to strict scrutiny there under. From that point forward, state supreme courts became the fora in which such questions were litigated with both notable successes and equally notable failures.
Whatever the litigation outcome, (and predicated on language in state constitutions that almost without exception guaranteed a public education to state residents) observable state level changes in the allocation of responsibility for funding public education have followed in Rodriguez’s wake. From heavy reliance by local school districts on local property taxes for funding, increasing state participation in financial support for public education opened state tills funded primarily through retail sales taxes and state individual taxes. In so doing, funding from property tax revenues that had proven relatively stable though inadequate because of great variations in the value of underlying tax rolls, was supplemented and in at least one instance replaced by state funding (Hawaii). This more explicitly shared responsibility has had mixed results; state funding has resulted in increased support during periods of general economic expansion but has declined during recessionary periods. Recent data show a general national pattern of reduced state support dating from the inception of the recession of 2008. In short, increased funding has proven unstable because of the greater comparative revenue elasticity of state revenue sources vis-à-vis that of the property tax.
Funding for public education must be stabilized. Because public education is such a huge undertaking, all levels of government must play a role in achieving that financial stability. As such, policymakers must be aware of the differences between property taxes, state retail sales taxes, and state income taxes as funding sources and should develop funding packages that take the best financial advantage of each source.
This essay briefly summarizes the differences between these revenue sources, highlighting factors that presently affect revenue capacity. I explore ways in which to better craft funding packages with particular attention to the local and state roles in this effort. I argue that a key element will be an effectively revitalized property tax, immunized from a wide array of constraints originating at the state level that have compromised its potential for revenue productivity. I argue that the state role is twofold: (1) enacting legislation protective of property tax revenues as a critical element of funding and (2) allocating from state general revenues, support critical to achieving adequate and equitable education. An important part of the discussion of the state role is an examination of the pitfalls of earmarking revenues such as gaming proceeds for public education. I warn against such reliance. Finally, I distinguish between indirect and direct support provided by the federal government for public education. I argue that indirect federal support for public education can be increased by enacting a credit for property taxes paid to support public education along with a credit for charitable contributions made to support foundations serving poorer public schools. I note that the limited direct federal support provided to public schools has been earmarked for designated purposes and is likely to remain both limited and earmarked.
Number of Pages in PDF File: 43
Keywords: education finance, income tax, property tax, educational opportunity
Date posted: September 19, 2013 ; Last revised: April 23, 2014