Letting school boards collect taxes is a mistake

Our view: Turning school systems into tax collectors might improve accountability, but at what cost?

October 20, 2011

Why not give school boards in Maryland the authority to raise money through property tax levies? That's a question officials in Frederick County are raising, and it's a timely issue in a state where public schools, and the adequate financing of them, are said to be a top priority.

Currently, school systems rely on a combination of local, state and federal sources of money, much of it coming through formulas that set minimum per-pupil funding. For county government, the frustration is one of accountability — county executives, councils or commissioners must set the tax rates and ensure the adequate financing of schools, but boards of education get to decide exactly how the funds will be spent.

It's a gripe common to a lot of jurisdictions where schoolteachers and administrators have avoided the furloughs and wage and benefit cuts that other public employees have been forced to accept. But Frederick may go one step further and offer legislation in the next General Assembly session to give the board the power to set and collect taxes.

That would be a mistake. While forcing greater accountability on school boards, particularly those elected to office, may sound like a good idea, there are serious pitfalls to any direct-taxation plan that could put Maryland's well-regarded public schools at risk.

It's not hard to find real-life examples of the damage that can be done. Many states finance schools this way, and in some places it works great. Voters are more inclined to accept tax increases when they know how their money will be spent, and public education is among the most popular of taxpayer-funded programs.

But that's not true everywhere. In some communities, especially those with a high percentage of fixed-income retirees or where property taxes are especially unpopular, such levies are hotly opposed, even if it means state takeover of schools. In California, Massachusetts, Ohio and other states with such property tax systems, school funding becomes a perennial battle between those who want better schools and those who seek to cap property taxes.

Worse, such a system would make schools more dependent on property tax revenue. This is seldom an issue when the real estate market is robust and growing, but when property values are in decline, schools would take it on the chin.

Baltimore and the state's 23 counties face the same problem for financing government outside the school system, but at least they have other sources of revenue to tap when property tax revenues are in decline. Unless Frederick County is willing to give its school board the authority to collect income taxes, licensing fees, parking tickets and the like, the schools will never have the same flexibility.

This will, in turn, lead to greater disparities. Counties with large property tax bases, such as Montgomery or Worcester (home to Ocean City), will have a huge advantage. Those struggling with more low-income households, such as Baltimore City and Prince George's County, will be put at a disadvantage — as will the large numbers of minorities who live there.

As frustrating as Maryland's school funding system can be (and we would never claim it to be anything close to perfect), direct taxation is worse. The strength of the current system is that it insulates public schools from problems that are chronic in other states — inadequate funding and huge disparities among rich and poor school systems. Direct taxation can aggravate both situations.

Still, the stated goal of officials in Frederick County — to make school boards more accountable — is a laudable one. Accountability is the very same issue that has fueled recent efforts to change how school boards are chosen in places like Howard and Baltimore counties. Voters want to have a greater say in school policies as well as finances.

The solution? There are many to this complex issue that don't require such sweeping changes. Boards might be required to post more of their financial transactions online. Schools might be forced to hire independent auditors or "inspector generals" to uncover wasteful spending. If the goal is to more closely scrutinize spending, that can be accomplished without turning school boards into tax collectors.

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