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Against the Grain

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SC Property Tax Boondoggle 

     The editors of ATG spent the better part of a year (1994-95)compiling information on the cost of the schools in South Carolina. The results were astounding. There was absolutely no accountability [still isn't], no audit of funds and no one department had the entire budget available. The Department of Education claimed they were audited by the US Dept. of Education, but phone calls and letters to that agency determined this was not so. Reports were "sent" to DC with information the SC Dept.of Education wished to selectively impart. That same reporting system existed in SC to various departments requesting an accounting from the SC Dept. of Education.

    ATG published the final cost of education in both grades 5-12 and higher education, and sent the results to the SC Legislature. It was totally ignored. Every time the word "reform" of the educational system was used, it meant only higher taxes and less accountability. This attitude of the legislature has never changed. ATG continued publishing these statistics through 1998, with the same results from the SC Legislature; no relief for the homeowner and complete support of an educational system which is still on the bottom.

    In October 2005, Rep. Bill Cotty (R), chair of the House property tax subcommittee, states that we don't understand how complicated the tax system is, and how schools would suffer from changing the system, it is obvious he has no idea that the schools already suffer from the SC Legislatures blind acceptance of the bureaucracy they support now. Is he reluctant to admit that 60% of the general budget is being spent on a system which is anything but "education?" A Democrat (Rep. Cobb-Hunter) wants to increase taxes based on increasing wages. With students unable to read, or speak English, how does she expect wages to increase?

   In looking back through the records kept by ATG over a five-year period, it becomes quite obvious the cost of education in SC has increased tremendously, with no progress in student "education" and even less accountability. Homeowners are being taxed out of their homes - funding the largest scam ever forced on them. Even the SC lottery, dumping H:undreds of Millions into the Education system, was and is, touted as the answer to the problem, is a joke. Take the time to look at that budget and see where the money goes. And they want more property tax increases? Also take the time to look at the list of business exemptions from Sales tax, and they want the homeowner to pay more?

   The article below was the beginning of the search for answers on the public education boon-doggle in SC. It is time for taxpayers to demand a true change in the failed system, and demand true ownership of their homes. If this is not forthcoming, we need to remove members of the legislature who continue to turn blind eyes to the problem.

 First  published in AGAINST THE GRAIN - October 1994

AND THEY WANT ANOTHER PENNY SALES TAX ?

In 1951, the state enacted a 3 cents sales tax for the purpose of constructing public school buildings and financing a state-operated public school system. While this 3 cents sales tax is still collected by the state, the burden of repairing, renovating and building public school buildings falls almost entirely on the local property tax. The outstanding bonded indebtedness of South Carolina public school districts is currently $1.2 billion with annual debt service payments of $225 million. The state's contribution to the school building program is $18 million annually or a per pupil allocation of $30. This is the same per pupil allocation that the state provided in school year 1969-70 when the state added the fourth penny to the sales tax for public education. Today, square-foot building cost is 4.5 times greater than it was in 1970. The $18 million currently provided by the state would fund the construction of about three elementary schools. However, the public school system is now growing about 5,000 students per year or the equivalent of ten elementary schools.

In 1977, the state enacted our basic public school foundation program known as the Education Finance Act. The Act stipulated that the cost of the foundation program would be borne 70 percent by the state and 30 percent by tile 91 school districts, with each district paying according to an index of tax-paying ability. This was a statutory guarantee that a child's basic education would not be dependent upon the wealth, or lack of wealth, of the particular district in which the child resided. Furthermore, the Act guaranteed that the purchasing power of the public school dollar would be held constant by annually increasing funding for the program at the rate of inflation. This new funding program began in school year 1978-79 and was phased in over a six-year period with full implementation occurring in school year 1983-84. In the model school program which served as the basis for computing the cost of this new foundation program, teacher salaries were based on the southeastern average. In 1984, the state added a fifth penny to the sales tax for the purpose of funding innovative public school reform. Astonishingly, it took one third of the revenue from this additional penny of sales tax to bring the state's average teacher salary up to the southeastern average. Why? The state had failed to increase funding for the foundation program at the actual rate of inflation. Today, it still takes one third of the revenue from the fifth penny of sales tax to maintain teacher salary at the southeastern average. Although in 1991, the state changed - with the blessing of State Superintendent Barbara Nielsen - - the method of computing the southeastern average from a true weighted average to an "average of the averages" with a resulting decrease in the average salary of $970 per teacher. Incredibly, more than half of the $35 million freed up in the Education Improvement Act (the Trust Fund created by the fifth penny of sales tax) was used to fund the state's $30 per pupil contribution to the public school building program. Remember the purpose of the first three pennies of the sales tax!!!

When the basic foundation program was created in 1977, two major programs (Public School Employee Fringe Benefits and Public School Transportation) were omitted because they were to remain fully funded by the state. Beginning in 1983, however, the state started shifting part of the cost of Employee Benefits to the school districts to be borne by the local property tax. This shifting of financial responsibility has progressed at a steady clip and by 1993 (the last year for which complete data is available) exceeded $110 million. In 1987, the state was ordered by the United States Department of Labor to stop using students under the age of 18 to drive public school buses. In one fell swoop, this caused bus-driver salary to jump from $13 million annually to $26 million annually. The $26 million funded a state salary schedule which was inadequate to attract adult bus drivers in many school districts. These districts were required to supplement driver salary from local property taxes. By school year 1992-93, transportation costs borne by local property tax exceeded $25 million. Remember the purpose of the original three cents sales tax!!!

In school year 1984-85, public education funding for current operations (debt service excluded) was borne 57 percent by the state, 34 percent by the local property tax and 9 percent by the federal government. In school year 1992-93, the funding had changed to 47.6 percent by the state, 43.2 by the local property tax, and 9.2 percent by the federal government. The 9 percent shift between state and local resulted in a $282 million annual increase in local property taxes. Remember the 70 percent state and 30 percent local funding formula of the 1977 Education Finance Act!!! Is there any wonder why property owners in South Carolina are fed up?

Although all five pennies of the sales tax was enacted to fund public education, in 1993, the legislature amended the sales tax law requiring that sales tax revenue from catalog sales on the first four pennies of the sales tax be placed in a trust fund for higher education. During the current fiscal year this is estimated to generate $80 million. Unfunded school building needs in our state currently exceed $1 billion. Teacher salaries are below the true southeastern average. Property taxes continue to rise. Why was there no cry of outrage from State Superintendent Barbara Nielsen, the constitutional guardian of public education? Can it be that we have NO guardian of public education funding? PROPERTY OWNERS, HOLD ON TO YOUR WALLETS!!!

Reprinted from ATG, October 1994, FYI

[reprinted in January 1995]