Act 1 redux

“That makes no sense whatsoever,” said Hutchinson.

That statement begs for an explanation, which, to be honest, I was not fully prepared to give at Monday's board meeting. I did not anticipate having to defend a practice widely used by school boards in the era of Act 1, and I certainly didn't expect to have to defend the ethics /morality of that decision.

A little history on school budgeting is in order. Once upon a time, although school budgets were developed over a period of months, the actual tax rate wasn't determined until fairly late in the process - usually not until June - by which time you would have a much clearer picture of the most important factors impacting the budget, such as:
the cost of health care for the coming year
the number of retirements, and (most significantly for many districts)
the amount of the state appropriation

Then came Act 1, under which school districts are required to submit preliminary budgets when all of those numbers are no more than educated guesses, and while you are barely half-way through the current fiscal year. Act 1 also limits, by formula, the possible real estate tax increase for the coming year. For next year, that number is 1.7%.

However, for a couple of big ticket items - special education and retirement contributions - if the increase in expenses is significantly higher than the index (approximately, the rate of inflation) districts are allowed to raise taxes to cover the difference (how nice of the legislature!) on the reasonable premise that these expenses are beyond local control.

This is a fairly simple calculation for the retirement contribution rate, which is already known for next year. But your special ed budget is not so easy to predict. It is not unusual for a particularly high-needs student to unexpectedly transfer into your district, and there is a moral and legal obligation to provide that student with appropriate services, regardless of whether there is money in the budget to do so.  

So instead of permitting a district to raise taxes to pay for future special ed costs - which are unknown - this number is determined by looking backwards, essentially allowing districts to recoup expenses that have already been paid - a fairly reasonable idea in an otherwise unreasonable piece of legislation.

But there's a catch. School boards have to decide now, in January, whether or not to apply for these exemptions. Keep in mind that this merely establishes the maximum tax rate; there's no requirement that we use it. But the opposite is not true; if you don't apply for the exemptions you can't change your mind later. So the prudent course is to apply for the exemptions, maintain flexibility, let the process play itself out, and hope for a less-than-worse-case-scenario.

But to suggest that it is immoral and unethical for the district to recoup expenses that the district was legally required to make (and has already made!) makes no sense whatsoever.


p.s. I should once again point out that Act 1 is a deeply undemocratic (unethical, immoral? - who's to say?) piece of legislation.  Local citizens already had an effective way to control local school spending.  If a majority of citizens believe that their schools are in need of additonal community resources, they can elect board members who agree with them. If citizens believe that taxes are too high, they can elect people who agree with them. It's really that simple.  Why state legislators think they are a better judge of each community's values is beyond me.

And to beat the poor horse one more time, school districts are legally required to pass their budgets on time, but the state legislature, not so much.