Guest Editorial, March 25-27, 2011
May 28, 2011
Taxpayers, parents and grandparents of current and future Park City school children: If you are not already aware of how school financing may impact your child and/or property taxes, you may want to gain an understanding about education finance in Park City and Utah. You may be concerned about the sustainability of the strong school program we have long enjoyed, and the possible impact on future programming and quality. Please find out how the district collects its revenue and how it spends that money.
Currently the school district is grappling with its annual budget process. On the revenue side there are limited major sources of funding, (i) local taxes, tied primarily to assessed valuation of real estate, the district’s principal source of revenue — $49.6 million in 2010; (ii) funds from the State of Utah, tied primarily to state income taxes — $2.9 million in 2010, and (iii) federal funds, a limited source of funding — $3.3 million in 2010 (2010 financial audit, p.15).
Over the past ten years, Park City has experienced an abnormal increase in real property assessed valuation, primarily from new construction. In essence, the tax base has more than doubled while our student head count has increased about 10 percent or 400 students. A wonderful set of facts. We have been able to fund education at an accelerated pace.
Many people may assume that the school board has the unlimited ability to raise taxes indefinitely. They believe that Park City is blessed with wealth, and can afford to support a strong school system. Many have voiced their willingness to have their taxes increased.
The new construction that provided higher-than-normal or expected tax receipts, (in particular under the voted leeway component), is now on hold, and assessed valuations have actually declined. The board’s unlimited taxing authority is a misconception. There is a limit to which the board can raise taxes, and this limit is perilously close to being reached, at which point additional sources of revenue will be scarce. The school district’s current expenditures and spending practices have built-in growth that the district has limited options to fund or no way to fund going forward. Not a comfortable position to be in for long-term sustainability.
Student headcount is only up 10 percent in the last decade. Do we think the number of students will stay flat for the next decade, or will we experience growth? Without the outsized increases in real estate, primarily from new construction and not inflation, how will we fund and maintain our level of education in the future?
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The district is faced with a need to rationalize and, if necessary, cut expenditures so that ongoing services are sustainable. Short-term and one-time fixes like transferring money from the capital account to the general operating account, or spending down a fund balance, will only exacerbate and make the problem worse in the long run unless some fundamental and paradigm shifts occur in how money is spent. Underscoring all of this is the fact that 87.6 percent of general-fund expenses are for compensation and benefits, or in other words "people" (2010 financial audit, p.8).
Park City School District management and the School Board need to be realistic about a sustainable budget, and should address the situation head-on this year. The hard budget decisions cannot and should not be put off to the future. Getting district expenses in line with realistic and sustainable revenue sources will only get harder as time passes. We are facing problems not unlike the federal government or many states, and it is the future constituents who will bear the burden if sustainability is not addressed today.
Parents and taxpayers: please get involved and educated on the realities of funding education. Difficult decisions and prioritization may have to be made and the more stakeholders that are involved and informed, the better. We all want to be sure our wonderful school district does not face an unsustainable future.
Kathryn Adair and Vern Christensen are former members of the Park City School Board.