SOUDERTON >> Proposed state legislation to do away with school property taxes has “laudable objectives,” including helping senior citizens and others on a fixed income, according to Wissahickon School District Superintendent James Crisfield.
“But it’s mixed in with a really nefarious, unstated subtext, which is a desire on the part of some to reduce spending on education. Both aspects need to be recognized and addressed separately in the open,” Crisfield said at a Monday, Feb. 6, press conference at Souderton Area School District’s E.M. Crouthamel Elementary School featuring officials from area school districts.
The proposal to eliminate property taxes was the portion to be addressed in this presentation, he said. Other topics raised were concerns about increasing costs to the districts for pensions and charter schools.
A proposal to replace school property taxes with an increase to state income tax and sales tax rates and adding to the items on which the sales tax is paid was narrowly defeated in the Pennsylvania Senate last year but is believed to have enough votes to pass this year.
“It would be a huge tax shift. It would be a bonanza for businesses who would no longer pay property taxes,” said Lawrence Feinberg, a board member in Delaware County’s School District of Haverford Township and a member of The Campaign for Fair Education.
In Wissahickon, the 10 largest property tax payments, totaling about $6 million per year, come from businesses, Crisfield said.
“The legislation would shift taxes away from commercial entities and onto individuals,” he said.
It would result in a regressive tax, he said.
“We’re moving away from the concept of a tax structure that emphasizes ability to pay,” Crisfield said.
Although the proposal calls for a dollar-for-dollar replacement of the amount that was previously received from property taxes, that would be virtually impossible to do and the amount of income received from the increased sales and income taxes would not be as predictable, he said.
The proposal would also mean a change to what has been a basic belief about public education, he said.
“The local community decides what it wants in local schools, not a monolithic state bureaucracy,” Crisfield said. “At Wissahickon, like other Montgomery County school districts represented here today, it is a local community value to have great schools, not good enough schools.”
Changes could be made to the property tax system to improve it, such as freezing the tax rate or giving exemptions to senior citizens or others on a fixed income or providing additional sources of funding, such as was previously done with legalized gambling revenue, he said.
“Unfortunately, and despite what anybody in 2017 may suggest, there’s no such thing as a free lunch,” Crisfield said. “Money for great public schools has to come from somewhere, so the property tax debate is about where, not how much. On the how much front, that’s for local communities to decide.”
“There has to be a better way”
The proposal to eliminate school property taxes doesn’t come from the legislators who support it, state Sen. David Argall, R-29 (Schuylkill/Berks counties), the primary sponsor, said.
“We didn’t write this. This was written by 80 different taxpayer groups who essentially came to the House, came to the Senate, and said please introduce this on our behalf,” Argall said in a video posted on his website in January.
“They understand the property tax system makes no sense. There has to be a better way to fund the public schools than how big is your house, how many acres do you live on,” he said.
“Voters normally don’t like the idea of more income taxes, more sales taxes, but if it means putting a stake through the heart of the school district property tax forever so it could never come back, poll after poll after poll has indicated to me that’s a switch that just about everybody would like to see,” Argall said.
“My goal isn’t to hurt public education,” he said. “We’re trying to save it, but we need to find a better way to fund the schools and I believe this is it.”
The school property tax must be entirely eliminated, he said.
“If you only eliminate it partly, it comes back, and people just don’t want that,” he said.
Pennsylvania now pays about 36 percent of public school costs statewide for grades kindergarten through 12th grade, putting it in 45th place nationwide, Feinberg said. Even when federal and state funding is taken into account, he said, school districts still have to come up with about 55 percent of the funding.
“I’m fortunate to live and serve in a well-funded suburban school district. Unfortunately, that’s not the case for all of our districts statewide,” Feinberg said. “If you look around the state, there’s a great many districts with poverty levels of 50 percent or more.”
Following the press conference, Louis Polaneczky, a certified public accountant and vice president of the Hatboro-Horsham School Board, said many people will end up paying more if the tax shift is made.
“Twenty of 22 of our districts in Montgomery County will have a net outflow of taxes,” Polanecsky said.
“We’re gonna pay more and we’re gonna get just the same as we do now,” he said. “I think this is a bad, bad proposal.”
Souderton Area School District Superintendent Frank Gallagher said property taxes fund 64 percent of the district’s almost $120 million 2016-17 budget. State funding accounts for 23 percent of the budget, he said.
During the press conference, Gallagher said reforms are needed for state laws regarding charter schools.
The Souderton Area district pays $2.5 million per year for students attending the brick and mortar Souderton Charter School Collaborative, he said.
“This amounts to millions of dollars coming out of our operating budget,” Gallagher said.
“I’m not suggesting they close. They do good work. They get good results,” Gallagher said.
If the charter school were to close, though, the district would probably only have to hire two more teachers at a cost of about $200,000 per year, compared to the $2.5 million per year now being paid, he said.
Along with reforming the way charter schools are funded, there should be changes to increase the amount of oversight, he said.
“I always say I’m not just here to complain. I really would love to work with our legislature to offer solutions on how to fairly fund traditional public schools in Pennsylvania,” Gallagher said.
Concerns about cyber charter schools were also raised.
“This year, we’re spending, statewide, $450 million on cyber tuition even though many of our districts have their own in-house cyber or blended programs that operate at much less of a cost to taxpayers and appear to provide a much better education,” Feinberg said.
Spring-Ford Area School Board President Joseph Ciresi said that district pays $1.3 million per year to cyber charter schools.
“In Montgomery County, $16.5 million goes to cyber charter. We’re handing a check for $16.5 million to organizations that we have no oversight on, that are not held accountable,” he said.
“This isn’t a brick-and-mortar school,” Ciresi said. “Our educators are being graded on a daily basis on how well they perform in our schools, yet in a cyber charter program, we don’t do that.”
There are cases, such as for shut-in students or ones in more rural areas, in which the cyber programs can be beneficial, but the Spring-Ford Area district has found that many of the students switching to a cyber school return to the district school the following year, he said.
Pension costs, which Feinberg said have “skyrocketed” to more than a billion dollars statewide, were another issue raised.
Pension reform proposals that have been raised thus far do not have an immediate impact to cut the costs, he said.
Yearly pension costs for the Upper Moreland Township School District have increased from $1.3 million a decade ago to $6.9 million of the district’s $63 million budget and are continuing to rise, Matthew Malinowski, the district’s business manager, said.
The increased pension costs are equal to the cost of the district hiring 129 more employees, he said.
“It’s clear pension reform must take place,” Malinowski said.
Attendees at the press conference also included representatives of the Cheltenham, Colonial, Upper Perkiomen, Upper Merion Area, Pottsgrove and Springfield Township school districts and Montgomery County Intermediate Unit 23.
“Between what’s happening at the federal level and the outlook for the next couple years at the state level, it could be a rough ride,” Feinberg said. “We need to dig our heels in, stand up a little straighter and fight harder to defend public education.”