Education Spending: A Major Driver of Higher Property Taxes

The Whipping Boy

The single favorite whipping boy blamed for ever-escalating property taxes is education spending. It is true it makes up the lion’s share of the overall property tax bill. Following is a brief discussion on some factor’s driving education spending. But a caution needs to be issued that controlling education spending is not the answer to alleviating the Property Tax problem.

First Causes

One of the most egregious causes of escalating education spending is the contracts school boards sign with the unions. Every three years, the union rolls out the heavy guns and blasts local school boards into submission. Even when there is a showdown, invariably, the result is better than inflation wage increases and miniscule concessions by the union. This has been the undeviating result for the past 18 years the writer has been following this.

In fact, there were times the agreements were double inflation. The argument that teachers are underpaid is a half truth. The unions have their system rigged so those at the bottom are grossly underpaid, while those at the top, those who have put in their time, are richly rewarded. What other job is there that gives one an automatic $10,000 pay increase just for being there twenty years? If those at the bottom try any shenanigans in the way of a change in leadership, they are squashed. There is no such thing as a secret ballot when electing their leaders. If you want to oppose the leadership you must stand before all to see and absorb the consequences to your career. (It appears that the union’s principle of standing up for the little guy is shelved when is comes to their governing themselves.)

Consequently Hands Are Tied

The result of these three year contracts is devastating to schools. First, since the contract is legally binding, the school board cannot force to the union to help meet expenses. They are forced to honor the contract. Their hands are tied when it comes to finding money to meet budgetary needs.

Insidious Results

Second, the result of a commitment to budget increases for just one portion of the budget, the rest of the school operation to suffer. That is, when there is a state imposed 3.5% cap on spending increases but 65% of the budget is contractually bound to 4.5% and higher increases for three years running, the remaining 35% of the budget absorbs the difference.

Here is an example: A $100,000,000 budget can be increased 3.5% to $103,500,000. If the teacher contract portion is committed to a 4.5% increase, its share of the new total goes from $65,000,000 to $67,925,000. That means the remaining operational expenses no longer can increase to $35,575,000 but only to $36,225,000. Repairs, maintenance, new books, increase utility expenses, etc. all must be covered by whatever is left over after paying the unions. That actually amounts to a 1.6% increase. Over three years, that adds up to almost $2,000,000.

The consequence of this perennial under-funding usually means repairs and maintenance go under-funded or pushed down the road until the reach crisis proportions. Then there is a bond for tens of millions which must be approved of by voters to cover these crisis needs. The bond then becomes a built-in, non-negotiable part of the budget. This, in turn, frees up expenditures on those parts of the budget and, thus, giving greater leverage to teacher unions to beat the board into another three years of above inflation, above state mandated caps salary increases.

Good Intentions Fail Every Time

In response to this, you get board members who give up in frustration or just cave in to an intractable situation. Likewise, voters wishfully believing, invariably succumbed to the siren song of these school board candidates who say when they get in they will put a stop to runaway school budgets. Little do they know they are walking into a lions den. They do not have the arsenal of experienced PR departments and contract negotiators the union does. Neither are they a match for experienced administrators used to navigating this scene.

Why Change a Good Thing

The NJEA wants the local property tax. It is the only tax that goes up by obscene amounts year after year without consequence. If budgets were held in check because legislators feared voter wrath if they raise taxes, the teacher unions would lose the upper hand they presently hold.

The current setup is ensures that the only ones held accountable for incessantly increasing school budgets are the non-salaried, expendable school board members. Voters throwing those bums out does nothing to stop the local property tax from increasing. The worst that happens is it just brings in another group of amateurs for the union to be beat into submission at contract time.

No Other Conclusion

This is why elimination of the Property Tax is crucial. If education funding were tied to the Income Tax, there is no way it would be allowed to increase by the current seven percent a year ad infinitum. Politicians would finally be confronted with reigning in education spending. No governor is going to risk re-election for increasing the Income Tax a compounded 31% in the four years of their term. But if the Property Tax is left in place, there will never be a reigning, let alone a reduction, in of its growth.

The question is whether we want a fair and just system of taxation or not?

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