Property Tax Funding for Public Schools - Research Paper Example

? “Property Tax Funding For Public Schools” Funding of the public schools in United s of America mainly comes from the “Federal, and the Local Sources”. For the reason that almost half of such funds are generated by the property tax collected locally, there is a huge disparity between the well-to-do and the impecunious communities. This paper addresses this financial discrimination. It describes that the major variation in the “Public School Funding” comes into view between the states and inside a few of, but not every state. Even though most of the Americans are not conscious of it, the other highly developed and industrial nations do not finance their public schools with the “Local Property Taxes”. Instead of doing that, they make equal per-student funding available from their “General Tax Revenues” for all schools statewide. Most of the Americans declare that they are the supporters of the “Equal Funding” for the public schools, but the wealthy and the influential citizens often resist the attempts to remove the funding discriminations. This disagreement may be a sign of unawareness about the funding disparities, thoughtless approval of the conventional & long established methods for funding of education, and egotistical yearning to maintain the “Personal Taxes” at a low rate. The “Legal and Political” attempts to modify and remove the inequalities have been feeble at the “Federal Level”. But significant commotion has started to take place in the state courts and governing bodies. This paper ends with suggestions and policy propositions for struggling “Political and Cultural” conflict to reform. Introduction: Property taxation and school funding are inter-linked with each other in United States. It has been known that almost half of the property tax revenue is used for funding public, elementary and secondary schools. It has become a hot topic to debate, across the United States as to which extent the public schools should be supported by the funds collected from property taxes. School funding is a controversial topic and it has become a matter to be resolved for almost every state.  It has been estimated that independent school districts receive 96% of their tax revenues from property taxes. This makes it clear that public school funding rely more on property taxation as compare to grants collected from local government (Fisher, 2007). Whereas on the other hand, almost half of the total property tax revenue collected are also in financing public elementary and secondary schools in the United States. According to the statistics of 2004-2005, United States spent total of $488.5 billion on public elementary and secondary education, with nearly 47 percent of the funds received from state sources, 44 percent funds obtained by local sources with just 9 percent of the contributions derived from federal sources. However, it is a known fact that local funds are mainly received from taxes, primarily the property tax. Since 1952, local governments’ dependence on property taxes has dropped, whether measured as a percentage of local tax revenue, own source general revenue, or total general revenue. There have been quite many strong views on both property taxation and school finance. The strongest statements typically in general disapprove of local property taxes or their use for funding education. A latest assessment of policies in the New England states, a region that rely more greatly on property taxes than the rest of the country, faces strong criticism for this dependence, as stated by Pierce and Johnson (2006) that high property taxes along with the weight and perverse incentives they generate, the frenzy they create, the overall town to town school funding inequities they grow typically symbolizes a never-ending series of nightmares for New England. Thus as recommended by the authors, its has been noticed that New England states need to restructure their tax systems by lowering their dependency on property taxes and bridging the revenue gap by improving their income and sales taxes. The same point was also indicated by Carr and Griffith (2005) that the final and ultimate goal for most states should be to reduce their reliance on local property tax while increasing state funding with state governments to provide at least 60 percent of the financial support to public schools. However, in 2004–2005 only 12 states met or exceeded this limit. There has been a strong but controversial link between property taxation and school funding which vary from state to state in the United States. One such link needs to focus on education requirements and includes the preference for local autonomy and local participation. There can be a number of definitions on fairness in reforming a school funding system. Wealth neutrality and access equality are the two main definitions that are directly related to the property tax which are also directly linked with the educational competency depending on the needs of the school children. In the process of restructuring and reforming the whole process, states can reduce their dependency on property taxation for financing schools by raising state aid, which is sometimes financed through income or sales taxes. However another option available for states is that they can reduce their reliance on local property taxes as well as it can be replaced by levying a state-wide property tax at a fixed rate. Moreover from a political point of view, pressure to provide sufficient funds to schools and pressure to provide property tax relief is sometimes mixed-up. State school aid is sometimes mentioned as one source of funding for relief from local property tax. Taxpayers who want deductions in their property tax liabilities sometimes pressure state government for specific school funding restructuring measures. The issue that arises here is what can be the best suited revenue basis that can sustain the autonomous local government bodies which includes the school districts as well. The income tax, sales tax and property tax are the well known bases for taxation. Amongst these the property tax is usually considered to be the best source (Fischel, 1996). The Local governments have to face problems when they seek to tax a “mobile tax base”. “Property tax base” is less mobile than “sales tax & income tax”. Another reason for depending on the local “property taxation” is the idea of the “home-voters” these are the voters whose ownership of homes provides them motivation for careful evaluation of the “local school spending” & it helps those who improve the quality of a school at levelheaded cost in taxes. Another important bond among the school funding and the property tax is the difference in the property assets per pupil and the likelihood that these differences could result in the discrimination for children. Example of this discrimination is that the children who live in the districts with greater assets in form of the property will have access to better education as compared to the students living in the districts where property wealth is poor ((Imazeki & Reschovsky, 2004). This disparity in education has resulted in high drop-outs and lower graduates. AN OVERVIEW OF PUBLIC SCHOOLS AND COLLEGES IN THE UNITED STATES: To recognize the problems faced by the education system in America, it is required to look at the way public schools are funded. The unequal funding for public schools and between states and within metropolitan areas has resulted in turning some public schools into an educational heaven for wealthy students and leaving the others into decaying infrastructures with overcrowded classrooms and high drop-out rates. It has been estimated that expenditures for public and private education from pre-primary level to graduate school were about $508 billion for the year 1994-95. The expenses for elementary and secondary schools were calculated about $308 billion for 1994-95 whereas on the other hand, higher education institutions spent approximately $201 billion. In America expenditures on schooling vary from state to state. Some of the difference can be explained by evaluating the costs of educational input costs like real estate and teacher salaries etc. However there is still a huge gap between state expenditures. Calculating for cost of living and price differences, New Jersey spent double as much as Utah spends on per student. The same occurs within a state spending between districts also varies. However a huge variation has been noted that in an average state one student in eight would live in a district that spends $3,800 or less while on the other hand one student in eight lives in a district that pays $5,400 or more. School funding comes from different federal, state, and metropolitan financing sources. According to estimation about 46 percent of public spending on elementary and secondary schools is obtained from local government budgets and other sources. The volume of the local tax base is one basis for the large gap in spending. The U.S. public school system has been facing a lot of problems which are not easily resolved. As reported by former Secretary of State Colin Powell that nearly half of all public high school students in the fifty largest cities in the US have failed to graduate with the highest drop-out rates ever recorded. The report further stated that only 52 percent of public high school students in these major cities graduate after four years while according to estimations, the national average is 70 percent on the record. While some 1.2 million public high school students drop out every year in United States < http://www.pbs.org/newshour/backgrounders/school_funding.html> In past days public schools were considered as agents for uniting the nation by teaching children and preparing them for a better future. Over the years now, in America various public schools have been in question due to cultural inequalities and with the decrease in practical value of the high school diploma the problem has grown more severe. It is known to all that all the public schools in the United States are commonly funded by the local, state, metropolitan and federal government. The local government is responsible for financing the public schools in their operations. Local governments are most commonly supported by the property tax of the residents living in the district of the school. It is also important to know that salaries of the teachers, course books and transportation are some of the expenses to count that are involved in running and maintaining a school. This clearly indicates that children that live in well-off neighborhoods will obtain more funding or benefits as compared to the children living in poorer neighborhoods. This has given rise to various inequalities in different states and districts thus resulting in a gap between the rich schools and poor ones HOW FEDERAL GRANTS HELP THE NEEDY AND LOW-INCOME STUDENTS TO ACHIEVE THEIR EDUCATIONAL NEEDS: It has been estimated that the average tuition cost per academic year for a degree program is at lowest starts from $20,000 which is hard to afford for an average student. Here we cannot ignore the role of grants offered by federal and state government which allow these needy students to acquire their education. These grants are in the form of loans and scholarships whereas in terms of loans they are not required to be repaid by the student. However, in case of scholarships they are strictly merit based and is offered to the brighter students only. The federal government grants are more focused on college students whereas the” NO Child Behind” Act has played a vital role in defining the efforts done by the federal government for the promotion of education among the needy community of students. Such measures taken by the government has also left its deep impact on primary and secondary schools without any discrimination and providing the best to students to complete their diplomas and certificate courses. This has guided the students in the right direction and also helped them to define their career path. Federal grant programs have helped various students to achieve their educational goals. PELL Grants have played an important role in assisting these needy students. It has helped in funding millions of scholarships for low income students. PELL GRANT was established in 1972 and since its formulation it has remained one of the most valuable sources for providing financial liberty to the low income students in keeping the smooth flow of their studies and meeting their various educational needs. State governments also provide various grants to their students which mainly depend on merit and need or nature of their studies.  For example in Oklahoma, it has a section of grants on need-based approach and specific grants for students pursuing their specialized studies, whereas in Michigan, the state offers grant programs which provide aid to different children depending on the criteria for the grants such as low income, out-standing and undergraduates students. Similarly student financial assistance departments in other states also offer a wide range of different grants to the needy and low-income students to assist with their educational needs < http://mycurrentarticles.com/1110/how-these-college-grants-help-the-poor-students-in-achieving-their-educational-goals/> AN ANALYSIS OF THE PELL GRANTS: Pell Grants provide educational assistance to low-income college students and is turning out to be welfare for the students in the 21st century. This allows the students to receive grants for nine years before acquiring their degree. Pell Grants are an attempt to facilitate low-income students to meet their educational needs, tuition fees and other academic funds. Pell Grant is a successful welfare program initiated by the government but this program is facing many challenges in trying to meet the huge demands and needs of the needy students and government is failing in its endeavor to grant aid to all the students at the same time. It has been expected that Pell Grants would rise to $ 43 billion in the coming few years . Conclusion: Property Taxes and school funding are closely linked to each other in the United States. Research indicates that half of the Property Tax revenue is utilized to find public and elementary schools. It has been a controversial topic in many US states because of its utilization of taxpayer’s money. But due to high taxation rates and inequitable distribution of tax revenue for education its has been recommend by the authors that a revision in the current policy is due and that the dependency on the property taxes should be lowered and also improving their income and sales taxes for diminishing the revenue gap. But that is a kind of balancing act for the governments because, apart from being under pressure to revise the current funding policy, there will be even more pressure to keep the school funding as high as possible so that the pupils get to have the best education. Research indicates that the average tuition costs per academic year for a degree program at its lowest starts from $20,000, which an average student cannot afford. But then we find how the Federal grants help the needy and low-income students to achieve their educational needs. Some grants come in the form of loans and scholarships but they are strictly merit based. However, acts like the “No Child Left Behind” Acts have played a vital role in defining the efforts done by the federal government for the promotion of education among the needy community of students. Also, in order to decrease the financial woes of needy and well-deserved students, federal grants like the PELL Grant help them to relinquish their financial difficulties so that they can pursue their education without any major headache. State government also provides grants but they mainly depend on merit and need or nature of the student’s education. But the focus is to ease the burden on students who come from a low-income background. LIST OF REFERENCES: Fisher, Ronald C. (2007) “State and local public finance”, 3rd ed. Mason, OH: Thomson/South-Western College Publishing. Carr Jennifer and Cara Griffith. (2005) “School finance litigation and property tax reform—part II” Reform. State Tax Notes, 167–172. Fischel, William. A. (1996) “How Serrano caused Proposition” 13. 12 Journals of Law and Politics 607–645. Peirce, Neal, and Curtis Johnson. (2006). ‘Are New England communities too small to be governed efficiently?” The Sunday Telegraph, January 1: E–4. Imazeki, Jennifer, and Andrew Reschovsky. (2004) “School finance reform in Texas: A never-ending story”. In helping children left behind: State aid and the pursuit of educational equity, ed. John Yinger. Cambridge, MA: MIT Press “School Funding”- < http://www.pbs.org/newshour/backgrounders/school_funding.html> viewed 8 May, 2011 “How These College Grants Help The Poor Students In Achieving Their Educational Goals”- < http://mycurrentarticles.com/1110/how-these-college-grants-help-the-poor-students-in-achieving-their-educational-goals/> viewed 8 May, 2011 “Rehberg: Pell Is 21st Century Welfare”- viewed 8 May, 2011 “Increasing Funding to Improve America's Public Schools”- viewed 8 May 2011 Read More