HB1 and its impact on local control of schools:

The law enacted on August 25, 2006 in Idaho's special legislative session has generated an amazing amount of debate, and this debate is sure to continue as the political season crests in early November. One topic of this debate is the notion that HB1 will somehow reduce local control in the public schools, by virtue of eliminating the 0.3% M&O levy, and replacing those funds from the General Fund, which in turn will receive the additional revenue associated with a penny increase in the sales tax.

In order for this action to reduce local control, it stands to reason that there needed to be some type of local control associated with the now replaced 0.3% M&O levy. On the face of it, the school districts are technically allowed to levy up to 0.3%, giving the appearance that this is "local control." But the reality is far different. To understand why this is so, a brief foray into the school M&O funding formula is necessary.

In Idaho, school M&O funding is based on a combination of monies from the state general fund (about 80% of total school M&O dollars) and the property tax M&O levy (about 20% of total school M&O dollars). By statute, the state is not allowed to levy property taxes, but for all practical purposes the M&O levy is a state property tax levy. Here's why: The total funds from the general fund and the property tax levy are added together in a single "bucket" that is then divided equally among the school districts based on the number of classrooms (technically, "support units") in each school district. The value of a support unit in the 2007 budget year is $80,313. This practice of combining the general fund monies and the property tax monies BEFORE dividing it up among the school districts is known as equalization, and it serves the purpose of removing the disparities that exist across school districts in terms of their property tax capacity. As an example of those disparities, just compare the Boise school district and the Meridian school district. Boise has taxable value of $535,935 per student while Meridian has $318,396 per student. Without equalization, Boise would receive two-thirds more property taxes per student than Meridian receives at the same levy rate.

Here's the crucial part; the reason that the just replaced property tax M&O levy did not constitute any meaningful local control. Any taxing district was free to levy LESS than the full 0.3%. But, if they did so, they would still be treated as though they levied the full 0.3%. In other words, the 0.3% maximum M&O levy was a use it or lose it proposition. For all practical purposes, the now obsolete school M&O levy was a state property tax levy.

As a final observation, all the preceding information deals with the revenue side of school M&O budgets. HB1 does not change anything associated with the spending side, and that’s an area where meaningful local control has existed and will continue to exist after the enactment of HB1. School boards and administrators will see no change (from HB1) in their ability to make decisions concerning curriculum, textbooks, or any other spending-side issue.

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