Empty classroom
James V. Shuls

As a professor who teaches courses on school finance, I regularly hear students say that inequalities in school spending come about because of our overreliance on local property taxes. This is a common perception and is mostly true. School districts do have different tax bases. As a result, they generate different amounts of money, even if they have the same tax rate. At the same time, however, districts don’t have the same tax rates. Some tax themselves more, and others tax themselves less.

Take the results from the April 5 votes, for example. Eleven school districts proposed operating levy property tax increases—six passed, and five failed. Below I highlight the 2015 tax rate ceiling for operating funds in these school districts. The chart indicates that the districts that passed increases already had higher tax rates than the districts where a proposal was rejected.

Each of the districts is listed below. They are organized from highest to lowest based on the tax rate ceiling for operating expenses after the vote. As you can see, the six that passed also have the highest tax rates. They also tend to spend more money per pupil.

We see the same thing at the state level. Take the 50 highest-spending districts, for instance. They spend, on average, $15,537 per pupil (not weighted by the number of students). The 50 lowest-spending districts spend about half of that. The casual observer might look at this and conclude that the difference in spending was caused by property taxes. They would be partly right. The highest-spending districts tend to have more local property wealth, but they also tend to tax themselves more. The average tax rates in our highest-spending districts is $1.553 more than it is in our lowest spending districts. In other words, some of the inequalities are self-inflicted.

The state guarantees every school district a certain level of funding.  This funding formula helps close the gaps between property-rich and property-poor school districts, but gaps persist partly because wealthy school districts tend to be comfortable with taxing themselves more.  Indeed, the state assumes each district’s local effort will be $3.43 per $100 of assessed valuation. In 2015, 205 school districts taxed themselves at a rate lower than this assumed rate. In fact, 101 districts taxed themselves less than $3.00 per $100 of assessed valuation.

Here is the question we must consider: Are we comfortable allowing school districts to tax themselves more to pay for schools? If we are, then we are comfortable with some level of inequality. If you are not comfortable with giving districts this freedom, then what you are really saying is that you want to hold down spending in school districts, especially wealthy ones.

*An earlier version of this post incorrectly indicated that Laclede Co. R-I had failed to pass the proposed increase. 

About the Author

James Shuls
James Shuls
Distinguished Fellow of Education Policy

James V. Shuls is an assistant professor of educational leadership and policy studies at the University of Missouri–St. Louis and Distinguished Fellow in Education Policy at the Show-Me Institute.