Everyone Out of the (Tax) Pool!

And now for something completely not different:  The New Castle County Tax Pool.  Ahead of the WEIC town hall scheduled for this evening at Cab Calloway, here’s some information on the New Castle County Tax Pool, as it was brought up during the last WEIC town hall (and some errant information was given by WEIC regarding how each district contributes to the pool).

I’ve written and given presentations, blog posts, Facebook posts on public school financing for the last couple of years and I haven’t mentioned the tax pool hardly at all even though it does significantly affect the tax revenue (in a negative way) for both Red Clay and Christina.  So what is it?

Once upon a time, there was only the New Castle County Public School District, one district serving the entire county’s public school students (interesting concept..).  Then, the county was broken up into the 5 main public school districts we know today: Red Clay, Christina, Brandywine, Colonial and VoTech.  For the purposes of the tax pool in this post, VoTech is excluded.  For the 4 other districts, check this out:

At the time of the NCCSD dissolution, its current operating tax was $0.468 per $100 assessed value.  That tax rate still exists today, it is embedded in our current school taxes as part of the operating tax (also called current expense tax).  What does that mean?  Christina’s current operating tax is $1.42 / $100 AV.  That $1.42 is a sum of two tax rates: The NCC Tax Pool rate of $0.468 cents + Christina’s direct operating tax: $0.952 cents / $100 AV.   The operating tax revenue is actually collected in two portions.  For reference:

District	NCC Tax Pool Rate	District Operating Rate	Total Rate
Christina	$0.468	$0.952	$1.42
Red Clay (pre-referendum)	$0.468	$0.758	$1.226
Colonial	$0.468	$0.738	$1.206
Brandywine	$0.468	$0.818	$1.286

Rabbit hole alert!  The money collected with the tax pool rate gets put into a big pot.  DDOE uses wizardry to allocate the pool money out to the districts.  Ok, it isn’t really wizardry but the formula is all kinds of jacked up and outdated.    

If you’re feeling adventurous and would like to play along at home:  the “formula” is as follows and is performed for each of the 4 districts:

A) Total Div I Units – Special School Units = Net Div I Units
B) Net Div I Units / Total Net Div I units = Allocation Factor
C) Allocation Factor * Tax Pool Receipts = how much tax revenue is returned/lost for each district from the pool.

A couple of charts and graphs I threw together:

In this bar chart separated by School District, the red bars indicate the gross operating tax receipts collected by each district in millions $ (money collected via Operating Tax).  The green bars show the after-effects of the New Castle County Tax Pool. You can see that both Christina and Red Clay are net contributors to the pool (they pay in more than they get out).  Brandywine and Colonial are net beneficiaries (they receive more from the pool than they put in).  The purple bar shows the after effects of the payments each District makes to Charter and Choice schools, illustrating how much general operating revenue remains for running the Districts. Infer from these graphs what you will, but I feel it is beyond doubt that our public school funding mechanisms are woefully obsolete.  

In fiscal year 2015 (school year 2014-15) the four school districts made payments to charter schools totaling approximately $35,000,000.  50% of that was paid through Christina alone.

WEIC wants to have a conversation about public school funding.  We all need to be part of that conversation because the funding issue extends well beyond the City of Wilmington.

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Credit Where It’s Due

Last night 6 of Christina’s Board of Education members did something extremely unsavory yet equally necessary.  The preliminary budget for 2015-16 was approved with all proposed reductions, some of which are shown here.  In what undoubtedly be one of the most challenging years in this District’s history, the Board did make the call when they had to and for that, I thank them.

Notable reductions, as mentioned by CFO Silber last night, School resource officers utilization will take the form of 1 officer in each high school, 1 officer within the City of Wilmington to be shared by Bayard Middle and Sarah Pyle, and 1 officer to be shared by the 4 middle schools in the Newark area.

Elementary counselors will have their utilization changed as well.   Each elementary school will have a counselor, but the days and hours the counselor is present will change from full-day and full-week hours.

EPER pay: the same number and type of EPER positions will be available in the District. The amount of funding to fill them will be reduced by $629,000 leaving around $900,000 to be allocated to the schools for use in filling some of the positions. The decisions on what positions will be filled is up to the each school’s leader.

As I mentioned previously, building discretionary budgets are reduced by approximately $800,000

Management and payment of all leases for multi-function copier machines has now been taken off the schools and will be paid and managed by the District business office.  Previously each school made payments for their copiers out of their building budgets.  That will not be the case this year.  Speaking of which, if you or anyone you know works in a CSD building with a leased Canon copier/printer, tell them to send all their print jobs to and do all their copying on those machines.  The lease agreements & payments with Canon cover all expenses associated with those machines except paper.  Any other printer, the District is responsible for toner, maintenance/replacement, paper, ink, etc.  Seems silly at first but toner and printers are expensive and that adds up quickly in schools.

Anyway, the analysis and breakdowns will continue.  Right now I’m trying to find someone to start an IV drip of caffeine for me.

CSD School Discretionary Budgets Down for 2015-16

In my last post I mentioned that District enrollments are down by over 900 students and how that translates into fewer earned teaching units from the State.  Those enrollment numbers also mean a decrease in school discretionary budgets, because those funds are calculated based on actual enrollments.  Not only are buildings seeing fewer discretionary dollars because of referenda failures, but also because of fewer kids coming to District schools.  The table below shows student enrollment by school in 2014, the projected enrollment as of July 21, 2015.  Based on 7/21 numbers, each school has a preliminary allocation for this year and of that allocation, 85% is “pre-loaded” into their accounts at the beginning of the school year, before all the taxes come in during the month of October.

Some of the decrease is attributable to Charter and Choice migration too, let’s not forget that.

See for yourself what Charter funding and the referendum process do to our school budgets:

Budget Season: Raise Taxes!, No! Cut Spending, No! Raise Taxes!

Those of you following along with the State’s budget woes understand what has to happen in order for the $80+ million gap to be closed.  Pretty much the same thing that Christina went through, either you raise revenue somehow or you obliterate your spending.  So we have lawmakers scrambling to find money without overtly saying they’re going to raise your taxes (like public school districts are forced to do every 3-5 years).

The latest maneuver is to adjust the realty transfer tax.   It’s currently 3% on all home sales in the State, split evenly between the State and the County or municipality the home is located in.  The new proposal is to make that 2% to the State, 1% to the county/municipality.  Kent and Sussex counties stand to lose the most from that deal as their smaller towns rely more heavily on the 1.5% the transfer tax affords them when a home is sold.  I get that the State needs to find money, but what puzzles me is a quote from State Senator Karen Peterson, D-Stanton.  She said

counties need to take more responsibility for reassessing their properties, claiming that some hadn’t done that for decades. “If they need a kick in the seat of the pants to get moving then let’s do this.

She’s right about the last time assessments were done.  New Castle County did it in 1983, Kent and Sussex in the 70s.  But if I follow correctly, she’s insinuating that counties should rely less on the State for their revenue (via taxes/fees like the transfer tax) and reassessing their properties would address that.

The State is $83 million short right now, presumably because they are not collecting enough taxes to meet their spending needs.  There would be open revolt if the State attempted to directly raise taxes (see Markell’s gas tax, or eliminating the Senior Property Tax Credit).  County reassessments would likely result in increased property taxes in all 3 counties.  Kent and Sussex residents would get hit HARD.  Think of all that new development happening down there.

And then Representative Melanie George Smith, D-Bear:

“We’ve assumed a lot of responsibilities back from the counties without charging them for it and so given that, this is the year we finally need to make those equal,”

Again, the State is $83 million short.  Rep. George Smith is echoing Sen. Peterson.  Both want to essentially pass the State’s budget shortfall onto the Counties which will, in turn, pass them on to their residents.  In theory, the Counties would rely less on State funds and the State would reclaim some of its expenses.  The State is positioning to indirectly raise taxes by having the Counties do the dirty work for them.  They’re afraid to say these words: “We need to raise taxes.” and even more afraid to say who they really need to raise taxes on.  Strike that, not everyone is afraid to say it.  Rep. John Kowalko said it.

Keep kicking that can, Delaware.

http://delawarepublic.org/post/state-lawmakers-grab-bigger-share-realty-transfer-tax