One of the things that allows so much nonsense to be bandied about when discussing school funding is that almost no one — including legislators, judges, and DoE officials — seems to understand how SWEPT (Statewide education property taxes) and adequacy grants are related.
In what follows, I’ll use nice round numbers that approximate but do not exactly reflect, the actual amounts involved. This makes the math simpler without affecting the validity of the points being made.
Each school district collects a SWEPT tax of about $2 per $1000 of all the property in the district. This is applied towards the ‘adequacy grants’ that are based on average school attendance. The district gets about $4000 for each student attending its schools.
There are a couple of things that might happen, which are illustrated in the table below.
In District 1, the amount collected by the SWEPT tax ($300K) is less than the amount needed to fund the adequacy grants ($400K). In this case, the shortfall ($100K) is made up from the state’s Education Trust Fund. The district still has to collect $1.6M in general school taxes to complete funding of the school budget ($2M).
In District 2, the amount collected by the SWEPT tax ($500K) is more than the amount needed to fund the adequacy grants ($400K). In this case, the excess ($100K) is applied to the general school tax. In effect, the district has already collected $100K of its general school tax, and still has to collect the remaining $1.5M.
The districts have the same number of taxpayers, the same number of students, the same school budget. They differ only in the total valuation of the property in the district.
| District 1 | District 2 | |
| Taxpayers | 1000 | 1000 |
| Students | 100 | 100 |
| Budget | $2M | $2M |
| Adequacy | $400,000 | $400,000 |
| Total valuation | $150M | $250M |
| SWEPT | 2/1000*150M=300K | 2/1000*250M=500K |
| SWEPT to adequacy | $300K | $400K |
| SWEPT to general | $0 | $100K |
| From trust fund | $100K | $0 |
| To be collected | $1.6M | $1.5M |
| Total local contribution | $1.9M | $2.0M |
| Total state contribution | $100K | $0 |
| Tax rate | 12.67/1000 | 8.00/1000 |
Note that District 1, because of its relatively low property values, has about 5 percent ($100K out of $2M) of its costs picked up by the state.
Now, there are lots of ways that a district could divide up its school tax burden.
The most straightforward approach would be to make the tax uniform, i.e., to divide the amount of taxes to be collected by the number of taxpayers. For these two districts, that would work out to $2000 per taxpayer.
What taxing property with a fixed rate accomplishes is that it collects a larger share of the money from people whose property is worth more, based on the fundamental principle of Marxism: those who have more should pay more.
(It’s fun to ask people how they would feel if, at the grocery store, people with nicer homes were required to pay more for the same basket of groceries. They see right away that this makes no sense at all. Yet it’s exactly the reasoning behind property tax rates.)
But that’s what a tax rate does within a district. If Pat’s house is worth twice as much as Chris’s, Pat pays twice as much in school taxes — regardless of what their incomes are, what other assets they have, what other debts they have to pay, and so on.
What this example shows is that trying to compare tax rates across districts is meaningless. The fact that the people in District 1 are being assessed $12.70 per $1000 of the values of their homes has nothing to do with the fact that the people in District 2 are being assessed $8.00 per $1000 of the values of their homes.
It’s not like the homes are ATMs, from which the taxes can be withdrawn. Those taxes have to come from other sources.
Each of these two districts has the same number of people, paying the same amount to get the same thing for the same number of students.
The particular tax rate in a district is nothing more than a fiction, an artifact of a particular mechanism for replacing a uniform tax with one that takes more from those who presumably have more.
Regardless of whether Pat and Chris live in District 1 or District 2, Pat pays twice as much as Chris. And that is the point of the tax.
If Pat ends up paying $3000, and Chris ends up paying $1500, does it matter at all whether those amounts reflect 1.3 percent or 0.8 percent of the values of their homes? It does not. But untold mischief (e.g., the Claremont decisions, and now the Conval and Rand cases) has resulted from pretending that it does.
