The problem of school funding
by Matt Brown

(Plain Press, December 2004) We have all heard the debates and harsh words that have been spoken over the issue of school funding. This is not a new problem, but since the recent failure of Issue 112 it is one that we have heard a lot more about in the past 3 weeks. At the Cleveland Municipal School District (CMSD) Board of Education meeting on Tuesday, November 16, CEO Barbara Byrd-Bennett blamed the people of Cleveland for the school district’s situation. While Cleveland taxpayers did reject Issue 112, they are not to blame for the funding that has been missing from the school district for years. The State of Ohio is partially to blame for these problems. Four times the Ohio State Supreme Court has ruled that the way in which Ohio funds public schools to be unconstitutional and yet there have been no changes. With this being the case, there is no reason that the people in Cleveland should be blamed for the current situation, as Barbara Byrd-Bennett did on Tuesday evening.

 

COMMENTARY

Blame can also be laid on the City of Cleveland’s tax abatement and reduction policies. There are millions of tax dollars being lost every year because of abatements and reductions that would have gone to the school district. Barbara Byrd-Bennett, the school CEO that so strongly pushed for Issue 112, lives in a tax abated house. How can one who does not have to face the monetary repercussions of a tax increase push for a tax hike with a clear conscious? Yes, Barbara Byrd-Bennett cares about the children, but she is still not one of the many living on fixed and low incomes that would have had to pay if the levy had passed.

I will concede that it would not be beneficial for the City of Cleveland to lift all tax abatement from housing and tax reductions from businesses. The tax abatements give a very good incentive for investors to move into previously undeveloped land and start building. These areas where tax abated houses are being built are not areas that were deriving much tax revenue for the city, so why not develop the areas and help raise property values in the surrounding areas.

The tax reductions that the city gives to businesses are also not completely without good reason. Again, the reductions give incentives for businesses to move into Cleveland, which in turns brings jobs. The main problem is that these tax reductions are usually a lifetime deal. It is not necessary for a business to be given that much because it is very unlikely that the business is giving that much benefit directly to the city in return. It should be a simple policy that tax reductions should only be given as long as the benefit accruing to the city through the presence of the business is greater than, or equal to, the cost of lost tax revenue to the city.

A Plain Dealer article on June 13, 2004 detailed how many downtown businesses have asked the county to reduce their property tax. One property that caught my attention was the Ameritrust Tower on East 9 th Street. The current taxable value of that property is $6 million and the owners want the taxable value dropped down to $1.4 million, which is approximately a 75% decrease in property value. The reason cited by the owners, the Jacobs Group, for their request is that there are no tenants in the building. With no tenants, the property is obviously not worth as much as it would be with tenants. The problem with reducing the taxable value is that the city would loose $395,735 in tax revenue. This means that from this one building the school district would loose approximately $193,910 (The school district receives approximately 49% of property taxes in Cleveland.). When looking at the total requests of businesses for property tax reductions in Cleveland, the city would lose approximately $10 million, of which about $5 million would have gone to the schools.

The city must re-evaluate the benefits and costs of tax reductions to businesses. If not given the tax reductions, some of the businesses may leave the city. The question is then, would enough businesses leave (the cost) to outweigh the money that would go to the school system if taxes were not reduced (the benefit)?

I do not believe that enough businesses would leave to offset the benefits to the schools generated from the remaining businesses. The children of Cleveland deserve the same schooling as their wealthier counterparts in the suburbs receive.

This can be accomplished if the City of Cleveland wants it to happen. There needs to be a re-evaluation of the costs and benefits of tax reductions. If the governor will not stand up for the children of Ohio at least the City of Cleveland should. Without an educated public our system of government and our economy will not hold out indefinitely.

Matt Brown wrote this article special for the Plain Press as part of his coursework in City as a Classroom at CaseWestern ReserveUniversity. The course, taught by Professor Rhonda Williams, focused on public education this semester.

 

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