Just because there’s a State Basic School Levy on your property tax bill, that doesn’t mean the money goes straight to public education. At least not after Utah lawmakers voted to change it.
In the future, under SB37, it will instead go into the state’s General Fund. The state will still give money to school districts, but changing the pot it goes into gives lawmakers more budgeting flexibility.
Education leaders don’t foresee any immediate impacts with the change, but they are worried about what might happen in the future.
In Utah, the basis of the public education funding formula is called the Weighted Pupil Unit, which is how much money school districts get based on enrollment. It’s an amount set by lawmakers each year. The state requires local districts to impose a basic property tax to raise part of the WPU that stays with the district.
Most school districts don’t collect enough on their own, so the state gives them income tax funds — which are earmarked for education and other services in the state constitution — to make up the difference. That way each district has the same amount relative to enrollment.
Under Republican Sen. Lincoln Fillmore’s bill, all of the locally collected tax revenue will go to the state’s General Fund, which is an unrestricted account — meaning the state can use it for any need like transportation or public safety. The state would still pay school districts the money they would have received, including any interest, but the bill doesn’t dictate where the money has to come from.
Fillmore told KUER that could depend on the year.
“Regardless of what account the funding comes from, I think red dollars spend just as well as green dollars,” he said.
That means state lawmakers could pay schools back with income tax funds, an account that lawmakers can only use for education and certain social services.
For Granite School District Business Administrator Todd Hauber and other school leaders across the state who opposed the bill, that’s a concern. Hauber called it “washing” money. He said the bill is taking one source of money and running it through an exchange mechanism so that it’s turned into a different kind of dollar, in this case, an unrestricted dollar.
Hauber said there won’t be any impacts for the upcoming fiscal year from the bill. Schools will still get the same amount of money around the same time. He’s more worried about the future.
One scenario that Hauber described is if the state pays schools back out of the income tax fund. It’s not a small amount, this year it’s $842 million. The Legislature would have to shift things around to make room for that new expense. Lawmakers could take some income tax dollars away from higher education and replace them with general fund dollars so that higher education is getting the same amount but a higher percentage of it is coming from the unrestricted account.
When the income tax grows, instead of giving more money to public education, Hauber said lawmakers could give that new money to higher education to replace some of the general fund money.
“So into the future, as income tax grows, they can wash it through higher ed and create a general fund dollar that can be used for general fund purposes.”
Hauber doesn’t think lawmakers have been transparent about what their long-term goals are with this change.
“This feels like an end run around Constitutional Amendment A,” Hauber said, which was challenged in court last election and voided from the ballot.
Amendment A sought to remove the constitutional earmark that says the state’s income tax revenue can only be used for public education, higher education and services for children and people with disabilities. Income tax is the only bucket of money that is mandated to be spent a certain way because of the constitution and lawmakers said they needed more flexibility with state money.
“You have to use this more complicated mechanism to get that flexibility because Amendment A didn't pass,” Hauber said. “And this doesn't require a vote of the people.”
Fillmore said the funding flexibility his bill provides “is a nice side effect so that we can make sure that we're that the state is able to meet the vast array of needs.”
Fillmore said he ran the bill to make calculations easier for the state and to set up a framework that could help distribute funds more equally to schools since some districts have higher property values than others. However, increasing funding equality is not addressed in this bill. Fillmore said it could be worked on in the future but hasn’t explained what that could look like.
The bill passed the Senate 19-8 and the House 41-27. In addition to school business administrators, this bill was opposed by the Utah School Boards Association, the Utah School Superintendents Association and the Utah Education Association.
The bill will be sent to Gov. Spencer Cox for his signature.
