The Remarkable Ignorance of Maine’s School Funding System

In 1958, The U.S. Supreme Court issued one of the most important rulings in its history. By throwing out the half-century old decision in Plessy v. Ferguson, they rejected its central premise that schools could be of the same quality, even if racially segregated—no more “separate but equal.” In Brown v. Board of Education, the court established a new measure, that each individual student deserves the same opportunity for a quality education. Since Maine schools are governed locally, state government’s role is to ensure that each is providing a quality education by assessing students annually to measure each school’s progress, and by providing funding to ensure an equal financial footing.

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The Maine Department of Education (MDOE) recently abandoned the first measure, intentionally implementing a new annual assessment and spending $10 million over two years on a test, that according to Education Commissioner Pender Makin, “would not be a valid way to assess schools.” The federal Education Department is withholding funds and labelled Maine schools “at risk” as a result. This leaves equality of spending which is achieved through a state funding formula for essential programs and services (EPS) required to offer a quality education.

Though the formula itself is incredibly complicated, it is based on a relatively simple concept. The state determines the cost of educating an average student, then it determines the ability of communities within a school district to pay that amount. When the state hands out the lump sum funding approved by the Legislature, it does so to help bring every school district’s combined state and local funding up to the same amount per student. This means sending more money to poorer communities and less to wealthier areas. Thus, providing every student an “equal” education.

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With minor exceptions, nearly all the money that municipalities have to spend in a given year on everything, including schools, comes from property taxes. None of it—not one dollar—comes from local income taxes which are prohibited by law in Maine. Because of this, the ability of a city or town to spend on education is based solely on property value. Average income has nothing to do with each community’s revenue or ability to pay.

For property rich towns, especially along the coast, this is a boon. Ultra-wealthy residents such as Martha Stewart and John Travolta pay no income tax in Maine but huge sums in local property taxes. This local revenue leaves these towns with far less need for state funding for their local schools.

Despite this relatively simple concept, bills to change the state’s school funding formula to include local median incomes end up being introduced in nearly every Legislature. At each of these intervals there is a remarkable display of ignorance of how local communities raise funds and of how local schools are funded.

This past week, the Legislature’s Committee of Education and Cultural Affairs held public hearings on several such bills and an embarrassing number of misinformed people who should know better argued in favor of changing the formula to add the irrelevant figure of median income. One would hope that those who make crucial decisions on school funding, including legislators, school officials, and local budget makers, would have taken a few minutes to make themselves aware of the nature of school funding, assuming they did not already have a strong understanding of it as required by their role. Not so, however, as a parade of people argued in earnest that the formula should be amended to include income.

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Dr. Robert Hirsch, for example, gave testimony on one of the bills as the Chair of the Owls Head budget committee. Dr. Hirsch should be careful what he wishes for. His claim that “Median income for Owls Head is about the same for the state as a whole,” is not accurate. According to the U.S. Census, Maine’s per capita income is $38,483, while that figure in Owls Head is 20% higher.

Owls Head is very well off when it comes to property value as well, but not as much in income. This is largely due to the fact that many wealthy property owners in Owls Head do not pay income tax in Maine because their valuable coastal homes are not their primary residence.

The voters and Town Council in Owl’s Head choose to tax their property value at just $13.20 per thousand dollars of value. By comparison, Rockland, the largest town in the school district, assesses nearly twice that rate at $24.27. The state average is $14.59. Thus, Owls Head’s lack of revenue to pay for their local schools is based on a choice to keep property tax rates well below the state average. To look to statewide school funding as a source of greater revenue for the town necessarily means taking these funds from other school districts.

Again, towns derive no revenue from income, so it has nothing to do with a town’s ability to pay for schools. Surely, the town’s budget committee chair is fully aware of this fact, or he is overdue for a long conversation with his superintendent.

In Dr. Hirsch’s defense, however, a conversation with a superintendent is no guarantee of accurate information. Lewis Collins is the superintendent of Schools in Jonesport and Beals, two Downeast coastal communities. Collins, a veteran superintendent of several school districts, told the committee that, “The formula, however, needs to be corrected to finally, and once and for all, acknowledge that family income is just as important as property valuation.”

Displaying a forceful and remarkable lack of understanding of school funding, Collins argued that the “ability to pay has much more to do with your income than it does with your location. Everyone knows that. It’s truly not a difficult concept to grasp and it’s high time the Legislature makes that fix to the formula.”

In the thirty years that Collins said he has been a public-school administrator one would think he would have a better grasp of funding sources.

Renee Jordan-Chandler, a School Board member in Jonesport, reinforced Collins’ argument by saying that “evaluating our community based solely on our location is discriminatory.” This is not surprising since she likely gets her understanding of the formula from Collins, her superintendent. “Balancing the high valuation of property taxes in Jonesport and Beals Island,” she added, “with the low-income of households would allow for the school system to receive the appropriate amount of funding.”

The sponsor of this bill (LD 951) is Rep. Valli Geiger (D-Rockland), who told the committee, “the addition of ‘weighting’ for student poverty through the addition of school district or municipality median income added to the school formula and either replacing or given equal weight in the formula to land valuation will ensure all students in Maine receive the resources they need.”

The basic flaw in Geiger’s argument is this: The property-wealthy communities in her region have a much larger ability to pay than those in areas where land values are low. These high value communities simply choose to assess property taxes at a level that is lower than communities with lower property values. This is a choice made locally, not at the state level. Instead of trying to force taxpayers statewide to pay more to her communities by way of state school funding, she should be asking the local town councils and voters to ante-up more for their schools.

As for media coverage, an article on the hearings in the Press Herald by reporter Lana Cohen likewise showed a lack of basic background research. It mentions “income” no less than eleven times and provided figures that compared communities based on median household incomes.

This one hearing demonstrated how dysfunctional the Legislative process often can be, wasting the time of all of those involved. Legislators, superintendents, lobbying groups, town officials, and the media all provided arguments that completely misunderstand the nature of local school funding. This lack of preparation prevented serious discussion of the issues they feel should be addressed by distracting the process toward a misinformed and false understanding.

Digging into pockets for money that simply is not there is no way to build budgets and fund programs. If property-wealthy communities are not prioritizing education in their use of property tax income, this is not an issue for the Legislature. Pretending that local communities derive funding from income when local income taxes are illegal in Maine is either dishonest or reveals an unnecessary lack of understanding of those who argue in favor of it. Trying to skew the school funding formula in a money grab to allow local budget makers to continue to avoid making difficult decisions at the expense of other communities with lower property values is selfish and bad policy.