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Double Taxation – the fallacy of pension legacy costs.
I am writing to alert you to a potential property tax increase coming from the Georgia General Assembly. House Bill 711, sponsored by Rep. Mary Margaret Oliver (D-Druid Hills), seeks to add a special tax district to cities formed after 2005. Rep. Oliver believes that newly formed cities owe, what she refers to as, “pension legacy costs”. The notion that these legacy costs exist is false and here’s why.
- Newly formed cities continue to pay fully into the General Fund and the Fire Fund. Embedded in these funds are the costs for benefits, including pensions for the employees providing these services.
- Newly formed cities continue to pay fully into the self-sustaining funds of Sanitation and Watershed. Embedded in these funds are the costs for benefits, including pensions for the employees providing these services.
- DeKalb County lowered the millage rate for the Police Fund (a fund newly formed cities do not pay into) in the 2015 budget.
- DeKalb County did not reform the pension benefit system until December 2015 – 7 years after the formation of Dunwoody.
- DeKalb County used unrealistic actuarial assumptions that negatively impacted funding.
If DeKalb County believed there was a crisis in the pension plan, chiefly driven by the new cities no longer paying into the police fund, why would the county lower the police fund millage rate in 2015? If the county believed that the crisis was caused by newly formed cities, why did pension reform not occur until just a few months ago in December of 2015?
House Bill 711 is only directed at newly formed cities. It is punitive, based on false assumptions, and is not congruent with the facts. Make no mistake about it, it is a discriminatory tax aimed at Brookhaven and Dunwoody. It is a bailout that would allow DeKalb County to continue poor fiscal management. It creates a liability for new residents and business for a service they never received. Imagine an entirely new property tax layered onto the commercial engine of the region – the Perimeter market – and the affect that would have on business, growth, and sales tax revenue to the county, schools, and state. House Bill 711 is wrong and would have dire economic consequences for the region and state if passed.
House Bill 711 is currently in the House Governmental Affairs Committee. Here is a list of emails for the members of that committee and the committee staff.
firstname.lastname@example.org (Policy Analyst)
email@example.com (Admin. Assistant)
Understanding DeKalb’s Millage rate system
First, DeKalb County’s millage rate isn’t one millage rate that funds all aspects of the county. DeKalb’s total millage rate is actually the sum of various component millage rates. I often refer to these individual rates as “buckets”. Here’s a list of some of the “buckets” for which you may pay a millage rate:
- General Fund – This funds services that are provided county-wide like the court system, sheriff, libraries, etc.. It is the largest fund and every resident in DeKalb, including all cities, pays the rate for this fund.
- Fire Fund – This funds the Fire Department that is used by the unincorporated parts of the county, as well as most of the cities, included Dunwoody, Brookhaven, Chamblee, Doraville, etc.
- Police Fund – This funds the DeKalb Police Department for unincorporated DeKalb and any city that elects to use this service.
- Roads and Drainage – This funds roads and drainage services to the county and any city that elects to use this county service.
- Parks and Recreation – This funds parks and recreation services to the county and any city that elects to use this county service.
- There are also debt service rates that are apportioned county-wide and otherwise pursuant to their issuance.
- House Bill 711 proposes to add a new “bucket” that would be filled only by cities formed after 2005.
Sanitation and watershed services are self-sustaining and charge a fee-for-service for unincorporated county residents as well as residents of cities. Newly formed cities have all continued using DeKalb as their sanitation service provider. Water is only provided by the county so all cities use, and pay, for this service.
Planning and Sustainability is a self-sustaining, fee-for-service fund that provides the plan review services to residents and builders who need permits. This area also handles business licensing services. Dunwoody and Brookhaven now provide this service as a city.
Since the incorporation of Dunwoody and Brookhaven, residents of these cities have continued to pay fully into the General Fund, the Fire Fund, the appropriate debt service, and they continue to pay into the self-sustaining funds of sanitation and watershed. So, the only services that these cities no longer receive, or pay for, from the county that are funded by property tax millage rates are: (1) Police, (2) Roads and drainage, and (3) Parks and Recreation.
Last week the Georgia Charter Schools Association (GCSA) sent an open letter to DeKalb Superintendent Green and the DeKalb Board of Education. In the letter, GCSA expressed their concern about the signals the DeKalb County School District (DCSD) was sending regarding charter schools, DCSD’s new charter school policy, and DCSD’s posture towards the State Department of Education’s (GADOE) requested policy revisions. GCSA requested that the DeKalb Board of Education revisit their Charter School Policy and align the DCSD policy with state statute, State BOE rules, and GADOE guidelines.
To read the letter from the Georgia Charter Schools Association in its entirety click here: OpenLetterFromGCSA
Last week, I attended the DCSD community engagement session regarding their petition to become a “charter district”. I was disappointed by this meeting and the presentation made regarding the charter district petition. At one point, a school district official defended their hesitancy towards autonomy for charter schools by saying that, “Well, you don’t just hand over the keys to the car to your 16-year old.” That’s right – that’s what they think of us. Given the track record of DeKalb bureaucrats, ponder that analogy for a while.
DeKalb’s idea of being a “charter school district” is not congruent with chartering philosophy. The concept of chartering is that pursuant to a contract, the school will be held accountable for their performance. If the school fails to perform, those involved in that school get removed. This philosophy is much better than allowing failing schools to exist in perpetuity, as is currently the policy of traditionally managed schools. We already have ample evidence on how DeKalb’s bureaucracy performs. DeKalb has languished at the bottom in almost every performance index while taxing at one of the highest millage rates in the state. The same bureaucrats that got us to this place cannot get us out.
DeKalb simply doesn’t want to give up control. There is too much at stake for those at high levels within the bureaucracy. If DeKalb relinquishes control then the jobs program and doling out contracts to their friends would end. The county’s rationale for pursuing a charter school district is to continue to obtain the waivers (class size, spending, etc.) that allow them to continue to bloat the central office while packing kids and teachers into crowded classrooms. I hope our new Superintendent sees through the well entrenched bureaucrats. I hope the GADOE sees through the charade that is this charter school petition.
Last week, in advance of the school board voting on a new charter school policy, the Georgia Department of Education (DOE) sent DeKalb a letter outlining necessary revisions. This 8-page letter was withheld from board members (they did ask to see this), who were then asked to vote on the policy. To my knowledge, board members have still not received this letter. I wrote to the Georgia DOE and requested a copy of the letter and they quickly responded. Here is that letter:
Additionally, here is the email exchange between the DeKalb school district and the Georgia DOE: Email exchange between DCSD and State DOE regarding charter policy
Of particular importance, on Friday, September 11th, at 7:31pm, the Georgia DOE indicated that:
“Your response will be a good indicator of DCSS’s commitment to being a good charter partner. The State Superintendent and SBOE are as hopeful as we are that our renewed partnership will continue in a healthy fashion.”
On Monday, the DeKalb Board of Education passed the charter policy without ever being provided the Georgia DOE’s letter containing requested revisions and guidance on on its charter policy. DeKalb passed the charter policy without including any of the changes requested by the state DOE. Of particular importance is the very first revision that the GADOE noted in their 8-page letter. Here’s that requested revision:
1. Please remove “unique” and “innovative” from the initial paragraph of the proposed DCSS Policy in which it is stated that DCSS seeks to authorize high quality charter schools with “innovative, unique…academic programs”.
- No state law, SBOE rules, or GaDOE guidelines require charter schools to implement unique or innovative programming that is not conducted elsewhere in a school district.
- Therefore, requiring “innovative, unique” academic programs in a new charter school or one seeking renewal places a greater burden on charter schools than is legally required.
- The goal in creating charter schools is to produce higher student performance in exchange for autonomy from the state and local district regardless of the academic model selected or the degree to which that model is unique or innovative.
DeKalb has hard-wired into their policy the onerous requirement that a charter school must provide a “unique” or “innovative” academic program. I predict that DeKalb will use this requirement to deny any and every charter not connected to the “friends and family” that run the district.
On that very same evening, the DeKalb administration recommended denial of a Spanish language immersion charter school to be located in the McNair cluster area. The McNair cluster of schools have struggled academically for years and now have been denied a school choice option. The reason for denial? The program wasn’t innovative as DeKalb already has a language immersion charter. That’s true. It’s in north DeKalb. What is also true is that one of the Board members who voted to deny this charter represents the district in which this charter school was to be located. What is also true is that a Board member who voted to deny this charter sends their children outside of their district through school choice programs, including the charter language immersion school in north DeKalb. So, school choice is good for the school board members who can get their children across town. School choice for the McNair kid who didn’t get in the lottery or isn’t able to get to North DeKalb in the mornings, well, apparently, tough luck. Your Board member and your DeKalb bureaucrats, have decided that this charter petition wasn’t “unique”. My advice to all new charter school petitioners: Argue that your charter petition is unique because you won’t fail children. Apparently, that’s a unique feature from my perspective.
The school district also denied the Druid Hills Charter Cluster last year. Soon, the district will take up renewing charters for conversation charters, like Chamblee Charter High School. If the district isn’t a good charter partner with the state DOE, can we expect Chamblee’s charter review and recommendation to get a fair shake? And, what do these developments portend for DeKalb’s application to the Georgia DOE to be a “charter school district”? At this point, DeKalb asking to be a charter school district, seems a bit like, an abusive parent submitting their name for a “Parent of the Year” award.
Georgia Education Per Pupil Spending, Graduation Rates, Tax Climate, Poverty Rating & Free/Reduced Lunch Percentage
In January, I posted this blog about education spending and results in Georgia.
In May, the US Census office released updated per pupil spending numbers. I have updated my regional map with these numbers, along with Georgia’s tax climate ranking, poverty ranking and the percentage of students receiving free/reduced lunch.
Georgia is still spending more per pupil and has a lower gradation rate than all of our border states. Texas, Tennessee and Mississippi all spend less per pupil, have higher graduation rates, better tax climate rankings and more poverty than Georgia. South Carolina and North Carolina both spend less, have higher graduation rates, similar poverty rankings but are rated below Georgia in tax climate. But look for both South and North Carolina to improve their tax climate rankings. North Carolina passed a major tax reform bill this year. South Carolina is working on a major overhaul.
Grover Norquist, Americans for Tax Reform, and the Cost of Government Center announced their support of Nancy Jester today in the Republican Primary for Georgia State School Superintendent.
“ATR and COGC laud the efforts of Ms. Jester to improve the education system in the state of Georgia through sensible spending, increased transparency and strong accountability” said Norquist.
Mr. Norquist is the president of Americans for Tax Reform (ATR), a taxpayer advocacy group he founded in 1985 at President Reagan’s request.
Jester said, “I am honored that Mr. Norquist, ATR, and the Cost of Government Center are supporting my campaign. I am dedicated to giving Georgians transparency and robust disclosures so they can see how their education tax dollars are being spent.”
Please help spread the word by forwarding this email to your friends and family. Ask them to join you, Grover Norquist, Erick Erickson, Sen. Josh McKoon and former Sen. Eric Johnson in voting for Nancy Jester, the proven, effective, conservative candidate for Georgia State School Superintendent.
And on election day, or when you go vote early, remember, “Nancy Jester is sixth on the ballot, first for kids and taxpayers.”
I am pleased to hear the DeKalb school system’s accreditation status has been upgraded from “probation” to “warned”. I worked diligently to shine light on the poor fiscal management of DeKalb. Some of my work was even cited in the SACS report from 2012. Clearly DeKalb still has a long way to go. Academic achievement and growth in many schools is unacceptable. DeKalb’s graduation rate, at 58.9%, is far too low. Of the 25 high schools in DeKalb, 8 have graduation rates below 50%, while only 4 have rates above 75%. All four of these schools are specialty or magnet schools.
I appreciate that SACS finally recognized that DeKalb needed some sort of intervention. The entire episode exposes the structural weaknesses in our state’s accountability model. While SACS can provide a useful and supplemental service via their third party accreditation products, Georgia must not continue to abdicate it’s role in holding districts accountable for their results and financial management. AdvancED/SACS has 5 standards for school district accreditation. While these standards are meant to drive improvement in various processes for a school district, not one standard measures outcomes for children. There is no minimum graduation rate or achievement level necessary to earn accreditation.
In many states, the accreditation status of schools is determined by their Department of Education or comparable public agency. Texas and Virginia both accredit their schools based on defined, measurable performance results. Their graduation rates are 87% and 89% respectively. These states are rewarding success with autonomy and no longer accept failure without consequences. Additionally, Texas has a Financial Integrity system that has 20 indicators that measure the financial health of a district and push money to be spent in the classroom.
From the Texas Education Agency’s website:
“The purpose of the financial accountability rating system is to ensure that school districts and open-enrollment charter schools are held accountable for the quality of their financial management practices and achieve improved performance in the management of their financial resources. The system is designed to encourage Texas public schools to manage their financial resources better in order to provide the maximum allocation possible for direct instructional purposes.”
Georgia has 0 financial integrity measurements for our school districts.
If Georgia had a system for financial integrity, like Texas, DeKalb county could not have engaged in the deceptive budgeting practices I uncovered. School districts would be forced to allocate money to instruction and not a bloated bureaucracy. If Georgia’s Department of Education had an accreditation system like that of Texas or Virginia, our schools would be rated and accredited based on measurable performance outcomes.
I am running to be the State School Superintendent to bring these types of structural reforms to our state.