Teacher Pay Funding Mechanism?

   My last blog/article advocated using local ad valorem (property tax) funding as a mechanism for teacher pay raises. I stated this is a preferable method for providing teacher pay, for several reasons:
1) Most Oklahoma voters do not prefer the state sales tax as a funding mechanism
2) Most Oklahoma voters do not prefer to increase the state income tax as a funding mechanism
3) Most Oklahoma voters do prefer "local control" for all public school issues, including teacher salaries
4) Most Oklahoma voters have consistently approved bond issues and building fund millage rates over the years
5) Most Oklahoma voters in local school districts believe their local public schools are successful in educating their students
6) Most Oklahoma voters in local districts like their public school teachers
7) Most Oklahoma voters believe that local ad valorem taxes should be utilized for teacher salaries
   I admit there are also several issues to be resolved, before proceeding with such a plan to increase teacher salaries. While the public school bonding (borrowing) capacity maximum for public schools is consistent (10% of the net valuation), the assessed property value for each school district is different. For example, Public School A (PSA) has a net assessed valuation of $100 million, so its bonding capacity is 10%, meaning that $10 million could be borrowed by the school for new buildings, etc... If the bonding capacity for school districts were increased 2%, it would mean that local voters could approve an additional $2 million for new buildings, etc... Since bond funding may also be used for building maintenance and repairs, the salaries of those employees who maintain and repair buildings may also be paid with bond funds. Presently in Oklahoma, most employee salaries are paid with general funds, not bond funds. If PSA had the legal authority to move $2 million in building maintenance and repair salaries to the Bond Fund, from the General Fund - $2 million for teacher pay increases could be realized. If PSA had 100 teachers, each teacher could receive a $20,000 pay raise. Too much? Maybe so, but lets look at another example...
   School District B (PSB) has an assessed property value of only $20 million, which would allow PSB to borrow $2 million for new buildings, etc... If the borrowing capacity of PSB was legally increased 2%, then $400,000 in building maintenance and repair salaries could be shifted from General Fund to Bond Fund. If PSB also has 100 teachers, then each teacher could receive a $4000 pay hike.
   There is an obvious inequity created between PSA and PSB using Bond Fund revenue for teacher pay raises. In the example above, each PSA teacher receives a $20,000 pay raise, but each PSB teacher receives only a $4,000 pay hike. The current Senate Joint Resolution 1 appears to have this inequity built in its structure, but as we look a little deeper - maybe its not so inequitable. For example, most school districts percentage of maintenance employee salaries to teacher salaries is almost the same statewide. If PSA has 100 teachers and 5 maintenance and repair salaries ($75,000) which could be transferred to the Bond Fund, it could provide a $750 pay hike for each teacher. The entire 2% increase in PSA's bonding maximum ($2 million) could not be used for the teacher pay raise. If PSB also has 100 teachers and 5 maintenance employees, each of the 100 teachers could also receive a $750 pay increase - just like the teachers in PSA. Equitability between schools results because of the ratio of teachers to maintenance employees. It's still not 100% equitable, but close enough in my opinion.
   Senate Joint Resolution 2 is another teacher pay mechanism which could be equitable for funding teacher pay hikes if utilized correctly. It increases the building fund millage rate from 5 mills to 10 mills. Currently, school districts receive 5 mills of the district property tax value which is deposited in each school's Building Fund. For example, if Public School A's district value is $50 million, 5 mills would be $250,000. PSA would have $250,000 deposited in its Building Fund. The proposition states that the millage rate will increase to 10 mills, so PSA would have $500,000 for its Building Fund, instead of $250,000. Like the Bond Fund described earlier, the Building Fund could have the potential to provide teacher pay hikes. In PSA's case, if 100 teachers were employed, each could receive a $2,500 pay increase, but only if $2,500 in maintenance salaries was moved from the General Fund to the Building Fund. The key for equitability statewide would be that all schools' ratio of maintenance salaries to teacher salaries is almost identical.
   To me, funding teacher pay raises with locally voted ad valorem revenue is a good idea. We can also look at other funding mechanisms which do not raise taxes to supplement the property tax. We will discuss those ideas in future blogs...