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Flat income tax proposed to fund Missouri’s schools

Ed Robb also calls for “pure per-pupil” basis.
Sunday, November 7, 2004 | 12:00 a.m. CST; updated 8:19 p.m. CDT, Sunday, June 29, 2008

Newly elected 24th District Rep. Ed Robb plans to wade right into the thick of the school funding controversy.

His proposal to shift the tax burden almost entirely off property taxes and onto a flat income tax has raised some eyebrows. But, more importantly, it represents an early entry in a long and heated debate over how Missouri’s schools should be funded.

The state government, in rewriting the formula, must confront two key challenges. First, how to generate money for distribution, and second, how to distribute funds as evenly as possible. Authored in 2003 while Robb was employed with the University of Missouri Economic and Policy Analysis Research Center, the plan calls for a fundamentally different answer to part one, and a slightly revised answer to part two.

Let’s tackle part one — how to find the money to distribute.

“You have to deal with this funding source question early in the process before you can really have a discussion on the distribution side,” said Otto Fajen, legislative director with the Missouri National Education Association. In 1993, he was involved with the creation of the formula now being attacked. It takes into account factors including property taxes and school enrollment to determine how the state distributes $2.4 billion to its public schools.

However, nearly half of the state’s school districts have filed suit against the formula, which has not been fully funded for the past five years.

Robb’s plan suggests a radically different revenue source for the formula, moving the roughly $2 billion formula away from reliance on local property taxes. Instead, the plan calls for a flat statewide income tax. The gap between the wealthiest and poorest areas of the state is growing, Robb said, and that is not likely to change.

Robb’s argument is that continued heavy reliance on unequally distributed local wealth only sets the stage for more inequality. Traditionally, property taxes have been viewed as the most stable source of income, said Geri Ogle, assistant commissioner of the Department of Elementary and Secondary Education. Property taxes are not as reliant on economic performance as income or sales taxes are.

Whether or not Robb’s flat-tax proposal would generate more money is unclear. Some of the plan’s skeptics, including Fajen, say that the flat tax might even raise less money than necessary.

Meanwhile, utilizing a flat income tax to fund Missouri schools other more broad drawbacks as well — namely, that it would reduce the very point of graduated tax rates. Wealthier people would not pay proportionally more in taxes if this plan is implemented. A benefit of local tax efforts, Fajen said, is that local voters feel in control over their schools.

Second, Robb’s plan calls for distributing money in a slightly different way, a method termed “pure per-pupil.” Robb supports this method because of its simplicity.

“You tell me how many students you have, I’ll tell you how much money you’re getting,” he said.

But Fajen said his organization had some concerns about this newfound simplicity. The current formula factors in needs such as special education that often drive up the costs of education. To gloss over those concerns would be unhelpful, he said.

Jacque Cowherd, who oversees the district’s finances, said the effect, if any, these shifts would have on Columbia schools is unclear.

“We have always benefited from the current version of the formula,” Cowherd said. “My opinion is that if this formula was fully funded, we’d be fine.”

Finally, Robb’s plan must confront the very nature of politics. Can this plan garner support from Democrats, Republicans, wealthy areas and poorer ones? That question is far from a known quantity, as this plan hasn’t even been entered as legislation. But it is worth remembering that in 1993, the last time the state’s school funding tool was so heavily reworked, deals with wealthier districts had to be struck so that their representatives would vote for it. Those deals resulted in hundreds of millions of dollars being kept out of the revenue-sharing part of the formula.

Robb is aware of the challenges and the dance that must occur for a new formula to evolve.

“The question is, can we put something in place with a life-span of more than seven or eight years, which is all the current alterations have lasted,” Robb said.


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