If property values are soaring, why do school districts need more money?

The question looms large as Hillsborough and Pasco ask voters for a tax to improve teacher, staff pay.
At a May 26 meeting in Wesley Chapel's Seven Oaks community, residents posed questions about a proposed special property tax to boost revenue for Pasco County schools.
At a May 26 meeting in Wesley Chapel's Seven Oaks community, residents posed questions about a proposed special property tax to boost revenue for Pasco County schools. [ MARLENE SOKOL | Times ]
Published May 31, 2022|Updated May 31, 2022

In a year of sticker shock for homeowners and renters, school leaders in two Tampa Bay counties are pitching a product that could be a tough sell: Higher property taxes to support public schools.

Special voter-approved taxes are how many Florida schools are plugging gaps as state allocations have not kept up with inflation. Dozens of these measures have passed successfully. Pinellas County voters have renewed a local-option property tax every four years since 2004, and by wide margins.

But this year could be different as the Hillsborough and Pasco County schools go for higher property tax rates. Voters will wonder: If my house doubled in value over the past five years, aren’t the schools getting twice as much money?

Related: Hillsborough school tax heads to August ballot after close vote

The two districts each want to raise as much as $1 for every $1,000 of taxable property value. For a $325,000 house with a $25,000 homestead exemption, that would work out to $300 every year. Such taxes, by law, are up for renewal after four years. The measures are on the Aug. 23 ballot.

Backers in both counties will have to explain that rising property values have not created a windfall for the public schools, but understanding that point requires a foray into the byzantine world of public school funding.

“I have to figure out, how can I say this in the most layman terms so people can figure this out?” said Terry Connor, deputy superintendent in Hillsborough and a point person on the tax effort.

Terry Connor
Terry Connor [ Hillsborough County Public Schools ]

There are several explanations.

The main one is that state government decides what tax rate school districts can impose on property owners. If districts want their share of state funding, they must abide by those rates. The percentage can go up or down. When property values increase, the state lowers the taxing rate to protect homeowners from runaway costs.

Related: Pasco moves school tax referendum to August

In Hillsborough, the state-allowed taxation rate fell over the past decade from $5.63 per $1,000 in assessed home value to $3.60. Even if voters approve the additional $1, the total rate will still be below 2012 levels.

In Pasco, the rate dropped from $5.60 in 2015-16 to the current rate of $4.30. As with Hillsborough, “even if the school district increases their rate, it’s still not going to be as much as it was in 2015-16,” said Linda Cobbe, a retired Pasco district spokesperson who is campaigning to pass the tax.

Linda Cobbe [Courtesy of Linda Cobbe]
Linda Cobbe [Courtesy of Linda Cobbe]

The state has held down school funding in other ways, too.

For example, its taxing formula once gave districts $2 for every $1,000 of assessed value to spend on capital needs, like new schools and renovations. The state lowered that amount to $1.50 after the 2008 financial crisis and never restored it.

Also, a law called Save Our Homes caps tax assessment increases for homesteaded owners to 3% a year. Like the lowering of taxing rates, Save Our Homes exists to make sure Floridians are not priced out of their own houses.

In addition, school funding is set by the Legislature in a holistic way that does not reward individual districts for rising property values. Revenues from the 67 Florida school districts are essentially combined, then redistributed based on a formula.

The state determines how much money each district will receive based largely on how many students are expected to enroll, and the needs of those with disabilities. More adjustments are made for an area’s cost of living.

Local tax collections become part of the calculation. But if those collections are high, the state kicks in less money. If they are low, the state contributes more.

“It is to create equity.” said Romaneir Johnson, Hillsborough’s chief financial officer. “The local tax can go through the roof. The only increase we get is from what the state says we will get.”

Romaneir Johnson, chief financial officer for Hillsborough County Public Schools, discusses the district's finances during a School Board retreat on Tuesday April 27, 2021, in Tampa.
Romaneir Johnson, chief financial officer for Hillsborough County Public Schools, discusses the district's finances during a School Board retreat on Tuesday April 27, 2021, in Tampa. [ DIRK SHADD | Times ]

The idea is to give each district enough money to run their schools and support their staff, whether they live in pricey Miami Beach or rural Gadsden County.

But in reality, districts are locked in a kind of arms race, with some passing new taxes and others following suit to keep up. Part of the pitch is the fear that teachers will leave for higher salaries offered by districts that already have the tax — or leave teaching altogether.

“In this post-pandemic market you’ve got a shift in the workforce,” Connor said. “You have teachers with a certain skill set. And the private sector is saying, ‘We can pay you more than what you’re getting paid in the classroom.’ And maybe you’re working three days a week at home and two days in the office.”

Hillsborough is rolling out its campaign quietly. District leaders so far have met with business organizations. They have also held informational sessions with staff, although Connor acknowledged they cannot pressure employees to campaign for the tax.

In Pasco, a political action committee called Lift Up Pasco Schools has gone public with fundraising and community events. A virtual town hall meeting took place on May 23. One of the first questions asked — and answered — was the one about rising property values.

Three days later, Lift Up met with homeowners in Wesley Chapel’s Seven Oaks community. Audience members asked why the district doesn’t impose a sales tax so everyone will pay, not just property owners. The answer: Under Florida law, a sales tax can be used only for capital purchases, not ongoing expenses such as payroll.

Nikki Smith wanted to know if it is safe to assume the tax will be permanent. “I’ve never seen a tax that goes away,” she said.

Jonathan Lockwood said the whole process seems illogical. As happened with the Florida Lottery, he said, the Legislature could continue to cut school funding as school districts collect more local taxes. “Maybe this is a losing battle because it’s rewarding the state for bad behavior,” he said.

Beth Brown, a retired Pasco principal who is chairperson of the Lift Up group, did not argue either point, but insisted Pasco has little choice if it wants to hold onto a skilled teaching force.

“I heard from a lot of neighbors and friends who had long-term subs (substitute teachers) all year,” she said. Blue-collar workers are leaving too. “We are losing bus drivers to surrounding counties, because can you blame them?” she said.

The campaigns in both counties include assurances that the districts are responsible with the money they have. That’s a challenge in Hillsborough, long criticized by investment analysts and state leaders for chronic spending deficits. For the first times in years, the Hillsborough district predicts it will end this fiscal year with a small surplus.

“We’ve done what it takes to get right internally,” Johnson said. “What we’re trying to do is be competitive in attracting certified, qualified teachers.”