Wednesday, Jan. 25 2012 10:38AM
School funding 101
District looking at bus advertising, sales tax
By Rob Roberts, rroberts@lsjournal.com
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ReprintThe Lee’s Summit R-7 School District is looking at alternative revenue sources after sustaining more than $50 million in budget cuts during the past four years and being told “no new property taxes” by voters last year.
Two potential sources to be discussed during a meeting between local school district supporters and lawmakers Jan. 26 are advertising on district school buses and a sales tax for schools.
Both would require passage of enabling legislation by the Missouri General Assembly, and the sales tax would require a further vote by school district patrons. School bus advertising would not require a public vote, and a bill to allow school districts across the state to sell it has been filed in the General Assembly by Rep. Mike Kelley, R-Lamar.
David McGehee, superintendent of R-7 schools, said he hopes the legislature passes bills to let communities decide both revenue measures themselves.
“It’s clear that a property tax increase isn’t flying here anytime soon, and there’s only so much more you can do through savings,” McGehee said. “So you’ve got to look for alternative sources of revenue.”
McGehee will be among R-7 representatives attending a 6:30 p.m. Jan. 26 public meeting on a variety of school finance issues at the Board of Education Office, 301 N.E. Tudor Road. The meeting will bring together state lawmakers from this area with members of the district’s Citizens Advisory Committee and Business Roundtable.
Bus advertising
Keith Asel, regional president of Hawthorn Bank, agreed with McGehee, saying, “As underfunding of the state school finance formula continues to make (R-7) cut costs, we’ve got to look at alternative funding.”
As a member of the education funding subcommittee of LS 360, a city visioning effort, Asel took the lead in researching school bus advertising recently and became a leading local supporter of it.
“Seventeen states currently permit advertising on school buses,” Asel said, “and the typical revenue per bus is between $2,500 and $5,000 a year.”
Assuming the R-7 district’s 147 buses average $3,750, the advertising would bring in $550,000 a year, he said.
“It’s not millions, but anything like this we can do saves teachers and programs,” Asel said.
The legislation currently before the General Assembly would limit exterior bus advertising to the rear portion of one side of each bus, Asel added, and it also would allow districts to restrict content.
“Obviously, you don’t want any adult content like alcohol, tobacco or firearms, and you wouldn’t want ads for sugary, unhealthy foods directed to the students,” Asel said. “Most of the ads probably would be image ads, like a bank or insurance company supporting education.”
Despite the ability to limit school bus advertising, however, some remain philosophically opposed to it.
Susan Linn, director for the Campaign for a Commercial-free Childhood in Boston, called school bus advertising “a lousy way to raise money.”
The Colorado Springs, Colo., school district, which transports about 12,000 more students than R-7, makes only about $40,000 a year from bus advertising, Linn said.
“The schools aren’t making what they thought they would, maybe a dollar a student,” she said. “So the benefits are slim and the consequences are great.
“Advertising in schools and on school property is harmful to children and education in numerous ways. For one thing, it’s targeted at a captive audience, and because of that it undermines parents who are trying to limit commercialism in their children’s lives.”
It also carries the schools’ implicit endorsement, Linn said, and it undermines education’s goal of promoting reason, “because one of the primary purposes of advertising is to subvert reason in order to sell products.” McGehee said advertising already is prevalent in school venues like stadiums and gymnasiums, and the idea of extending it to bus exteriors doesn’t give him any heartburn. But the superintendent said he did object to a portion of the bill currently before lawmakers that would allow advertising on the interiors of school buses. According to McGehee, he wants the issue to be narrowed locally to a consideration of “clearly defined and limited” bus advertising. “I don’t want to see our buses with bubble wrap all around them,” he added. Senator Will Kraus, R-Lee’s Summit, and Rep. Jeff Grisamore, R-Lee’s Summit, both said they supported the bill allowing individual districts to make the call on school bus advertising.
“My immediate concern was for the safety of school children,” Grisamore said. “I thought people reading ads on buses might distract them from looking out for students.” But Grisamore said Kelley’s bill appears to take safety into account through the limited placement of the ads.
“There have been no reported accidents related to school bus advertising,” Asel added, “and some districts have been doing it for years.”
Sales tax
According to McGehee, an even greater revenue generator for schools would be a sales tax, and he supports looking at a model that would return half of the revenue to patrons in the form of property tax relief. A one-cent sales tax for schools would generate roughly $15 million a year in the R-7 district, the superintendent said. That would mean a $7.5 million-a-year bump for the district. For taxpayers, it would mean a property tax rollback of 46 cents per each $100 of assessed valuation.
Under that scenario, the owner of a $250,000 home in the district would save almost $220 a year, McGehee said. Owners of commercial properties would save about $1,500 a year for every $1 million of valuation.
McGehee added that local taxpayers appear to be far more sensitive about property tax levels than sales tax rates. In addition, the sales tax is appealing because the revenue it generates would grow along with the city’s retail base, which is expanding much faster than its residential base, and part of the sales tax revenue would come from shoppers who live outside the district.
Nevertheless, McGehee said he doesn’t believe the issue will gain enough traction to merit a bill and serious debate for two to three years.
Meanwhile, he said, the state legislature continues to underfund the state’s public school finance formula.
Even with the roughly $5 million bump recently proposed by Gov. Jay Nixon, he said, the formula will be underfunded next year by more than $400 million, as it has been for three or four years. Therefore, the superintendent is generally supportive of two bills currently before the legislature that would require the roughly 150 “hold harmless” school districts in the state to share in the underfunding burden. McGehee said recently that the hold-harmless provision was enacted to prevent the select districts (which don’t include R-7) from losing state funding under a revised 2005 school finance formula calculation. The provision was not designed to protect the hold-harmless districts from an economic downturn, he added.
House Bill 1043 calls for hold-harmless districts to give-up one-third of the amount that formula districts lose due to underfunding, McGehee said, and a Senate bill calls for 50 percent proration. If all districts shared the underfunding burden equally, McGehee said, R-7 would actually net an increase of about $1.5 million in annual state aid. Under the Senate bill, it would reap a $450,000 increase. And under the House bill, it would lose $50,000. If nothing is done, McGehee added, the R-7 district will lose about $1.6 million.
