| BACKGROUND | STUDY COMMITTEE |

The Citizens Network (CN) is a broad-based, diverse, non-partisan, grassroots organization of citizens from throughout the capital Region working together to address challenges affecting the quality of life and future of the people who live and work here. As a citizens group, our greatest value lies, first, in identifying important issues that need public discussion, and second, in bringing ordinary citizens together to have that discussion in a focused way that will help develop and shape broad-brush principles and the outlines of a solution that could be used to change public policy and the law.

The issue, financing local education, was selected by the Citizens Network Steering Committee as the first regional issue to be studied: (a) based on the fact that in our poll of more than 500 Capital Region citizens, over 62% who responded chose it as the most important issue; and (b) because we believe that this study will be an important complement to others already underway or recently completed on improving the quality of education in Connecticut.

Our study examines the issue of the property tax as the primary means of funding public schools. It presents an opportunity for citizens to be involved in the conversation, learning about and analyzing this critical aspect of providing a quality education for all of our children. In the course of the study the committee will: (a) establish the facts, (b) analyze what the facts mean in terms of positive and negative consequences, and (c) draw conclusions/make recommendations about what could be done to change and improve the situation.

Background

Local school budgets in Connecticut are increasingly dependent on property taxes, the slowest growing major revenue source in the state. This is the result of the cumulative effect of a decade’s worth of budget decision-making. Statewide, property tax revenues grew by 45% from 1993 to 2003 while sales tax revenues grew by 55% and state income tax revenues increased by 101%.

While all state aid to towns and cities (largely but not only for education) grew by 39% from 1993 to 2003, local school spending increased by 56% during the same period. This resulted in a decline in the percentage that state aid contributed to the municipal budgets in 115 of the state’s 169 municipalities.

Because both property tax revenues and state aid increased at a slower rate than education spending, municipalities most often made up the difference by slowing the growth rate of all other local spending. In fact, spending on local government functions other than education and debt service (for example, streets, libraries, recreation) grew 26%, slightly less than the rate of inflation. During the same period, state spending grew by 65%.

Furthermore, local property taxes are highly visible, involving an annual bill for what is usually a large amount. By contrast, sales tax is much less visible. The property tax’s visibility, large size and the aging of Connecticut’s population make it readily open to increasing opposition. Thus, not surprisingly in Connecticut, there is a trend both toward more referenda on education budgets being held and then failing, and toward greater opposition to increases in the property tax.

It is important to note that when Connecticut adopted the income tax, many people in the state believed that additional funds would go to local school districts as part of the deal. In fact, that has not been the case and state support for education has, as we have seen, remained relatively flat.

A Regional Citizen Study Committee

Key Question: What are some better ways in the future to pay for public education in Connecticut?

(The committee will define what it means by “public education” for purposes of the study.)

Facts. What are the facts about Connecticut’s state and local funding overall of public education? What are some key trends?

Conclusions. After looking at relevant reports and hearing input from a number of different perspectives on education financing, the committee will be asked to indicate what these facts mean in order to answer the key question and recommend possible solutions.

Recommendations. Beginning with relevant reports in education in Connecticut such as the recent report of the State Blue Ribbon Commission on Property Tax Burdens and Smart Growth Incentives, the committee will be asked to develop:

• a set of broad brush principles and proposals that would lead to a better system of finance for Connecticut’s public schools;

• an idea of what the solution(s) would look like and how they can be maintained in place over time;

• a menu of ways forward, based on the experience of Connecticut and other states;

• suggested next steps to change public policy based on these principles/proposals, solution(s) and menu.

1/20/05