South Carolina deserves education funding fix

June 13, 2010 

South Carolina's education funding has splintered into a system so complicated and confusing it's difficult to know how much we're spending to educate a child. And when education accounts for nearly half the state's spending, that is unacceptable. An overhaul is long past due.

What will make it happen? Logic, equity and political muscle, says state Sen. Tom Davis of Beaufort County.

Davis says it can happen, and he says that despite Beaufort County coming up empty-handed again under the state's Education Finance Act, the primary source of state funding for education.

Here's why. Beaufort County lost out on about $428,000 when the House and Senate voted to use the 2009 formula for determining a school district's ability to raise money, rather than a newly constituted formula. Charleston County, home of Senate leader Glenn McConnell, lost more than $7 million.

Twenty-seven other school districts also saw their EFA funding drop as a result of the change. It's not just Beaufort County's problem anymore, and the inequity is becoming increasingly apparent.

That step backward in the funding formula was particularly disappointing because it corrected a fundamental flaw of the 2006 property tax reform law. Act 388 removed property taxes on primary homes as a funding source for school operations, but the value of those homes was still used to calculate a district's taxing ability. The 2010 formula changed that.

Act 388 also is the source of other pressures to change education funding. The inequity between what resident homeowners pay for school operations through a 1 percent sales tax and what nonresident and commercial property owners pay through property taxes is glaring -- and many contendhurting real estate sales.

With Act 388, Davis says, lawmakers stopped short of the original goal. Instead of using sales tax money to provide property tax relief for owners of all types of property, lawmakers only provided relief to resident homeowners and levied a 1 percent statewide sales tax to make up the difference. But with about $1.5 billion in sales tax exemptions out there, Davis maintains it's possible to pay for education and provide property tax relief for all.

In exchange for taking away local control of education revenue, lawmakers can give educators more discretion in how they spend the money they get. They've done that through budget provisos during the past two years. They could make it permanent law.

Beaufort County's problem has been that a fixed amount of money to divide up for education means when one district gains, others lose. Tinkering with the system isn't enough to get the wholesale change we need. Today, we have to look to the Education Finance Act, the Education Improvement Act, the Education Accountability Act, the Education Economic Development Act and the S.C. Education Lottery to determine where and how money is spent. That's on top of federal directives.

Our best hope now is a task force meeting this summer to come up with a way to address this problem in the next legislative session. Davis has been promised a place on that task force. Any changes to education funding will have to be part of comprehensive tax reform already being studied by the Taxation Realignment Commission.

The goal, Davis says, should be a system that is equitable, simple and transparent. Opponents to change should be put on the defensive. Lawmakers who look at the issue only in terms of the impact on funding for their individual districts aren't watching out for the long-term interests of South Carolina.

The Sentencing Reform Commission is the example to look to. The compelling logic of the plan to reform that system -- along with the urgent need to reduce prison expenses -- propelled change through the legislature in a few short months. The same thing needs to happen with tax reform. The state's budget problems the past two years certainly point out an urgent need for change.

In the meantime, Beaufort County awaits a report on our legal options. That could be money well spent if lawmakers don't get the job done.

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