Oct 19 2012

School Board Considers Major Changes to School Parcel Tax

Permanent or long-term tax is on the table –

At its meeting on October 10, the Piedmont School Board discussed the next school parcel tax measure, which may have a much different structure than in the past.  Immediate public input was urged repeatedly, prior to the Board’s anticipated final approval of the ballot measure on November 28.  Changes will be difficult after that date.  (Emails provided below.)

Changes and options discussed by School Board members included:

  • Permanent tax
  • Tax with a 6, 8, or 10 year term
  • Flat tax with no escalator (not more than $2,088-$3,547 level)
  • Possible escalators (2-3% cap or an inflation index)
  • 2-part tax (a permanent baseline flat base tax and a supplemental tax)
  • “large” supplement if state tax measures fail (on the scale of $3 million Measure E)
  • Exemptions based on age or income
  • Legal restrictions on parcel size-based tax  
  • Continuation of Citizens Advisory Committee
  • 4-year renewal

Each School Member offered his or her preliminary thoughts.

Andrea Swenson:  “hopes for” a flat tax of 6-8-10 years or permanent, preferably with an income exemption.

Rick Raushenbush:  “open to” a long-term or permanent tax; noted it was a problem to have both a long-term tax and an escalator; noted legal issues with exemptions.

Ray Gadbois:  pointed out advantages to stability of a longer-term tax; “open to” different options for an escalator at a lower growth rate tied to inflation index, noted opportunities to increase accountability through polls, surveys or annual public meeting; noted legal problems with an income-based exemption and parcel-sized based tax.

Roy Tolles:  Mentioned a 6 year or permanent tax, a 3% cap, making increases more “upfront”, and limiting exemptions to the supplement above a baseline tax.

Sarah Pearson:  “leaning toward” a permanent tax, may be time to test the voters

An additional “large” supplement if Propositions 30 and 38 fail?

Consideration of a “large” supplemental parcel tax on the scale of the $3 million Measure E if state tax measures (Propositions 30 and 38) fail was mentioned repeatedly by Board members.  Options previously identified by Superintendent Constance Hubbard to create $3-4 million dollars in additional cost reductions were not raised by any Board member. 

The Board encouraged the public to participate at the next Budget Advisory Committee (BAC) meeting on October 23, as well as the next 2 Board meetings on October 24 and November 14.  The BAC meeting offers a relatively informal format for public input.  It was noted that, after November 28, changes will be difficult to make.

Comments offered by each Board Member:

School Board Member Sarah Pearson can see the value of going back to the voters periodically, but is “leaning toward” a permanent (“evergreen”) school tax.  She is requesting feedback on this because it will be hard for the Board to change its mind after it makes a decision in November.

School Board Vice President  Andrea Swenson noted that the School Board members have a responsibility to consider the interests of not only the students and parents, but community members.  She hopes there can be a flat tax without an escalator and that it can be a 6-8-10 year tax or permanent.  She would also prefer there be some income exemption, although this is “not a deal-breaker”.

School Board President Rick Raushenbush likes the idea of voting on the tax now and then, but not a risk every 4 years.  He is open to a long-term or permanent tax.  He feels the “ultimate control” is in the residents’ ability to vote for or against School Board members.  Raushenbush felt an escalator is a problem, especially for a long-term tax.  He indicated that having both a long-term tax and an escalator was a problem.  He pointed out that $7 million in state funding has been replaced by $3 million in Measure E funds, $1.2 million in Measure B increases, $1 million in stimulus bill funds, and $3.8 million from reduction in staff costs, although some of this was furlough days.  As for age exemptions, he pointed out they result in a higher tax on young people and that age is not equivalent to income, and reiterated that there were legal issues with an income-based exemption.  Raushenbush also felt it would be appropriate to request a supplemental tax from voters before cutting people/program.

School Board Member Roy Tolles noted that if either Proposition 30 or 38 does not pass, a much bigger tax – one on the scale of the $3 million Measure E – may be considered. He would also consider a longer term for the tax such as 6 years and/or a permanent baseline tax.  He suggested any exemptions should apply only to the portion of the tax above the permanent baseline.  Tolles further noted that a 5% escalator leads to the parcel tax becoming a larger and larger portion of the School budget.  He would prefer a 3% escalator, or a limitation to an average of 3% over its term, with further flexibility for an individual year.  Tolles noted that past increases had been “backdoor” and they should be “up front”.

School Board Member Ray Gadbois felt that if a state measure passes in November 2012, the new school parcel tax should remain the same as the current tax, depending on the outcome of state measures.  He felt that, while annual increases of 5% per year had been necessary in the past,  it is important to reduce the growth rate of the school tax in the future.  He prefers a structure that will reassure the community that the future growth rate will not be as high.  He noted there were a variety of options such as a 2% rate to match property taxes, or tying increases to Social Security increases or the CPI to keep up with inflation.  Gadbois noted the importance of creating more stability in funding over the long term, rather than having “a question mark every 4 years.”   He pointed out stability in the tax could help the stability of property values, because values are tied to the strength of Piedmont education.   At the same time, Gadbois pointed out the importance of preserving an ongoing sense of accountability to voters, which is currently achieved through the 4 year renewal process.  He noted options such as continuing “something like” the current Citizens Advisory Committee and strengthening the public process for imposing levies with polls, surveys, public meetings or other mechanisms which create accountability with less risk to the source of funds.

As for exemptions, he noted age-based restrictions are legal, but income-based restrictions are “on the legal edge” and could prompt a legal challenge.   And a tax based on parcel size risks turning the school parcel tax into an illegal ad velorem tax, which the district “must be careful” to avoid.   Gadbois felt it was important to develop a contingency plan in case Propositions 30 and 38 fail to pass to solve the additional [$2.5 million] deficit faced by the School District.  The additional deficit will be $2.5 million.

Two public speakers were present to offer their input.  George Childs, a member of the Citizens Advisory Committee, pointed out there were a fair number of residents on lower levels of income, and the tax is a struggle to pay for those residents.  He urged an exemption based on household income, pointing out that concerns regarding how people would be qualified for the tax can be by adopting a variation of the frameworks which Lifeline or other programs utilize.  He  stated that the Citizens Advisory Committee has proved to be a valuable resource and must be continued.  He felt the tax must be flat with no escalator.   He urged a four year term to ensure the funds are used appropriately and that the Board is aware of voter desires.  Hope Salzer acknowledged that people of different income levels reside in Piedmont but urged continuation of the school parcel tax with an increase if Propositions 30 and 38 fail.  She noted that the Beach School library is open only 3 days per week.

School Board members will give direction for development of a Draft Resolution at their next meeting on October 24th.  The Draft will be presented to the Board on November 14th, and a vote on the resolution is anticipated on November 28.   Therefore, input should be provided via phone calls or email as soon as possible. The Tax Measure is planned to be  on the ballot for the March 2013 Election necessitating Board consideration at this time.

Timeline for School Parcel Tax Consideration:

  • Oct. 24 – School Board provides direction to staff on a draft resolution
  • Nov. 14 – Draft resolution presented to the Board
  • Nov. 28 – Special Board meeting to approve the resolution and ballot

Click here to send email all School Board Members

List for your email:  rraushenbush@piedmont.k12.ca.us, aswenson@piedmont.k12.ca.us,  spearson@piedmont.k12.ca.us, rgadbois@piedmont.k12.ca.us, rtolles@piedmont.k12.ca.us, chubbard@piedmont.k12.ca.us

6 Responses to “School Board Considers Major Changes to School Parcel Tax”

  1. Below is a table of the eight highest ranking districts with 2012 API’s, school tax amount, senior exemption and percentage of tax to Piedmont’s. San Ramon Valley, with its tax 4%-7% of Piedmont’s, also adds a compassionate supplemental income exemption. All senior exemptions are 100% at age 65, I confirmed both by online information and calling each district. All districts with a school tax have a senior exemption except Piedmont. Clearly these are legal and the norm.
    Senior exemptions are not mandatory or automatic, seniors can “opt out” by doing nothing and essentially become an additional donor; I presume the many affluent seniors in Piedmont would take this route.
    Now is an appropriate time to implement a senior exemption in Piedmont. I suspect many seniors in Piedmont will not take the exemption and, additionally, the School Board may wish to focus on obtaining nominal increased funding from the various donor campaigns that support the school system. At the end of the day a senior exemption would be of little economic consequence in the big picture.
    Some obvious questions are (1) How are the other districts able to perform as well as Piedmont’s on smaller taxes, and (2) How much per student is spent to achieve these results?

    API Tax 2012 Senior% PUSD
    San Marino 954 $1169 (2) Yes 33 – 56%
    La Canada 950 $150 Yes 4 – 7%
    Portola Valley 947 $458 (2) Yes 13 – 22%
    Piedmont 938 $2114 – $3590 No 100%
    Manhattan Beach 937 none n/a
    Palo Alto 934 $625 (2012) Yes 17 – 30%
    Arcadia 929 $228 Yes 6 – 11
    San Ramon Valley 927 $144 Yes 4 – 7%

  2. I agree with Rick in establishing a senior exemption. Not all Piedmont seniors are affluent by any means. Allowing an “opt in/opt out” feature will be that most equitable way of ensuring the input of some of the voters over time, particularly if a permanent or long-term feature is presented and approved by the voters.

  3. I respectfully disagree with my friends Rick and Jim. Age does not confer poverty, particularly in Piedmont. To be sure, not all Piedmont seniors are affluent by any means. The same is true of the many younger families, often with two working parents, who stretched their household budgets to the limit in order to get a Piedmont public school education for their kids, and are living on the smaller lots that pay a disproportionately high share of the parcel tax already. Supporting our schools is something all Piedmonters do together, and do very well. Many of Piedmont’s most affluent seniors already benefit from greatly below-market Prop 13 tax assessments. A blanket school parcel tax exemption for seniors would just perpetuates this inequity and place an even greater burden on non-senior, non-affluent households.

  4. I have asked PCA to publish an expansion of my comments and it addresses and provides several counterpoints to Tim’s comment in detail. While I much respect Tim’s professional expertise and insight on public issues, I respectfully disagree with him on the senior exemption issue. Age neither guarantees nor confers poverty or wealth. Seniors are locked into whatever pension, fixed income, savings, social security, etc. that they either have or have not amassed. Working age adults are under no such constraint and are still earning full wages. Seniors can no longer enter the work place and find full time employment to make up for the rising tax bill if it is burdensome. And frankly, although illegal, age discrimination is always a factor. To many Piedmont seniors the high tax rate is of no consequence, it is the few who need the exemption that creates the need.

  5. Tim:

    Note that what is being requested is a VOLUNTARY annual exemption requiring application. Seven out of the 8 highest API school districts in California have found this to be an advisable option for those over 65 who feel a need to request it. Piedmont is the exception. It also has the highest taxation of the 8 districts, with San Marino running a very far 2nd place.

    Nothing about this exemption is mandatory and nothing is permanent.

  6. We hear often that a senior exemption cannot work because of the high percentage of Seniors in Piedmont, higher than other districts. The fact is that Piedmont has a LOWER percentage of seniors than virtually all other highly rated school districts. Piedmont has a far higher school tax and no senior exemption, all other systems with a tax have a senior exemption. By the 2010 Census the 65 + percentages are:

    San Marino 17.6%
    La Canada 15.7%
    Portola Valley 26.9%
    Piedmont 15.4%
    Manhattan Beach 12.7%
    Palo Alto 17.1%
    Arcadia 16.3%
    San Ramon Val. 14% 8% 18% Danville, San Ramon, Alamo

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