kitchen table math, the sequel: up

## Sunday, March 13, 2011

### up

cross posted at the Irvington Parents Forum *

Proposed Tax Rate Increase: 4.31%

Average assessment in Irvington = \$24,500
Approximate full value = \$731,000
Estimated increase in school taxes for the average assessed home = \$604.17

History of Irvington tax rate increases:

2005-06: 13.42%
2006-07: 9.41%
2007-08: 5.87%
2008-09: 8.86%
2009-10: 0.42%
2010-11: 0.28%
Proposed 2011-12: 4.31%

In the years 2005-2009, we saw increases far beyond the rate of inflation.

Inflation for 2010 was 1.6%, so again we are far above inflation. (Core inflation - excluding food and energy prices - was only 0.7% from October 2009 to November 2010.)

Here’s a chart of core inflation since 1971: **

If you superimpose Irvington’s percent change in tax rates on this graph, the problem becomes obvious. Annual tax rate increases well beyond inflation make school spending unsustainable.

(pdf file)

(pdf file)

* If any of you would like to join the Irvington Parents Forum, please do. We have members from around the country.
** I don't know why the label on this chart is "Core inflation, previous 12 months." UPDATE from gasstationwithoutpumps: Inflation is usually measured as a ratio of two index values taken at different time points, divided by the time between the points. The label is saying what index is used and what pair of time points (the core index at time on the x-axis divided by the same index 12 months earlier).

Catherine Johnson said...

I posted this to give a concrete example of what has happened to school spending in my town (& state).

We've doubled spending in 10 years' time with no measurable gain in student achievement ---- and the administration is intent upon continuing to put through tax hikes well beyond the CPI.

One thing I learned teaching myself math for the past few years is that you can't look at numbers in isolation; you have to look at the trend.

There is a clear trend - a clear reality - in New York state spending to tax and spend far above inflation every single year.

If that trend were to continue unchecked, eventually all income would have to be given to the school; homeowners wouldn't be able to feed their children because their taxes would be 100% of income (or close to).

Obviously, that can't happen --- but what makes it stop?

Catherine Johnson said...

I'm pinning my hopes on democracy.

BUT of course democracy got us to where we are today.

Catherine Johnson said...

One other thing I forgot to mention (will drop it into the post) -- the proposed 4.31% increase will go up at the next board meeting or the one after because the administration arrived at this figure by cutting foreign language instruction in grades 5 and 6.

The public wants that program to stay, and we have 3 or possibly 4 votes on a 5-member board to keep it.

So: proposed tax hike is in fact higher than 4.31%.

Catherine Johnson said...

Another thing: the district has been borrowing to pay tax certs.

Tax certs, for those of you who haven't dealt with them yet, are suits property owners bring in court against the district, asserting that they have been overtaxed.

Everyone wins these cases, and when they win 2 things happen:

1. the district has to pay back the money the court has ruled belongs to the property owner, not the district

2. going forward, the tax base is now smaller because the court has ruled that that property was assessed at too high a value

So: we are over-taxing property owners, spending the money, then borrowing money to pay back the money that shouldn't have been ours to spend in the first place.

Meanwhile spending continues to rise rapidly (which means pension liabilities rise rapidly) SO taxes and spending are never readjusted downward to match the reduced tax base.

This means that when one person's taxes are legally lowered by the court, the rest of us have to pick up that property owner's share.

Grace Nunez said...

Has the number of students in your district gone up?

gasstationwithoutpumps said...

'I don't know why the label on this chart is "Core inflation, previous 12 months." '

Inflation is usually measured as a ratio of two index values taken at different time points, divided by the time between the points. The label is saying what index is used and what pair of time points (the core index at time on the x-axis divided by the same index 12 months earlier).

Glen said...

There is a clear trend - a clear reality - in New York state spending to tax and spend far above inflation every single year.

If that trend were to continue unchecked, eventually all income would have to be given to the school; homeowners wouldn't be able to feed their children because their taxes would be 100% of income (or close to).

Obviously, that can't happen --- but what makes it stop?

First, what makes it happen? The way New Yorkers vote. What makes it stop? New Yorkers risking the contempt of NPR and voting for people who agree with you.

Catherine Johnson said...

Glen -- I don't know what to make of the politics.

I do think most people are mathematically mystified. Here in Irvington, all expenditures are treated in isolation from all other expenditures, and when we do have a big-ticket item it's always presented as "the price of one tank of gas for your SUV per family" -- so therefore, every expense is actually a small expense.

People who actually get the concept of addition (or, worse yet, multiplication!) have tried again and again to quote the old Everet Dirkson line about "Pretty soon you're talking real money" but to no avail.

This year a board member told voters that the curriculum director position, budgeted at \$213K including benefits, is "nothing" compared to the budget as a whole (\$50 million for 1800 kids).

The guy he told that to, who is a writer, said that by that reasoning his taxes are nothing compared to the entire state budget, so he figured he just wouldn't pay them.

Catherine Johnson said...

I think the board member may actually have characterized \$213K as a drop in the bucket.

Catherine Johnson said...

gasstationwithoutpumps - thanks

Catherine Johnson said...

Hi Grace - enrollment is dropping.

Tax rate going up; enrollment going down.

Anonymous said...

I'd like to offer a small criticism of the whole way we measure inflation thing.

So ... one of the interesting bits is that housing is usually converted to "imputed rent." What this means is that if your house (that you may have already paid off, or perhaps have a fixed rate loan on) goes *up* in value, inflation does too. This is actually reasonable for people who are renting because their rents *will* go up and also if they want to buy a house, the cost of that house has gone up, too.

But for people who "own" (in quotes, because I'm counting people with mortgages) a house, then things are different.

Consider: Food, clothing, energy, etc. go up by 10%. Or more. As a hypothetical. In the meantime, fortunately, the equity in your house is collapsing and you now owe the bank more money than the house is worth if sold. I said "fortunately" in the previous sentence because the equity in your house collapsing cancels out the fact that the stuff you are buying has gotten more expensive. Inflation can, with the correct increases in stuff you buy and decreases in your home equity, actually come out at zero.

That's right. Lose a ton of equity in your house and pay a lot more for food, energy, clothes, transportation and they can cancel out to zero. As we measure inflation.

For renters, this can actually work out as their rent drops as the other stuff goes up. But for "homeowners" it feels much more like "prices are up, but I've also lost a lot of capital" and this doesn't feel like a wash.

I suspect that the inflation numbers may make less sense for homeowners than renters.

What to do with this, and how to adjust for it, I have no idea.

-Mark Roulo

Hainish said...

First, what makes it happen? The way New Yorkers vote.

I dunno about this. School board elections have notoriously low turnouts. Maybe it's more like, the way New Yorkers DON'T vote (or pay attention, etc.).

Hainish said...

Re: Curriculum directors. I've heard teachers complain about the fact that their district has hired a curriculum director or a curriculum developer, who often gets paid far more than the teachers and then gets to tell teachers what to do. They resent this.

momof4 said...

In the areas where I've lived, school board elections almost always have very low turnout because they are stand-alone events (the only item on the ballot), instead of being included with all of the other local/state elections. The school employees vote and have a disproportionate effect, due to the low turnout of others. Just recently, they tried (unsuccessfully) to mandate voting at all schools (usually the districts are consolidated for the election) and the BOE office to make it even easier for staff.