2019 Legislature: Modest education increase plus promises for tax reform – March 18, 2019
The news leading up to the 2019 session was all about a very large revenue surplus, somewhere near $1 billion. As the session moved forward, new revenue numbers came in and those projections were revised downward. Next came a big push for tax reform that included a $300 million proposed cut to the Education Fund (see ‘Tax Reform,’ below). This was met with resistance, so the legislature decided to deal with tax reform later. The end result was a decent funding year but not what many originally hoped for. New education funding includes:
- 4% increase on the WPU;
- Student enrollment growth fully funded at a cost of $35.7 million;
- $15 million in the TSSA Account, in addition to $18.8 million of property tax money (see below);
- $27.3 million in ongoing money for mental health professionals in schools; and
- $300,000 for conversion of the T.H. Bell loan program to a scholarship program for students pursuing education as a career.
“Given the overall budget situation, education was clearly prioritized by our legislature, and we’re grateful for that” said UEA President Heidi Matthews. “Education fared better than most other departments and agencies.” She went on to thank lawmakers for their commitment to study Utah’s tax structure rather than pass last-minute legislation without full public discussion. “We look forward to working with legislators in coming months to devise a solution that stabilizes state funding and grows investment in public education.”
The legislature created a new funding mechanism called the Teacher and Student Success Account (TSSA). The UEA originally supported creation this concept as part of a compromise with the 2018 Legislature to deliver significant new funding to education. Integral to the compromise was an agreement to direct more than $800 million in new, ongoing revenue to the TSSA account. Without that funding the UEA opposed the creation of TSSA as prescriptive and redundant.
For 2019, TSSA will have $33.8 million, plus $65.1 million from last session, for a total of nearly $99 million of ongoing funding. Up to 25 percent can be used by the school district for teacher salaries. The rest will be spent according to an outcome-based plan developed by the school principal in consultation with teachers, parents and others at the school. School success is judged by a one-percent annual increase in points on the state accountability system. Now that the bill has passed, local teachers and school district bargaining teams are encouraged to learn more and collaborate with administration in determining how this money is directed.
One of the major efforts started during the 2019 session was tax reform. The need for this effort is due to the decline in revenue in the sales tax, which is the primary source of funding for all state government services outside of education. House Bill 441 was designed to lower sales and income tax rates and expand the number of services to which sales tax is applied. The response was very swift and mostly negative. This opposition led legislators to drop the bill and instead form a task force (House Bill 495) to study tax reform over the summer. About $330 million in sales tax money was moved to one-time funding to incentivize working towards a solution.
The Senate proposed one possible tax reform solution that was somewhat troubling to education stakeholders. Senate Joint Resolution 3 would have allowed income money from the Education Fund to be used for social services. This proposal passed the Senate but was not heard in the House.
It will be both interesting and important to follow what happens in the interim before the 2020 Legislative session regarding tax policy.
SB4: Public Education Budget Adjustments is the primary funding bill for public education. It would increase the WPU by 4 percent, fund growth, appropriate $15 million to the Teacher and Student Success Account and fund several other public education services. A competing bill, House Bill 2, is moving through the House. The House version provides a much lower level of public ed funding in anticipation of allocating more after a special legislative session to address the state’s overall tax structure during the summer.
After public blow back, tax reform ends up in task force – March 12, 2019
HB495: Tax Restructuring and Equalization Task Force creates a task force to study state and local revenue systems with the purpose of making recommendations to address structural imbalances among revenue sources. The task force is required to solicit public feedback and involvement.
Surprise last-minute proposal to shift funds from education passes Senate, moves to the House – March 12, 2019
Senate Joint Resolution 3 took a crazy turn late Monday evening when Sen. Dan McCay abruptly replaced it with a substitute that seeks to reverse the constitutional provision dedicating all income tax to public and higher education. The resolution asks that the Utah State Constitution be changed to allow income tax, which is currently dedicated solely education, to be used “to provide services for the poor, the disabled, or the elderly.”
The substitute resolution was adopted and passed by the Senate on a vote of 21-8. It now goes to the House for consideration. Should the bill pass there, the question would be placed on a public ballot asking voters to change the constitution.
The UEA strongly opposes this last-minute attempt to divert education funding. In a statement to the media about the proposal, UEA President Heidi Matthews said:
“This represents a significant fundamental shift in the way we fund public education and public assistance in Utah. Such a sweeping change requires careful consideration, study and stakeholder input before being placed on a public ballot. Initiating something this big with barely two days left in the session, when there’s no time whatsoever for a committee hearing or public input, is absurd and certainly not good lawmaking practice.
“This change would do nothing to address the structural imbalance that has been the focus of sales tax policy discussion for many months. This is akin to the 1996 constitutional change, when higher education funding was added to the Education Fund. It didn’t solve the structural problem then and it won’t solve the problem now.
“The legislature has the ability to fix the broken sales tax structure without cutting public education. This proposal is simply a diversion from the real crises: a broken sales tax structure and the chronic underfunding of public education.”
The income tax was dedicated to fund only public education prior to a constitutional change in 1996 that allowed higher education expenses, previously paid from the General Fund, to be included. From 1996 until now, higher ed expenses have shifted until they are 100 percent paid from the Education Fund.
Legislature pulls massive tax overhaul bill, sends it to interim for more study – March 7, 2019
UEA headquarters staff take a moment to celebrate the
legislature's decision to send HB441 to interim study
Utah lawmakers have abandoned their plan to cut funding to public education by $300 million and overhaul Utah’s sales tax system. They will instead study the changes over the summer as requested by the UEA.
According to the Salt Lake Tribune“the abrupt turnabout came in the face of mounting pressure and criticism from industry, community and education leaders.” HB441: Tax Equalization and Reduction Act faced mounting criticism from both educators who objected to deep cuts in the Education Fund and business that would have been impacted by changes to the sales tax.
“Let’s celebrate – and then get to work, because our fight is not over,” said UEA President Heidi Matthews in an email to UEA leaders. “Likely, tax reform will be a topic for interim and maybe even a special session this spring or summer. We will now have the necessary time to support efforts to fix this massive problem and to find solutions that assure our students have the funding and resources they need to be successful.”
PRESS RELEASE: UEA Opposes Proposed Massive Cuts to Education Funding – March 6, 2019
The state needs tax reforms, but the fix must not come at the expense of students
The Utah Education Association supports legislative efforts to reform Utah’s broken tax structure. Proposed measures in House Bill 441 to broaden the sales tax base will ensure the state’s ability to provide needed services. However, the UEA believes those sales tax improvements can and should be enacted without lowering the income tax rate, thereby reducing funds available for education.
The following can be attributed to UEA President Heidi Matthews:
“For years, educators, school administrators and parents have relied on lawmaker promises that a growing economy would ultimately lead to new investments in the education of our students. Utah’s economy is currently among the nation’s strongest and our budget surplus is more than $1 billion. Now is the perfect time to make those long-promised and much-needed investments in our students – NOT cut the Education Fund by more than $300 million.
“Utah’s broken tax structure is nothing new. Legislators have seen this coming for years but have not addressed it. We believe legislators can devise a way to repair the broken sales tax structure without drastically cutting funding for education. This whole proposal is a gamble. Our kids’ education must not be used as a political device just to make needed sales tax changes palatable. We urge legislators to keep the promise to our students, to allow the Education Fund to continue to grow and to invest that new growth in the resources our students so urgently need.
“The tax problems HB441 attempts to address are more than 20 years in the making. Details of such a massive tax overhaul cannot be fully understood and openly discussed when they are released with barely two weeks remaining in the legislative session.
“We look forward to working with legislators as we seek positive solutions to Utah’s tax structure problems and provide the resources our students need.”
About the bill – HB441: Tax Equalization and Reduction Act, sponsored by Representative Tim Quinn, attempts to fix problems with Utah’s sales tax by lowering the rate and adding new taxes on many services. The bill also reduces the income tax rate from 4.95% to 4.75%, which has the effect of cutting the Education Fund by about $300 million each year.
Sweeping tax proposal includes a $300 million cut to education – February 28, 2019
The House Revenue and Taxation Committee passed a massive tax overhaul bill that attempts to fix problems with Utah’s sales tax by lowering the rate and adding new taxes on many services. HB441: Tax Equalization and Reduction Act also reduces the income tax rate from 4.95% to 4.75%, effectively cutting the Education Fund by about $300 million each year. Representatives from travel, broadcasting, oil/gas, legal services and several other industries that would be taxed under the proposed tax changes spoke against the bill in the committee. Education groups, including the UEA, are also opposed. It now goes to the full House for consideration. For more information, view the UEA HB441 Issue Brief.
Education budget committee proposes 4% WPU increase – February 19, 2019
The Public Education Appropriations Subcommittee presented its FY2020 recommendation for education funding on Feb. 19. The committee is recommending a 4% increase in the WPU and fully funding student enrollment growth. Other significant funding proposals include $32 million to hire more school counselors, psychologists and nurses; a $10 million increase to a program to support students at risk of academic failure; nearly $9 million for a school readiness initiative; and nearly $5 million to expand the Teacher Salary Supplement Program.
The recommendation also included $35 million for the Teacher and Student Success Account (TSSA). TSSA received $65 million during the 2018 legislative session but the money was distributed through the Flexible Allocation line item last year. The proposed $35 million would be combined with the ongoing $65 million from last year and distributed through a new, highly prescriptive school improvement program tied to standardized test scores created by Senate Bill 149. The UEA recommends that such a significant new funding program be studied during the interim session (See UEA’s Issue Brief on SB149).
Subcommittee recommendations will be considered by the Executive Appropriations Committee, with final funding decisions made in a few weeks.
UEA calls for ‘largest education investment in Utah history’ – February 1, 2019
Responding to calls by the Speaker of the House and the Governor for the largest tax cut in Utah history, the Utah Education Association suggested at a press conference Friday that it is time for the “largest education investment in Utah history.” (View the press conference here.)
| UEA Executive Director Brad Bartels outlined
budget requests for the 2019 Legislative Session
“The growing Utah economy provides an ideal opportunity for lawmakers to invest in the promise of a quality public education for every Utah student,” said UEA President Heidi Matthews. “We look forward to engaging with legislators and our education partners to modernize our flawed tax system and address critical student needs. Now is the time to keep the promises made to Utah’s students, teachers, and our future. Our students are counting on us,” she concluded.
Early in the week, the State Board of Education held a press conference where they presented the Board’s goals for the 2019 General Session. Among the board's top asks are $35.6 million to fund student enrollment growth, $176 million to increase the value of the weighted pupil unit by 5.5 percent, and $30.6 million in ongoing funding and $65 million in one-time funding to promote "safe and healthy schools." Combined, this budget request is very similar to the UEA’s 2019 public education budget request of 6.5 percent increase in the WPU.