Strained marriage: Property taxes and rural school districts
By LIN WARFEL

   One of the early marriages as Illinois became a state was between public schools and property taxes as their major funding source.
   About 120 years ago, my great-grandfather helped establish a school about a mile south of the homestead where I live. The school had one teacher and about 15 students, from grades one through eight. That was enough to create strong differences of opinion in how to manage and pay expenses. One of my grandmother's early memories of her childhood was of her father and a neighbor, both directors of the school, standing in the dirt road in front of our house yelling at each other in disagreement over school business. The roads have changed, and the schools have changed, but paying for the schools still evokes similar incidents today.
   Great-grandpa could stand in the road and survey nearly all the wealth of the district. It was pretty much all visible property, as folks tended to have little money in banks, and few investments in bonds, stocks and other financial instruments.
   Nearly all the income in the district was derived from farming the land, with most of the buildings in effect being "tools" to help create income. In today's economy, real estate remains an important segment of the rural districts, but there are now many residents with assets other than land and barns. That change is not adequately reflected in the distribution of the tax load on the residents.
   Through vigorous efforts of many people, most Illinois legislators now agree that the tax burden in rural districts is not being fairly distributed, but the lawmakers disagree on how to change it.
   Current studies show that property taxes (about two-thirds of which are for public schools) represent about 34 percent of a farm family's income, but only 5 percent of an urban family's income. Small wonder farmers resist further increases in tax rates. In cases like this year, farm income is down, but land taxes will be up 10 percent.
   It should be noted that homes on the farm are taxed at the same rate as homes in town, but the farmers pay additional taxes on their land. All homeowners get the $3,500 allowance, and senior citizens get additional relief. As exemptions grow, the tax burdens grow on the payers who are still in the pool, chief among whom are the owners of farmland.
   Recognizing the unfairness, many legislators, both rural and urban, continue to look for a way to achieve equity.
   Suggestions include:
   – Freezing property taxes and supplementing school districts with state funds.
   – Dividing school funds into two separate mechanisms, with local property taxes paying for building expenses and the state paying for educational and operational expenses.
   – Using local income taxes to offset property taxes.
   – Adopting a "Michigan plan," with the elimination of property tax support of schools, forcing the Legislature to come up with an alternative funding plan.
   – And incorporating a "New York plan," which would limit property taxes on farms with the state supplementing local districts for the loss of property taxes.
   Two processes currently at work will help us move toward resolution of the problem. The first is an improving ability to collect and organize meaningful data about where we are with taxes. Second, putting it bluntly, is that the current leadership of the Legislature draws ever closer to retirement. A change in leadership could well create an opportunity for change in education funding.
   After long considering the merits of the above programs, I do have preferences.
   First, I would like for those making the legislative choices to make every effort to develop simple mechanisms. Complexity seems to come naturally with law, but due effort can help simplify.
   Second, I prefer keeping property taxes to fund property, with the state funding educational and operational funds. I favor completely replacing property taxes on educational and operational funds with state income tax money, distributed through a formula to recognize differing costs of doing business in different areas of the state.
   Observing and participating in the debate over the past 25 years has been interesting, but as yet not very fruitful. Yet, it has been very gratifying to see our government responding to issues of fairness. The system does work, but slowness is the norm.
   The lesson in government taught by the actions of our nation is that legitimate needs will be addressed, and progress will be made, almost always in a peaceful fashion. I believe there is a strong appreciation for public education that will endure, and that adequate funding in an equitable way will evolve.
   What if I'm wrong? The pressures will continue to build, both on the farm owners' side, and within public education.
   There will be more difficulty getting quality volunteers to serve on school boards. There will be greater difficulty interesting bright young people to consider careers in education. More students will move into private education, and politicians will respond with more financial support for private education. Negotiations with education unions will be more difficult. Landowners will resist ever more strongly increased property taxes.
   The quality of education will decline due to the increased distractions of greater funding difficulties. Faith in our system of government will also decline, as politicians decry conditions but make no substantial changes in the laws.
   We must not let that happen. Write a letter to your state representative. Together, we can do better ... and will.

   Lin Warfel is a fourth-generation Champaign County farmer who's been active in education and agricultural issues most of his adult life. He served for 10 years on the Unit 7 school board, including two as its president, and has been on the Parkland College Board of Trustees for nine years, including four as its secretary. He is a co-author of the Illinois Farm Bureau's "Change How Illinois Education Is Funded" program.

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