A bill that would divert Utahns’ property taxes away from local public schools and instead drop them into the state’s general fund is now headed to Gov. Spencer Cox’s desk after it passed out of the Senate on Thursday.
Under SB37, the state would still be responsible for allocating the minimum amount of money that each local school district requires — set at $4,494 per student for fiscal 2025 — but the bill allows lawmakers to solely use income tax revenue to do that, freeing up local property tax dollars for other state purposes.
School districts and education organizations across Utah have opposed the measure.
“Have you spoken to the districts, and are they now supporting this bill?” Sen. Kathleen Riebe, D-Cottonwood Heights, asked the bill’s sponsor, Sen. Lincoln Fillmore, Thursday,
“No, I have not spoken to school districts since the last time we debated this bill,” the Republican from South Jordan answered. “I imagine that they have not changed their position.”
How SB37 changes school funding
Utah’s “Minimum School Program” (MSP) is the primary way the state funds K-12 public education. It ensures that all schools receive a baseline level of funding, regardless of local wealth, by combining state and local tax revenue.
Each year, the state sets a “Weighted Pupil Unit” (WPU), which determines the minimum amount of money that must be allocated for each student. Schools receive funding based on the number of students they serve, with adjustments for factors like grade level and special education needs.
School districts also must levy a basic property tax rate, which helps fund the MSP. If a district’s local property tax revenue isn’t enough to meet the per-student minimum, the state provides extra funds to make up the difference.
Right now, when local property taxes are collected each November, each county then deposits that revenue into a “Public Treasurer’s Investment Fund,” which school districts can access.
That fund also allows districts to earn interest on local property tax revenue, currently at a rate of about 4.5%.
If SB37 becomes law, local property tax revenue would instead go directly into the state’s general fund. The Utah State Board of Education would then have 35 days after receiving the money to transfer an equivalent amount — taken from the income tax fund, not the general fund — into each district’s investment account.
Sen. Fillmore on Thursday argued the bill “isn’t a clever way” for the state to “steal money from public education.”
(Francisco Kjolseth | The Salt Lake Tribune) Phil Dean, chief economist with Kem C. Gardner Policy Institute, speaks about Utah K-12 public education funding on Wednesday, August. 14, 2024.
“The bill requires that whatever money is collected, the same amount of money in the exact same time frame, and with the exact same funding flexibility, is distributed to school districts as soon as it’s collected,” Fillmore said.
However, those opposed to the bill have argued it could sow division between local school boards and their communities.
Residents pay property taxes expecting to support schools, but their money “may or may not” be used for that purpose, Lexi Cunningham previously told The Salt Lake Tribune. Cunningham is the executive director of the Utah School Superintendents Association and the associate executive director of the Utah School Boards Association.
“Taxpayers have a right to know where their tax dollars are going,” Cunningham previously said, adding that, at the end of the day, it’s school boards who have to answer to their communities.
