Revenue Sources

There are five sources of funding for school districts (Concordia, 2018).  Approximately, 1% is from our lottery system, 6% is from miscellaneous local funds, 12% from federal funds, 22% from local property tax and 59% from state funding, estimating 81% of education funds stem from state resources (Concordia, 2018).

chart 1

According to Brimley, Verstegen, and Garfield (2012), characteristics of a good tax system include: equity and ability-to-pay, observing if our system is fair for all individuals regardless of their economic status.  Adequacy of yield, which looks at massive amounts of tax revenue.  Costs of collection, which helps to maintain taxes have a low collection and administrative costs to the government and individuals.  Tax shifting, regarding impact and incidence which should ultimately remain minimal to benefit the masses.  Neutrality, which is influenced by the tax rate and lastly predictability, governments depend on tax funding that remains consistent.  Taxes are evaluated using five criteria: growth, stability, simplicity, neutrality, and equity.  Growth deals with the funding used to cover government program costs.  Stability deals with the governments capacity to predict steady income based on tax revenue.  Simplicity refers to taxes being cost-effective, equity calls for the fairness of the progression of taxes and neutrality was previously explained above.  The chart below illustrates taxes collected for educational funding.

Chart 2

Overall, property tax remains the highest tax.  Reason being, the property is the most substantial asset of most individuals based on the value of the property.  Thus, it yields a more significant amount of tax benefit.  Whereas, sales and lottery tax would be the smallest tax because the yield you receive is predicated on whether a person chooses to participate in the lottery or specific sales.  Ultimately in the area of education, property tax continues to be the most beneficial because it provides the most stable source of funding for schools regardless of the community.

References

Brimley, V., Verstegen, D.A. & Garfield R.R. (2012). Financing education in a climate                        of change (11th ed). Upper Saddle River, NJ: Pearson.

Concordia University Irvine Online (2018).  Understanding California’s Property Tax.                     Retrieved from http://www.lao.ca.gov/reports/2012/tax/property-tax-primer-                        112912.pdf

 

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