Consolidation of Salt Lake County's four school districts could cost taxpayers an additional $17.6 million per year, not save tax dollars as many believe.
That was the conclusion of consultants reporting to the Murray and Salt Lake City school boards Tuesday night. The boards took no action on the report.In a study looking at fiscal implications of reorganization, Larry Walters and Adrian VonMondfrans of Wasatch Institute for Research and Evaluation said that contrary to a widespread belief that consolidation would bring savings, reorganization of Salt Lake, Murray, Granite and Jordan into one school district could bring a $17.6 million per year revenue shortfall, an amount equal to 3.9 percent of existing budgets.
"This means that the districts will be forced to either raise additional revenues or cut programs," the report said.
Release of the report comes two weeks before it will be presented to the Legislative Education Interim Committee, which has been hearing consolidation data on the state's 40 school districts. The four Salt Lake County districts shared the $10,000 cost of the consolidation report. Davis County is also mentioned in the report but only under the section on cooperative programs.
Other key findings in the report include:
- Revenue will decline under consolidation because it would be necessary to iron out differences in tax structures and assessed valuation, so taxes rates would likely fall.
- Reconciling instructional costs to a common denominator under consolidation would increase costs nearly $8.16 million a year. This is tied to rising salaries.
- There is no financial reasons for Granite to agree to consolidate with Murray because it would likely result in lost revenues and increased costs.
- Consolidation of Jordan and Murray would substantially increase Jordan's instructional costs because of Murray's higher salary and benefit levels.
- Murray should oppose consolidation with either Jordan or Granite for financial and other reasons such as loss of local control.
- The districts, including Davis, have cooperative programs, and they should explore other possibilities to realize cost savings through cooperative projects.
Walters said in looking at the districts, they were studied in a national context for administrative efficiency. Utah ranks 41st in the amount of its educational dollar going to administration. That means it's fairly efficient, he said.
"As a state we don't expect to see a lot of savings through administrative reorganization," he said.
In fact, he said, the most fiscally efficient school districts are those with student populations of 7,500 to 10,000. A countywide, consolidated district would have 162,555 students.
Administrative costs could likely go up. Walters noted that in Los Angeles County's consolidated school district another administrative layer was added. "You'd have to have more administration just to make the district functional at all," he said.
In studying other school districts that have consolidated, it has been found that teacher salaries and benefit packages usually increase to equal the district with the highest level. Walters said that this increase could be as much as $8.7 million in the revenue shortfall.
Walters also said that state law would require equalization of property taxes, except the debt, under consolidation. If the lowest rates were applied to all districts, the revenue would fall $7.3 million or 6.9 percent. He said given the current fiscal climate in Utah it is unlikely that taxes would increase.
The report also points out there would be a need to equalize the voted leeway, so revenue would decline there, too.