The Role of the Property Tax in Public Education Funding

A: No state has completely abandoned the use of the property tax as a source of revenue for public schools. States have shifted from a reliance on local property tax revenues as a substantial source of funding. In these cases (e.g., Indiana and Michigan) the state took on a larger role in the administration of the property tax revenues, in essence shifting from local property tax reliance to state property tax oversight. By oversight, I mean that the state sets the tax rates or tax ceilings or floors for local school districts (or parent governments). For instance, when Indiana, made this transition, the state eliminated a number of special local property tax levies and replaced the lost revenue with an increase in state sales and use tax rates (from six percent to seven percent). More on Indiana House Bill 1001 (2008) is available here. Instead of eliminating the local property tax, many states have placed limits on local property tax growth, California’s Proposition 13 being the most

A: No state has completely abandoned the use of the property tax as a source of revenue for public schools. States have shifted from a reliance on local property tax revenues as a substantial source of funding. In these cases (e.g., Indiana and Michigan) the state took on a larger role in the administration of the property tax revenues, in essence shifting from local property tax reliance to state property tax oversight. By oversight, I mean that the state sets the tax rates or tax ceilings or floors for local school districts (or parent governments). For instance, when Indiana, made this tran