Why Utah Has Trouble Funding K-12 Education (Hint: It’s Not Public Lands)

Oct 6, 2014

By Center for Western Priorities

Some Western politicians are promoting the idea of states taking over national public lands, such as national forests and national monuments. While this fringe concept is not widely supported by the mainstream in most Rocky Mountain states, advocates pushing the idea employ a common refrain to support their position: Western states could fully fund schools if only they could take over and develop national public lands.

For example, Utah Congressman Rob Bishop recently stated: “Our education system has a harder time [funding] itself in the West because [public land] prohibits us from developing our property taxes, developing our energy royalties, developing high paying jobs with income taxes, so kids are hurt in the West.”

While it is true that the development of certain state-owned lands helps fund public schools in states like Utah, Congressman Bishop’s claim misstates both the root of the problem and the fiscal reality of a state takeover. Utah’s school funding shortfalls, especially its recent troubles, are a mess of the state’s own making, caused by tax cuts and a failure to assess a reasonable charge on oil and gas companies.

Meanwhile, taking over national public lands, and paying for all related costs, would actually drain state resources, potentially resulting in a land sell off. Just taking on wildfire fighting costs, for example, could cost the state of Utah hundreds of millions of dollars annually, more than the state spends each year on its law enforcement budget.

Utah undoubtedly has a problem funding K-12 education; the state spends just $6,206 per pupil per year, a number that is the lowest in the nation and more than $4,400 below the national average.

But low per pupil spending is not reflected in other states with lots of public land. Wyoming, for example, spends $15,897 per pupil on K-12 education, which is more than two times what Utah spends and the highest per pupil spending in the nation.

So, why is it that funding for public education thrives in Wyoming and other public lands states, as Utah struggles to fund its schools? Below are the three key factors driving Utah’s K-12 funding problems.

Utah has Consistently Lowered Property and Income Taxes at the Expense of K-12 Education

Utah funds public education through a combination of local property taxes, state income taxes, and federal sources, in addition to a small amount of funding (less than 4 percent of total) from the sale and lease of Utah state trust lands. But as federal sources have remained stable, or even increased in recent years, Utah state income taxes and property taxes have been cut.

In 2006, Utah Governor John Huntsman implemented large cuts to the state’s individual income taxes. These tax cuts, combined with the effects of the Great Recession, have significantly reduced Utah’s tax burden, but also decreased the amount of money generated for public schools. And, while the majority of other states raised taxes to make up for revenue declines caused by the recession, Utah avoided such a move by opting for further budget reductions.

Making matters worse, Utah has made consistent cuts to the minimum property tax rate, a critical source of education funding, under the banner of “tax relief” for businesses and homeowners.

Utah Fails to Charge a Reasonable Tax on Oil and Gas Extraction

Because of Utah’s failure to charge a reasonable tax on oil and natural gas produced on private and public lands, the state is leaving hundreds of millions of dollars on the table that the legislature could appropriate to Utah’s school children.

Utah has by far the lowest “effective tax rate” on oil and gas drilling activities of any state in the Mountain West. (An effective tax rate allows for the comparison of the amount of revenue Utah receives from oil and gas production relative to other states). While North Dakota, Montana, and Wyoming all have effective oil and gas tax rates north of 10 percent, Utah’s effective oil and gas tax rate is 3.3 percent.

Even nominal tax increases, in line with those assessed by its neighbors, would generate much needed funds for K-12 education in Utah.

Utah has a Higher Proportion of School Aged Kids than other States

Several reports have highlighted Utah’s unique demographic makeup. For example, the Utah Foundation noted that “with very high birth rates and a very young population, there [are] many school aged children.” And according to the U.S. Census, nearly 31 percent of the state’s population is under the age of 18; Texas is the next closest with 26.6 percent of the population under 18 (the national average is 23.3 percent).

Thus, because of Utah’s demography, funding education presents a unique challenge. Utah has more children to educate and fewer working adults paying into the public education system.

Solving Utah’s education funding shortfalls will require creativity and hard choices. Americans across the political spectrum have different tolerances and different expectations for taxes, the role of government, and school funding. There are strong and divergent opinions on taxing and spending and these debates aren’t likely to go away anytime soon.

But Utah politicians are being disingenuous and deceptive by blaming national public lands as the cause of the state’s low K-12 education funding, and using this as a ruse for why the state should take over national public lands.