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Morgan: The Abbeville decision

Posted: January 23, 2015 10:54 a.m.
Updated: January 26, 2015 1:00 a.m.

While I was taking a finance class as part of my doctoral program in Virginia in the early 1990s, one of the topics we discussed was a lawsuit that had been filed in South Carolina, now called the Abbeville case, which challenged South Carolina’s structure for funding public education. Life takes funny turns. Here I am 21 years later in South Carolina when the case is finally settled.

In early November, the South Carolina Supreme Court ruled on the Abbeville case. In its ruling, the Court held that, “our State’s education system fails to provide school districts with the resources necessary to meet the minimally-adequate standard.” (Does it occur to anyone else that “minimally adequate” sets a pretty low bar?) The Court particularly highlighted the disparity in opportunity that exists between rich and poor school districts, and noted that while the General Assembly has primary responsibility to correct the constitutional deficiency, it urged all the interested parties to work together to find solutions. I am disappointed that Governor Haley and House and Senate leaders have asked the Court to reconsider its decision. But I think the Court was adamant enough that it will not change its mind.

So what might this all mean?

Funding

Probably the most significant impact this decision will have is on how education is funded in our state. The current structure was developed back when textile manufacturing dominated the economic landscape. Under the current structure, it is nearly impossible for rural districts with significant poverty and limited tax bases to compete financially with affluent districts, creating significant educational disparities. Act 388, which changed the emphasis for K-12 funding from the property tax to the sales tax, simply exacerbated an already bad situation.

Legislation to address funding disparities, called the “SC JET Act” (“South Carolina Jobs, Education, and Tax Act”) will be introduced at the General Assembly this month. The proposal would set a statewide millage rate of 100 mills and would eliminate or reduce sales tax exemptions to fund the legislation. The legislation would also streamline the 70-plus revenue streams for K-12 education, allow districts more flexibility over how money is spent, and give school districts options to raise more operating money for schools. SC JET would save businesses more than $750 million per year in property taxes, which is obviously attractive.

There is a lot of support from the business community and the State Chamber of Commerce for this legislation, although resistance is expected from more affluent school districts. There also undoubtedly will be opposition over eliminating or reducing sales tax exemptions from those who are benefitting. (South Carolina actually exempts about half of what could be collected in sales tax.) Opposition also exists to giving local school boards any meaningful authority to raise revenue, which I find curious. Why have elected local school boards if they aren’t allowed run their districts? One area that SC JET does not address is how to resolve the serious inequities that exist in school facilities. Facilities will undoubtedly have to be addressed to meet the Court’s mandate.

District consolidation

As the Supreme Court’s decision does note, establishing a more even educational playing field goes beyond just funding and extends to how resources are utilized. One of the key issues related to the use of resources is the sheer number of very small, inefficient districts in our state. Small districts certainly have some advantages, but they are not as fiscally efficient as larger ones because of the cost duplication for administration and other centralized functions, which is money that doesn’t go to classrooms.

In South Carolina, there are 46 counties and 81 school districts, including some that have fewer than 1,500 students. The lack of efficiency involved is pretty obvious. Although district consolidation is never a popular discussion, the idea of redirecting resources to classrooms through greater efficiency may be attractive to legislators. One of the reasons Kershaw County is nationally recognized for its efficiency in terms of return for education dollars spent is that it serves the entire county and can leverage resources across the entire county.

Persistently failing schools

Another issue tied to the Abbeville decision undoubtedly will be how to address persistently failing schools, many of which are in poor rural districts. There long has been sentiment within the General Assembly that a number of local school boards are unwilling and/or unable to take the necessary actions to turn these situations around.

Some states, most notably Louisiana and Tennessee, have instituted statewide “turnaround” districts. The loss of local control is not generally well-received, but this approach coupled with some district consolidation may have to be part of the compromise needed to get broader funding reform passed. Attracting and retaining teachers, especially in rural areas, should get a lot of attention as part of this discussion.

More than funding

While, on the surface, the Abbeville decision is about funding, it is much more complex than that. There are a lot of moving parts. I believe that as the General Assembly tackles the Court’s directive, issues of accountability, governance, teacher retention and quality, as well as how existing resources are utilized, will come strongly into play. I also expect that voucher proponents will try to use the situation to advocate for private school options.

I don’t anticipate the whole thing will get fully sorted out during the upcoming legislative session, although the Supreme Court has retained jurisdiction in the case and will probably not tolerate a lot of foot-dragging. A thoughtful approach needs to be pursued so that whatever solutions are ultimately pursued make good long-term sense.

Make no mistake, this is a watershed moment for public education in South Carolina.

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