What Are Schools Worth? (And Who Benefits When They're Worth a Lot?)

ISSUE 64 | JUNE 30, 2004

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To read a fascinating account of the value that good schools add to homes, take a look at this February 18 news story from the San Francisco Chronicle.

In the old days, local taxes based on the assessed value of real estate were the main source of revenue for schools. Local taxes went hand in hand with local control of local schools. As properties rose in value, they were reassessed periodically, enabling school districts and other public agencies to benefit. Now, it is only through parcel taxes that a handful of communities tax themselves to provide operating income over and above what normally comes their way.

Why should individuals selling homes enjoy the price appreciation that comes from strong schools, and not contribute to the financial well-being of those schools? Why shouldn't a tax on home sales, paid by the seller, be allocated to schools and the other local institutions that make up the commons? Why shouldn't brokers be taxed a portion of their commissions, so they, too, contribute to the ongoing viability of the community that is the territory they are working?

INVESTING IN THE COMMONS CAN BE MOTIVATED BY SELF-INTEREST

One firm that understands this well is Washington Mutual. This owl has watched with wonder as this bank has made extraordinary gifts over the years, funding improvements in teacher preparedness and parent involvement in California and other western states. I asked Antonio Manning, who is in charge of education philanthropy in California, to explain the bank's generosity. He said they have given $11.7 million in the two prior years (2002-2003) for three purposes. "First, we want to ensure that we raise the quality of the teaching profession. We want schools in the inner city to have the same quality of teachers available to them as schools in the suburbs, all as a means to improving student achievement. Second, we aim to improve parent involvement which we believe will boost student achievement. And third, were trying to make sure we have a well educated workforce."

This owl believes Washington Mutual is guided by enlightened self-interest. Their home loan portfolio is spread across California. If schools were perceived to be in trouble, the value of the homes that secured that portfolio would decline. By investing in better schools, the executive management of Washington Mutual is investing in the security of its home loan portfolio. Higher home values meant the home loans theyd made were less risky.

Read more about Washington Mutual's school related philanthropy. Also, read their giving guidelines.

PRACTICAL ADVICE

If schools have such a strong influence on home values, and if enlightened lenders like Washington Mutual can mobilize to strengthen school improvement initiatives, how can education leaders turn this to their advantage? Follow the money, advises this practical owl. Who else has an interest in your success? Title insurance companies. Real estate firms. Local lenders Employers who need to recruit new employees who want good schools nearby. Are you talking to them? Are you asking them to become partners? Are you asking them to underwrite the cost of your staff most in jeopardy: librarians, counselors, aides?

Begging for gifts is not what this owl has in mind. If Washington Mutual is not an exception, then enlightened self-interest should be your theme as you approach businesses with a voluntary tax proposal. You should be asking for substantial contributions. To win a "yes" when you pop the question, ask what that business needs. A local high-tech employer needs high school graduates with strong math and science knowledge. Hewlett-Packard funds science education. Why not break out curricular support that relates to the self-interest of your prospective partners?

Your county real estate association needs your district to publish school and district level accountability reports so they can hand their clients the facts when asked about schools. Why not ask them to underwrite the cost of your SARC program, including printing. With real estate firms and title companies awash in money, the result of a booming residential real estate market (rising prices and an increasing volume of home sales in nearly every market), they are quite capable of funding your SARC program and the district accountability report you need under NCLB.

If you have construction firms or homebuilders with headquarters in your district, why not ask them to support your algebra curriculum? All high school students need algebra to graduate. Perhaps that extra algebra tutoring could boost an unmotivated senior into a well-paid job after graduation.

LESS PRACTICAL ADVICE ABOUT NEW FUNDING FOR SCHOOLS

In the current crisis, few legislators have the courage to propose new taxes. They need your encouragement. Go outside the usual channels, and get with your parents and local business leaders to lobby for a bill that would tax home sales and return the benefits specifically to schools and other civic infrastructure that contribute to home value. This owl is no lawyer (thank goodness). But if Proposition 13 can be circumvented while protecting the elderly on fixed incomes, it could be with a tax like this, where a direct cause-and-effect connection between the appreciation of home values and school quality can be inferred.

As California's cowardly legislators continue to deny the obvious problem — that our state treasury takes in about $20 billion less than we are spending — the impetus for reform will have to come from elsewhere. Look not to the Governor, who remains allergic to new taxes. Look to yourselves, your public, your local businesses, your parents and teachers for the courage and initiative to solve school funding problems.

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