The impact of Serrano v. Priest on local school tax rates

The controversy of a political issue isn't whether both benefits and drawbacks exist but rather whether the benefits outweigh the drawbacks, and that was the case with the Proposition 13 tax cut measure whose major benefit was the reduction of property tax for homeowners (as well as owners of agricultural, rental residential, and non-residential property) and whose primary drawback was the reduction of revenue to the state government, local governments, and school districts.

It is potentially debatable rather than controversial to say that Proposition 13 was the last of five major factors which impacted public school finances in the 1970s. Three of those factors involved increased expenditures rather than taxation revenue: the energy crisis, the increased cost of lawsuits and liability insurance, and Title IX which impacted primarily athletics and had less impact at the high school level than on colleges where the creation of women's athletics involved scholarships, the hiring of salaried coaches rather than giving a existing high school physical education teacher a stipend to coach a sport, and travel expenses to colleges in another state rather than elsewhere in the county.

The public schools' other two financial crises during the 1970s involved taxation revenue. Proposition 13 was approved by the state's voters on June 6, 1978, and cut taxes in two ways. It reduced the base amount of property tax to one percent of the assessed value (with additional taxes permissible upon voter approval), and it based assessed value on a property's purchase price rather than on market value.

Proposition 13 also required a public vote to raise property taxes; previously a county Board of Supervisors, a city council, a school district, or a water or fire district could change the tax rate by majority vote the way water rates and sewer rates are still set during the annual budget process.

The other fiscal impact on public schools was the 1971 Serrano v. Priest court decision which distributed property tax revenue statewide instead of sending the entire education portion of property taxes to the school districts where the property was located. The redistribution from Serrano v. Priest was revenue-neutral on a statewide basis, although some school districts lost revenue while others gained revenue. It is also possible that Serrano v. Priest contributed to support for Proposition 13 as some homeowners' property taxes were no longer being used proportionally for their own schools.

Ivy Baker Priest was California's state treasurer. She was also the United States Treasurer under President Dwight Eisenhower, and her signature appears on Series 1953 and Series 1957 dollar bills. She allegedly made the quip that it didn't matter whether a woman's face was on a dollar bill as long as her hands were. She was elected as the state treasurer in 1966 and re-elected in 1970.

Los Angeles parent John Serrano and his attorneys argued that the policy of sending property tax revenues to local school districts violated the right to equal education since schools in more affluent districts would have more education funding than schools in lower-income areas. The California Supreme Court agreed with that argument, and the school portion of property tax payments was subsequently sent to the state rather than being distributed to local school districts by the county.

The state legislature responded with the passage of Senate Bill 90, which increased the state's responsibility for school support in an attempt to equalize the tax burden for affluent and lower-income school districts. The impact of Serrano v. Priest and SB 90 was reflected in the change in school district tax rates from 1972-73 to 1973-74.

In 1973, San Diego County had 28 elementary school districts, six high school districts, nine K-12 unified districts, and five community college districts. Because the unified school districts had a single tax rather than separate taxes for the elementary and high school districts the tax rates in the unified school districts were the highest.

Seven of the nine unified districts had a tax rate of at least $4 per $100 of assessed value in either or both 1972-73 and 1973-74 (Borrego Springs and Coronado were the exceptions). The five community college districts were the only school districts with rates of under $1 per $100 of assessed value; all five had rates under $1 for both years.

The Palomar Community College District had the lowest rates for both years, levying property owners $0.486 per $100 of assessed value in 1972-73 and $0.478 per $100 of valuation for 1973-74. In 1972-73, the San Diego Community College District had the second-lowest rate at $0.601 per $100 of property value, but an increase to $0.651 for the following year coupled with a Sweetwater Community College District reduction from $0.696 to $0.627 gave the Sweetwater district the lowest 1973-74 rate other than for the Palomar district.

The Grossmont Community College District had the highest junior college rate both years with assessments of $0.826 in 1972-73 and $0.817 during 1973-74. (The other district, the Oceanside-Carlsbad Community College District, had rates of $0.723 for 1972-73 and $0.688 in 1973-74.)

The Fallbrook Union High School District had a 1972-73 tax rate

of $1.130 per $100 of assessed value, and of the nine high school districts only the Julian Union High School District had a lower rate with a tax of $1.126 per $100 of valuation. The Fallbrook property owners received a tax cut of $0.042 per $100 for 1973-74 and the $1.088 per $100 rate became the county's lowest among high school districts as the Julian district's $0.141 per $100 increase created a new rate of $1.267 per $100 of taxable value.

The Grossmont Union High School District had the highest rate among high school districts in both years at $3.229 in 1972-73 and $2.550 in 1973-74; the $0.679 decrease gave Grossmont taxpayers the largest relief among high school district property owners.

Eight of the 28 elementary school district had rates of less than two cents per $100 for 1972-73. The Spencer Valley district in Santa Ysabel had the lowest rate at $1.117 per $100 of assessed value. Julian Union Elementary School District property owners had the second-lowest rate at $1.226 per $100 while the Pauma school district rate of $1.512 per $100 ranked third in terms of the taxpayers' preference.

The rates per $100 of assessed valuation were $1.615 for the Fallbrook Union Elementary School District, $1.630 for the Warner Union School District, $1.700 for the Bonsall Union School District, $1.914 for the San Pasqual Union School District, and $1.919 for the Vallecitos School District.

The Bonsall Union School District was the only one of those eight with a rate decrease for 1973-74; the $0.004 per $100 tax cut gave Bonsall property owners a payment of $1.696 per $100 of assessed value. That moved the Bonsall district from sixth to third for the lowest elementary school district tax rate.

The $0.214 Julian elementary school district increase to $1.466 per

$100 and the Spencer Valley increase of $0.469 which created a rate of $1.586 per $100 gave the Julian taxpayers the most desired rate. The Warner rate of $1.698 per $100 ranked fourth and the Pauma rate was increased to $1.730 per $100. The $0.157 increase for the Fallbrook Union Elementary School District moved Fallbrook to the sixth-lowest rate at $1.772 per $100 of valuation.

Those were the only six elementary school districts with 1973-74 rates of under $2 per $100. Vallecitos School District taxpayers experienced an increase of $0.182 per $100 for a 1973-74 rate of $2.101 per $100 of assessed valuation. That ranked Vallecitos seventh, as San Pasqual property owners were given a tax hike of $0.302 and a new rate of $2.216 per $100.

The Valley Center Union School District had the largest increase of any of the county's school districts; the $0.615 increase changed the district's rate from $2.069 to $2.694. The largest decrease for any district was the $1.192 for the Lemon Grove district whose taxpayers saw a decrease from $3.827 to $2.625 per $100 of assessed value. Lemon Grove had the highest 1972-73 elementary school district rate, and despite a decrease of $0.485 per $100 the Escondido Union School District had the highest 1973-74 elementary school district rate at $3.080 per $100.