SAC Legislative Bulletin
The official legislative newsletter for the School Administrators Coalition (SAC) which includes
MASA, MAESP, MASSP, MOASBO, MOCASE, MUSIC, MO K-8, MARE & MSHSAA

March 5, 2010 - No. 9  - Copyright 2010

SPRING BREAK

Spring break arrived early for members of the General Assembly.  The break began on the afternoon of Thursday, March 4.  The General Assembly will reconvene on Monday, March 15 at 4:00 p.m.

BUDGET UPDATE

Current year revenue collections continue to fall below expectations.  February revenues were down more than 14% over February 2009 collections.  To date, fiscal year collections are lagging 12.7% behind.  The Governor has indicated that state government must downsize further.  Additional withholdings in the current fiscal year are expected.

The House Budget Committee released its initial draft of HCS for HB 2002 which will be discussed by the Committee when the General Assembly returns from spring break.  The committee is scheduled to meet on Monday, March 15, at 9:00 a.m. to begin reviewing the various provisions of the substitute and make needed changes.  The amended budget bill will then make its way to the floor of the House where additional amendments are likely to be offered.  Once the House completes its work on the budget and approves the bill, the budget will be forwarded to the Senate where a similar process will be undertaken.  Changes will be made to the bill before the General Assembly passes the final budget in early May.  The bill must then be sent to the Governor for consideration.  It is too early in the process to make any assumptions about the final budget for K-12 education; however, school administrators must be aware of the recommendations.

The HCS for HB 2002 includes an $87,705,320 increase for the foundation formula as noted below:

PROPOSED LIMITATION ON ELECTIONS

TO INCREASE SCHOOL DISTRICT LEVY

SCS for SJR 30, sponsored by Sen. Bartle, will soon be placed on the Senate calendar for debate.  SCS for SJR 30 requires that any ballot measure to increase tax rates in municipalities, counties or school districts either be placed on the ballot at a general election (November of each even numbered year), or if placed on a ballot at any other time of year, a sixty (60%) percent voter approval rate would be required for passage of the tax increase.  Currently, the Missouri Constitution requires a simple majority for passage of a school district levy increase which typically is placed on the municipal election ballot in the month of April.

SCS for SJR 30 would make it substantially more difficult for school districts to pass levy increases and would likely result in increased costs for school districts, as the costs associated with a general election would be in addition to the costs of municipal elections which must be held for the election of school board members. The costs of an election are paid by the various entities that participate in the election.  Adding a general election would add unnecessary costs to school districts during a time when they cannot afford additional financial obligations.  In addition, moving levy increases to the general election ballot would make it difficult for school districts to accurately budget and plan for the fiscal year.  Currently, school districts are in the midst of the budgeting process when the results of the municipal election are finalized; this allows school districts to adjust the proposed budgets accordingly.  The general election occurs every other November, and school districts would be unable to budget for the potential passage of a levy increase that would occur mid-year.  It is imprudent to pass a resolution that, if approved by the voters, would directly limit school districts’ ability to seek local support for education.  School districts must retain the current ability to seek voter support.

“FAIR TAX” PROPOSAL

SS for SCS for SJR 29, sponsored by Sen. Purgason, was taken up for debate on Thursday, March 4 and laid over after brief discussion.  The debate on the resolution will likely resume after the legislative spring break.  SS for SCS for SJR 29 would place before the voters a constitutional amendment to do away with the state income tax, corporate franchise and bank franchise taxes, and all existing state sales and use taxes, and replace these taxes with a maximum 7% modified sales tax on goods and services.  The modified sales tax would be levied on property, including leaseholds, rents, and services used or consumed in the state, child care services, health care services, professional services, and many other services.  Although the resolution would initially tax many goods and services, sales tax exemptions would be submitted to the General Assembly annually, and an ongoing battle would ensue to protect tax revenues from being reduced or depleted.  This is evidenced by language added in the Senate Substitute which exempts private and parochial school tuition payments, motor fuel, insurance premiums, donations to charities and business-to-business transactions from the modified sales tax.  For each tax year beginning January 1, 2013, the tax rates for the state individual income tax would be reduced by twenty percent from the prior year’s rate until the rates are eliminated on January 1, 2018.  In addition, the General Assembly would provide for annual rate adjustments to ensure revenue neutrality during the phase out of the income tax.

The resolution is purported to be an economic development tool in that it would lower the tax burden placed on businesses and, theoretically, attract more businesses to the state.  This argument fails to acknowledge that Missouri is considered to have the 16th best business tax climate in the nation, as reported by the Tax Foundation, a conservative entity located in Washington, DC.

No other state has adopted the “fair tax” proposal to date, and concerns with the proposal are numerous.  Missouri does not need to be the pilot state.  Missouri must have a reliable and consistent tax base to support vital and ongoing state services.  The income tax has proven to be a more reliable revenue source than sales tax.  In difficult financial times sales tax revenues often decline and are not available to sustain needed programs and services.  Over the long term, the proposal would likely depress revenues, resulting in a lack of funding for education and other state supported services.  In addition, it would be difficult to enforce the obligation to remit sales tax on purchased goods and services, particularly on small businesses throughout the state.  It is unlikely that the State would invest the resources necessary to educate, audit and ensure that sales taxes are correctly calculated and remitted, thus creating the opportunity for fraudulent reporting and remittance of taxes.

School administrators must contact their state senator, explain the detrimental impact the resolution will have on public education, and request a “no” vote on the “fair tax” resolution when the bill is brought before the Senate for further debate.

SENATE ACTION

The Senate third read and finally passed SB 768, sponsored by Sen. Bartle, which would eliminate the mandate that certain school districts charge tuition for non-resident teachers’ children that attend school in the district and would authorize school districts, at their discretion, to allow non-resident children of teachers or regular employees to attend school in the district, and the school districts would be authorized, but not required, to prescribe a tuition fee to be paid by the employees.  SB 768 will now be referred to the House for consideration.

The Senate third read and finally passed SB 614, sponsored by Sen. Wilson, which would modify the definition of “bullying” to include cyberbullying and electronic communications.  SB 614 will now be referred to the House for consideration.

RETIREMENT SYSTEM

This week Senator Crowell filed three bills which would impact various retirement systems of the State.  These bills have been referred to the Senate Veterans Affairs, Pensions and Urban Affairs Committee.

SB 1048 would establish a new retirement system for state employees hired and judges appointed or elected after January 1, 2011.

SB 1049 would require that state employees hired after January 1, 2011 participate in a new retirement plan.  In addition, these employees, members of the General Assembly, uniformed members of the Highway Patrol, and statewide elected officials would be required to reach age sixty-two before becoming eligible for retirement, and members of the retirement plan would be required to contribute five percent (5%) of their compensation to the plan.

SB 1050 would create the Missouri Public Trust Company to manage investment assets of the Missouri State Employees Retirement System and the Missouri Department of Transportation and Highway Patrol Employees Retirement System.  Other public pension systems would be authorized to contract with the trust company to serve as trustee of their system’s assets or for investment management and advisory services.  The bill excludes the Public School Retirement System and the Missouri Local Government Employees Retirement System from the provisions of the bill.