Recently, I commented on the aftermath of our votes for Amendment one contained in HB 581. This provides homeowners with a floating homestead exemption, which limits the amount if tax due to property tax valuation.
When reviewing Coweta School Superintendent Dr. Horton’s presentation, he made good points we should all consider and work to find ways to protect our excellent public schools.
The State of Georgia uses the Quality Basic Education (QBE) Formula to calculate what it believes is necessary to provide “quality education” to public school students. Both Fayette and Coweta have proven it takes more than the basic formula to provide quality education and local taxation makes up the difference.
All public-school districts are required to have a school budget that equals at least “five MILs” of its own property tax digest Districts are required to levy the equivalent of at least five mills in property taxes as a basic local commitment. That minimum is then deducted from total QBE earnings, and the state pays the balance of the earnings to the system.
Initial calculations for the 2025 school year reflect that Coweta had $40.4 Million dollars subtracted from the QBE funding for the system going from $178.8 M to 138.4M. Fayette did slightly better, with a reduction of 38.5 M going from $168.2 M to 129.8.
The State of Georgia calculates the Five Mils fair share on the gross of the property tax digest instead of the net. Georgia has made it clear that although the vote on HB 581 was state-wide, the result will be considered a “local initiative.”
This means that the property value used for the “Five Mils fair share” will include any reduction for homestead exemptions under HB 581 as well as homestead exemptions made for seniors which has impacted Fayette for years, because the state does not recognize “local initiatives” when determining the value of local property.
In other words, the legislature has devised a system that while the Five Mils Fair Share deduction will continue to grow with the value of our property (hopefully), the amount of local property tax available for taxation will continue to be constrained due to these exemptions.
Some will argue the schools will have to do more with less, but when personnel are more than eighty percent of the cost, it is hard to find a lot of room.
For example, benefit costs for FCBOE were approximately $59.5M, in 2025, those costs are expected to be approximately $80.5M growing at a compound growth rate of approximately 23% per year.
For retirement, FCBOE contribution rate has gone from 12.28% of salaries to 19.98% in 2024. In 2020, a starting teacher out of college (T-4) made 43.358. In 2024, a starting teacher makes $49,321 or 13% more. Changes to the base teacher pay scale or normally compensated by state funding, but local supplements are paid locally.
A fair market analysis shows that both Fayette and Coweta pay competitively and compete for good teachers often among each other. Reasonable people will agree that quality employees follow the money.
In just this cursory analysis, we can see while revenue may be limited, costs continue unabated and more than the cost of the CPI.
However, Dr. Horton made another point that the legislature specifically disallows school systems from using sales tax through a LOST to address reductions driven by HB 581 but allows cities and counties to do so. That makes no sense.
With both Fayette and Coweta completing multiple ESPLOSTs, using a portion of that penny toward operational costs in future years would be a way to offset potential revenue shortfalls and rising costs.
The legislature wisely set a two-cent overall cap for optional sales tax. Therefore, taxes would not go up as people are already paying the “penny for schools.” However, future projects such as solar powered buses, car rider line Starbuck’s drive thru, or other nice to have projects may need to be put on hold.
I made the point last week that I believe “opting out” is not an option as the voters have already spoken. However, the legislature has not given our school leaders many tools or options. We have already seen what this type of exemption has done to Fayette driving cuts to schools to balance the budget.
We may need out local delegations of legislators to take the lead and fix this legislation and recognize the position that these two quality school systems are in with massive cost increases and local tax pressure.
