Thursday, December 03, 2009

Out Of Many, One?

Will Consolidation Of Taxing Districts Save Money?

Long Island. 125 school districts. 132 fire districts. 340 town special districts. Who can keep count any more?

Next door, in a city of 8 million, a single school system. [Within the single system, schools exceeding standards, others barely making the grade, and dozens of high schools, each maintaining their unique identity. So fall the arguments that, come consolidation, the gold standard in Jericho will de-evolve into the failing level of Roosevelt, or that East Meadow would lose its identity to Elmont.]

One sanitation department. One fire department. City water flowing through the pipes. And not a single "special" taxing district.

The discourse never strays far from the mark. "Property taxes are too high on Long Island." Yet, we fail to do the one thing that could conceivably lower (not cap -- lower) them.

Freeze the Assessment. Nope. Freeze home values at $1, and the tax rates will rise through the roof to meet the required levy. A school district budget of $40 million remains at $40 million, without regard of your home's assessment. Tax rates will rise in inverse proportion to decreasing assessments (and declining properties on the assessment role). And with decreasing State Aid, homeowners will pay even more as the tax levies, ala the surge waters of Katrina, continue to rise.

Cap the property tax. Sorry. We said, "lower the property tax," not slow its growth to 3 or 4 percent every year. [Do the math. In Just three years, a cap increases your tax by 10%. Where's the savings?]

Legalize basement apartments in single family homes. Supplemental income for homeowners, so they can afford to pay those outrageously high property taxes? We don't think so. The logic to such reasoning applies like a band-aid to a hemorraging artery. Issues of safety aside, the added burden upon services such as water and sanitation would necessitate an increase in the property tax, and a single family house, now assessed as a multi-family dwelling, well, you figure out the property tax on that one!

Stop using public money to pay for private schools. You heard us! Tax dollars to public schools. Period.

The State to fully fund public schools. Ideally, yes. Indeed, in our interpretation of the State Constitution [Article XI, Section 1 mandates that "The Legislature shall provide for the maintenance of a system of free common schools, wherein all children of this state may be educated." (Emphasis added.)], NY is required to finance a system of free public education. Did someone say, FREE? Reality check. Given the fiscal hole NYS is in, and the way New York's government operates -- or fails to, in its dysfunction -- look for less State Aid, not more!

Spend less of the taxpayers' money. YES!!! In a nutshell, curbing expenditures, trimming budgets, eliminating waste, cutting excesses, not spending money that government -- local and otherwise -- does not have.

In New York, from Albany to the local Board of Ed, it has, for generations, been spend, spend, spend. And when you have no more tax dollars at hand, borrow, indebting the next generation.


The tree is bare. The pot is empty.

Taxes on a Nassau County ranch on a 60'x100' lot? $10,250.

Taxes on a Queens County ranch on a 60'x100' lot? $3,475.

And we can't save the overburdened taxpayer by consolidating school districts and eliminating special districts? Wouldn't it at least be worth a try?

Where keeping services local makes sense -- as in neighborhood patroling by the police department (which, by the way, can be and is accomplished by a single department) -- keep it local. Otherwise, the decentralized system under which we now operate everything from garbage collection to water distribution simply does not work for John Q. Public.

They tried decentralizing schools in New York City, each school district having local control. It was a dismal failure, economies of scale notwithstanding.

You don't have to be a Nobel Prize winner to know that the special taxing districts (and, unlike the State's recently adopted consolidation measure, we include school districts among them) are strangling Long Island's homeowners.

Relying upon bogus fixes, or worse, doing nothing, is simply not an option.
-  - -
From Newsday's Opinion Pages:

Nobel winner's work challenges LI on consolidation

William Bianco and Regina Smyth are professors of political science at Indiana University.

Most Nobel Prize winners vanish from the news shortly after their award is announced. But the work of this year's winner in economics - who will accept her award Dec. 10 in Stockholm - speaks directly, and in unexpected ways, to one of the most vexing issues facing Long Island: whether to consolidate the multiple layers of schools, governments and municipal authorities that distinguish Nassau and Suffolk Counties.

Over many decades, Elinor Ostrom, the first woman to win the Nobel Prize in Economics, has challenged the assumption that consolidation over a broad region is automatically going to be more efficient and cheaper than having many smaller organizations, each offering the same services locally.

She would have many questions to ask, for example, about Nassau County Executive Thomas Suozzi's recent proposal that the county executive be put in charge of a single, countywide school district, as a strategy for lowering the property taxes.

Consolidation tends to produce gains in efficiency, she has found, but also significant losses as organizations grow in size. So there is a tradeoff: We have to decide if the savings are worth the cost.

Over 40 years, Ostrom has explored how individuals successfully collaborate to allocate and preserve scarce natural resources.

She and her students and colleagues - including the two of us, who teach with her - have applied their theories to lobster fisheries in New England, forests in Indiana, Bolivia, Uganda and Tanzania, irrigation systems in Nepal, groundwater management in Australia, and cow grazing lands in Switzerland.

In a case especially resonant for Long Island, one of Ostrom's early studies took up the issue of merging of local police departments: Is one department in a region more efficient than several?

She found economies of scale with shared crime labs and dispatching, but when it came to patrolling neighborhoods, smaller departments with fewer layers of supervision were better at spotting early signs of problems, which turned out to be more efficient in the long run.

Ostrom has found that successful solutions, such as Costa Rica's management of pollution in the face of growing eco-tourism, often developed from the ground up. Rooted in local knowledge, these solutions were easier to implement and more likely to be successful than regulations imposed by a central government.

Efficiency can be trumped by the value of a local government's in-depth understanding of how ordinary people in a locale will be affected by changes in public policy.

How does this apply to thinking about the future of Long Island? A good example is the issue of school consolidation.

In its December 2008 report, Suozzi's state Property Tax Relief Commission raised the prospect of merging districts with fewer than 2,000 students, which would combine up to one-third of Long Island's school systems. The commission estimated millions of dollars in cost savings.

Ostrom and her colleagues would ask: What are we giving up for this savings? Is the trade-off worth it? And what exactly are we trying to get out of consolidation? How will consolidation achieve it? What do we lose by consolidating?

Staying local has advantages. With many small districts, a region as a whole is less vulnerable to failures, such as corruption, malfeasance or incompetence at high levels. Another advantage is expert knowledge: It's possible that a small district like Cold Spring Harbor may succeed not so much because of its wealth, but because it knows how to serve its community's needs extremely well.

Ostrom's team would ask: If the goal is to improve the delivery of education, then what is going to change in the classroom with consolidation?

Presumably you are not going to close schools right away; everyone will keep working as they have been. It's not as if you consolidate and suddenly free up enough money to hire 50 more teachers, and cut class sizes in half.

So the main change in staffing would be at the central office: one superintendent instead of two. You probably wouldn't reduce the assistant superintendents by very much, because there is a bigger population to manage.

A larger district can purchase supplies at discount, which isn't trivial. But not everything is pencils or school buses. Different districts may prefer one textbook or another for chemistry classes, for example. But if only a few different texts can be ordered to get bulk savings, say, there's no obvious advantage to the centralized purchasing - other than a windfall for some textbook publisher. In that situation, is the lower price of textbooks worth the loss that comes with one-size-fits-all teaching?

Ostrom would say if you want to centralize at all, centralize around functions that are clearly more efficient - the purchase of "public goods," for example, such as paper towels, pencils or motor oil, where everyone gets the same thing, and the amount of good is equal for everyone.

Of course, sometimes the smaller units she favors can do bad things. They can be under the radar and wind up being less accountable. Minorities can be more easily frozen out, because of their small numbers. The Long Island Index has found that the fragmented school system limits opportunities for students in low-income communities across the area. And Newsday has reported frequently on the patronage and wasteful spending that goes on in the Island's many special districts for fire, water, park and sewer services.

But on balance, Ostrom has found, the advantages of centralization are marginal compared with the possibilities opened up by the spread of information and commitment - people's belief that their opinions count - that come with staying small and local.

People arguing against centralization often sound like cranks who just want their own and don't see beyond their backyards. But this work has shown that sometimes when they express their fears of losing local control, they have a point.

Finally, Ostrom would ask, if consolidation is so compelling, why isn't it happening already? School districts and other authorities don't have to be merged into the same person, or organization or offices. There are many ways for them to cooperate - telephones, e-mail, texting - and talk to each other.

Her faith ultimately lies in the wisdom of local people. With the economy in the tank, people feel pressure to do something to lower their taxes. But in this case that something may be worse than what is already there.


  1. I don't find the position being advanced by Ostrom to be terribly convincing. At a certain point numbers don't lie. No matter how you slice it, there are enormous redundant costs in administration and support services. And yes, significant economies in purchasing could be realized, even in situations in which districts are using different books. Finally, not noted, is the fact that larger scale would improve schools' bargaining position when it comes to labor, something that is sorely needed.

    Why hasn't consolidation happened? In part, because there are powerful vested interests that oppose it and in part because, despite Ostrom's argument, school districts have very little incentive to cooperate with each other.

    As you note, the empirical evidence, expressed in terms of the tax rate differential between Nassau County and Queens is overwhelming, and makes the case against consolidation difficult to believe.

    Here's the practical import of what is now happening with schools on Long Island: we pay an enormous amount of money to educate our kids. In the best case scenario, they then go to college, plus maybe graduate or professional school. They then come back to Long Island only to find that it's become way too expensive - in large part, because of school taxes.

    So what do they do? Well of course the answer is that they then leave Long Island with their valuable education, which is our loss. So Long Island, in effect, is now an export economy, in which our most valuable assets - our children and the economic value they can create as professionals - go somewhere else.


  2. You failed to mention that residents of New York City pay an additional income tax, on top of the state and federal income taxes.
    A family with a combined income of $100,000 would pay an additional $3400 in income taxes if they lived in that Queens ranch. While it doesn't completely close the gap, it does bring it closer.
    Additionally, many city residents end up sending their children to parochial or private schools because they don't have confidence in the quality of the public schools. If you add that factor as well, the Nassau County tax rates are a bargain for people in that situation.

  3. Yes, NYC has an income tax, a progressive tax, based on one's ability to pay, which offsets the regressive property tax, which (a) is based on the valuation of one's property and (b) does not take ability to pay into consideration.

    Is it any wonder that Generation Next is fleeing Long Island for the City, which has now become not only more livable, but, amazingly, more affordable?

  4. CA,

    one of the main reasons NYC is more affordable than LI is:

    1-salaries are way better for most jobs.
    2- in manhattan and parts of the outer boros you can manage without a car.