The Real Consequences of Property Tax Compression for Oregon Public Schools
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Date
2014
Authors
Vedder, Andrea
Davis, Matt
Journal Title
Journal ISSN
Volume Title
Publisher
University of Oregon
Abstract
Since Oregon's stringent property tax reforms in the mid-1990s, tax limitations have created a complex and somewhat unpredictable levy system for local public service administrators who rely on property taxes to fund their operations. School districts, in particular, have hit the tax limitations and been forced to reckon with expected but uncollected ("compressed") property tax revenue. This study examines the relationship between property tax compression rates and school production in Oregon, which we measure with the district-wide percentage of eighth grade students who meet or exceed state standards in the mathematics assessment. From the Oregon Departments of Education and Revenue, we've compiled a panel data set on 147 school districts over the six academic years from 2006-2007 to 2011-2012. We've created an Ordinary Least Squares model designed to control for demographic, financial, and fixed district and year effects that may affect a district or year's overall level of student achievement, and attempt to isolate the effect that property tax compression has on district production. Our results indicate that there is a significant quadratic relationship between property tax compression rates and student achievement, such that while low levels of compression have positive effects on achievement, compression rates above 17.33 percent will negatively affect production. Simply put, our results indicate that a small amount of tax compression paradoxically benefits school districts, but the high tax compression rates bring down a district's percentage of students who pass state mathematics exams.
Description
21 pages
Keywords
Property taxes, Tax revenue, School districts, School districts -- Oregon, Student outcomes, Tax compression, Measure 5
Citation
Vedder, A., & Davis, M. (2014). The Real Consequences of Property Tax Compression for Oregon Public Schools. Oregon Undergraduate Research Journal, 7(1). doi:10.5399/uo/ourj.7.1.3