House Education staff preview county-level equalization and STARS proposals ahead of bill hearings

Legislative staff told the House Education Committee that school retirement employer contributions (TRS/PERS) are pooled at the county level and funded primarily with county property taxes and some non-levy revenue, and used a live Power BI tool to show how that pooling affects counties differently.

The presentation, led by Pat McCracken of the Legislative Services Division and Julia Patton of the Legislative Fiscal Division, explained that employer contribution levels are set by statute and are roughly 9% of salary; districts remit that employer percentage to the retirement systems and the systems pay benefits. Staff used a role-play exercise and county examples (Fallon County and Madison County) to show how counties with large natural-resource or property wealth generate non-levy revenues that alter local levy needs.

Why it matters: staff said House Bill 156 would extend the countywide, pooled approach used for county retirement to the district-level base funding area. Under HB156 the district base area — currently filled with a blend of district property taxes, district non-levy revenue and state guaranteed tax base (GTB) aid — would become a countywide base GTB component. That change would (1) equalize base funding across the county, (2) allow non-levy revenue in the base to be applied to overbase levies or other funds, and (3) shift some mill calculations from district to county level so impacts vary by district.

Staff demonstrated district-level impacts using the fiscal division’s spreadsheets and dashboards. Example districts in Richland County (Savage and Lambert) showed how moving base to the county level could let a district apply non-levy revenue toward an overbase levy and substantially reduce that district’s overbase mill levy (staff cited a roughly $90,000 non-levy amount that could reduce a $130,000 overbase levy to about $40,000 in the example). Staff cautioned that district effects depend on local non-levy balances and the particular mix of funds in each district.

STARS Act and teacher-pay incentives: staff previewed the STARS Act (identified as HB252 in the briefing), which would expand the earlier TEACH Act incentive for starting teacher pay. Under STARS, if districts meet an elevated starting-pay benchmark, the “quality educator” payment could expand from being limited to early-career hires to applying to every quality educator in a district. Staff said that the quality educator component is among five state-funded components and is currently the largest; they estimated the STARS-related request in House Bill 2 would be in the neighborhood of $50 million in the first year and approximately $53–54 million in year two, depending on assumptions.

Housing-adjustment component: staff also described a proposed adjustment for districts with median housing costs above the state median. That adjustment would raise a district’s maximum budget limit; any additional authority created by that adjustment would generally be local, voter-approved money and would be authorized to fund a restricted set of employee housing supports. Committee staff read the statutory-like list of permitted uses included in the proposal: employee housing stipends, construction or purchase of district-owned housing for employees, rental assistance and subsidies, down-payment assistance, shared-ownership models with employee buy-out options, district-guaranteed or subsidized housing loans, relocation assistance, and other Internal Revenue Code–authorized assistance designed to improve employee access to affordable housing.

Staff emphasized that some components of STARS are 100% state-funded (for example the Future Ready component tied to postsecondary attainment and the expanded quality educator payment), while others (the housing adjustment) create local taxing authority and therefore depend on voter decisions. Staff offered to email slides and spreadsheets and told members the dashboard will update when December actuals are ingested into the model.

The presentation concluded with committee questions about how taxable values and median housing costs are calculated (staff said the Department of Revenue’s assessed values will be the data source), whether districts crossing county lines complicate county-level base calculations (staff confirmed that cross-county districts exist and that tuition formulas and residency rules continue to apply), and how House Bill 587 and other recently passed bills change the flow of non-levy and special revenues into the SEPTA account.