Sunshine Week: Rough Readin’ School Districts’ Writin’ about ‘Rithmetic

March 16, 2023

Some school districts are setting poor examples when it comes to literacy — financial literacy, that is.

For six years now, an obscure accounting rule is supposed to shed light on how much revenue governments are giving away through corporate tax breaks. But despite plenty of time to practice, some school boards just can’t get it right.

Source: Pixelshot

The rule, known as GASB Statement 77, is a huge deal. Finally, most governments have to formally report the costs of some economic development subsidies, not just boast of their supposed benefits in their end-of-the-year spending reports. And not just cities, counties, and states have to report foregone revenue, so do passive losers like school districts, which rarely have a say but lose revenue to abatements given away bycounties or cities.

In honor of Sunshine Week, a time dedicated to the vital need for transparency across government, let me share what I see and offer ideas for how compliance with GASB 77 could be strengthened — because more residents deserve to know what corporate giveaways cost them.

I have a front-row seat on sloppy school prose. When I’m not soaking up the South Texas sun, I spend much of my time scouring the data and entering these lost revenue amounts in our Tax Break Tracker (check out your city or state and let us know if you think information is missing!)

Some of these documents are nearly indecipherable, and New York State school districts are among the worst. (They lose more revenue than any state’s, $1.8 billion in 2021 alone!)

For example:

#1 Albany School District

“The total assessed value of all affordable housing properties is $369,104,465 for the School Tax year, with taxable assessed values of $57,382,001. The total PILOT payments on these properties were $969,070. This value is an expression of what the total value of collected shelter rents would be if they were collected and apportioned as taxes. This constitutes a $1,458,628 abatement of school taxes.”

Got that? Me neither. What I think this paragraph means is that the district lost a net total of $1,458,628 million in tax abatements after accounting for $969,070 in offsetting revenue (Payments In Lieu of Taxes, or a “PILOT”), making their gross loss to abatements loss $2,427,698. But we can’t be sure.

#2 Baldwinsville Central School District

“The County of Onondaga IDA, and the [School] District enter into various property tax abatement programs for the purpose of Economic Development. As a result, the District property tax revenue was reduced $2,876,685. The District received payment in lieu of tax (PILOT) payment totaling $2,333,550 to help offset the property tax reduction”


C-grade prose, right? Readers cannot tell whether the $2,876,685 is the gross loss or net of the PILOT. The ordering of the sentence suggests it is gross (so the net would be about $540,000). But we encountered this boilerplate so many times, we reached out to some school districts — and most said that first figure is actually the net abatement. So the gross loss is actually about $5.2 million and the net — or final loss — is almost six times worse than the misleading language suggests).

This could all be fixed if New York’s Comptroller Thomas DiNapoli (who oversees compliance with Generally Accepted Accounting Principles) would issue guidelines and/or boilerplate language for jurisdictions to use.

Other ideas for better GASB 77 disclosure include requiring governments to list the names of the companies receiving tax breaks, requiring that all abatement losses be reported, regardless of any offsets (unlike California today), and requiring financial statements to be user friendly (i.e., machine-readable) which may soon come to fruition thanks to a new federal law.

School districts should be setting good examples when it comes to disclosure — like making sure financial reports are coherent. Let people decide for themselves if they think waiving taxes for corporations are a better use of public money than supporting small businesses or hiring more teachers.