Monday, September 17, 2007

State employee retirement: 30% or 100% taxpayer funded?

Utah state and local government employees, including school district employees, receive generous retirement benefits. Utah taxpayers cover 100% of the cost of state/local government employee retirement benefits (some employees on the older system chip in some of their own funding).

However, the Utah Public Employees' Association claims differently. In their August/September 2007 newsletter, the UPEA states

Contributions into the retirement system are only funding 30% of the cost; 70% of the cost of the retirement system is funded by investment earnings. Put another way, for every $1 of benefit paid out by [Utah Retirement System], only 30 cents is being funded by the employer (taxpayer).

Obviously, we disagree. The other 70% should also be considered taxpayer funded as well since investment earnings are derived from taxpayer contributions in the first place. This is no different than the investment earnings that individuals and households earn in their own retirement accounts. The earnings are attributed to the investor's account.

Thursday, September 06, 2007

Charter Schools Still Receive Less Funding Per Student than District Schools

In its September 2007 newsletter, the Utah Taxpayers Association has released an analysis of per student spending for district schools and charter schools for FY2006.

After excluding lunch service and non K-12 programs and deducting transportation costs and federal start-up funding, charter schools received $5,329 per student in FY2006 while district schools received $6,001.

While some of the per student funding difference between charter schools and district schools is attributable to different enrollment demographics, more than half of the difference is attributable to charter schools being short-changed on local replacement funding.

Click here to see the report.

Sunday, September 02, 2007

Fees + Taxes = Double Taxation?

Today's Deseret Morning News reports on the increased reliance on entrance fees to fund national and state parks. One of the persons quoted in the article suggested that having to pay taxes and fees is the same as paying twice.

We've heard the same argument with regards to congestion pricing. Such "paying twice" or "double taxation" reasoning leads to some very interesting conclusions.

For example, should cities stop sending residents monthly water bills because federal taxes, state sales taxes, and local property taxes are used to fund water projects?

Should the state eliminate the gas tax (really a user fee) because state and local general sales tax dollars and local property tax dollars are used to fund roads?

Should the state stop charging for lunches in public schools because federal taxes and state liquor taxes are used to fund school nutrition programs?

It's fairly obvious to most people that if government were to eliminate these fees that general taxes would have to be raised elsewhere or government programs would have to be streamlined (including those that were being funded in part by fees).

However, the real question to those who argue that these fees are double taxation is why do government services have to be either 100% funded by general taxes or 100% funded by fees but not a combination of both?

Reliance on user fees makes sense in many instances, particularly if user fees encourage personal responsibility and more efficient use of resources.