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Kansas City schools missed out on $45 million last year due to tax breaks for developers | KCUR 89.3

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Rebecca Parker has a list of things she would add to her library at East High School if it had more money. She says that the school could buy more books, updated technology and new furniture.

“A lot of it is 40 years old. It was placed here around the time I graduated from high school,” Parker said. “While it’s coming together, you want to have a good place for the students to work.”

Kansas City Public Schools and charter schools lost $45 million in potential funding last year due to tax breaks for developers, according to a city report obtained by the district.That equates to $1,700 per student diverted from KCPS schools and into development projects.

Developers who build projects — from retail businesses to apartment complexes — can seek tax breaks from the city that forgo local tax payments for years or even decades.

Cities use tax breaks to attract developers and businesses in the hope that those projects will generate revenue that makes up for the lack of taxes.

However, the district is concerned that Kansas City is over-incentivizing private projects by giving them tax breaks for too many years and in areas of the city that are already heavily developed.

District officials say KCPS can’t afford to miss out on so many tax dollars, especially as it faces nearly $300 million in deferred building maintenance.

“Every unnecessary dollar that flows into a private development project is a dollar that doesn’t go into our public school classrooms,” said KCPS Senior Policy Strategist Kathleen Pointer.

Parker, the librarian at East High, says the part of the school she works in is 30 years old, but the main building is nearly 100 years old. Its age means it is not designed to meet current needs – for example, it does not have enough bathrooms for students to use at times.

“They have to go to class because there just aren’t enough restrooms,” Parker said. “Having more and updated bathrooms would greatly impact our ability to teach students and have them in front of us for longer.”

Parker said she feels the impact of tax incentives when she compares the funding her school receives to what she hears from librarians across the state. She says other districts sometimes assume Kansas City’s size and density would bring in more revenue, but don’t have the resources to match nearby suburban schools.

“Every unnecessary dollar flowing into a private development project is a dollar not going into our public school classrooms.”

Kathleen Pointer, KCPS Senior Policy Strategist

“We don’t have the kind of staff equipment, science labs, things like that that you would typically find in a Lee’s Summit high school,” Parker said.

The district considers tax credits to be a matter of equity. Pointer says Northland schools lose between $500 and $900 per student on tax credits, compared to Kansas City’s nearly $1,700.

“This is significantly higher than neighboring districts that serve wealthier, mostly white students,” Pointer said.

Kansas City Public Schools is also the only school district in the region that has not been able to raise school taxes through a bond measure – it has not had a successful school bond since 1967.

Get more money into the classroom

The school district plans to pass a bond and redirect more money to classrooms as part of its long-term strategic plan, Blueprint 2030.

The plan also contained a proposal to close 10 schools to fund an academic vision that would give its students the same opportunities that students in the suburbs have.

The district has since scaled back the number of proposed closures to only two schools. However, that means it won’t be able to implement all of its academic goals, including instrumental music for kindergarten through third grade, science labs and foreign languages ​​in its elementary schools.

Jennifer Wolfsie, a board member, said additional funding could also be used to expand the district’s pre-K program.

“It would be wonderful if these were things we could fund now,” Wolfsie said. “More money would help us do that.”

Wolfsie notes that the school district wants to see economic development in the city, and understands that business incentives are part of that. d In 2022, the district reported that it supported or did not oppose half of the projects within its boundaries.

Still, she says tax incentives are moving in the wrong direction. From 2018 to 2022, the amount cut from KCPS and charter schools increased by 60%.

“I can’t even remember how many years now we’ve been focused on trying to make the use of incentives and abatements more reasonable,” Wolfsie said. “You’d think we wouldn’t increase the amount of their use.”

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Dan Moye, director of land development for the Economic Development Corporation of Kansas City, says there has been a shift in how Kansas City approaches tax incentives over the past decade. City officials have scrutinized developers’ requests for tax incentives more in recent years, while public criticism of tax breaks has intensified.

That latest round of tax orders reduced the maximum length of tax breaks from 25 to 15 years.

“I think as time goes on, obviously we’re going to see less and less impact on the school district because there’s less time out there,” Moye said.

The school district came out swinging against tax incentives in 2020 as Australia-based BlueScope Construction sought another 13 years of abatements from the city. The company had already received two decades of tax breaks.

The city council downvoted the request after then-KCPS Superintendent Mark Bedell wrote a letter saying that not requiring BlueScope to pay property taxes contributes to educational inequities.

Moye says the dollar amount KCPS loses through tax abatements is expected to increase over time because the value of the businesses and properties receiving the abatements will increase. He says the current $45 million figure isn’t the best representation of current incentive practices either, because projects approved a few years ago don’t all show up in the numbers yet

District officials acknowledge that reassessments have driven up the amount of reduced money. They say the amount of money they are missing has grown faster than the amount they are able to bring in through taxes – 60% growth in incentives compared to 30% in tax collection.

‘Tax revenue is their lifeblood’

KCPS officials say they are not opposed to all tax cuts, they just want a seat at the table. They note that other states have limits on incentive agreements that affect school districts.

Across state lines, Kansas school districts must sign on to plans that include tax-increment financing through which program developers can receive incentives. In Ohio, school districts must approve TIF plans that lower taxes by 75% or more for more than 10 years.

“There’s a vested interest in making sure the school district supports a project (elsewhere), and we don’t feel that’s the case within our boundaries,” Pointer said.

Tax incentives are given through eight different programs in Kansas City, which the district says makes it difficult to monitor all projects. Moye said the district’s representation also looks different across the “alphabet soup of agencies,” so the district may have a vote on some groups and not others.

Pointer also notes that some agencies, such as the Port Authority and the Kansas City Area Transit Authority, do not process projects using third-party financial analyses. She says it raises concerns that projects are asking for more money than they need.

Moye says it’s important not to keep too much money away from the district because a strong local school system is “important for economic development.” In recent years, the district has regained accreditation and has strengthened their academic programs. KCPS board member Wolfsie said Kansas City needs a strong school district to remain competitive in drawing new employers to the city.

“My vision for Kansas City Public Schools is that we actually become the asset that the city says over time: ‘We have a great public school system here that no matter when you come in, no matter where you live, we have an abundance of opportunity for you to send your children to,” said Wolfsie. “We’re on our way to it.”