Douglas Rooks has been a Maine editor, columnist and reporter for 40 years. He welcomes comment at [email protected].

The Legislature is considering a bill to overhaul the state’s school funding formula on the grounds that it’s “outdated,” and that proposed changes would make distribution of the massive amounts of state aid to local districts — $1.5 billion this fiscal year — more “fair and equitable.” So far, so good.

The problems with LD 2226 begin almost immediately, however, based on a common misperception of why we have a formula and what it can be expected to do. It’s frequently contended property valuations don’t fully capture a town or regional district’s ability to pay for schools.

In many areas, second homes and shorefront property result in high valuations but residents’ incomes are relatively low, supposedly limiting their ability to pay property taxes. Critics say revising the formula to reflect those income disparities is the solution.

But this approach fundamentally misperceives why we have such robust state funding — 55% of approved expenditures — and what its purpose is. Very few states make such large transfers of state money, raised chiefly through income and sales taxes, and send it directly to local budgets.

The rationale is clear: allow every public school in Maine to offer an adequate education without unduly burdening property taxpayers. Contrast, for instance, neighboring New Hampshire, which contributes very low levels of state assistance.

Property taxpayers are largely on their own. Property-rich communities can usually afford good schools while keeping taxes relatively low. Towns with scant property valuation often have poor schools combined with sky-high property taxes. Those fundamental inequities, which persist despite several court orders mandating reform, is exactly what Maine’s funding system avoids.

The 55% funding the state provides is an average; the actual percentage of local budgets so funded can vary from less than 10% to more than 90%. Simply put, many towns couldn’t afford a local school without state aid.

So while it’s tempting to think including local incomes would make distribution fairer, this is trying to accomplish something the formula isn’t designed to do. State aid essentially replaces local dollars, and does so with objective valuations for every municipality. And we don’t have to speculate about what would happen if incomes were factored into the distribution formula. We’ve already tried it.

Real estate “bubbles,” overvaluing of commercial property in particular, have occurred repeatedly before major recessions, most recently the “Great Recession” of 2008. Hot markets drove up municipal valuations and reduced state aid — temporarily.

Portland lawmakers convinced the Legislature to factor incomes into the distribution formula and the results were disastrous. Revised aid totals were all over the map, difficult to explain to legislators, let alone their constituents.

A University of Maine researcher later explained what happened. Income varies by only a factor of 2-1, meaning Maine’s “poorest” community has about half the income of the “richest.” Property values vary far more widely, at the time by 17-1.

Introducing income into a formula designed to rectify low valuations distorted it in ways no one could have predicted. The following year, lawmakers scrapped the new formula and went back to the old one.

While the rationale behind the new proposal is different, based on family poverty levels, the results would likely be similar. What sounds fair in theory runs afoul of how the formula works in practice.

There are parts of the new bill that attempt other adjustments, for transportation costs and special education. They may be justified but should be approached with caution.

What no one says aloud when the state is doling out $1.5 billion to some 277 individual school districts is that this is literally a zero-sum game. If rules are changed to pay one district more, another district will get less. It seems fair if your schools gets more, but unfair if aid declines — a potent factor amid reported discontent over property taxes.

If Maine were to consider a reform to truly increase taxpayer confidence in the system, it could be on the revenue side of the ledger, namely the uniform state property tax briefly in effect from 1973-77, before being repealed by referendum.

Under its terms, each town and city paid exactly the same property tax rate for schools, then $11.53 per thousand. Districts could raise more money on their own for improved or expanded programs, but the required tax burden was the same statewide. There were technical problems in implementation that contributed to the uniform tax’s unpopularity, but for a state so dependent on state funding for local services, it made sense, and still does.

As the Hippocratic Oath puts it, “First, do no harm.” Before lawmakers get into formula-shifting business again, they should take heed.