Harrison Epstein, Daily Herald

Editor’s Note: This is the third of three stories in a series examining the feasibility and plausibility of Orem splitting away from the Alpine School District. The issue, Proposition 2, will be on the ballot for Orem voters this November. The series will look at the three listed targets from the feasibility study — what is in the best interest of the students, teacher’s salaries and benefits, and financial feasibility for a new district.

An anonymous Orem resident noted that Wednesday’s farmer’s market at the City Center Park was like entering a war zone of words over whether the city should have its own school district or stay with the Alpine School District. Quickly, the passion on both sides has built and built, nearing levels reminiscent of the Hatfields and McCoys or Montagues and Capulets — just here in Utah County.

With the issue on the ballot Nov. 8, the feuding is increasing around the city. Both sides talk about the students and the teachers, but the heart of the dispute is the money.

The actual fiduciary figures are extremely fluid and will not be known until long after votes are counted. If Proposition 2 passes, it is the new district’s school board that will make the financial decisions. The earliest they would be elected is November 2023.

Of the approximately 46,556 voters in Orem, fewer than 500 attended the July public meetings where financial information was introduced. For both the city and the school district, that could mean a lot of hard work educating residents.

Harrison Epstein, Daily Herald

Groups in support of the split and opposed have created presentations articulating their perspectives. While the information is available for the general public, two groups shared their arguments with the Daily Herald.

According to groups seeking a new school district, the following are the high points of their presentation:

• Orem would realize a decrease in taxes of 11-17%
• Revenues: Federal, $15.1 million; State/local, $93.4 million; Property taxes, $64.4 million; Nutrition services $1.1 million; Foundation, $0.7 million; interest income, $0.3 million. With total revenues being $174 million.
• Expenditures: General fund, $147.3 million, capital fund $5.8 million; Debt service $15.7 million, with total expenditures $68.8 million leaving a $5.2 million surplus.
• For the past 20 years, Orem has paid $765 million in property taxes to the Alpine School District, of that, $428 million went to the General Fund and $163 million went to bond allocations.
• Approximately $174 million of Orem taxes left Orem to build schools in other parts of the district.
• ASD increases taxes on an average of 8.2% a year. Over 20 years that is a 165% increase.
• Current ASD bond debt is $538 million, with a potential $595 million in new bond debt on the November ballot.
• In previous bonds, Orem’s percentage of the contribution has been; 39.32% (2001), 29.17% (2006), 27.96% (2011), 25.98% (2016) and 19.5% (2022 if the ASD bond is passed).
• Orem’s return on the bonds are; 17.5% (2001), 17.2% (2006), 10.8% (2011), 11% (2016) and 3% (2022 if the ASD bond is passed). Over the past 20 years, Orem’s contribution to ASD has been an average of 28% and the average return is 13% back to Orem.

“This is a win-win for both sides,” said council member LaNae Millett. “It lets ASD go take care of their growth pressures and allows Orem to focus on rebuilding our unsafe schools.”

“Orem can financially sustain itself,” she added.

The group claims the city is paying twice on certain properties. For example, Orem taxpayer’s money built Hillcrest Elementary in 1954, but in 2017 the 63 year-old school and property was sold by ASD to Orem.

Harrison Epstein, Daily Herald

Schools built in Orem prior to 1995 were all paid for by Orem taxpayers. In 1995, the Utah State Legislature gave school districts the discretion to use money where it is most needed, but also made bonding one of the only tools to raise funds, according to Utah Sen. Keith Grover. Grover supports Proposition 2 and Orem splitting from ASD. In 2017, Hillcrest was considered an asset of the district.

The group StrongerTogether, a Political Issues Committee opposed to a new district, listed the following as top concerns if Orem had its own school district.

• An Orem-only district would have a smaller tax base.
• It would be a higher cost for each Orem household.
• Lower enrollments mean Orem would receive $30 million less from the state to operate schools.
• ASD subsidizes Orem schools by $21 million a year, leaving Orem to cover that shortfall.
• Cost per student would be about $6,500.
• When enrollment declines costs go up. Schools below 400 students would increase costs drastically.
• Tax shortfall would be $21-$38 million per year.
• Not included in the feasibility study are “realistic” start-up costs, inflation adjustments and higher interest rates.
• There is no funding for higher teacher pay, smaller class sizes and facility improvements.
• Based on a median average of the cost of a home at $500,000 current school taxes are $1,650. Additional taxes for an Orem-only district would add $800 equaling $2,360 for tax payers in a new district. That is a 51% increase in property taxes based on low end projections.
• Of the $16 million in property taxes raised in Orem, $13.7 million will be spent in Orem with $2.4 million spent elsewhere.
• The net benefit to Orem is $18.6 million.

Two weeks ago, at the Farmers Market, the StrongerTogether banner said there would be a 30% tax increase, this week the banner allegedly said 51%.

Orem City Council member Tom Macdonald, who supports StrongerTogether, said he was concerned about the financial burden on the city.

Macdonald described the situation by paraphrasing a quote from Nancy Pelosi, Speaker of the U.S. House of Representatives. “We need to pass the bill to know what it says.” Macdonald said that is something he would not do.

The Feasibility Study

The General Fund is the largest and most important fund of a school district. Most of the revenue and expenses for instruction and other daily school operations, are charged to the General Fund. The financial revenues in the Fund are as follows: local property taxes, interest earnings, other local revenues, state funds and federal funds, according to the feasibility study.

The study was conducted by DEC LLC, led by Paul McCarty and Michael Wankier.

“A comparative analysis of general fund revenues in dollars, per pupil revenue, and percentage analysis was done among our comparison group of school districts. ASD’s General Fund revenue ranks first, with an impressive at $625 million, with highest revenue in the comparison group. However, on a per pupil basis, a more important metric, since property taxes allow a district to enhance Utah’s Minimum School Program, ASD ranks next to last, trailing only Jordan District, in General Fund revenue among its peer districts. ASD also ranks next to last in property tax per pupil at $1,714, trailing only Nebo District. At $103 per pupil, ASD also ranks next to last in other local funds generated through fees and other local revenue streams,” reads the study.

According to the study, ASD is third in the state for per pupil funding, trailing Provo City School District and Nebo School District.

“A split of the Alpine School District into a New District and the Remaining District will result in changes to the taxpayers in community,” the study said. “These changes can be evaluated by looking at the amount of taxes paid or the mil rate charged to arrive at the taxes that are paid. Regardless of the approach taken, a split of the district is just the first step. The overall impact that it will have to tax payers will ultimately be determined by the decisions that are made after the split, for each of the communities.”

Full text of the feasibility study can be found at https://orem.org/schooldistrictstudy/. The presentation from anti-split StrongerTogether can be found at https://strongertogether.education/ and the pro-split Orem’s Future presentation can be found at https://oremsfuture.com/.

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