South Carolina public schools are missing out on at least $318.2 million a year due to corporate tax breaks that were granted to spur economic development, according to a new study.
That figure, tabulated in a recent report from the left-leaning national advocacy group Good Jobs First, would be enough to hire 6,365 teachers at a median salary of $50,000 a year.
Alternatively, school districts could have spent it to buy 3,850 brand-new school buses in a single year, finally sending the state's fire-prone, smog-belching, 1990s-vintage bus fleet to the scrap yard.
Instead, municipal and county governments have granted the tax incentives to a wide variety of companies in a bid to bring jobs to their communities.
That may be a self-defeating strategy in the long run as employers relocating to South Carolina discover that local schools are graduating students who are unprepared for basic math or other skills needed for a modern job.
As The Post and Courier's recent series Minimally Adequate revealed, one in three South Carolina students graduates high school unprepared for most jobs, according to state test results. In some rural and poor districts, where the state's long legacy of under-funding and neglect has done the most damage, entire high school graduating classes fail to produce even a dozen career-ready alumni.
"[W]hen elected officials hand out subsidies that undermine local school finances, they are shortsightedly undermining the very economic development that taxpayers want to support," the Good Jobs First study said.
The study worked from an incomplete data set that included about 5,600 of the nation's 13,500 school districts. A new federal accounting rule required districts to report the revenue they lost to corporate tax breaks, but not all districts complied with the law in its first year.
South Carolina's total ranked high among the states in part because its school districts did a better job of complying with the new reporting mandate.
Still, among the states the study examined, South Carolina came second only to New York in the subsidy losses it reported. Schools in 28 states missed out on a combined $1.8 billion due to corporate tax incentives during the 2016-17 fiscal year, according to the Washington D.C.-based group's calculations.
"With K-12 funding still lagging pre-recession levels in many states, tax abatements merit close scrutiny lest they undermine the skills of America's future workforce," the study's authors wrote.
In South Carolina, as in many states, school district leaders do not get to vote on certain tax incentives that hurt their bottom line. The schools must educate the children of all the families who come to work in their area, but the new employers often pay little in taxes, and state law prohibits the use of homeowners' property taxes to fund schools as well.
Berkeley County Schools reported the most losses of any South Carolina school district and the seventh-highest figure in the country, about $43.5 million per year.
The county has lived up to its slogan of being "Open for Business" by doling out tax breaks since 2015 that brought in an estimated $3.5 billion worth of economic development and 8,500 new jobs, including a $1 billion Volvo plant and a $600 million expansion of Google's data center there.
Some county residents have begun to push back against the massive tax breaks as the county's roads, sewer system and schools struggle to keep up with booming population growth.
County Councilman Kevin Cox, who joined council two years ago, said he agrees with the basic deals the county often cuts with industries investing $2.5 million or more, allowing them to pay a property tax assessment ratio of 6 percent instead of the standard 10.5 percent.
Beyond that, he said he hopes his fellow council members will stop sweetening the deal because it's hurting the schools.
"You want to come here for a reason. Pay the fair share, and we’ll be happy to have you," Cox said.
Charleston County Schools reported $25.3 million in missed revenue, the 14th highest rate in the nation and fourth-highest in the state. Daimler and Mercedes-Benz received tax breaks for its assembly plant in the county, while Boeing Co. received a promise of more than $900 million worth of tax breaks over the course of 30 years as an incentive to build its 787 Dreamliner assembly plant in North Charleston.
The city of North Charleston even cut a deal with outdoor retailer Bass Pro Shops, promising in 2014 to slash its sales tax burden in half for 15 years if it builds a new megastore at Ingleside Plantation. The store has not been built yet.
Burnie Maybank, who served as state revenue director under former Govs. David Beasley and Mark Sanford, said the current tax system that funds public schools needs revising. He said local governments often feel they have to offer tax incentives because the standard tax rates are too high.
"The General Assembly spends a considerable amount of time trying to lower taxes on homeowners when they are among lowest in country, and little time trying to lower taxes on manufacturers when they are among the highest," Maybank said.