Kansas City schools missed out on $45 million last year due to tax breaks for developers
City estimates show Kansas City Public Schools missed out on $45 million in tax revenue last year because of tax breaks for developers and businesses — and that amount has only been growing over the last five years.
Rebecca Parker has a list of things she’d add to her library at East High School if it had more money. She says the school could buy more books, up-to-date technology and new furniture.
“A lot of it is 40 years old. It was placed here about the time I graduated from high school,” Parker said. “While it's holding together, you want to have a good space for students to work.”
Kansas City Public Schools and charter schools lost out on $45 million in potential funding last year because of tax breaks for developers, according to a city report obtained by the district.That amounts to $1,700 per pupil redirected from KCPS schools and into development projects.
Developers building projects – from retail businesses to apartment complexes – can seek tax breaks from the city that waive local tax payments for years or even decades.
Cities use tax breaks to attract developers and businesses, in the hopes that those projects will generate revenue that makes up for missed 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 town that are already heavily developed.
District officials say KCPS can’t afford to miss out on that many tax dollars, especially as it faces nearly $300 million in deferred building maintenance.
“Any unnecessary dollar flowing into a private development project is a dollar that isn't going 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 almost 100 years old. Its age means it wasn’t designed to meet current needs – for example, it doesn’t have enough bathrooms for students to use during passing periods.
“They're needing to go during class because there just aren't enough toilets,” Parker said. “Having more and updated bathrooms would greatly impact our ability to teach students and to have them in front of us for more time.”
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 that Kansas City’s size and density would bring in more revenue, but that they don’t have the resources to match nearby suburban schools.
“Any unnecessary dollar flowing into a private development project is a dollar that isn't going into our public school classrooms."Kathleen Pointer, KCPS senior policy strategist
“We don't have the kind of staffing equipment, science labs, things like that, that you would typically find in a Lee’s Summit high school,” Parker said.
The district considers tax abatements to be an equity issue. Pointer says Northland schools lose between $500 and $900 per pupil to tax waivers, compared to Kansas City’s nearly $1,700.
“This is substantially higher than neighboring districts serving wealthier, mostly white students,” Pointer said.
Kansas City Public Schools is also the only school district in the region that hasn’t been able to raise taxes for schools through a bond measure – it hasn't had a successful school bond since 1967.
Getting more money into the classroom
The school district plans to pass a bond and redirect more money into classrooms as part of its long-term strategic plan, Blueprint 2030.
The plan also included a proposalto close 10 schools in order 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 just 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 of education member, said additional funding could also be used to expand the district’s pre-K program.
“It would be wonderful if those were things that we could fund now,” said Wolfsie. ”More money would help us do that.”
Wolfsie notes that the school district wants to see economic development in the city, and understands that incentives for businesses are part of that. In 2022, the district reported that it supported or didn’t oppose half the projects within its boundaries.
Still, she says tax incentives are moving in the wrong direction. From 2018 to 2022, the amount abated from KCPS and charter schools increased by 60%.
“I can't even remember how many years we've now been focused on trying to get the use of incentives and abatements to become more reasonable,” Wolfsie said. “You'd think that we would not be increasing the amount of their use.”
Dan Moye, director of land development for the Economic Development Corporation of Kansas City, says there’s been a shift in how Kansas City approaches tax incentives over the last decade. City officials in recent years have scrutinized developer's requests for tax incentives more, at the same time public criticism of tax breaks has grown louder.
The most recent round of tax ordinances reduced the maximum length of tax breaks from 25 to 15 years.
“I think as time goes on, we will see just naturally less and less of an 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 when Australia-based BlueScope Construction sought an additional 13 years of abatements from the city. The company had already received two decades of tax breaks.
The city council voted down the request after then-KCPS superintendent Mark Bedell wrote a letter saying not requiring BlueScope to pay property taxes contributes to educational inequalities.
Moye says the dollar amount KCPS loses through tax abatements is expected to increase over time because the value of the businesses and properties getting the abatements will increase. He says the current $45 million figure is also not the best representation of current incentive practices because projects approved a few years ago aren’t all showing up in the numbers yet
District officials acknowledge that reassessments have driven up the amount of abated money. They say the amount of money they’re missing has grown faster than the amount they’re 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 don’t oppose all tax abatements, they just want a seat at the table. They note that other states have limits on incentive deals that impact school districts.
Across the state line, Kansas school districts have to sign on to plans that include tax increment financing, a program developers can receive incentives through. In Ohio, school districts have to approve TIF plans that cut taxes by 75% or higher for longer than 10 years.
“There is a vested interest in making sure the school district supports a project (elsewhere), and we do not feel like that is the case within our boundaries,” Pointer said.
Tax incentives are granted 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 at some groups and not at others.
Pointer also notes that some agencies, like the Port Authority and Kansas City Area Transit Authority, don’t vet projects using third-party financial analysis. She says that raises concerns that projects are asking for more money than they need.
Moye says it’s important to not keep too much money away from the district because a strong local school system is “vital to economic development.” In recent years,the district regained accreditation and has strengthened its academic programs. KCPS board member Wolfsie said Kansas City needs a strong school district to stay competitive in drawing new employers to town.
“My vision for Kansas City Public Schools is that we actually become that asset that the city over time says, ‘We have an awesome public school system here that no matter when you come in, no matter where you live, we have a plethora of opportunities for you to send your children to,'” Wolfsie says. “We're on our way to that.”