More elderly residents do not necessarily reduce school tax base

University Park, Pa. -- A concentration of senior citizens in a community can be a financial boon to a school district, rather than an adversary, unless the group includes a high percentage of newcomers with few, if any, emotional ties with the area, according to two Penn State experts.

"The 'aging of America' will not automatically exacerbate fiscal strains on public school systems and their community residents," said Michael B. Berkman, associate professor of political science. "A large influx of new arrivals can, however, have a negative impact on tax revenues, especially if tax policies such as property tax rebates are in place which, albeit well-meaning, can reduce annual per-pupil spending by hundreds of dollars."

"When a state provides rebates to all elderly homeowners (including those who would have backed raises in school taxes), officials must either cut spending for schools or increase another tax," said Eric Plutzer, associate professor of political science and sociology.

Berkman and Plutzer are co-authors of the paper, "Gray Peril or Loyal Support? The Effects of the Elderly on Educational Expenditures," published in a recent issue of Social Science Quarterly . Their study examined the impact of senior citizens on local spending for public school education.

The researchers used a data set of more than 9,000 school districts in 40 states, with people age 60 years and older comprising 18.9 percent of the average school district in 1990. Ninety-one percent of those senior citizens had lived in the same county for more than five years.

As expected, longtime older residents find higher taxes for public school education more acceptable than newcomers, who favor lower spending. The differences in spending levels depend not only on the degree of their personal commitment to the host community but also in the way in which states and municipalities finance local public education.

"In some localities, the arrival of new retirees is not only welcome but desired and encouraged," Plutzer said. "Retirees have disposable income -- a plus for economic development -- and appear to impose few costs on the community. They tend to be property-owners, they do not increase the number of school children, they commit few crimes, and they incur social services, such as medical care, often funded by state or federal government rather than by local agencies.”

However, even with a loyal senior citizen population willing to foot higher bills for the school district, the overall level of educational spending can be depressed by policy changes such as property tax rebates (called "circuit breakers") or by replacing property taxes with other revenue sources such as sales or income taxes, the researchers said.

"By the year 2030, people over age 65 will outnumber those under 20, reversing the nation’s demographic profile," Berkman said. "As baby boomers' age and life expectancy increase, political decisions, including those related to education, will be more and more influenced by the needs and preferences of older Americans."

Plutzer added, "Nevertheless, our results show that the aging of America does not in any sense pose a threat to school funding, a budget category that overall is currently larger than that of the Defense Department. Our data indicates that the great majority of senior citizen residents will support educational funding if they feel an emotional attachment to the community."