Research suggests that tax breaks don’t do much to grow the economy. Yet, investing in schools is one of the best ways to create jobs and opportunities for everyone.
Good schools are proven economic development. Families choose communities because of strong schools. Employers depend on skilled graduates. Local economies benefit when students have the teachers, counselors, facilities, and opportunities they need to thrive.
Yet school districts must often absorb the costs of economic development incentives. A city council or county board may approve an abatement, and because schools rely heavily on property taxes, districts often bear the largest losses.
For school business officials, every dollar has a use. Every budget choice has a consequence.
Promoting Transparency and Collaboration
We became aware of these losses with Governmental Accounting Standards Board Statement No. 77 on Tax Abatements, which took effect for most state and local governments in fiscal year 2017. Before GASB 77, tax abatements were often hidden in plain sight: approved by one public body, felt by another, and difficult for residents or school officials to trace.
GASB 77 requires governments that grant abatements — and governments whose revenues are reduced by abatements approved elsewhere — to disclose those losses in their annual audited financial statements, often called Annual Comprehensive Financial Reports, or ACFRs. Good Jobs First, a D.C.-based nonprofit that promotes corporate and government accountability, advocated for this standard because disclosure is the first step toward accountability.
Good Jobs First now compiles selected GASB 77 disclosures in its Tax Break Tracker so communities can see how much public revenue is being diverted through corporate tax abatements.
When Good Jobs First reviewed ACFRs in the greater St. Louis region, the organization found that St. Louis Public Schools lost more than $39 million to tax abatements in 2024, or $2,360 per student.
In Virginia, Good Jobs First estimated that state data center tax breaks diverted about $267 million from K–12 schools in FY 2024 — not including local losses, which most localities failed to report.
In New York, property tax abatements granted through Industrial Development Agencies cost school districts more than $1.8 billion each year.
In most states, school boards cannot control the tax-break decisions of cities, counties, or development agencies, even when schools lose revenue as a result. These so-called “passive losses” are required to be included in ACFRs, thanks to GASB 77, although organizations don’t always report them. https://goodjobsfirst.org/gasb-primer-and-faqs/
For school business officials, every dollar has a use. Every budget choice has a consequence. Economic development subsidies should be held to the same standard. Our communities prosper when public dollars serve students, families, and communities first.