Letter to Representative Tipton regarding Secure Rural Schools Funding for FY2012 and future SRS reform

Dear Colleague Letter
Colorado Secure Rural Payments (SRS) Funds map
Colorado Counties SRS Payment summary table (.xls) file


Dear Representative Tipton,

As you are aware from learning about Payment-In-Lieu-of-Taxes (PILT) recently, many counties are compensated for the tax-exempt status of federal lands lying within their county.  Our county is approximately 50% federal public land (159,584 acres).  Another form of federal payments to counties to compensate for the tax-exempt status of these federal public lands are "Forest Payments", also known as Secure Rural Schools (SRS) payments.

A summary of SRS published by the Congressional Research Service (June 24, 2010) contains excellent background information:

"Counties with federal lands managed by the U.S. Forest Service as National Forest lands (such as we have the Grand Mesa, Uncompahgre & Gunnison National Forest & San Juan National Forest) and with certain Bureau of Land Management lands have historically received a percentage of agency revenues from fees and sales of forest products generated by these lands." 

Since 1908 the USFS has paid 25% of its gross receipts to the states for use on roads and rural schools in the counties where the national forests are located.  This mandatory spending program was enacted to compensate local governments for the tax-exempt status of the national forests, but the compensation rate (10% of gross receipts in 1906 and 1907; 25% of gross receipts since) was not debated in 1906-1908.  This program is called "USFS Payments to States" because each state allocates the funds to road and school programs. --but the USFS determines the actual amount each county receives or uses.  As timber sales especially declined substantially, Congress enacted the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS; P.L. 106-393) as a "temporary, optional program" based on historic revenues rather than current revenues. 

SRS expired at the end of 2006.  Congressional debates over reauthorization have considered several formulas.  Meanwhile, legislation with mandatory spending raises policy questions about increasing the federal deficit and thus poses a procedural barrier to enabling legislation.

There are many valid concerns about SRS, including: 1) a decline in USFS receipts of 83% since 1989; 2) annual fluctuations of payments (up and down) by more than nearly 30% annually (making it hard for the federal and local governments and schools to budget); and 3) linkage between competing management decisions and outcomes.  In the long-term the SRS system should be modified, with serious consideration of changing to more of a tax-equivalency compensation system for local governments and rural schools.

However, without a short-term action, our rural schools will lose the federal funds we need to offset the tax-exempt status of nearly half of Ouray County.  Over  75% of the SRS payments received by Colorado counties goes directly to local rural schools.  Ouray County distributed 75% of the SRS forest payments to our Ouray County local schools in 2010 and 2011.  The remainder goes to the County Road and Bridge Department, to help provide safe routes to the schools.

As a result of the Emergency Economic Stabilization Act of 2008, 38 Colorado counties received $17.2 Million in FY2008, $12.2 Million in FY2011, dropping to $5.0 Million in FY2012.  The funds received by these 38 Colorado counties affect 2,819,994 people & 480,000 Colorado school children.

As a result of the Emergency Economic Stabilization Act of 2008, Ouray County received $96,745 in FY2008; $86,066 in FY2009, $78,763 in FY2010, and $70,877 in FY2011. 

Rural schools in Representative Tipton's Third Congressional District are the most affected by the decrease in SRS Funds.  27 Third Congressional District counties, together totaling 667,373 people, received $14,231,847 in FY2008, $10,085,105 in FY2011, and this will dramatically drop to $4,159,396 in 2012; a loss of over $10 Million since 2008, with at least 75% of that money going to our rural schools (see attached map). 

For example, in Ouray County, by Resolution 2011-006, $59,097.26 was transferred to the Public School Fund, and " distributed to each school district in the County in proportion with which its pupil enrollment during the preceding school year bears to the aggregate pupil enrollment in all districts in the County during said preceding school year".

By Resolution 2010-014, $64,549.62 was transferred to the Public School Fund by Ouray County and distributed to the local rural public schools in the same manner. 

These funds covered one and a half to two teachers' salaries each year for the Ouray and Ridgway School Districts, directly contributing to our locals schools' abilities to have manageable class sizes and excellent performance ratings.  Both school districts are currently ranked among the best in the State.

During a luncheon on March 17 (yesterday) with Reggie Bicha, Executive Director of the Colorado Department of Human Services, Governor Hickenlooper, and Colorado Human Services Directors Association, and Casey Family Programs, emphasizing opportunities for increased State-Local Partnerships to benefit Child Welfare in Colorado. A reoccurring theme of the speakers was that healthy kids live in healthy families and in healthy communities.  It was acknowledged by the Child Welfare experts that 40% of American children are not fluid readers by 8th grade, with the statistics worse for those children who do not have a permanent and healthy living situation.  For these reasons very few foster children ever make it to college.  Ouray County schools produce excellent readers with a very high percentage of local children going on to college and higher educational opportunities.  Losing Secure Rural Schools funds, or leaving them at the FY2012 level, will have an impact on our schools and communities in Ouray County and the Third Congressional District.  These funds contribute to the health of our Ridgway and Ouray schools.  This comes at a time when schools are struggling for appropriate state and federal funding, at a time when our local schools have just made significant cuts from the loss of State funding, and as local property tax revenues are projected to fall which will reduce another funding source. 

Now, more than ever, the health of our children, families, and communities depends on full funding of SRS at the FY2008 levels to offset the tax-exempt status of federal public lands within their counties. 

I urge you to sign the "Dear Colleague" letter by March 18th (attached)!  It is essential to support full funding of the Secure Rural Schools forest payments at FY2008 levels next year and to work with your colleagues toward an appropriate long-term compensation system for rural schools and local roads.

Sincerely,

Lynn Padgett,

Ouray County Commissioner, District 1