AEFP 45th Annual Conference

Toward a Meaningful Impact through Research, Policy & Practice

March 19-21, 2020

Florida's Public Education and Capital Outlay and Debt Service (PECO) Trust Fund: Analysis of Revenue Decline and Recommended Revenue Enhancers

Presenter: 
Wesley Frank Lewis, University of Centeral Florida, wes.lewis@knights.ucf.edu

The State of Florida finances the building of the state universities’ and colleges’ physical plants through a variety of dedicated funding sources. One of the primary funding sources is the Public Education and Capital Outlay and Debt Service (PECO) Trust Fund, which services 67 public school districts, 28 public colleges, 12 state universities and other public entities. Since 1992, PECO has been able to provide $20 billion dollars for capital projects. Unfortunately, the fund has been unable to meet the demand for needed capital expenditures due to decreasing revenues from the Communications Service Tax and the states decreasing willingness to issue new PECO bonds.

To understand the reasons behind the declining revenue, the researcher conducted an analysis of Florida Communications Service Tax revenues, changes in state policies, and an overview of the state of Florida’s telecommunications industry. From the data a few major themes emerge: (a) major disruptions in traditional telecommunications services, (b) tax-exemption of broadband services, (c) election of more fiscal conservative governor and legislature, and (d) over bonding of PECO program. These four themes play a part in the decline of CST and underutilization of PECO by the state of Florida which leaves educational capital expenditures tied to cash revenue provided by Gross Receipts Tax. As Florida enters into a new decade, the Communications Service Tax can be reformed by removing the tax exemption for broadband service providers to bolster the PECO program to allow policymakers the needed revenue to ensure the K-20 system has the infrastructure needed.

Poster: 

Comments

Your policy recommendation to broaden the base makes sense. Are there other states that have done that by taxing broadband? What has their experience been? And are there other base-broadening measures that could be considered? There, you might look at current policy discussion in MD and UT for options.

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