1 / 5

John Barrick

Courtesy photo

2 / 5

Jared Wilks

Courtesy photo

3 / 5

Jeff Wilks

Courtesy photo

4 / 5

David Wood

Courtesy photo

5 / 5

Ryan Skousen

Courtesy photo

❮ ❯

Orem voters face a crucial decision regarding Orem schools, but proponents and opponents of Proposition 2 are presenting two very different sets of numbers. In such circumstances, voters look to credible sources for accurate information. Historically, both Alpine School District (ASD) and Orem City Council have routinely relied on the Utah Taxpayers Association (UTA) for key financial data. For example, ASD and Orem City Council both refer voters to UTA statements on proposed education and municipal bonds, respectively. As Councilman Tom MacDonald said in a City Council meeting (Sept. 27, 2022), the UTA is “the best tax watchdog we have in the state.”

On Oct. 3, 2022, UTA published a statement to Orem residents that numbers used by Stronger Together (ST) regarding an Orem split from ASD are “patently false.” ST immediately derided UTA’s credibility even though ST had sought UTA’s endorsement themselves, and we as voters have relied on this tax watchdog for 100 years. As tax and accounting professionals who reside in Orem, we would like to provide a brief explanation of the conflicting numbers in hopes that voters will have accurate information when making this crucial decision.

ASD and ST both claim that Orem annually receives $21.5 million more from ASD than it pays. However, these numbers rely on erroneous and outdated information which can still be seen in tables and documents ASD and ST include on their websites. Correcting these errors shows that Orem pays $9.7 million more to ASD than it receives each year, meaning an Orem school district is financially viable and soundly able to pursue educational goals without significant tax increases.

Now the details. Three major funds cover the budget of a school district: (1) a general fund which pays operational costs, (2) a capital fund which builds schools and (3) a debt fund which pays off previous bonds. All three funds must be considered when determining whether the Orem School District can operate without additional taxes. In June, ASD estimated a $29 million general fund deficit for Orem schools (only one of the funds). Soon after, ASD revised this estimated deficit to $21.5 million after it was discovered that ASD made an error in calculating state revenues. ST used this revised number (dividing $21.5 million by Orem’s 2020 tax base of $7.3 billion) when it calculated the 56% tax rate increase Orem residents would face if Orem left ASD.

These ASD and ST calculations are wrong for three primary reasons, which the UTA identified in their statement. First, the revenues and expenses contained many material errors. Second, ASD’s $21.5 million deficit considers only the general fund while excluding the capital and debt funds. Third, Orem’s taxable base has increased by 36% to $9.3 billion since 2020. Correcting for these errors and omissions not only erases the claimed deficit, but reveals that Orem is contributing a surplus of $9.7 million annually (see chart and details at https://youtu.be/fV4Xc-3lTSQ).

Orem contribution (deficit) to ASD (in millions)

ASD general fund (operations) numbers: ($21.5)

Corrections

• Remove non-major fund expenses: $2.7
• Increase state revenues because the wrong taxable base was used: $2.6
• Include all Title I federal revenues: $1.6
• Reduce non-major fund revenues: ($0.2)
• Remove Polaris and Summit expenses: $6.2
• Geneva Elementary cost savings: $1.4
• Overstated transportation cost overhead: $1.5

Capital fund: $4.6

Debt fund: $10.8

Correct contribution from Orem to ASD: $9.7

While a general fund shortfall of $5.6 million still exists, the deficit is one-quarter what ST estimated. More importantly, ASD’s calculation omitted both the capital and debt funds. Once these additional sources of revenues and expenses are accounted for, we see that Orem provides a subsidy of $9.7 million annually to ASD. A new Orem school board will be able to use these amounts to fix Orem’s seismically unsafe schools and improve education for Orem’s students and teachers.

Further, ASD proposes a $595 million bond (Proposition 1), the largest school bond in Utah history. If passed, Orem’s citizens will pay $116 million in debt and at least $84 million in interest. In return, Orem receives just $15 million for two multipurpose gymnasiums.

We know Orem voters need accurate numbers for making this critical decision. The numbers we provide are consistent with the Utah Taxpayers Association’s analysis. We trust their analysis just as ASD and Orem City Council have trusted them countless times in the past. As accounting and tax professionals, we urge you to become informed about the financial implications and choose best how Orem can fund local education.

John Barrick earned his Ph.D. in accounting at the University of Nebraska and is a CPA.

Ryan Skousen is business consultant and CPA. He earned his Masters of Accountancy at Brigham Young University.

Jared Wilks is a technology company CFO. He earned his Masters of Accountancy at Brigham Young University and is a CPA and Certified Fraud Examiner.

Jeff Wilks earned his Ph.D. in accounting from Cornell University.

David A. Wood earned his Ph.D. in accounting from Indiana University.

Newsletter