How St. Louis County’s senior tax freeze takes from the young to give to the old

The year-old senior tax freeze in St. Louis County, which allows seniors to lock in a portion of their property tax bills as property values appreciate, has already poked holes in school district budgets in its first year. Districts in the county expect losses to mount as property values rise, with the highest impact likely to be on what are now the best-resourced public schools in the region.

For now, districts have been able to account for the lost revenue, officials in multiple county school districts tell SLM. But over time, as school district costs increase and a swath of property tax revenue stays frozen, the situation could present a fiscal cliff for schools. 

The tax freeze seemingly came from good intentions: the idea of safeguarding vulnerable seniors from rising costs and allowing them to stay in their homes. But it follows a pattern of policies that favor the old over the young. And unlike the city, the county set no upper limits on eligibility—even the most affluent seniors are eligible. As St. Louis Public Radio reported in December, higher-income people had more applications approved than lower-income ones. 

“I was surprised, but I also could understand the motivation for it, because seniors can be living on these fixed incomes, social security, and they can be relying on [it],” Max Gillman, an economist and professor at the University of Missouri–St. Louis, says of the passage of the senior tax freeze. “I’ve seen my St. Louis County tax bill rise by hundreds of dollars every year. After the COVID pandemic, the house prices in Missouri shot up, and they haven’t fallen. I think that was the real motivation for this legislation, the accelerated rate of growth in the price of houses.”

The Missouri legislature passed a law authorizing freezes in 2023, which then-Gov. Mike Parson signed into law that July. Each county can then choose whether to implement a freeze, as well as the particulars, with some more aggressive than others. Ozark County, for example, did not implement a tax freeze program. St. Louis County appears to be among the most permissive adopters, requiring residents to only be at least 62 and both a resident and owner of the property.

A map of the estimated impact in St. Louis County shows more than $30 million in total “dollar value loss” for schools, fire districts, and other entities in the first year alone. The bulk of school funding in Missouri comes from property taxes, so schools have the most to lose when local property taxes decline (or fail to increase). 

Harvard University’s Opportunity Insights nonprofit highlights how crucial a strong education is to prosperity in adulthood. Among the organization’s key findings is that a strong education system helps children when they’re as young as five, making meaningful changes over time.

“Students taught for a single year by a great teacher … instead of an average teacher earn $50,000 more over the course of their careers,” reads a summary of Opportunity Insights findings. “This adds up to an increase in future earnings of $1.4 million for an entire class taught by a high quality teacher.” Keeping great teachers generally means rising, competitive wages, and properly-maintained facilities. 

For people from impoverished backgrounds, relocation to strong school districts can be life changing, as exemplified by the subject of SLM senior editor Nicholas Phillips’ recent piece on high economic mobility areas, Nehemiah Colyer. Colyer—who got to change schools after a Missouri Supreme Court decision allowed students at unaccredited school districts to go to accredited ones—graduated from one of the highest-performing districts in the state: Parkway West.

Now the Parkway district is among the hardest-hit from the senior tax freeze. Parkway saw the second highest “dollar value loss” in the first year of the senior tax freeze: $2.7 million, county data shows. It’s behind only the Rockwood School District, which saw just over $4 million in projected taxes lost. As property values increase, and taxes for seniors who opted into the freeze stay flat, that number will grow.

Some school district administrators suspect that a simpler reapplication process, and greater knowledge of the program, will mean more people will apply for the program in subsequent years. (St. Louis County did not respond to questions about whether it projected an increase in applications, which were around 70,500 in the first year.)

Saint Louis University sociologist, professor, and demographer Ness Sandoval—a veritable household name in discussions about the region’s population issues, and the potential calamity of the area’s population trending older—says people should start viewing schools less as tax obligations and more as assets.

Likening the senior tax freeze’s impact on schools to a foundation crack in a home, he says “if you see a crack, you need to look at, is it a minor or a structural crack? This could mean structural, long-term problems for some of our school districts.”

A 2003 working paper from the National Bureau of Economic Research found that not only do increased property values mean more funding for schools, but the inverse is true, too—that, in the summary’s title, “School funding raises property values.” Researchers found that a $1 increase in state aid per student amounted to $20 per student in housing value increases. “We have to kind of think that these are public goods,” Sandoval says. 

To him, and others, there’s something bigger at work with policies like the senior tax freeze: a generational fissure.

“I just think we have many senior citizens who don’t believe that they have a responsibility to invest in the youth,” Sandoval says. “I think we’ve lost focus on the common good. … I would say, among many senior baby boomers, they have no vested interest in the common good. They are going to make things worse.”

Gillman, however, defends the tax freeze on the merits, even while acknowledging its flaws. He calls it a “redistribution of income,” safeguarding the budgets of the elderly by placing rising burdens on the young, but says it can be beneficial to incentivize seniors to stay put because they provide a “support network” for children in the region. Gillman also notes that the policy takes away money that districts projected to get with rising property taxes, but might not result in a net deficit year-to-year, as rising tax bills for those who aren’t frozen may offset the frozen ones. 

Sandoval says he understands the merits of the policy, and the need to protect vulnerable populations like seniors from rising costs, but said it exacerbates the decline in families with young children seen in the region over the past 16 years.

 “If this pattern continues for the next 20 years, we will look back, I think, with regret that we didn’t do more to invest in our youth,” he says. 

So far, the tax freeze hasn’t meant major cuts to school district programming. Some administrators are projecting confidence as the tax landscape shifts. 

The Rockwood School District, which lost more than $4 million in projected funds from the senior tax freeze, just voted down Proposition S in the fall, a 45-cent levy increase to boost pay for school administrators and staffers. A survey of voters showed that the top reason for voting it down was opposition to higher taxes, one way that districts could grapple with a partially frozen property tax base.

“Four million dollars is not a small amount of money and it’s nothing to sneeze at,” Rockwood School District superintendent Curtis Cain tells SLM. “Seventy-nine percent of our revenue comes from local resources. In terms of taxes themselves, this is significant. Let there be no doubt, no question, about that. We choose to not panic. We choose to figure out how to strategize and to keep the main thing the main thing, which is what’s happening within the classrooms of the Rockwood School District, but it will present challenges.”

Jacob Myers, the CFO of Webster Groves School District, tells SLM that it has used “attrition” to cover budget deficits. The tax freeze’s impact so far in that district is $495,437, per county records, but the district is also facing declining enrollment and other issues, Myers says. Last year the district shed 15 full-time employees through buyouts.

“We’re able to take our time in that evaluatory process, because we have that fund balance,” Myers says of the district’s healthy reserves. “If we were a school district that had a lower fund balance, we’d have to be much more reactive. But this allows us to kind of reprioritize, but the funding levels are what they are, so we have to make adjustments to expenditures accordingly.”

John Brazeal, CFO for the Clayton School District, says that the district accounted for a slightly bigger hit from the tax freeze than it got, but the longer term brings uncertainty. The district is estimating a financial hit of $6 to $8 million over the next decade.

“You know, I think the real telltale story here is the future,” Brazeal says. “As we go year by year, there’s going to be new people joining the program. There’s going to be people leaving the program, and with the change in assessed values over time, the credit that is granted, in total, will exceed and start growing. So, if it does impact us by $6 million over a decade, that becomes real money at some point, and certainly can have an effect on operations. While it didn’t have an adverse effect this year on our spending, our budgets, it will have an adverse impact at some point.”

Major changes to the tax code aren’t new, and follow a “nationwide trend,” Institute on Taxation and Economic Policy local analyst Rita Jefferson says. Jefferson has studied the most prominent edge case of the tax freeze movement: California’s Proposition 13. Passed into law in 1978, the initiative capped the year-to-year growth of property tax values for California homeowners of all ages, she says. 

“The effect that that has on taxing districts, and particularly schools, means that they basically can’t plan on school districts actually being able to keep up with the cost of running the school district,” Jefferson says, “because that property tax levy is basically capped at an extremely low value, relative to how the school district actually works.”

That initiative completely changed how California funds schools. To make up for the loss of revenue from Proposition 13, California greenlit a significant increase in state funding. “The statehouse dumped billions and billions of dollars into local school districts across the state,” Jefferson says. “It reorganized the entire way that the state decided to spend money on school districts, right? It was no longer going to be the case in which school districts could spend vastly, vastly different amounts of money because of all these caps on growth.”

But even with that increased state spending, per-student funding in California dropped from fifth in the country to 47th, the California School Boards Association wrote in 2022. Jefferson suggests that a heavy reliance on state-level funding can put districts in peril. “The challenge with using [state funds is that] unless you have a very robust school funding mechanism, or a very robust formula—it really can get to the point where the state stops spending nearly as much per-student than they were 30 years ago, 20 years ago,” she says.

And perhaps more troubling for St. Louis County district, Missouri is not California. Few people anticipate an influx of funding slated to come to school districts through state taxes. Without that additional state support, Jefferson predicts programmatic changes: fewer teachers, increased class sizes, potentially shorter school weeks, and fewer courses offered. 

“All of these things that I think would be a net negative for not only students, but for families in general,” she says. “On behalf of being able to say, ‘We’re giving out a property tax cut.’” 

Property tax freezes also incentivize homeowners staying put, which can also disproportionately benefit older people and hurt younger ones seeking to enter the housing market. In a 2005 paper for the National Bureau of Economic Researchers, two University of California – San Diego researchers noted the “lock-in effect” of Proposition 13’s property tax break. Among their findings are that these policies increased the period that people rented, particularly younger people, saying that “longer tenure by owner-occupiers forces younger households to delay their transition from renting to owning.” 

And yet Missouri is not alone in implementing its senior tax freeze. In 2012, the National Conference of State Legislatures identified six states with some kind of senior freeze, three of which had income-based eligibility and three of which didn’t. Ten states also had an assessment freeze at that time, including Illinois. In 2021, the Chicago Sun-Times found major mismanagement of a senior freeze program similar to Missouri’s in Cook County. That piece noted that the program in 2020 “shifted $250 million … in taxes from eligible seniors onto everyone else.”

There does seem to be room for a balance here: helping less affluent seniors who need tax relief, but also keeping school funding apace. Sandoval suggests an important fix to the county’s freeze could be means-testing it, making the program contingent on need. The City of St. Louis, for example, has a cap on the market value of the property that is eligible for the freeze, set at $528,392, and requires applicants to have no existing tax abatements on the property. 

Gillman suggests a tiered system, based on income, for senior tax freezes, but adds that it would be complex and potentially difficult to implement. “I’ll tell you a fundamental concept of tax law, when you’re creating it,” he says, “and that’s to make it as simple to implement as possible.” 

Jefferson suggests that an expansion of the state property tax credit that already exists in Missouri could ameliorate some of the issues faced by lower income seniors, and Missourians in general. “I think there’s a lot of avenues available that don’t necessarily require throwing a baby out with the bathwater or even—necessarily—saying, ‘This school district just has to deal with it.’”

Why It Matters: Sandoval calls schools “assets” for communities, noting that the continued appreciation of those assets requires continued funding. Brazeal, of the Clayton district, says the unwillingness of some people to pay for that is emblematic of a fissure between some taxpayers about their civic obligations, with some arguments emblematic of a transactional approach to how governments provide services. “Some people are like, ‘I don’t have kids in the district anymore, why should I have to pay taxes?’” He notes that’s not true of everyone, however: “Although others are like, ‘Clayton School District is what makes Clayton Clayton.’”

What’s Next: More tax freezes—and not just for seniors—could be incoming. A bill passed by the Missouri legislature last year authorized some counties to vote this spring to cap property tax increases at five percent, or freeze them entirely, regardless of age. Some counties are allowed to vote for the five percent cap, and others are singled out for the freeze, but not all counties are eligible for either. The Missouri Independent reports that 17 counties are excluded from opting into the caps, including St. Louis city and county, 75 will vote on a cap at a five percent increase, and 22 will vote on a total freeze for property taxes. St. Charles County is among those that are eligible for a complete freeze, and County Executive Steve Ehlmann has said he’s in favor. St. Charles County voters will weigh the question on April ballots.

That expansion would further change the way we fund Missouri school districts. Bond issues—like one in Clayton School District also slated for the April ballot—would likely become even more important for districts under a total freeze, putting funding into a cycle of needing continued popular support. 

In St. Louis County, for now, only seniors are eligible, and they must reapply every year to take advantage of the freeze. Applications for the next round of the senior freeze opened on Nov. 1, and will continue until June 30, with final approvals coming in October.