The unforeseen costs of foreclosure

There are obvious results of the foreclosure market – depressed housing prices, homlessness, etc – there are many unseen effects.  For example, less homeowners means less property tax revenue and less school funding:

“But school systems across the USA are vulnerable: More than half of school districts nationwide, including those serving once-fast-growing communities such as Fort Pierce, rely on local property taxes for more than 25% of their budgets.

As the housing crisis continues to unfold, school administrators are preparing for a body blow, although they’re uncertain how much they’ll benefit from the federal stimulus money now rolling out to states.”

Not surprisingly, the article sheds light on Lee and St. Lucie counties in Florida.  The article notes St. Lucie schools have lost $22 million in revenue already because of the foreclosure crisis.  The problem is exacerbated in Florida by school funding being so reliant on property tax revenue:

“In Florida, where state money accounts for about 41 cents of every education dollar spent, lawmakers in Tallahassee face a projected $5 billion shortfall in 2010. The prognosis for Florida schools is bleak, says Bill Montford, CEO of the Florida Association of District School Superintendents.

‘There are some school districts in Florida that are on the verge of serious, serious financial breakdown,’ he says. ‘And it’s not because of mismanagement — it’s simply because of the economic crisis.'”

Of course, the Florida legislature is in session right now.  Their reaction should be interesting.

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