In 1996 the citizens of the State of Utah voted to amend the constitution to allow all income tax revenue to be earmarked for education. Prior to that vote income tax revenue was used only to fund public education. Because income tax revenues were growing much faster than the sales tax revenue it became necessary to ask the citizens if they would agree to allow income tax to also fund higher education. The measure passed and since that time just over 10% of the income tax revenue has been used to help fund higher education.

This year a new fund is being created under HB 294 to help people better understand how the funds for education are appropriated. Most people involved in education have misunderstood how the funds are allocated. Today the income tax revenues are split between public education (Uniform School Fund) and higher education. Therein lies the confusion. According to the Utah Constitution the Uniform School Fund can only be spent on public education. Many believe that all income tax revenues flow straight to the Uniform School Fund and that the legislature has been illegally funneling money to higher education. In reality the income tax dollars flow to both higher education and the Uniform School Fund.

The creation of the Education Fund should eliminate much of this confusion. Under this system, all income tax revenues would initially be received in the Education Fund. The legislature would then appropriate funds from the Education Fund to the Uniform School Fund and higher education. All revenue from the Uniform School Fund would still flow straight to public education, just like it always has.