To achieve savings, we need different way to fund education

Now that we are in the wake of our second defeated district budget proposal, it seems a good time to revisit Vermont’s unique education funding system. After all, a great number of people have said they voted down their local school budgets “to send a message to Montpelier.”

Average property tax increases across the state have no recent precedent, and the education funding formula is quite complicated. Unsurprisingly, this leaves everyone confused and angry, wondering how we got here. I can’t cover every nuance here, but I hope to give a brief historical synopsis, followed by the confluence of events that have made this year particularly difficult, concluding with some thoughts about the road ahead.

As late as the 1990s, local school budgets were funded directly by local property taxes. This resulted in wealthier towns being able to offer greater educational programming at lower tax rates than poorer towns could. While at the federal level education is not considered a fundamental right, Vermont provides “that all Vermont children will be afforded educational opportunities that are substantially equal.”

In 1997, in what is known as the Brigham decision, the Vermont Supreme Court determined that the way we were funding education was fundamentally unfair. In response the Legislature passed Act 60, creating the statewide education fund. This act led to our current system where decisions about district spending are made at the local level while money is collected and redistributed at the state level.

This resulted in more money flowing to poorer areas of the state, but it also came along with a complicated formula and to some degree insulated taxpayers from the direct consequences of local spending choices. The only meaningful change to this in the last quarter century was the recent change in pupil weightings, which was meant to address the fact that Vermont had been chronically underestimating the true cost of educating certain classes of students; for example, English language learners, students living in poverty, and so on.

This year, several statewide and national factors came together and created what many have referred to as a perfect storm in education funding. While some people have pointed to the change in pupil weightings as the biggest or sole driver of the record-breaking increases we are seeing, the truth is more complicated. At the most basic level, property tax increases are being driven by the enormous increase in proposed education spending — recently estimated at about $250 million dollars, or approximately a 15 percent increase year over year.

Contributing to this are such things as inflation, the end of federal funds, continuing student mental health needs, a high rise in the cost of district employees’ health insurance, increased special education spending, the vertiginous rise in home values, and more. This has resulted in reasonable school budgets causing eye-watering property tax increases. Many have called our current trajectory unsustainable, and I would agree. So, what do we do?

The first measure is cost containment. Many Vermont schools currently have class sizes and school populations that are too small for optimal instruction. Where feasible, larger sizes should lead to expanded educational offerings and cost savings. Rural special education spending is another serious driver of increased per-pupil education spending.

The House just passed a bill to establish Boards of Cooperative Education Services that should offer some relief by better enabling supervisory unions to share special education resources. These boards will also be able to help with grant writing, offering access to federal dollars for districts too small to handle grant writing in-house. Last, a bill coming out of the Senate, S.98, seeks to create a prescription drug affordability board that should help contain the skyrocketing cost of health care for district employees.

Second, we need new, dedicated revenue sources to supply the education fund. Possible candidates include a tax on the cloud, a tax on sugary beverages, treating second homes as a distinct category from homestead properties, and a wealth tax.

Third, if we want a true accounting of what we are actually spending on education, we need to remove from the education fund expenses that simply don’t belong there. Items that could, and perhaps should, move from the education fund to the general fund run the gamut from universal school meals to student mental health and other social service needs to PCB remediation and school construction. Education is expensive in part because we ask so much of our schools, which now take care of many functions that were traditionally performed elsewhere.

But let’s be realistic: Raising taxes in one area to offset taxes in another just shifts the pain. Getting a clearer picture of cost drivers is useful, but it doesn’t make education any cheaper. If we are to bend the cost curve and achieve savings, we will need a different way of funding education.

The House Committee on Education, on which I serve, and the House Committee on Ways and Means have been taking a great deal of testimony on what such a change might entail. I do not pretend to have all the answers, and I speak only for myself here, but I think some amount of local control will have to be sacrificed. One plausible route is to have the state provide districts with some sort of minimum funding per student, with districts being able to fund services above and beyond that base level through local taxation. It’s not as straightforward as I just made it sound, and any such big change will be contentious, but this is one possible path.

Your legislative team is here, and we want to hear from you. I am delighted to have heard from so many folks — please also remember to loop in your senators and the governor. To address a problem of this magnitude we are going to need all hands-on deck.

Brian Minier, a Democrat, represents South Burlington in the Chittenden-11 House district.

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Updated Wednesday, April 17, 2024, to remove the assertion that Act 60 "enjoyed great bipartisan support and was not opposed by a single school board or superintendent."