January 12, 2012
By Nathan Burgess, Stowe Reporter

Vermont’s system for funding education has leveled the playing field for poor communities, according to a report presented to the Legislature last week. 

But questions about rising costs, declining enrollment and other issues continue to dog lawmakers, school officials and students.

“The mixed blessing of this is we’re all in this together,” said state Rep. Peter Peltz, D-Woodbury.

In 1997, the Vermont Supreme Court ruled that relying on town-by-town property taxes to finance public schools was so unfair, it was unconstitutional. Schools showed the effects of huge swings in property values from one community to the next.

As a result, the Legislature passed Act 60 and later Act 68, setting up a complicated tax system that raises money and allocates funding at the state level, while giving local voters control over their school budgets.

The intent was to give children in property-poor communities the same opportunities as those in wealthier towns.

It worked, according to a report that consulting firm Lawrence O. Picus and Associates delivered to lawmakers last week. The report found no link between per-pupil spending and a town’s property wealth. It also highlighted five schools that have worked within the funding system to significantly increase student performance on the New England Common Assessment Program, commonly called NECAP: Brewster Pierce Memorial School in Huntington, Colchester High School, Montgomery Elementary, Whitcomb Senior High School in Bethel, and White River School in White River Junction.

But the report also highlighted sharp increases in the cost of education in Vermont, even as enrollment declines. Vermont has the lowest student-to-teacher and student-to-staff ratios in the country. As a result, per-pupil spending has ballooned 83.7 percent since fiscal year 2001, the report said.

Local reaction

Local lawmakers and school officials had mixed reactions to the report.

Peltz, who’s on the House Education Committee, said the report puts to bed any question about the equality of funding, paving the way for a debate on costs.

“This is a significant concern, but one of the things that at least we don’t have to dwell on is the legal structure we created around how it is funded,” he said. “Now we really have to look at the cost of how we’re delivering education and what we’re getting as a result of it.”

Peltz was instrumental in passing Act 153 in 2010, which offered incentives for school districts to consolidate services to cut costs, and also required that control of some services be shifted from school districts to the supervisory union level. He said that conversation will continue this year.

“If there are issues in terms of how can we address costs and improve outcomes, who is going to drive that?” he said. “Is that driven at the state level or the local level?”

Most importantly, he said, the state needs to address high-school dropout rates, particularly in poor, rural communities, in addition to focusing on preparing gifted students for college.

Rep. Heidi Scheuermann, R-Stowe, said the report largely missed the point.

“Nobody argues that equity hasn’t been achieved,” she said. “In fact, people who support changing and really modifying the system, they say we want to ensure that equity continues. This report is just sort of the status quo and that’s unfortunate.”

Scheuermann said the debate needs to shift toward where education is leaving students, and whether programs are preparing them for today’s economy.

“I want to know if they’re prepared for the 21st century, and that’s not addressed,” she said.

Income sensitivity

Among other issues, the report points out that, while Vermont test scores are higher than much of the nation, they’re only average in New England.

Scheuermann also questioned the fairness of the system, saying that while schools are funded more equitably, the tax burden for paying for them is not as equal. 

She named a number of exemptions that need to be looked at, including income sensitivity, which adjusts the tax burden for people whose income doesn’t cross a certain threshold; and tax increment financing districts, which allow towns to use new tax money from freshly developed areas to pay for such things as roads and utilities — money that would otherwise go the state education fund.

State Sen. Richard Westman, R-Cambridge, agreed. He supports keeping  the system equitable, but doesn’t think the state should rely so much on property taxes. In past years, the state transferred millions of dollars from its general fund, which comes from other taxes, into the education fund. However, that transfer was reduced last year, and property taxes had to make up the difference.

Westman also questions how that burden is spread out. Homeowners qualifying for income sensitivity are shielded from increases, while many second-home owners have seen their home values decrease, and thus their tax bills dropped. As a result, homeowners who don’t qualify for income sensitivity and business owners are covering the bulk of increasing costs, he said.

“Are we, through our tax structure, discouraging economic growth here?” he said. “I think that’s important.”

Tracy Wrend, superintendent of the Lamoille South Supervisory Union, said that, while the report is still a working draft, and she wants more time to dig into the details, it confirms many of the conversations local school officials are already having.

“I was interested to find that many of the themes we have been discussing locally are forefront in the report: quality and equity; local control, governance and efficiency; and the link between increasing spending by $1 and the amount of increase in local homestead property taxes, to name a few,” she said.

Wrend said she was particularly interested in digging into the case studies, and what they say about how lessons learned in the five schools could improve local schools.

With equity issues settled, Peltz said it’s time to move on.

“If we can stop accusing one another of misguided behavior or expenses or how you spend money; if we really worked together, if the students were foremost in our minds and we though about how best to do this, this is going to be what comes out as a result of this report,” he said.