Editor’s note: This commentary is by Heidi Spear, of Fayston, who is running for state representative in the Washington 7 District. She is a graduate of Middlebury College and has worked as a tech executive in Cambridge, Mass. She is currently board chair of Mil Milagros Inc. and Fayston Elementary School.
[O]ur education funding system has unleashed a rising tide of spending that will not abate until we reform the system. Coupled with the Legislature’s decisions to shift an increasing percentage of the education funding burden to property taxes and fund other state programs out of the Education Fund, property taxes in our state have skyrocketed. Taxes are exceptionally high by regional and national standards, particularly given the municipal services typically provided. They undermine our attractiveness as a place to establish residency, operate a business or invest in real estate. They suppress our property values, and for owners who can’t divest properties at a reasonable price, they undermine financial security and life savings. Our education funding burden is 37 percent higher than the national average and 40 percent higher than in Massachusetts: a situation that belies our higher spending and our smaller tax base.
This problem didn’t just arise this year. It isn’t like the problem didn’t exist last legislative session or in many that preceded it. Our education funding system has been in place for the last 17 years. So pardon me my skepticism when the political leadership holds a press conference and indicates they are on it — suddenly they are the champions of reform. Year after year, they have kicked this down the road, setting the parameters of our formula, base education amounts, tax rates and excess spending thresholds as if nothing were amiss. Year over year, they have issued new education mandates that forced higher spending, eroded General Fund contributions to the Education Fund, and raided the Education Fund, all resulting in further spiking property taxes. Incumbents say they are on it, despite still having no reform proposals to offer. Words come easy in election cycles, but sincere work is harder to come by.
As for the gubernatorial challengers, their proposals have been discouraging in their impracticality or alarming in their inevitable devastation of public education. The lack of proposals from our current governor, who championed Act 60 legislation and has presided over the significant erosion of the Education Fund and the entire system’s continued impact on families, towns, and business owners is, by contrast, disturbing. It is beyond reason that he has put no practical proposals on the table.
It is beyond reason to suggest that consolidating districts will solve our problems. Our largest schools and districts are spending more per student than the vast majority of small schools and districts. There is no correlation in the data between smaller schools and higher spending or larger schools and better outcomes. Efficiencies could be gained through targeted consolidation, surely, but the evidence is unequivocal that consolidation within our current funding system, absent consistent and appropriate accountability for spending, does not translate to these efficiencies.
It is beyond reason to suggest that just moving funding from property taxes to progressive income taxes will solve what is fundamentally a problem of unbridled spending driving excessive burdens on our residents. The cost of education delivery and its negative impact on our economy will not be resolved by shifting the burden to income taxes. Shifting what we raise through property taxes to income taxes would require that we increase our income tax haul by over 50 percent. Given how mobile those who pay the vast majority of this burden are, this is astonishingly shortsighted. Without addressing how we have undermined fiscal restraint and triggered unbridled spending, we would be encouraging more departures from Vermont, not just because of the immediate jump in income taxes but in the surety that they would climb up from there unabated. To suggest this change is a solution to our problem reflects undisciplined thinking, or an effort to shift the out-of-control and inequitable burdens into the shadows and allow a quiet erosion of our tax base while proclaiming our support for children and families.
To identify our solutions to rising property taxes, we must clearly define and address our underlying problems. The conversation around property tax reform is far too little anchored by the realities of our spending or the particularities of our education funding system. Why does education spending continue to rise despite lower student populations? Why do small incremental spending increases locally translate to astonishing increases in our property taxes?
The most fundamental reasons for our out-of-control spending increases are that there are no effective limits on statewide spending and accountability for spending has been undermined. By design, whatever a community votes to use from the common pool of education resources is theirs, no matter how little they contribute or, very importantly, how high their relative consumption. In our system we don’t define what education we commit to providing statewide or what it should cost to deliver on that commitment. We have no effective limits on the range of educational opportunities we fund and we set no budget for statewide spending.
We are unique in this respect and not in a good way. We are far from the only state sued for inequity of education opportunity but none have followed in our footsteps to address the problem. None would. States need to balance competing needs for statewide resources and contain property taxes and we are doing neither. Most states have implemented an alternate approach that defines the state’s education commitment and allocates resources based upon the cost for delivering that education and a community’s need for aid to meet that funding requirement. Statewide funding is provided to help meet that commitment, but not beyond. For us, whatever a community votes for they get, so inadequate funding for some and excessive funding for others persists without correction or restraint.
Further, by design, we actively encourage profligate spending through discounting, and we do so inequitably. We don’t, as was prescribed with passage of Act 60, pay equally for equal education spending choices based upon income or property wealth. We don’t pay equally, because we don’t tax on total spending, or even on total state resources consumed. The measures we get taxed on exclude many state grants and up to 50 percent of the resources consumed at some schools, opening the door for tremendous inequity of resources and tax burden.
Communities that leverage particular advantage, through this unaudited discounting in our funding formula, are spending more and increasing spending at a higher rate. There are districts in this state, small and large, that spend in excess of $30,000 for every student in their building, while they are taxed as if they spend half that much. Most districts with the highest total expenditures pay equal or lower tax rates than those who approve far lower expenditures — even below average spending. This accountability issue has nothing to do with the total revenue raised across each community — it has to do with the relative burden each taxpayer faces in one community versus another.
Unmanageable complexity, unlimited spending, spending incentives and the expanding role of schools play a central role in our rising property taxes, but so too does the Legislature committing smaller and smaller percentages of General Fund revenues to fund education despite the mandates it keeps adding.
Even citizens in towns that are net receivers can and do lose in the current formula due to this unaudited discounting. For example, the citizens of Barre City who pay property taxes based upon spending at Barre City School and Spaulding, pay disproportionately high tax rates, income adjusted or not, for the education investments they approve versus, for example, the citizens who vote for the significantly higher spending levels at Bellows Free, Essex Community or Brattleboro High School. This problem is not acknowledged and is often obscured by always looking at our system through the lens of sending versus receiving towns and education spending per equalized pupil — both constructs of our funding formula.
Excessive spending will continue until we stop providing huge discounts and subsidizing communities spending way above the state average. Excessive spending will continue until we set limits on what spending is reasonable. The Brigham mandate required cost sharing, ensuring substantial equality of educational opportunity throughout Vermont irrespective of district wealth. It did not mandate cost shifting or unlimited funding, which is what we have today, to the serious detriment of fiscal restraint and our state’s economy. Opponents of spending restraint like to declare that we can’t set limits, as if funding to a commitment level and not beyond were the equivalent of our original foundation formula with its inconsistent and inadequate state aid. This is absolutely false. Defining our statewide commitment and ensuring adequate funding to that level statewide or regionally is entirely different from our original funding system.
Complexity also sustains and propels spending. To a large degree we have continuously higher spending because most people don’t even know who is spending how much or to what end and accountability is lost. There isn’t clarity around, let alone management of, expenditures statewide. Viewing education spending through the artificial constructs of our funding system, inequities in resources and tax burdens are entirely cloaked. So few understand our system that it just chugs on sucking up resources like the Once-ler’s Thneed factory.
Another big driver of spending increases are the new mandates for schools that keep coming out of our Legislature with alarming regularity. The idealism of the mandates would be admirable, if they weren’t mandates, without funding sources and without any financial impact analysis whatsoever. How much did the mandates around concussions cost? How much will proficiency-based learning mandates cost? In arrears or in advance, nobody in Montpelier is bothering to determine such technicalities that are compounding our spending problems and undermining affordability in Vermont. It is far from responsible in my view to pass legislation with no regard for costs. The Legislature is not taking responsibility for property tax increases, while they are clearly driving them in more ways then one. They are treating property taxes like a blank check.
Another big spending driver is something which has nothing to do with the formula itself but everything to do with how the state manages, or doesn’t, its statewide investments in supporting the wellbeing of Vermont families. Our schools’ role in our society has been expanding considerably. I am not just talking about the addition of technology instruction and preschool, though those do increase costs, I am talking about schools being expected to deliver increasing nutrition, health and social services. While student populations have declined, the number of students in poverty, who have experienced trauma, who have intensive special needs that include psycho-social disturbances and delays are rising as a percentage of our student body.
Regular education teacher to student ratios do not account for the higher staffing ratios overall. Now nurses and health educators are required at every school, and, special education and paraeducation staffing is significantly higher relative to our total student population. Demand for their services continues to rise. Behavioral interventionists are also in increasing demand. It is not terribly uncommon for a student to be assigned a paraeducator for one to one services from the time they enter a school to the time they leave it. Some of them support students with genuine learning challenges, but increasingly they are staffed to reduce disruptions and protect other students. They are too frequently very expensive Band-aids for wounds they don’t heal. Behavioral interventionists are much more expensive but provide greater promise for transformation and student independence. Few districts can afford them.
The needs of families and children that aren’t addressed early or well by AHS show up in our schools and property taxes are used to fund a significant portion of the cost. Meanwhile, we can plainly see and research strongly supports that our costly supports don’t hold a candle to the potential impact of fewer dollars invested earlier to support new mothers and struggling families. There is a limit to what schools can do to support student learning. A healthy home life that supports student learning matters a great deal and service delivery and investment should recognize that.
Unmanageable complexity, unlimited spending, spending incentives and the expanding role of schools play a central role in our rising property taxes, but so too does the Legislature committing smaller and smaller percentages of General Fund revenues to fund education despite the mandates it keeps adding. So too does the Legislature raiding the Education Fund, using it to fund adult education and corrections high schools. Of note too, our income sensitivity and current use policies, while protecting some, do further concentrate the tax burden on unprotected residential and nonresidential property taxpayers. All of these decisions by our governor and Legislature translate to the extraordinary property tax burdens we face today.
With all that in mind, do not move to Utah or Florida or anywhere else yet! We do have practical solutions at hand, if we can just get state leaders to stop perpetuating the status quo and actually implement reform. Here are a few ideas we should champion as if our homes depended on it (because they do, unless you are fortunate enough to be entirely income and cost-insensitive).
1. Define our educational commitment and provide statewide or regional funding to that level. Massachusetts and many other states have implemented the approach of ensuring funding to a defined level based upon an education commitment and cost analysis. This approach is called adequacy funding because it ensures adequate funding for all districts, something our current system does not do. We do not necessarily have to eliminate statewide funding or pooling of property taxes altogether, features other states’ systems don’t share, but statewide funding would be similarly targeted and limited to a defined commitment level. Funding could also be handled regionally, instead of statewide. Responsibility for any spending beyond adequacy, however, would fall squarely on the communities that vote for it. To ensure that such a reform doesn’t increase inequity on the basis of community wealth, a luxury tax premium for spending in excess of some percentage above adequacy could be implemented. Fiscal restraint and statewide funding limits would be restored with this reform.
2. Implement policy that acknowledges the current overlap between the work of the Agency of Human Services and public schools, aligns and centrally funds their service delivery and targets resources based upon best practices that ensure that we make a constructive difference in children’s lives. As noted, schools pour a large and growing percentage of resources into handling whatever needs walk through the door on any given day, as law dictates. Many of the needs we see, however, are far more effectively and efficiently addressed through earlier, family-based interventions, such as the Nurse Family Partnership. We don’t meet children’s needs satisfactorily and we aren’t managing taxpayer money well when we ignore these basic facts.
3. Restore the integrity of the Education Fund to fund PK-12 education only and fix the percentage of PK-12 education funded through the General Fund and dedicated funding sources rather than allow these contributions to be continually eroded. Since 2005 the percentage of PK-12 education that was funded through these sources dropped from 39 percent to just 32 percent. In 2012, Gov. Shumlin and the Legislature approved a reduction in General Fund contributions of $23 million. In the same year they shifted corrections high school funding to the Education Fund to the tune of $4 million. The degree of dependence upon property taxes is significantly higher in Vermont than in other states. Requiring a larger and fixed percentage of contributions from the General Fund and other dedicated funding sources, would ensure that the Legislature and governor’s interests are aligned with ours — to effectively manage and contain statewide PK-12 spending.
There will be objections to the proposals I just offered, naturally. The system we seek to change benefits some districts and lobbies, so this will inevitably be the case. The primary objection will be around Brigham-compliance, which is ironic given our current system. For context, while spending has exploded in Vermont, disparity has not narrowed but grown to in excess of 300 percent. A constitutional challenge is a reasonable approach if the Legislature fails to act. Further, tax burdening is currently more like siphoning from some communities to others and it is not without legal questions of its own. The other objection will be around political feasibility. However, as noted, the citizens that would benefit from reforms are not just citizens of sending towns. Citizens in many towns that are net receivers are disproportionately hard-hit in the current formula as well, due to the inequities fostered by our current system. And, of course, we all lose as the current system gobbles up resources that undermine families’ security and savings, businesses’ margins and growth capacity, housing development and our real estate market.
The objections are not insurmountable and any excuses from the Legislature that their hands are tied shouldn’t be tolerated. To be successful, however, we must build a broad coalition built upon a clearer understanding of our underlying problems and the alternatives available to us. Importantly, it can’t be built upon the challenges and frustrations particular to sending towns, but must be built upon the broader common goals we all share: increased affordability, greater equity of both education opportunity and spending accountability, and targeted AHS and PK-12 investments that support top quality education without shortchanging our ability to foster economic growth in Vermont. Reform efforts will not succeed without public pressure — without the public outrage the status quo deserves. Citizens need to hold their elected representatives accountable and demand that this problem be tackled. I will be doing that. Will you?
