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by Ben Kinsley
Everyone wants answers about why property taxes are going up another 12% next year. Some blame small schools, some blame administrative overhead, some blame legislative inaction regarding our education funding system and school governance.
Sadly this news was inevitable. While the Legislature, the Governor, and local Vermonters negotiate over what the next iteration of public education looks like in our state, they bought down property taxes last year using one-time monies. The Governor and the Legislature were both in alignment on this, but these one-time funds[1] created a $98 million hole for property taxes to fill in FY2027 (which is the 2026/2027 school year) before schools even spent a dollar more.
Of course, schools did spend a dollar more, or $114 million to be precise. At least that is what the state estimates schools will pass this upcoming Town Meeting Day. This means a combined total of nearly $212 million in new revenues necessary to make the Education Fund whole for next year.
From the current year (FY2026) makeup of the Education Fund (EF), we can see that the largest non-property tax revenue source is the Sales & Use Tax, this is joined by the Purchase & Use Tax, the Meals & Rooms Tax, and the Lottery Transfer to make up the consumption tax revenue in the EF. The consumption taxes are projected to increase by $21 million in FY2027. Sales & Use, which is of course the largest of the four, is expected to see only a 2.5% growth rate.
In order to accommodate the expected 5.7% increase in school spending, property taxes must grow at a higher rate because the other revenue sources (particularly the consumption taxes) are growing more slowly than spending is. This leaves $191 million in school spending to be picked up by both the Homestead and Non-Homestead property taxes.
However, school spending (or rather the budgets passed on town meeting day) is not the only spending obligation that the EF covers. There are additional things like special education, pension funds, transportation aid, and universal school meals that are paid directly out of the EF. These additional items are expected to increase $19 million in FY2027 so the total property tax increase for next year nets out at $205 million.
If we break down that increase, there is plenty of blame to go around. One-time monies and school spending are responsible for 43% and 49% of the increase respectively. Essentially, the Legislature, the Governor, and school budgets are all responsible here.
Perhaps the better question is how did we end up here? There has been a 47% increase in school spending since 2019. Adding to that has been a 54% increase in state-directed spending during that same time-period. In dollars, that totals $838 million in new spending. Consumption taxes have only increased $265 million during that timeframe which means that property taxes needed to pick up the slack. That has resulted in a 62% increase in the homestead property tax bills that Vermont families are paying. An average growth rate of nearly 9% annually for the last 7 years.
I think most of us have probably felt the weight of these increases. Incomes have certainly not kept pace. In the five year period between 2019 and 2024 the Vermont median household income grew only 6.7%. That equates to 1.3% per year while property taxes were increasing at a rate of nearly 7 times that. Incidentally, teacher salaries grew at twice the rate of the broader workforce over the same time period.
So what do we, as Vermonters who care about both our schools and our wallets, do about this? Well, the Governor has already suggested using another $75 million to kick the can down the road again. This is a bit like a game of hot potato, eventually someone will have to pay the bill.
The real solution is to reduce current education spending and put in place mechanisms that apply downward pressure on future spending. Many of the components of Act 73 do this, the governance changes are intended to reduce administrative overhead, class size minimums will reduce instructional overhead, and a statewide foundation formula will provide the mechanism for downward pressure on future spending.
The best thing we can do at this point is advocate for evidence-based reforms that have been proven to work in other states. And, of course, urge our Legislators to follow through on right-sizing our staffing and put in place a foundation formula that will balance the needs of students and taxpayers.
[1] $77.7 million from the General Fund in addition to the $20.6 million in unallocated funds – EF Outlook
Ben Kinsley has over a decade of public policy experience in Vermont. Working for non-profit organizations, he has shaped public policy in areas such as education, elections, and ethics. He was recently named as Executive Director for Campaign for Vermont, a non-partisan advocacy group seeking to grow the state’s middle class.
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Categories: Commentary, Education
So Trump is giving us a tax break, and the money grubbers in Mount Peculiar want it. Never saw that coming !
The second paragraph states that they brought down taxes using one time money. That is funny after watching mine go up $400.00, about 9% higher. Only in bizarro world is this lower.
My fantasy is that the majority vote no on town meeting day. Make them bend or break.
Re: “The real solution is to reduce current education spending and put in place mechanisms that apply downward pressure on future spending. Many of the components of Act 73 do this, the governance changes are intended to reduce administrative overhead, class size minimums will reduce instructional overhead, and a statewide foundation formula will provide the mechanism for downward pressure on future spending.”
Hog wash. Act 73 perpetuates one-size-fits-all governance that will, if projected into the future, transport every child into a government concentration camp. Mark my words, Act 73 will not lower costs. And, most certainly, it will not improve student outcomes. It’s mere ‘pillow arranging’ to hide the stains on the education couch.
Ask yourselves – why is Vermont’s School Choice Tutioning governance not mentioned by Mr. Kinsley? He knows about tuitioning. I’ve written Campaign For Vermont on the subject.
Here’s the deal: For every student in a tuitioning town that chooses a private school over a public school, the cost per student decreases by more than 30%, parental and student satisfaction increases, and student outcomes improve.
Don’t pay any attention to that man behind the curtain. Mr. Kinsley is the great and powerful Oz – yet another of the foxes guarding the public education chicken coop.
As an example of all of this issue of school expenses and property taxes, the School Bd. in my area has decided it best to close our elementary school, with a town vote pending, but they predict that property taxes in our town will increase more than others in the area! Am I missing something??
Great question. It depends on what your school district does when it closes its school.
If parents are allowed to choose the school, public or independent, in-state or out-of-state, for every student choosing an independent school your ‘real’ cost per student will be just under $20K annually. The savings will be approximately 30% less than your existing public-school costs.
If the district decides to reopen your elementary school as an independent school, as they did in North Bennington, for every student choosing to attend it your ‘real’ cost per student will be just under $20K annually. Again, the savings will be approximately 30% less than your existing public-school costs.
If, on the other hand, parents choose a nearby in-state public school, the cost per student will likely not change much because the tuitioning governance gives preferential cost treatments to public schools. You may still save money. But not as much as when parents choose a private school.
And lastly, if your district decides to ‘designate’ a nearby school, public or private, your school board will negotiate an agreed upon cost per student in the neighborhood of Vermont’s Average Annual Tuition allowed by Vermont’s School Choice governance.
In all cases, when parents can choose the school they believe best meets the needs of their children, taxes will decrease and student outcomes will improve.
The only other caveat rests in the as yet undetermined governance structure of Act 73. Act 73 overtly seeks to eliminate School Choice Tuitioning. And the so-called ‘Education Fund’, ultimately determined by the legislature, may require your less expensive district to share the costs of more expensive districts. In other words, the proverbial “…inherent virtue in the equal sharing of misery.”
Too many warm bodies collecting paychecks in the school system as well as with all (other) state workers…personnel inflation. This is at the behest of the 2 public-sector unions that OWN the democrat party in Vermont, the VTNEA and the VSEA. They siphon off their sustenance from those paychecks and recycle that taxpayer money back into the democrat party coffers in a vicious, destructive cycle. The voters of Vermont have the opportunity to remedy this malaise every 2 years but…
Thanks for printing this piece from Ben Kinsley. I would urge people to read the policy paper on education reform from Campaign for Vermont. It is well reserached and focuses on how we can significantly cut the overely bureaucratic educational structure in Vermont where we have costly Supervisory Unions serving around 85,000 students. Change is absolutely necessary. Because they are willing to not protect the vested interests: Vermont Superintendents Association, Vermont Principals Association and the Vermont NEA, their proposals are the best and most practical that have been presented to date.