|
Getting your Trinity Audio player ready...
|
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.
Discover more from Vermont Daily Chronicle
Subscribe to get the latest posts sent to your email.
Categories: Commentary, Education
So Trump is giving us a tax break, and the money grubbers in Mount Peculiar want it. Never saw that coming !
I have seen no such tax break from Trump.
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.
John: Are you not one of the foxes who have been guarding the State education chicken coop? Do you have any self-interest in maintaining statewide control of the public education system? Are you a beneficiary of previously negotiated ‘defined benefit’ retirement packages?
I ask because one year ago you wrote the following commentary published in VT Digger.
“John Freitag: Prioritizing the magic in education”
“First, have teacher and staff contracts be negotiated on a statewide basis. Contract negotiations take away the time of a great deal of administrative, board, teacher and staff from providing educational services. Negotiating contacts on a statewide level currently takes place for state employees, and recently health care benefits for teachers and staff have been moved to a state-negotiated level as well.”
“Second, we could see what policies and procedures could be adopted on a statewide rather than a supervisory union or district level. Keeping the focus of superintendents and their offices as much as possible on actual education and supporting their principals who provide their schools administrative leadership should be the main goal.”
While, on one hand, you recommended the consolidation of Supervisory Union districts, there was nothing in your assessment addressing any other structural change. Certainly, there was no mention of Vermont’s School Choice Tuitioning program. And, curiously, you make no mention of it today.
Why?
Postscript: “This commentary is by John Freitag. He was facilities manager for the Strafford School District for 34 years and in 1994 was named “outstanding support staff” in Vermont.” – VT Digger December 5, 2024,
Hi Jay,
It is always good to question if one has a vested interest. In this case, in regards to VTNEA negotiated benefit contracts, I do not. As a Facilities Manager my retirement and benefits were part of the Sate Employee and Municipal Employee system. While I appreciate yearly retirement which after 34 years of pulic service came to a total of $16,638 in 2024, it does not include any health, eye, or dental care and my retirement goes primarily to covering my wife and my insurance, drug benefit, and out of pocket health costs.
I do appreciate your mentioning my December 5,2024 commentary. Please feel free to send a link so others can read it.
One of my concerns with the current set up for contract negotiations, besides the time and resources put into this in every district that are diverted from educating kids, is that they are loopsided in favor of the VTNEA. They have a number of highly paid ( over $100,00 per year) negotiators spread out through Vermont whose skill and expertise is matched against volunteer school board members, many of whom have children in clases the teachers they are negotiaing with,
The VTNEA effectively plays one district against another in raising salary and benefits.
They do not want any change to the existing system which would take it our of the districts and put skilled negotiators, as in the case with state employees, on both sides.
Finally, while I am in favor of school choice, there is only so much you can put in one commentary. Happy Holidays,
John
Be it the VTNEA, the VSEA, VT Superintendents Association, VT Principles Association, and myriad others, they provide public sector defined benefit retirement programs with all future funding a taxpayer responsibility.
I would ask you to please correct me if I’m wrong. But I don’t want you to waste your time further in that regard, because your concern that the VTNEA, or any of the other professional associations, and their respective lobbyists (i.e., negotiators), has everything or anything to do with Vermont’s education governance would be a moot point with School Choice Tuitioning for all Vermont parents.
After all, when an educational free market comes into play, even the unions and various other professional organizations must compete on a level playing field. How they do so is up to them.
Part of the problem is, of course, that School Choice Tuitioning isn’t available for all Vermont parents and is, in fact, being phased out with Act 73. And while you, today, express support for School Choice, I find your claim befuddling.
How can you support School Choice, on one hand, and support the Governor’s Act 73 take-over of public education, with its ‘state-wide’ regulatory capture of entire public education system as a whole, on the other?
It seems that neither you, nor Ben Kinsley, nor anyone else for that matter, will answer that question… whether you have the time and space to comment or not.
In Vermont, a major reason why public education is so expensive and the quality is bad (for the money spent) is because it’s run by a monopoly. The teachers unions, the Vermont Principals’ Association, the Vermont Superintentants Association, the Vermont School Boards Association all work together to further THEIR best interests.
Consolidating districts is moving precisely in the wrong direction; it plays right into the monopoly’s hands. Although consolidation might save on expenditures for things like office equipment and photocopy paper, the bottom line is that consolidation will give the monopoly even MORE power.
The only solution to the monopoly problem here is to unleash competition. School choice must be a major element of any solution.
Consolidation = Concentration
Robert,
I agree that school choice should be a major element of any solution. However it is not a complete answer. Please check out Campaign for Vermont’s proposal. They are about not consolidating districts, they are about consolidating Supervisory Unions.
In regards to the NEA and contract negotiaitons, they currently have things the way they want it. The Vermont NEA has multiple staff members each with pay packages of over $100,000 who specialize in negotiation contracts and playing one district against each other. Those on the opposite side are school board members with little or no experience who often have kids in the classses whose teachers they are negotiating against. On top of that oftne contenious contract negotiations are a huge waste of time and resources by administrators, teachers, and school board members who should be focusing their time and energy on the education of children in their care.
Personally, I would be in favor of contract negotiations being done on a statewide level, similar to how it works for state employees. You would have top negotiators on both sides for a change, something sorely lacking now.
It would of course mean, like state highway workers who all get paid the same no matter where they live, an adjustment period where those currently in the highest paid districts would take minimal increases while those in lower paying districts would be gradually increased to the same level.
A major problem for rural school districts is getting and keeping good teachers who often are tempeted to go to higher paying districts. This would no longer be the case and there would be some real equity for schools throughout the state without any more laws or bureaucracy.
Some of the estimated over $300 million dollars saved by reducing Supervisory Unions from 52 to around 15 to align with our Technical and Career Education centers, could go towards this salary change. Other savings and cost containment measures proposed by Campaign for Vermont could further bend the curve in educational spending while actually increasing overall educational quality.
June 2011: According to the Vermont Department of Education, “the amount needed in the education fund in Fiscal Year 2012 to pay for grants and education spending was about $1.353 billion, which required revenues for the education fund from the following sources:
Nonresidential Education Property Tax: $551 Million
General Fund Transfer: $276 Million
One-third Sales & Use Tax: $112 Million
One-third Purchase & Use Tax: $26 Million
State Lottery: $22 Million
Medicaid Reimbursement: $6 Million
Vermont Yankee: $2 Million
Total raised: $995 Million
These sources left a $364 Million gap in school funding for FY 2012 to be raised through property taxes on homesteads in Vermont.”
Since 2012, how have the named revenue resources changed? What were lost revenues replaced with? Were they adjusted higher or lower? Was the plan all along to raise property valuations to gouge homeowners with impunity?
The absolute absurdity and ignorance is entrusting the Legislature, the Adminstration, or the affiliated Departments, NGOs, or Unions have any incentive or desire to cut spending, streamline costs, or do a better job keeping the books from being cooked year over year. Our property is their cash cow – milking it dry is not their concern at all. It is all leveraged with bonds – if we default, they take it one way or another. Over a decade of saying “we’ll fix it this year” – they sure will, they will fix your appraisal value to 30-40+% over value and charge you for the fraud, collusion, and corruption. No reason whatsoever they can’t fix it – other than fraud pays them well not to fix it at all.
My house insurance went up fifteen percent this year because it will cost twenty thousand dollars more to replace it. The insurance companies have become the new appraisers.