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by Jeff Wennberg
The slow-moving train wreck that is Vermont’s education finance system has claimed its latest casualties among local property taxpayers. Long before Act 68 and state property taxes became the principal means of funding K-12 education, Vermont experienced education finance crises approximately every ten years.
Whether it was the Miller Formula (1969), Morse-Giuliani (1982), the Foundation Plan (1988), Act 60 (1997), or Act 68 (2003), each reform was precipitated by a property tax revolt. Prior to Act 60, each system was designed to supplement local education property taxes with broad-based state revenues. Over time these formulas became more complex as they also sought to mitigate wealth disparities among school districts.
The Legislature enacted each reform during periods of state fiscal surplus, plowing fresh revenue into the new formula to reduce pressure on the property tax. But over the ensuing decade non-property tax support of education waned as the Legislature turned its attention to other priorities. Before Act 60, regardless of the funding formula then in place, every time the property tax reached about 70 percent of the cost of education a tax revolt ignited, beginning the cycle once again.
Things got so bad that, by 1995, the local property tax funded three of every four dollars expended for education. Indeed, two-thirds of all property tax collections were in support of schools; the balance was for all other municipal services. The Legislature’s failure to adequately support schools understandably exacerbated disparities among local school budgets and programs.
This led to the landmark Brigham Decision, in which the Vermont Supreme Court concluded that these disparities were unconstitutional, forcing another legislative fix. One ‘solution’ that had been proposed repeatedly in the past was a state property tax. This idea had been successfully opposed by the Vermont League of Cities and Towns because while the property tax was the most stable and predictable of all taxes, it was exclusively available to local governments and school districts. And I was among the more vocal local officials committed to keeping the only tax controlled by local voters out of the hands of the Legislature.
The Vermont Supreme Court stated no preference regarding how “substantially equal educational opportunity” would be achieved, but the state property tax advocates seized the ruling as a mandate to replace the local education property tax with two state property taxes. But there were other solutions. The state could simply restore adequate funding to state aid and unlike the pattern of the past, maintain it. That would allow local voters to control spending through school budget approvals and relegate the Legislature to simply writing the check. So, Act 60 was born and a few years later, Act 68, which fixed some of its worst architectural flaws.
Throughout the 1997 legislative session I travelled the state and wrote extensively in opposition to the state property tax. This was familiar territory for me. While I was serving as President of the Vermont League of Cities and Towns in 1991, Republican Governor Richard Snelling, whom I had supported, and Democrat Speaker of the House Ralph Wright had publicly hinted that a state property tax on non-residential property was in the works. I called the State House reporter the morning the news broke to convey VLCT’s opposition but he told me that the story was out and they were not interested in our reaction. Before I could say anything, he put me on hold to take another call. I realized I had to say something so outrageous he would have to print it so when he came back, I said, “The prospect of an agreement between the governor and the speaker on a state property tax represents an unholy alliance threatening the authority and wallets of local voters.” Snelling later asked me why I took a shot at him, to which I answered, “I was not shooting at you, governor, I was shooting at Speaker Wright. You forgot to duck.”
The Act 60 plan was so complicated that none of its proponents could explain it. The problem was voters would be asked to approve school budgets without knowing the effect on their tax bills because the tax would be the result of all local school budgets approved across Vermont. Act 60 effectively severed the connection between the local budget and the local tax burden. This was by design because its authors also sought a significant increase in spending for education – an increase they were unwilling to enact themselves, but which could be created by convincing local voters that regardless of the size of the local school budget “someone else” would pay the bill.
At one point I was given the opportunity to debate an Act 60 proponent before the Burlington Chamber of Commerce. When challenged on the question of transparency, my opponent resorted to Sen. Cheryl River’s dodge, “You don’t have to know how an automatic transmission works to drive a car.” He was asked repeatedly to explain how it would work and finally made an attempt, but after a few sentences admitted that he could not. The moderator turned to me for rebuttal, and I said, “I don’t know about you, but I feel like we just lurched into reverse.”
At the time I described the system as “the perfect property tax eating machine” and history has proven that correct. To be fair, because the Legislature now incurs the wrath of angry property taxpayers, they have been more attentive to supporting the education fund with non-property tax revenues. But the obvious ultimate result will be state control of local school budgets, whether directly or indirectly through spending caps or more convoluted mechanisms.
So, Vermont now spends more per pupil than any other state save three. And student performance based upon national standardized testing has steadily declined relative to the national average for over a decade. Even Vermont’s Joint Fiscal Office in their 2023 “Report on Vermont’s Educational Financing” concluded, “These figures are particularly striking when considering the continued increase in education expenditures per pupil in Vermont without a commensurate change in student performance when compared to national trends.”
That brings us to the current cries for reform, driven by the massive state property tax increases Vermonters are discovering in their mailboxes. The Legislature could seize control of all school budgets as predicted above, or they could do something that would guaranty improved educational outcomes for our kids. The state collects all the money into the Education Fund, and then doles it out to the schools. What if instead of the schools receiving these payments, the funding went to the students, or put another way, was sent to the school of their choice on their behalf? Vermont has a long tradition of school choice in the ‘sending towns’, which some in the Legislature have sought to suffocate. What if we extended those options to all families in all communities?
School budget votes would be based upon the number of students expected to enroll and the state grant associated with each. Schools that excel will attract more students; those that do not will decline. This creates a powerful incentive to improve and even diversify educational offerings. Even if some schools fail, at least its students need not.
The Supreme Court said Vermont children have a constitutional right to “substantially equal educational opportunity.” But children are substantially diverse. There is no such thing as one size fits all. Ask any parent of two or more children; the educational environment in which one child thrives may not be appropriate for the next. So “equal educational opportunity” requires a high degree of educational diversity. Our college and university system is built on this concept and proves it.
Only by funding the education of our children – individually – can we hope to reach the highest level of educational achievement for each student. The priority needs to shift from funding institutions to funding education.
I have little hope that the current Vermont Legislature would entertain such a concept. But the state financing system needed to implement such a reform is already in place. The Legislature will likely move in the opposite direction. Rather than return control to the most local level – the family – they will take it to themselves, further separating authority over the educational program from those with the greatest stake in it. The sadly inevitable result will be an accelerated decline in student performance and achievement.
Studies of educational success have shown over and over that the most important factor for achievement is not funding or demographics, it is the engagement of parents in the education of their children. Disconnecting local taxes from local budgets increases spending but decreases accountability for outcomes. Empowering the Legislature disempowers communities and obstructs local accountability. The Legislature may succeed in seizing control of local budget decisions, but if they do so the unintended consequence for Vermont’s educational opportunities will be tragic.
Jeff Wennberg served as Rutland’s school board president, mayor, and public works commissioner (not all at once), and as environmental commissioner for the State of Vermont under Governor Jim Douglas. A long-standing advocate for universal school choice, he now resides in North Carolina where his principle retirement activity is spoiling his grandchildren.
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Categories: Commentary, Education, State Government, Taxes
Mr. Wennberg’s assessment, including his review of the complicated and sordid past of Vermont’s publicly funded K thru 12 education malaise, is spot on. And he politely avoids pointing the finger at the usual education special interest suspects who oppose his viewpoint.
For anyone interested, there is proposed legislation, H.405, introduced a year and a half ago, and currently sitting on the shelves of the Committee on Education collecting dust, that expands existing school governance and funding that mirrors Mr. Wennberg’s suggestions.
My last check indicates that the following representatives are Committee on Education members.
Rep. Kathryn Webb, Chair
Rep. Lawrence Cupoli, Vice Chair
Rep. Peter Conlon, Ranking Member
Rep. John Arrison
Rep. Sarah “Sarita” Austin
Rep. Erin Brady
Rep. Jana Brown
Rep. Philip Jay Hooper
Rep. Kathleen James, Clerk
Rep. Casey Toof
Rep. Terri Lynn Williams
Please call or write to these legislators and ask them to bring H.405 to the floor for discussion. H.405 is easily understood and, in fact, already being implemented in almost 90 of Vermont’s school districts. H.405 simply proposes to expand Vermont’s ‘tuitioning’ governance to all Vermont children and their families.
Larry Cupoli, has been retired for two years so I’d update the list
HOUSE COMMITTEE ON EDUCATION – 2024
Rep. Peter Conlon, Chair
Rep. Erin Brady, Vice Chair
Rep. Casey Toof, Ranking Member
Rep. Sarah “Sarita” Austin
Rep. Jana Brown
Rep. Nelson Brownell
Rep. Tesha Buss
Rep. Kate McCann
Rep. Brian Minier
Rep. Mary-Katherine Stone, Clerk
Rep. Chris Taylor
Rep. Terri Lynn Williams
Let them know you’d like to see the H.405 bill on School Choice moved to the floor for discussion and a vote.
Mr. Eshelman:
What is on its way to bankrupting this state is also the way the state allocates social welfare program benefits. In Vermont, as opposed to states like Michigan, etc, only the income statement is considered. Not assets. So you have people “beating the system” regularly and moving here to do so. These folks stay under the income limits, determined in Vermont by the number of dependents they have, and collect free healthcare–adults are on medicare/medicaid (the one that is not for social security) and the children are on Dr. Dynosaur. These people have money in the bank, drive new cars & have houses that are paid off. You know who notices? The dental professionals, doctors offices & urgent care centers. They see these folks walk in and look well off, nice car parked in the office driveway, but they and their children receive free Healthcare. I guarantee they are cashing in on other benefits too. It’s all about staying under that income limit. Vermont doesn’t examine assets, but other wiser/competent states do. These collectors will keep the Super majority in power.
Which VT legislative committee creates the policies that govern how social welfare benefits are doled out? The State of Vermont needs to start examining assets. I have 2 well to-do friends, one divorced the other not married by choice. They live in Chittenden County, own their own homes, drive nice, paid off cars, take luxurious vacations, have a large savings, and they and their children receive free healthcare, etc. They are likely cashing in on the property tax subsidy, too. All because they “work” part-time enough to stay under that Vermont defined income limit policy that also does not examine their assets. For those of us that work full time and pay hefty taxes and have children that we support, well this is just a slap in the face!
Sunseeker: You’re preaching to the choir. The extent to which corrupt dysfunction exists in Vermont’s governance can’t be exaggerated. And I suspect the simple ignorance and incompetence of our elected officials is much of the reason. On the other hand, cronyism (i.e., Vermont’s new fascism) is rampant too.
But this Wennberg missive is about public education – the head of the snake. And my remarks here are intended to point out the ease with which our education system can be reformed, thereby decreasing property taxes by at least 25% in the short term and increasing positive student outcomes at the same time.
All we need to do is enact H.405. This proposed legislation doesn’t change our education governance. Nearly 90 Vermont school districts already have School Choice. What H.405 does is simply extend the existing School Choice governance to all Vermont K-12 students.
The question is, can your friends and neighbors, those currently ‘on the take’, be convinced to vote for reasonable political representation before the otherwise inevitable bankruptcy affects them too?
i hope mr. wennberg , now living in north carolina , is not collecting a vermont pension///// i am one of the group that opposed act 60////
I do not know who mday44yahoocom is, but I thank you for working to prevent Act 60 from becoming law. Indeed, when the Senate Finance Committee travelled the state to take public comment the overwhelming majority of those testifying spoke in opposition. And, no, I am not receiving a pension from the State of Vermont.
Many states require anyone on public pension requires you to live in that state or take a cut in their benefit. I think that is a wonderful idea for Vermont!!!!
NOYB, and just for information, which states would that be?
In the for what it’s worth department, just living in a Vermont governed by the current progressive-liberal-democrat legislature, already drastically cuts the value of retired State employee benefits.
Re: “…just living in a Vermont governed by the current progressive-liberal-democrat legislature, already drastically cuts the value of retired State employee benefit.”
Living in Vermont cuts the value of EVERYONE’S retirement benefit, State employees or not…because taxes and the resulting cost of living are so high. And Vermont taxes and the resulting cost of living are high for two reasons. First, BECAUSE State retirement programs are underfunded for the ‘Defined Benefit’ they provide, and taxpayers have to make up the difference.
Getting into the weeds:
The standard investment disclaimer states: ‘Past performance is no guaranty of future results’… unless, of course, one has a State ‘Defined Benefit’ retirement plan.
The point is, most other people receive ‘Defined Contribution’ benefits. The difference being that ‘Defined Benefit’ programs guarantee a specified benefit amount…. no matter what. If the retirement fund investments aren’t invested properly and don’t appreciate in value, the taxpayers make up the difference. And who invests those retirement funds? The State does.
In a ‘Defined Contribution’ program (as the name describes) the employer guarantees the ‘contribution’ it pays into the retirement account, not the ‘benefit’ it provides. If the retirement account, managed by the retiree, is invested wisely, it appreciates in value. If not, it doesn’t appreciate in value. And taxpayers aren’t on the hook to make up the difference for poor investments.
The outcome is inevitable.
Reason #2: Government jobs are the fastest growing sector in the Vermont economy. And now the “progressive-liberal-democrat legislature”, and the people they hire, are becoming the only people left to fund their own inefficient system.
It’s a funny thing about bankruptcy. It begins gradually and ends suddenly. Kind of like the frog in a pot of slowly boiling water.
Case in point: There are more than 37,000 full-time equivalent employees working for the Agency of Education serving only 73,000 K-12 public school students. And these employees receive ‘Defined Benefit’ retirement programs.
This might help explain why the Agency of Education has a $2.7 Billion (that’s Billion, with a ‘B’) education system… costing taxpayers about $36,000 per student.
How long can this spending be sustained?
Not much longer.
Here are a few things I have learned from our recent relocation to spend time with our grandchildren. You can still purchase a nice (small) home for under $300,000, and a very nice home for around $350,000. This is because new homes are being built by the thousands, and the supply balances the demand, at least where we live. Social Security benefits are exempt from state income taxes. Property taxes are about 1/4 to 1/3 what Vermonters pay for a similar home. Electricity is about 30% cheaper than in Vermont, which boasts the highest percentage of non-hydro renewable generation of all 50 states. Income tax rates are lower, but sales taxes are applied to just about everything, and you pay an annual personal property tax on autos and RVs; but the annual registration fee for on-road vehicles is a fraction of Vermont’s. The bottom line is the cost of living in NC is significantly lower than in Vermont, which makes it more affordable for retired folks (but not as cheap as Florida). When Vermont’s Clean Heat Standard gets baked into oil and gas heating bills it will be worse than the state property tax whack folks are seeing now. I’ll keep the light on for you.
Mr. Wennberg: How are the public schools in the location where nice houses cost $300-$350,000? How do they rank? Just curious. And how is the crime?
Sunseeker, North Carolina has no teacher’s unions – they are banned by law. As a result teacher pay is set by the state although local districts can supplement to a degree, at least that is what I am told. Compensation for all school employees is lower than many other states, and I for one believe it should be raised. Just the same, my grandchildren attend public schools in one of the best performing (and largest) school districts in the US (Wake County). Home prices there are higher and the schools no doubt are a factor, but incomes are very high as this is the location of the silicon valley of the south (The Research Triangle). I live 30 minutes away in a community of 35,000 that is largely agriculture and manufacturing (Caterpillar, Pfizer, Coty, Moen, etc.) and 25% Hispanic. This county is working very hard to improve the schools as more manufacturers move in (A Japanese biotech firm and a Vietnamese electric car manufacturer building a $4 billion plant that will employ 7000 when completed). I do not have personal experience with our local schools but I would guess they are comparable to most schools in Vermont. Crime is low here but the larger cities have more, although in Raleigh crime ranks among the lowest for cities of that size. And Raleigh is one of the cleanest cities I have seen.
Re: “North Carolina has no teacher’s unions – they are banned by law. As a result teacher pay is set by the state although local districts can supplement to a degree, at least that is what I am told.”
There are simply too many aspects to consider when making a reasonable comparison between Vermont and NC. It’s not Apples and Oranges. More like Apples and Potatoes. The following NC numbers are not thoroughly researched but are indicative of the differentials to be considered in a Vermont comparison.
North Carolina, for example, has Charter Schools. Vermont doesn’t. Vermont, on the other hand, does fund some private school tuitions.
Vermont K-12 Students 73,000+- (enrollments have declined 12% since 2017)
NC K-12 Students 1,500,000+- (enrollments have increased 3.75% since 2012)
Vermont Agency of Education administrative staff 161 (453 students per staff member)
NC Dept. of Public Instruction administrative staff 689 (2177 students per staff member)
Vermont Public K-12 Education budget $ 2,700,000,000+- (cost per student $36,000+-)
NC Public K-12 Education budget $11,100,000,000+- (cost per student $ 7,400+-)
One of the major differences in per student costs is that Vermont calculates its published cost on the ‘equalized student enrollment’ that arguably doubles the actual number of kids (Average Daily Membership) in school. NC counts the actual number of students.
According to the NEA (teacher’s union):
Vermont Cost per student is $26,749
NC cost per student is $13,173
Test scores:
VT NAEP Grade 8 Math Scores 276
NC NAEP Grade 8 Math Scores 274
It’s not just what we spend. It’s what we get in return. NC gets twice the bang for its buck than Vermont.