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.