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Follow VPR's statehouse coverage, featuring Pete Hirschfeld and Bob Kinzel in our Statehouse Bureau in Montpelier.

Shumlin On Ed Financing: Identify The Problem Before Voting For A Solution

Looming increases in the statewide property tax rate have prompted calls for education financing reform. But the most powerful Democrats in Montpelier say they’re not yet convinced that Vermont’s school funding system needs fixing.

There are a lot of reasons the statewide property tax will jump by more than 10 percent over the next two years, and not all of them have to do with increased spending on public schools. Sluggish home values, declining student enrollment and other factors all play a role in determining statewide rates, which fiscal analysts say will climb by 5 cents this year and 7 cents the next.

But increases in local school budgets do play a significant role in the upward pressure on rates. And more and more lawmakers say flaws in the school funding system, called Act 60 and Act 68, have exacerbated the pace at which local budgets are rising.

Specifically, critics point to a provision in the law that cushions lower- and middle-class households from the full financial impact of their votes on local districts.

"Do we have a challenge as we look forward with income sensitivity driving school spending beyond a sustainable rate, because of the theory, the theory, that not enough voters are directly impacted by the increases that they vote? Or is that purely untrue?' - Gov. Peter Shumlin

Gov. Peter Shumlin said it’s possible that income-sensitivity has caused people to vote for higher budgets. But he said Vermont needs to find data proving that thesis before it proceeds with changes to the system.

“Do we have a challenge as we look forward with income sensitivity driving school spending beyond a sustainable rate, because of the theory, the theory, that not enough voters are directly impacted by the increases that they vote?” Shumlin said Tuesday. “Or is that purely untrue?”

Shumlin spoke at a symposium at St. Michaels College in Colchester, where legislators, education officials and other policy makers mulled the wisdom of changes to Act 68. The fact the symposium was held at all speaks to the urgency of the property tax issue. But the generally positive comments about Act 68 from Shumlin, House Speaker Shap Smith and Senate President John Campbell suggest that reform in 2014 won’t be broad or sweeping.

Smith said Vermonters are rightly concerned about increasing tax bills.

“But I would submit to you that if people felt that they were getting an excellent return on their investment, I think Vermonters are willing to spend a significant amount of money on the education for their kids,” Smith said. “And I don’ t think that we can divorce the question of quality from the question of financing. Those two issues must be tied together.”

Campbell said dissatisfaction with Act 68 stems in part from its complexity. The number of variables involved in determining property tax rates make it difficult for the average voter to isolate the cause of their tax increase. Ratepayers might reside in a district in which local school budgets are rising only by the rate of inflation. But they could still see double-digit percent increases in the tax rate because of declining student enrollment, a drop in the common level of appraisal, or the number of local properties receiving property tax exemptions.

That fact that lawmakers and their constituents can’t easily isolate the cause of their fiscal turmoil, according to Campbell, tends to breed contempt for the funding formula.

“There were rarely people who really knew what Act 60 did or what it was, or what the formula did, and I can tell you this … almost embarrassingly, is that there are still people in the Legislature that do not know what Act 60 does, what it’s supposed to do… or what the formula does,” Campbell said at the symposium.

Smith, Campbell and Shumlin said Vermont’s unique system of school financing means children growing up in poor places get as good an education as those from more affluent regions.

“We sometimes forget that in almost every other state in the country, they still have that system,” Shumlin said. “Your access to educational opportunity depends upon your zip code. In Vermont that’s not true.”

Lawmakers this year will consider a number of tweaks to Act 68, including ones that would increase modestly the proportion of education spending borne by people with household incomes of less than $95,000, or hike financial penalties on the highest-spending schools.

But Representative Heidi Scheuermann, R-Stowe, said the time has come to do away entirely with the statewide funding apparatus, and replace it with a regional funding system that ensures a closer connection between the decisions voters make on Town Meeting Day and the property tax bills that arrive in their mailboxes.

“The governor really focused again on income sensitivity. While I know that’s a problem, I’m hopeful that this will be more than that,” Scheuermann said. "It’s really about the whole system, and whether or not it actually works. We have achieved equity in funding. And that’s good … Now we need to achieve equity and fairness ... (for) taxpayers.”

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