Vermont lawmakers began the process of undoing parts of Act 127, a 2023 law designed to help school districts with a lot of costlier students to educate raise more funds from their tax rates.
Increasing the education tax yields for these districts was aimed as providing these students with substantially equal educational opportunities without placing disproportionate tax burden on residents of those district. Act 127 capped per student spending increases at 10%, creating a tax increase cap for per pupil spending increases between 5 and 10%.
In simple math, it meant that a district could increase its per pupil spending by 9% but taxpayers would only see increases based on 5%.
Guess what happened? Many districts added budget items based on the tax-impact immunity caused by the 5% cap. And can you blame them? Vermont’s education funding formula is unwieldy, almost impossible to explain or understand.
It is unpredictable, overly influenced by the state’s surging property values (made worse by our state-wide housing shortages and the impact of COVID on property values) and still, years after the Supreme Court decision that led to it, not delivering substantially equal educational opportunities for all students.
Substantially equal educational opportunities also means substantially equal tax burdens for those who pay for them. Hence Act 127 which was designed to help extremely rural districts and those with students whose learning needs are more expensive (English as a second language) than others.
Good intentions -- unintended consequences and an outcome that reflects that the creators of school budgets throughout the state could see a loophole whereby they could add a few percentages points to their per pupil spending for a new roof or HVAC system or windows or a lab etc., without any tax consequences. It’s hard to blame those budget-makers.
Prior to this week’s legislative action to remove Act 127’s 5% cap and replace it with some other mechanism to help the districts with reduced taxation yields transition (and condition taxpayers to paying more), overall state education spending was slated for a 20% increase.
That is not sustainable.
