By Neil Nussbaum
Act 46 is a train wreck. “But what about out-of-control education spending and our shrinking, aging population?” you ask. “Skyrocketing education costs in Vermont are a huge problem.” Indeed, before the coronavirus, they were half of the existential problem facing our state.
If you have a nail to pound in, use a hammer. Accidentally reach for a fish instead and you’re just going to just make a mess. Skyrocketing education spending is our “nail.” But the Legislature reached for the Act 46 fish – big mistake! Act 46’s so-called “sustainable modeling” is based on three fallacies:
1. Consolidating multiple no-cost school boards into one umbrella no-cost school board will result in costs savings.
2. Centralizing costs will result in economies of scale greater than the increased cost that comes with centralization.
3. Closing schools will result in savings greater than the decrease in the tax rolls of the towns suffering school closures.
Here’s the hammer:
1. Abolish disconnected school budget voting.
Not so long ago, education spending in Vermont was funded just like municipal spending, by local property taxes. Listers placed values on all town property. The school board came up with a proposed budget, which it brought to the town for a vote in combination with the proposed municipal budget. Once the town approved the combined budget, property owners were each assessed a property tax based on their proportion of the town’s total property wealth (the grand list).
Under this education funding model, there was a direct connection between the budget that the townspeople voted on and the amount of pain that they’d feel on tax day and money spent on their school. But town grand lists varied widely, leading to the anomalous situation where a “property wealthy” town could raise substantially higher education revenue with a substantially lower tax rate than a “property poor” town, say, three times as many education dollars at half the property tax rate, for example. In 1997, the Vermont Supreme Court changed all that, ruling that (1) education funding was the responsibility of the state, not the towns; and (2) every Vermont school child should receive substantially equal education dollars. This led to the passage of Act 60, the first “prebate” law. Today, Vermont schools are funded largely by Vermont’s Education Fund. Incoming fund dollars are “income sensitized,” meaning that if a property owner’s education property taxes are more than approximately 2% of their income, then they receive a partial payment from the state to bring the education property taxes down to the 2% level. And outgoing fund dollars are sent to the school districts based on the number of schoolchildren in the district.
Today’s education funding system is a much more egalitarian approach than the pre-1997 model. The problem with today’s system, however, is that there’s no longer a meaningful connection for property owners between proposed budgets and either the pain they’ll feel on tax day or money spent on their school. Indeed, these days you need a master’s degree in accounting and a free week of research time to decipher the net effects of a proposed budget vote on your wallet and on your school. Most of us unfortunately don’t have either of those things, so we’re left instead with the uneasy feeling that the proposed $40 million school budget that closes schools is just not right, even though we can’t articulate exactly why.
THE SOLUTION
1. The solution is to abolish disconnected school budget voting. There are two diametrically opposed ways of accomplishing this:
a. Return part of education funding to the towns – not 100% but some proportion of it, say 50%; or
b. Give the state full control of education spending levels and the education property tax rate – under this scenario, Town Meeting school budget votes would be eliminated. Our annual education property tax bill would instead be based on the lesser of (1) the statewide education property tax rate or (2) a percentage of our annual income. The amount of money going to our schools each year would be decided by the governor.
2. Rein in salaries
Salaries made up approximately $27 million of the $40 million proposed budget that was voted down on Town Meeting Day in my consolidated school district. Controlling these costs is critical. How can it be done?
a. Decentralize salaries. Centralization creates distance and disconnect between employees and stakeholders. One-size-fits-all collective bargaining agreements tend to rise toward the highest sub-market in the central whole. Decentralization typically brings these costs categorically down.
b. Control special education costs. Special ed made up almost a quarter of the $21 million in my district’s proposed instructional program budget. Controlling these costs is also critical.
If you walked into a school in my district before the coronavirus hit, you couldn’t help but notice – the school was very well staffed. A significant number of these employees have jobs that were created by one of our national disabilities laws, such as Section 504, the ADA and the IDEA.
Our national commitment to those among us with disabilities has been one of the great, transformative achievements of our generation. However, it is time to revisit the cost of this commitment. Consolidating resources, increasing reliance on technology, relaxing overly expansive mandates, and enhanced oversight should lead to categorical savings.
3. Decentralize facilities expenses.
Back in the day, if the roof sprung a leak the local principal could call some folks to fix it quickly, at a reasonable price. Now the process involves roping in the central district office, hiring an architect and/or other design professional, and obtaining approval from our 14-member school board (no small feat). It takes longer and, more importantly, it’s much more expensive. Just as with salary expenses, reconnecting laborers with stakeholders can drive these costs way down.
These changes will not be easy to implement – far from it. But they will, in the end, pound the nail into place, which is a lot better than the stinky fish mess that we have on our hands right now!
Nussbaum lives in Moretown.
