Op-ed: The education fund, taxes and tax rates

By Layne Millington
Superintendent, Two Rivers Supervisory Union

As we look at the coming school year, it is crucial to understand the impact of last year’s legislated changes to education funding that lead to budget failures across the state. This was the first time that most Vermonters experienced such an unprecedented increase in taxes, and it is important to understand why; and more importantly, how little control we have over our local tax rates.

In June 1997, Vermont put into place The Equal Educational Opportunity Act, with the aim of balancing educational spending. This act made all Vermont taxpayers responsible for the cost of education in every district. The school taxes we pay fund the needs of all districts, not just our own; and conversely, the funds we receive to run our local schools are paid for by all Vermonters. This unique system has led to some unintended consequences. Districts either benefit from or suffer due to the leverage points created by this funding model and how they are used. Understanding this framework is key to navigating the challenges and constraints we face in running our local schools at a cost our district’s taxpayers can afford.

Our current state of affairs was further impacted when the legislature recognized that certain student groups require more funding to achieve the same educational outcomes as their peers and enacted changes that went into effect last year. Those changes reallocated funding from schools with lower populations of these students to those with higher numbers. This sudden shift meant that some districts lost significant amounts of funding which they relied on to operate effectively.

Faced with these newly imposed deficits, these districts had no choice but to request additional funds from taxpayers. As a result, since all taxpayers pay for these increases, all taxpayers experienced an unprecedented increase in tax rates last year.

Several districts, such as ours, refused to pay for such increases and therefore slashed local budgets to the detriment of their schools; but because the benefits of these cuts were spread across all state taxpayers, the local tax impact was minimal. Further, the needs of the districts who lost money in the reallocation were so great that their increases not only cancelled the impact of local cuts, but those who cut still experienced large tax increases.

This year, we are looking at another round of increases that are out of local control. These are brought on by several factors, the most significant of which may be the use of one-time money last year to pay for essential operations to reduce the tax burden on local communities. To use the example of one of our board members; last year districts including ours used a coupon – the
one-time money – to pay for needed services. This year those essential services are still needed, but we do not have the coupon – so districts must cover the difference by increasing taxes. The more districts who did this, the greater our local taxes will be… because again, all Vermont taxpayers pay for these increases.

General Characteristics of Vermont Education Funding

• We all pay each other’s costs when it comes to funding education and, because of this, we have very little local control over our own tax rates.
• When we cut our spending, all taxpayers across the state share in that reduction.
• When we increase our spending, all taxpayers share in that increase.
• Lastly, unless all or most districts cut spending together, our local tax rates will not go down significantly. Our local tax rates can still increase even if we make dramatic cuts.

A Winning Strategy from Tough Decisions

After putting the state through the incredible tax increases seen last year, the legislature is now pivoting to try and fix the problem. The governor has put forward a plan to reduce the number of districts across the state, a plan that also implies the consolidation of schools; to be fair, though it is difficult to admit, statewide consolidation of schools and increasing student-to-staff ratios are the only real levers that can create a significant reduction in taxes.

The critical question is: which schools will remain open and which will face closure? Based on statements made during the announcement of the restructuring plan, along with logical considerations, it seems likely that low-performing schools with substantial facility issues will be closed.

Should this assumption hold true, our community will need to make challenging decisions in the coming years. We must determine whether to reduce school budgets, potentially providing minimal relief to local taxpayers, or to invest in enhancing our facilities and services to ensure that our schools are selected to remain open following the consolidation.

Considering several scenarios, including closing schools and tuitioning out all students, the difference between advancing our district for long-term survival and making detrimental cuts to reduce taxes is only $75 to $160 on an average priced home. It is essential to understand that the $75 to $160 savings would not reduce your current taxes but rather lessen the average $800
increase we will likely face this year. This increase is not necessarily a consequence of local actions, but because we are subsidizing the increases in other districts.

We are weathering a storm not of our making, and which requires appropriate legislative action if we are to see clear skies again. While we wait, the choice is yours on how we proceed – but the impact may be forever.

Click here for a list of public meetings on the proposed school budgets within the TRSU.