Want to know how to keep property taxes for school spending down and avoid the projected two-cent hike recently projected by state officials?
In theory, it’s not that hard: just keep local spending per pupil the same as last year.
In her report to the Legislature on Monday, Tax Commissioner Mary Peterson projected that an increase of two cents on the homestead and nonresidential property rates would be needed to pay for expected increases in statewide school spending. But she also noted that local schools and municipalities could partially control their own fate by keeping per pupil spending from rising. An important concept, she emphasized, is that the statewide property tax rate is predicated on a district’s spending per pupil — if a school district reduces that per pupil spending, the district’s share of taxes sent to the Education Fund would also be reduced.
“Both the $1.00 (representing a two-cent increase over the prior year) and 1.94 percent base homestead rates will be subject to adjustment based on local spending decisions,” she explained in her report. “These adjustments must be understood as a pricing mechanism only; districts are not raising the amounts that they are spending over the base amount locally. Rather, the local rate is adjusted so that the district contributes to the Education Fund in proportion to its spending per pupil, providing a signal to voters of their district’s spending per pupil relative to other districts…. A district which adjusts its budget to spend the same amount as it did in the current year per pupil, and which has no CLA increase, will see essentially no increase in its homestead property rate.”
The message is clear: taxpayers in school districts that work to keep per pupil costs down will pay lower taxes.
That’s not just a “duh” moment; nor is it all that easy to achieve.
We all know that lower spending on town budgets means lower taxes, but we have become more distanced from school taxes and how those are financed in the past several years. That’s partly because school finance is a complex subject and partly because it’s easier to blame “big government” — or the funding formula — for our troubles than it is to do the hard work of reducing spending at home. Nor is it easy to keep per pupil spending from rising when fewer students in a school district mean less state financing to the school even as infrastructure and labor costs grow.
Nonetheless, that’s the tough job each school district — as well as the Legislature — must address, if we are to contain school-based taxes.
As the Legislature and governor’s administration wrangle with this issue in the coming session, here are some important facts to consider:
• The projected number of students in Fiscal Year 2016 is 88,626 statewide; that’s 631 less than in FY2015 (and that includes the pre-K students the state has added over the past couple of years.) That continues a trend of the past couple of decades. Since 1997, K-12 student population has declined by 20 percent. But here’s the kicker: even with that decline in students, Vermont employs more teachers and paraprofessionals than ever. The current student-to-staff ratio is 4.67-to-1, as well as class sizes from 2 to 9 students in 20 percent of elementary classrooms.
• About 80 percent of education costs are employee-driven; that is, the cost of hiring teachers, administration and staff.
• Education funding is comprised of far more than just the property tax: 30 percent of the General Fund is devoted to education; 35 percent of the sales and use taxes go for education; all lottery proceeds; and one-third of all purchase and sales taxes on vehicles. Furthermore, nearly two-thirds of Vermont homeowners pay the bulk of their education tax on income rather than property value.
What is crystal clear in that school costs in Vermont today are out of line in relation to the number of students being taught. Our collective failure is that a reduction in expenses did not mirror the drop in students. The solution is just as clear: We have to bring our student-to-staff and student-to-teacher ratios more in line with national averages.
All the political hullabaloo about ditching Acts 60 and 68 and coming up with a “better” formula for school funding — basically, a version of robbing Peter to pay Paul because any changed formula is nothing more than shifting the burden from one group of taxpayers to another — is a deflection from the real issue of reducing costs.
Governor Peter Shumlin is right to direct the focus of this issue (see his commentary on Page 5A) on the state’s per pupil cost. We hope the Legislature adopts the same framework. What’s most important is helping chart a path to make our schools more economically viable, while improving student outcomes.
The strength of Vermont’s educational system is that we are already allocating sufficient resources (that is, we don’t need more tax revenue); rather, we need to re-allocate those expenses in ways that are more cost effective. And on an optimistic note, the goal is to make Vermont’s public school system one of the best in the nation. It remains the state’s best economic development tool, and one of the state’s most promising assets.
But change must be embraced. Voters can take measures into their own hands by understanding their school budgets, and making the necessary adjustments — even if that means consolidating with neighboring schools and finding other ways to use the school facility as a community hub. If that fails (and it has for the past decade), the Legislature and the governor will have to force the issue — perhaps with measures that are punitive to schools whose per pupil costs are far above the norm. The latter is certainly not desirable, but when local control fails to do its job, someone has to step to the plate to get it done.
Angelo S. Lynn