Why we have the current problem

There are short-term and long-term problems with Education funding in Vermont. They are related. The short-term problems hit hard this year. The long-term problems have been brewing for decades. 

Note the careful use of the word "projected." Tax rates are not really known until late in the legsilative session when the "Yield Bill" is signed into law. That bill set the number used to calculate everyone's taxes.

Short-term problems

There are really two short-term problems coming together to make the mess we are in:

We are now in the process of fixing the first with a bill (H.850) which has recently been singed into law. The second is what we are considering now.

The 5% cap in Act 127

In the explanation of Vermont's education tax calculation there is a difference between the district tax rate and the town tax rate. The district tax rate is pre-CLA. When the CLA is applied (as described here) the result is the town tax rate that appears on your bill.

When Act 127 was written there was fear that a few districts would get hurt a lot more than others because of changes in the weighted pupil count (explained here) used to calculate taxes. So a cap of 5% was put on the amount that the district homestead tax rate could go up. At the time, such increases were well below that. However, as school boards began putting their budgets together many realized that the needed increases in their budgets were hitting, or almost hitting, that cap. Some boards decided that if that were the case, they might as well spend more. The cap would keep their tax rate from going up any further, even though they increased their budget. 

In addition, Act 127 stated that if you didn't go through the cap the first year, the cap would not apply for any of the remaining four years that the cap would be in affect. Another reason for school boards to exceed the cap this first year.

As a result, projected education spending went up even more, and so did projected district tax rates, which brought more districts over the cap, etc. etc. Finally, all school districts were projected to exceed the cap. The tax rates could not be set high enough to bring enough money into the Ed Fund to satisfy the projected amounts that would be passed by the voters. A $30 million hole appeared in the projected Education Fund.

The increase in education spending

Education spending is now projected to increase more than $200 million. That is not simply the result of some school boards taking advantage of the 5% cap. There are a host reasons:

Long-term problems

The needs are infinite. One can always spend more on education. And when "education" now includes mental health and behavioral health needs, that just adds infinity to infinity. But . . . tax payers don't have infinite pay checks. They can't afford infinite taxes, so lines have to be drawn.

The linear connection between votes and taxes

People talk of resetting the "linear connection between budget votes and taxes." What does that mean?  When budgets go up, the tax rate is expected to go up. That's understandable, but not always the case in Vermont. In Colchester the school district budget has consistently gone up. The percent amount it has gone up since 2017 ranges from 3.67%  in FY2018 to a projected 9.59% in FY2025. The percent change of the tax rate on my bill has ranged from -3.69% in FY2023 to a projected 15% in FY2025. In FY2023 the school budget went up by 4.03%, but my tax rate went down by 3.69. That is not a nice linear relationship.

The result is that voters have almost no idea what the impact of their vote will be on their taxes. They know it will trend up, but by how much?

School spending

Vermont's Education Fund now requires about $2.4 billion to honor all the State's projected voter-approved budgets. The State's student count is decreasing as the cost of educating them is increasing. To many people, that does not make sense. But there are reasons. Some of those are mentioned above. Much of it relates to Vermont's rural nature, the preservation of smaller schools and insistence on local control of school budgets.

Student to Staff Ratios

In 2020 Vermont is said to have a staff to student ratio of 10.5 to 1. The lowest in the country. A study completed in 2019 investigated that ratio. Reducing staff would certainly save money, as the cost of personnel is a significant driver to increased budget.

Mental and Behavioral Health Services

Public schools are taking on more mental and behavioral health services as schools seem to be the appropriate place for such services to be provided. But should such services be paid for through education taxes?

School construction

In 2007 the State stopped assisting in school construction projects. There has been no real help since then. Many Vermont schools have not been maintained and are deteriorating. Act 72 of 2021 created a Task Force to look into school construction. A recently released an assessment of Vermont's school illustrates the condition of Vermont schools. A continuing and significant amount of money is needed.