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by Bekah Mandell Vermont has a unique education funding system. Unlike most states, where the wealth of your community determines the resources available for your school, Vermont’s statewide funding system means that we’ve succeeded in reducing the disparities in spending between rich and poor communities while maintaining local control. There’s more that we can do to make our ed funding system simpler, fairer, and more transparent, but right now, I want to focus on how we got to have one of the most equitable school funding systems in the country.
Until the late 1990s Vermont schools were funded through a foundation system. The state determined a minimum amount necessary for an adequate education. If a town couldn’t raise that much on their own, the state would make up the difference. But state aid only got towns to “adequate” funding.
To spend more, they were on their own, which for poor towns meant much higher taxes for very little additional money per student. But for richer towns – towns with a ski resort or lots of other property wealth, a small bump in their tax rate would yield a lot more money to spend on their schools.
The foundation amount essentially served as a floor for rich towns and a ceiling for poor towns. As a result, where a student lived had a really big impact on the resources available to them. And that’s still true in most states across the country, unfortunately.
And then in the mid 1990s, a family in an under-resourced district sued the state under the common benefits clause of the Vermont constitution and won. The court’s decision emphasized the goal of protecting local control while pushing for greater equity across districts.
The subsequent changes to Vermont’s education funding system are grounded in three central principles: fairness for students, fairness for taxpayers, and protecting local control.
Here’s that means:
FAIRNESS FOR STUDENTS comes from the fact that school taxes are statewide taxes that go into one big pot that we all share – we are one of two states that have a statewide education tax (Hawaii is the other). That means in Vermont, school funding is not dependent on the wealth of the particular community.
LOCAL CONTROL means that local school boards and local voters determine local spending and governance.
FAIRNESS FOR TAXPAYERS means they Taxpayers pay the same tax rate for the same per-pupil spending, regardless of their town’s wealth. Towns with more spending per pupil have higher tax rates; those with less spending per pupil have lower rates, and towns with the same per-pupil spending have the same rates. That may sound simple, but it wasn’t true before 1997.
And another big part of fairness to taxpayers is that we try to have a system based on ability to pay. And income is the best measure of ability to pay.
Under the current system, about two-thirds of resident homeowners pay some or all of their school taxes based on their income. But our income sensitivity system has gotten out of whack–it’s no longer doing what it was supposed to do.
Right now, low and middle-income Vermonters face tax cliffs that can make their school taxes jump substantially even when their income does not. And the wealthiest Vermonters pay based on their home value, not their income because it results in a lower tax bill.
To put it another way, the higher rates that low- and moderate-income taxpayers pay are subsidizing lower education tax rates for the wealthiest Vermonters.
While there's work to do to fix the cliffs and shore up our income-based funding system, it is worth remembering that our current system is built on a unique foundation of equity, fairness, and local control.
Bekah Mandell is Director of Communications and Development at Public Assets Institute in Montpelier.
publicassets.org