Study what?

It appears there will be two new studies of Vermont’s education funding system. The Legislature has commissioned one—and a California-based consultant recently won the contract. In addition, two communities in southern Vermont—Dover and Wilmington—have decided to pay for their own study of how their local economies might have been affected by Acts 60 and 68.

It’s not entirely clear what the Legislature hopes to learn from its study. There has been a problem with higher property taxes in recent years. But that’s due in large part to cuts in General Fund support for education. It doesn’t require a study to figure that out.

Dover and Wilmington appear to be seeking evidence that Acts 60 and 68 have hampered local economic development. Their argument is that local businesses have had less money to invest to create jobs because school taxes increased under the current funding system. If the only interest—and obligation—of business owners in Dover and Wilmington was to educate the children residing in their own towns, they might have a case.

But it’s not.

Perhaps it’s worth reviewing the 1997 Vermont Supreme Court decision that gave rise to Act 60 and Act 68.  Under the previous funding system, property wealthy communities—like Dover and Wilmington—could generate a lot of money per student with relatively low tax rates. In poorer communities, it was just the reverse: tax rates were high, but per pupil spending was low. The court said the system was unfair and that Vermont was not meeting its constitutional obligation to provide equal educational opportunity to all children.

Now we have system in which all businesses are taxed at one, uniform rate. It’s a state tax—no longer a local tax—and the money supports the education of all children in the state.

Going back to the old system where property-wealthy communities were likely to have better schools than property-poor ones would run afoul of the Supreme Court’s ruling. And in the long run, it wouldn’t serve the interests of businesses in Dover and Wilmington. There are clear links between education, job skills, and lifetime earning power. Unless they expect all of their future employees and all of their customers to be local residents, businesses in Dover and Wilmington have a stake in the quality of education delivered throughout the state.

Since Act 60 was passed almost 15 years ago, one thing that has been hard to shake is the notion that towns pay taxes. They don’t; individuals and businesses pay taxes. And under Act 60, all businesses are treated the same and pay the same tax rate. It’s hard to see how that favors some communities and disadvantages others. I guess I’ll have to wait for the report.

Posted by Jack Hoffman on July 29, 2011 at 2:05 pm

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