Problems old and new undermine fairness for some taxpayers and districts

Vermonters have been understandably upset by the abrupt rise in their school taxes for fiscal 2025. Most of the complaints focus on the rise in spending, as does the response from policymakers. But taxpayers may also be affected by changes that make the funding system less fair.

The Agency of Education presented some clear analyses last spring explaining the main reasons for the spending increase: rises in salaries and benefits in response to inflation; health insurance cost increases exceeding inflation; the expanding need for expensive mental health services for students; the loss of federal funds the schools received as part of the pandemic-related American Rescue Plan Act (ARPA). There are other reasons as well, related to fiscal decisions made in the past few years. The expenditures are critical for providing kids with a quality education. But knowing that doesn’t make the tax bumps easier to take. Even modest increases can be a problem if the costs, and who pays them, are not distributed fairly.

In fact, some districts and taxpayers have been facing disproportionately higher bills for a while.

New Census data offer proof that federal and state governments can significantly reduce child poverty. Almost 9 percent of Vermont’s kids lived in poverty, according to the three-year average of the federal official poverty measure for 2021-2023. However, the Supplemental Poverty Measure (SPM)—which factors in state and federal government programs such as universal school meals, food and utility assistance, and the child tax credit—came in 3 percentage points lower, at less than 6 percent for the same period. The difference in poverty rates was evident across New England, where anti-poverty programs are generally strong. In Vermont, the 3-percentage-point difference between the two measures accounted for roughly 3,000 children.

Low- and moderate-income Vermonters can see big tax jumps even when spending doesn’t change

Education spending saw its biggest jump in years in fiscal 2025, and school taxpayers are noticing the change in their bills. The increase this year was due to a lot of factors outside both schools’ and taxpayers’ control—inflation, healthcare costs, and the loss of pandemic-era federal support chief among them. All of that led to an increase in total homestead taxes of 12.9 percent, although the rate varied from town to town.

But taxpayers can see their tax bills suddenly balloon even when spending increases are modest. The reason: thresholds built into the system.

   

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