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Education spending: Just the updated facts

Providing a good education for each of its citizens is one of the most important jobs of state government. So it should come as no surprise that we spend a significant amount of money, about 5 to 6 percent of the state’s gross state product, on public education. But with all the talk about skyrocketing school costs in recent years, it has surprised many that education costs as a percentage of the Vermont economy actually have not changed much over the past two decades. Health care costs, on the other hand, have skyrocketed and now equal nearly 20 percent of the state’s economy.

This is some of the information that we uncovered last year and published in “Vermont Education Spending: The Facts” in October 2010. More people read this report than any we’ve written. So we decided to update it this month with the new data that has become available in the past year. While the new data don’t change the conclusions, the updated version of this popular two-page report is still a quick, illuminating read.

Posted by Paul Cillo on October 20, 2011 at 3:19 pm

2 Responses to “Education spending: Just the updated facts”

  1. Dan Fleming says:

    Hi Paul,
    1/ I would be curious to understand what the effect of the ARRA and Education Jobs funding had on curbing spending growth. I know that locally, while some job cuts were necessary, these funding packages had a big effect on keeping most school programs whole while decreasing net per pupil expenses (grosss PPS actually rose very slighty). I expect these to end soon, if not already, with SERIOUS effect on Act 68 expenses. You really should look at gross spending (not Act 68) as that is what education really spends.
    2/ I have no idea how you developed the % income chart, but I can tell you that my wife and I (largely retired) paid 8.3% of our AGI (8% of our gross income) in Vermont education tax for 2010. Someone must know some dodges that I have not figured out. Of course if we had made $1M the percentage would be less for us as it is based on property value not income!!!
    3/ As for jobs effect. Great, but bear in mind that this equates to an average salary of $32.5K. Since teachers average salary is $46K the other salaries, while much appreciated, are not up to the State median. Also, the basis for this is public funding that has to depend on non-public sources to be realized. Without the fundamental wealth generators this can not happen, much less be sustained.
    Thanks for listening,
    …Dan South Burlington, VT

  2. Paul Cillo says:


    Thanks for your post.

    On your first point, federal funding over the last several years has reduced the need for school staffing cuts as it was intended to do. But the state also reduced the General Fund transfer to the Education Fund, which put more pressure on school districts to cut spending to avoid property tax increases. The net result, as our report shows, is that there have been reductions in education spending for two consecutive years.

    Regarding your point about gross education expenditures versus “education spending,” which is the portion of K-12 education costs that affect the school tax rate, we use gross education costs when we’re looking at the statewide system as a whole as we do in the first chart in our report that compares statewide health care and education costs as a percentage of gross state product. We use education spending when we’re looking at the impact on school taxes.

    Your second point about the percent of income chart raises the problem with our current system for paying for schools, which is heavily reliant on property taxes. We used the median percentage (school tax as a percentage of income) for each income group. That means that half of those in that group have a higher percentage and half lower. Your household with school taxes at 8 percent of gross income is clearly in the half that is higher than the approximately 2.6 percent median. Meanwhile, there are those at the top that are paying less than .5 percent of their income. A system based more on income instead of property would be fairer to everyone.

    Finally, there needs to be a healthy balance between the public and private sectors. Both need to be strong for a society to prosper and for that prosperity to be shared by everyone. Economist Jeffrey Thompson, who produced the job creation numbers cited in our report, notes that public investment in infrastructure and education is a job-creation engine that “builds the skills of the current and future workforce, improves the physical infrastructure of regions, and makes communities more attractive places for families and firms.” Public investments provide the foundation for wealth generation.