Public Assets Institute > Policy Areas > Education > The Ed Fund needs an outside opinion

The Ed Fund needs an outside opinion

Gov. Phil Scott wants to use a $96 million surplus in the Education Fund for a little tax relief for homeowners and to expand job training. Another scenario laid out by the tax commissioner in December was, in essence, to just lower everybody’s school taxes for one year. These aren’t the only options, nor the best ones, which is why the Legislature needs to create an Education Fund Advisory Committee to oversee the long-term stability of the education finance system.

Governor Scott proposed last week that half of the surplus—about $48 million—be returned to resident homeowners in the form of a rebate. He recommended a flat amount of $250-$275 to each household. If you were going to issue rebates, that would be a better way to do it than, say, a small percentage reduction in everyone’s tax bills. The percentage approach favors those with higher tax bills, i.e. those with more valuable property or higher incomes. A fixed rebate is better for lower-income households, but better still would be to set a maximum income threshold and to include something for renters.

With the other half of the anticipated surplus, the governor proposed additional Career and Technical Education (CTE) programs, which was surprising coming from this administration. Governor Scott has long been supportive of these kinds of technical training programs. But he also has long been critical of what he sees as excessive education spending. It’s hard to imagine Scott asking for a $48 million increase in education taxes, which essentially is what this is, to pay for these CTE initiatives.

The surplus has accumulated over the last two years, largely because of wild swings in consumer spending driven by the COVID-19 pandemic. In addition to property taxes, the sales and use tax and a portion of the rooms and meals tax support the Education Fund. These non-property tax revenues jumped almost 16 percent in fiscal 2021 and are forecast to rise 7.5 percent this year. The average growth rate projected for the next five years is just under 2 percent.

Ninety-six million is enough to burn a hole in anyone’s pocket. Better job training would help workers and employers, and who would sneeze at a $250 rebate check? In an election year, what elected official wouldn’t like to claim credit for lowering school taxes by 8 or 9 percent.

But these are windfall expenditures, things to spend money on when you weren’t expecting it. The Legislature and the administration need an independent advisor that can look ahead four or five years and focus on the Fund’s long-term stability. They need something like the Education Fund Advisory Committee proposed as part of a larger education funding bill moving through the Senate.

The committee wouldn’t control the Education Fund. It would advise the Legislature and the administration, just as the Capital Debt Affordability Advisory Committee recommends how best to manage the state’s long-term borrowing. The advisors need to have a thorough understanding of Vermont education funding system and the freedom to look beyond the two-year election cycle.

Ideally, such a committee also would help the Legislature break its bad habit of waiting to set the annual tax rate schedule until long after most school districts vote their budgets on Town Meeting Day. The rate schedule can—and should be—determined in January before local school boards finalize their budgets. It’s not fair to ask voters to approve school spending without knowing how much their taxes will be.

With inflation, the war in Ukraine, and the constant threat of new Covid strains, $96 million might provide a buffer against new economic volatility. But that’s the kind of decision that would benefit from the thoughtful advice of people whose job it is to take the long-view and plan for the future. 

Posted by Jack Hoffman on March 17, 2022 at 3:33 pm

One Response to “The Ed Fund needs an outside opinion”

  1. Bert Munger says:

    There has to be lots of “deferred maintenance” in the education infrastructure. This would be an opportunity to get caught back up.