Vermont education study: all schools have equal access to revenue

This post is an edited version of Paul Cillo’s testimony to the Vermont House Education Committee in January 2012.

The comprehensive study of Vermont’s school funding system released last month should be welcome news to Vermonters, who have invested significant effort over the past fifteen years to reform the system. The study’s conclusion: “the current funding system meets the goals established by the Court and Acts 60 and 68 – to provide equal access to all towns for raising revenues for PreK-12 education.”

This means that all Vermont children, regardless of their family’s or their town’s wealth, have the same access to resources for their education. And the report makes clear that school districts around the state have used this opportunity to improve education for their children: district-to-district variation in student achievement has been reduced, Vermont’s student test scores are among the highest in the country, and we graduate more of our students than nearly every other state.

Overall, the report by California-based Lawrence O. Picus and Associates is very good—the best effort by an outside consultant to assess Vermont’s school funding system that we’ve seen. The problem with out-of-state consultants generally is that they often fail to understand the culture and therefore the intentions of the people of the state they’re working in. The Picus team made a real effort to listen to Vermonters and understand Vermont, and their report is better for that effort.  We do take issue with some of their analysis, however.

• Spending: The Picus report points out that Vermont had the second highest growth in per-pupil spending in New England over the last decade — New Hampshire had the highest. What the report doesn’t mention is that the Supreme Court in each of Vermont and New Hampshire found each state’s school funding system to be unconstitutional in 1997. And both states have taken steps over the past decade to reduce town-to-town spending disparities by making more resources available for the education of children in poorer districts. This improvement in equity has likely increased per-pupil spending in both states as school districts that previously did not have sufficient resources now spend more.

• Equity: The report points out that Vermont has achieved equity that most other states have not, but it doesn’t take the next step of analyzing what it would cost other states to match the equity of Vermont’s system. When the report notes that Vermont’s average per-pupil cost is higher than in most other states, it does not account for lower average spending in other states due in part to inequities: low-spending, poor districts pulling down the state spending averages.

• Cost drivers: According to the Picus report: “The historical decline in Vermont enrollments have driven up the cost of education.” (p. xiii)  This is simply nonsense and misleads readers. As we’ve discussed in other posts, reducing the number of students in a school does not increase the cost of operating the school or make education less affordable; in fact overall school costs have come down in recent years. The report means to talk about spending per pupil, but is sloppy about this important distinction throughout the report. That’s not to say we should ignore per-pupil spending. It’s an indicator we should track, and we should be analyzing why some districts consistently spend more or less than the per-pupil average. But an increase in per-pupil spending, by itself, is not evidence that we’re spending more money overall.

• Economics: Our biggest concern with the report is in Section 5: Economic Analysis. The Picus analysts clearly have a bias for town property tax-based funding systems because that is what most of the other states have, and they acknowledge the bias in the report. Consequently, they make the discussion about Vermont’s income sensitivity and about pricing signals to voters more complex than it needs to be.

In essence, towns don’t pay taxes, people do. Act 68 is designed to send pricing signals to individual taxpayer/voters. And the pricing signals are the same for voters in every town. Higher school district spending per pupil results in higher taxes for resident taxpayers. This point is not made in this section of the report. In fact, this section confuses readers with an extensive discussion about pricing signals to towns rather than individuals.

One closing thought:

There is a lot of concern about the declining enrollment in Vermont schools and about how that is increasing the per-pupil cost of education. As noted earlier, increasing per-pupil costs from declining enrollment is not making the system less affordable. In fact, the system may be more affordable as overall system costs decline as they have for the past two years.

But decreasing enrollment does create an opportunity. So far, we’ve opted to respond to the drop in students by trying to reduce costs: shrinking the system to match the lower enrollment. Another possibility is to expand enrollment to fit the system.

Think of it this way: we have excess capacity in an education system that is among the best in the country. Maybe there are children that would want to come here to attend our schools. Many people who establish businesses here do so because they had a childhood relationship with the state. Maybe Vermont could cultivate future entrepreneurs for Vermont by opening up our schools to out-of-state, or even out-of-the-country, children who want one of the best educations available in the U.S.