Public Assets Institute > Policy Areas > Education > Vermont House should repeal unfair school penalties

Vermont House should repeal unfair school penalties

The Vermont General Assembly has a chance this week to walk back from the destructive changes it made last spring to the state’s education funding system. The Senate appears poised to vote to repeal the tax penalties that will hit school districts that exceed arbitrary spending limits set by the Legislature. The House should do the same.

There are three problems with the so-called “allowable growth” penalty:

  1. It violates a fundamental principle of Vermont’s current school funding system.

After Vermont’s previous funding system was declared unconstitutional, the Legislature created a system designed to provide equal access to educational resources for all Vermont students. Now, whether a school district is rich or poor, it has the same amount for education spending per equalized pupil as any other district with the same tax rates. In other words, for the same effort (the tax rate on local residents), districts get the same educational resources for their children (education spending per pupil).

Under the allowable growth provision approved last spring, the Legislature set arbitrary growth limits for every school district. As a result, one district may raise its spending to $15,000 per pupil without penalty next year, while another district would be penalized for raising its spending to $14,000 per pupil if that amount exceeded its allowable growth.

Now, districts with equal education spending per pupil have the same tax rates, and a district that spends more than another district has proportionally higher tax rates. If the allowable growth penalties are not repealed, there will be no rhyme or reason to school districts’ fiscal 2017 tax rates and spending.

  1. It takes Vermont back to a funding system that pits school districts against each other.

Many school districts, especially ones with declining enrollment, are finding it difficult to stay under their spending limit without making cuts that will harm their students. The Agency of Education estimates that more than 100 school districts will exceed their growth thresholds next year and be forced to pay penalties.

Their penalties, however, become a windfall for districts that can stay below their thresholds because of increasing enrollment or other individual circumstances. The penalty revenue will go into the Education Fund and reduce the amount that has to be raised through property taxes. Therefore, districts that stay below the thresholds—including districts with very high per-pupil spending—will have lower tax rates than they would if there were no penalties.

Vermont’s old system of state aid to education was based on formulas that pitted winners against losers. The state shouldn’t go back to a system that penalizes one district to create a windfall for another.

  1. The chaos created by this fundamental change is unfair to school boards and local voters.

The allowable growth limits were added at the 11th hour last year with little or no vetting, and the result has been ambiguous legislation with conflicting interpretations. School boards have been scrambling to finalize their budgets and get them to the printer before scheduled budget votes. Meanwhile, their spending limits have been changed almost daily.

School boards deserve to know their proposed budgets are based on solid data and that the tax consequences of those budgets can be clearly presented to their local voters. Neither are possible without legislative action.

The House needs to accept the fact that there are now too many uncertainties surrounding the allowable growth penalties at this late stage and that the only fair and reasonable solution is repeal.

Posted by Paul Cillo on January 18, 2016 at 9:11 pm

One Response to “Vermont House should repeal unfair school penalties”

  1. Rita Pitkin says:

    This flies in the face of equity, is shortsighted, and likely illegal. A rush to an education “fix”. Hope they get rid of it.