Education funding: Diagnosis before treatment

Whatever Montpelier did this year about education taxes was going to be a can-kicking exercise. By overriding the governor’s veto of the so-called “yield bill,” which sets tax rates for the coming year, the Legislature avoided a protracted fight over how far to kick the can. That bought them some time—about six months. Now, let’s hope, we’ll get a serious effort to understand what’s going on with education funding before plunging ahead with solutions.

In response to the uncharacteristically large increase in school budgets for next year, the Legislature created the ambitiously named Commission on the Future of Public Education in Vermont. It is scheduled to start meeting in July.

The commission’s final report is not due until the end of 2025, which may or may not be enough time to complete the kind of top-to-bottom review of public education in Vermont outlined in the legislation. But the commission also is supposed to produce a report “containing its preliminary findings and recommendations, including short-term cost containment considerations” by December 15 of this year.

That’s not a lot of time, especially when the legislation seems to assume the commission won’t really get down to business until the fall. (“The Commission shall prepare and submit to the General Assembly the following: (1) a formal, written work plan, which shall include a communication plan to maximize public engagement, on or before September 15, 2024; …”) But cost-containment plans, even short-term ones, can do real damage if the commission and the Legislature don’t take the time to understand first what drove the cost increases.

There are at least three areas the commission should explore before considering any new controls on school budgets.

• Cost drivers. Last winter, when people were still in shock over the early school budget projections, the Agency of Education finance director presented the Legislature with her analysis of major cost drivers. Inflation appeared to be an important factor, in areas like health care, salaries and benefits, non-payroll costs. Also, schools started picking up costs that had been covered with federal aid. That analysis was based on preliminary and incomplete budget information, but it made a lot of sense. Updating that same report based on the budgets that ultimately passed would be a good starting point for the commission. Let the commissioners see how the money was spent and ask them where they would cut.
• School consolidation. Act 46, Vermont’s school consolidation law, promised greater efficiency and higher quality in education. Despite calls for before-and-after assessments of school mergers, there has been no comprehensive analysis of the effects of Act 46. There have been no evident savings. At least anecdotally, there are signs that people are less engaged with the new and larger consolidated school districts. The commission needs to understand the consequences of consolidation for two reasons: First, to understand the effect on current levels of spending. Second, to have a fact-based response when proponents argue that the solution to the recent budget increases is further consolidation.
• Student weighting. The fiscal 2025 school budgets are the first to be based on a new system for allocating funds that the Legislature approved two years ago. Act 127, which was the biggest change to Vermont school finance in nearly 20 years, instituted a weighting system to increase funding for certain categories of students. The weights were intended to allow some towns and school districts to spend more money without raising taxes. The commission—and all of the rest of us—need to understand how the weights affected next year’s budgets. It shouldn’t be a surprise that spending went up in certain districts, but the pattern, at least from the preliminary data available last winter, was not at all clear. More data analysis is needed. The commission also should take some time to talk to local school officials to find out how they responded to the new incentives and disincentives for spending.

There are other avenues for the commission to pursue: the recent change in special education funding, the bad habit of buying down tax rates, numerous tweaks to the funding system that have made it more confusing to voters, and more. But whatever information the commission gathers, it should serve its primary task: understanding the problem before reaching for solutions.