Critics of the stateís educational funding system have long argued that because individual property tax bills are limited according to the income of the taxpayer, voters have little incentive to restrain school spending. They have advanced various ideas to make property taxes pinch more sharply so voters will hold down school budget growth.
It has always been a curious position to take: We will make your tax burden heavier in order to force you to make it lighter.
School spending has been going up in recent years despite declines in enrollment for a number of reasons: rising health care costs, rising fuel costs, rising teachersí salaries. Further, with smaller student bodies, the per-pupil payments schools count on from the state bring in less revenue. It has been a frustrating trend for the taxpayer who has watched school budgets continue to rise as student enrollments fall.
Over the past few years school administrations, faculties and voters have responded to the economic downturn by practicing extraordinary budget restraint. During the recession many schools passed budgets with little or no growth. In many places teachers agreed to contract give-backs or frozen salaries. Layoffs have taken place. Everyone has shared the pain.
This year schools seem to be making up for lost ground. In many cases, budget restraint is achieved by deferring necessary spending on maintenance or physical infrastructure. Inevitably, teacher contracts are going to reflect negotiated pay increases. Health care continues to be a huge burden. So school budgets in many towns are taking an upward tick this year.
The Vermont House responded to that upward tick last week in approving a higher statewide property tax. The bill calls for a tax on homes that will rise from 89 cents to 94 cents. The rate for nonresidential property would be up from $1.38 to $1.44.
In other words, taxpayers will not be insulated from the effects of their own actions. Voters at town meeting are responsible for approving school budgets, and the higher budgets they pass are the cause of the House action in raising the statewide tax. The income-sensitivity provisions in the education finance law limit the increases that taxpayers face, but they will face increases nevertheless. If voters donít like the higher tax approved by the House, they have themselves to blame.
And if taxes once again start pushing toward a level of intolerable pain, voters can be counted on to impose austerity on school budgets in the future. Vermontís school budgets are not a runaway machine. They are the work of local voters, and thatís the way it should be.
Republicans argue that school spending growth is unsustainable, and they have a point. Large increases year after year, especially in the face of declining enrollments, are not something local voters will continue to support.
Voters in some towns continue to look at the advantages of consolidating small schools into larger ones in order to save money. These moves make sense in many cases, though even when consolidation makes fiscal sense, school boards sometimes fear the loss of local autonomy and the demise of an important community institution. It is a sign of the importance of our many small schools as centers of community that consolidation has been so difficult to achieve.
Republicans have less of a point when they argue that the school financing system is broken. The property tax is a regressive tax, which means it is more of a burden on low- and middle-income taxpayers than on wealthy taxpayers. But Vermontís income-sensitivity provisions introduce a significant degree of progressivity into Vermontís system, making it one of the fairest in the nation. And the fact that revenues are shared equally among all towns, rich and poor, is one of Vermontís great public policy achievements.
A recent national report described how economic inequalities have rotted the foundation of American education, dropping America down low in achievement among industrial nations. But Vermontís system was created to ameliorate those economic inequalities, granting property-poor towns equal access to revenues as that enjoyed by property-rich towns. Vermontís high marks in standardized tests show that the stateís system is producing generally good results.
Lawmakers are likely to consider a variety of adjustments in to the present system, such as reducing the subsidy for small schools, increasing the penalty for high-spending schools, lowering the income ceiling for income-sensitivity. These proposals are no panacea, shifting the pain of taxes slightly.
The reality is that school taxes are going to continue to go up as the economy grows and as taxpayers decide they have the wherewithal to pay them. The greatest restraint on school spending is the pain facing taxpayers, and that pain is great enough without lawmakers trying to make it worse.