Realtors group wants action on school costs
By Neal P. Goswami
VERMONT PRESS BUREAU | January 29,2014
MONTPELIER — The Vermont Association of Realtors is putting the spotlight on a study it funded of Vermont’s education-financing system that concludes there are significant problems with the way Vermont pays for its schools. The association is also calling for changes this year to the state’s income-sensitivity program.
The 1,700-member association, also known as Vermont Realtors, commissioned Northern Economic Consulting to conduct the study, which argues that Vermont’s system for educating its children lacks sufficient cost controls. According to the report, total education spending and per-pupil spending has risen sharply during the past 15 years in Vermont while student enrollment has dropped.
The consulting group, in a State House press conference Tuesday morning, called on lawmakers and the Shumlin administration to begin discussions during this legislative session about how to address those trends.
“The impetus behind this study was the fact that the educational funding apparatus in the state of Vermont has reached a point where I think everybody would agree that it’s unsustainable, to a certain degree,” CEO Isaac Chavez said. “Even with local school boards having level-funded budgets and zero increases, you’re still seeing 3 to 4 percent, 5 percent, 6 percent increases in the local property-tax rates.”
Economist Art Wolfe of Northern Economic Consulting said the firm looked at education spending trends across the country and found Vermont to be an outlier.
“Vermont spends about 70 percent more than the average in the United States, so there is a huge gap,” he said.
But while the state has experienced among the highest rates of growth in total education spending, enrollment has dropped.
“We’ve lost more students than just about any other state in the nation,” Wolfe said.
Richard Heaps, also an economist with Northern Economic Consulting, said the study shows a “need for leadership to begin to change the course of what’s going on with our education spending.”
Heap said the rising spending trend has occurred during the past 15 years, which included boom times and recessions. A housing boom helped increase the tax base for school districts for much of that period, he said.
“We’ve had a whole mix of economic times, and what has happened during that time is that our spending has marched ahead. As a result, we find ourselves in a position where our spending is very high, and it’s no surprise that our taxes are going to have to be very high in order to pay for that.”
The report authored by the two economists includes several long-term policy ideas that lawmakers and the Shumlin administration could embrace in an effort to rein in spending. He said the report does not endorse any specific idea, however.
Among the ideas are to have state government cap spending at a certain level for individual school districts and to consider changes to the state’s income sensitivity provisions for financing Vermont’s public-school system.
Rising property taxes notwithstanding, voters continue to pass local school budgets in nearly all Vermont communities, even some budgets that include significant spending increases. And Heap argues that income sensitivity, which provides property-tax relief based on income, is the reason.
“For two-thirds of Vermonters, you know what you’re going to be paying is based on your income — you’re income sensitized,” he said. “Most of our voters are protected from the full impact of the increase in the budget, so they vote to increase the budget.”
“One of the problems is, we don’t have most of the voters paying a commensurate share of that increase that they’re voting for,” Heap added.
Vermont Realtors called on lawmakers to address income sensitivity this year, as well as a grant program that helps keep small schools afloat. Reducing income sensitivity provisions and encouraging consolidation of smaller schools by reducing grants to them will help reduce overall spending, the group argued.
“We deal with property owners on a day-to-day basis. Every single day, we see on the ground people make hard decisions on whether they’re going to continue to live in Vermont, whether they’re going to continue to educate their kids in Vermont,” Chavez said. “We’re losing students hand over fist … and it’s not something that’s going to stop overnight. There has to be some solution or else we’re going to get to a point where people aren’t going to want to move to Vermont anymore.”
House Education Committee Chairwoman Johannah Leddy Donovan, a Burlington Democrat, said issues surrounding the state’s education financing system should not be framed around income sensitivity.
“I’m very disturbed that a group of Vermonters who pay on their income are sort of being accused of just voting willy nilly because it doesn’t impact them, and we know that it does impact them. If their school budget goes up, their percentage of income that they pay goes up to support that,” she said.
Donovan said her committee may undertake a review of the small schools grant program this session.
Gov. Peter Shumlin has not called for any major overhaul of education financing this session other than to urge voters to scrutinize their local budgets. Spokeswoman Susan Allen, in an email statement, said the administration is expecting additional reports on the state’s education funding situation to be made public in the next several weeks.
“The governor appreciates the extensive discussion Vermonters are having about school spending, property-tax rates and potential changes to ensure we can continue to afford both. When it comes to ensuring that our children have the best educational opportunities at a price we can afford, we are all in this together,” Allen wrote in the email. “The Realtors put forward some ideas today, and we are expecting more suggestions regarding our state finance structure and school governance to come from other individuals and groups as the session continues, including from the report that will come out next week following up on the joint legislative/executive branch finance symposium earlier this month.”