Looking Beyond Act 60

As the 2001 legislative session draws to a close, it has become apparent that there are not likely to be any significant changes to the controversial education finance law, Act 60. It won't be for want of trying.

House Speaker Walt freed (R-Dorset) offered a plan that would have increased the state's per pupil block grant from $5383 to $6500. If towns voted to spend more than that, they could do so without participating in the unpopular sharing pool, which would be abolished. The Freed plan froze the statewide property tax rate at the present $1.10, and would have required an additional $81 million a year. Freed proposed paying for it with $45 million from a one cent sales tax increase, $20 million from expected state surpluses, and $15 million from unspecified sources. Ways and Means Chair Dick Marron (R-Stowe) later produced another version of the plan, raising the state property tax rate to $1.26, but eventually the House abandoned the effort for want of strong support for any version.

The Senate Finance Committee generated another plan. It would have raised the statewide property tax from $1.10 to $1.33, and the per pupil block grant from $5383 to $6200. It would also have expanded the income sensitivity provisions, and capped sharing pool payments by the property-wealthy towns. This latter provision clearly ran afoul of the Supreme Court's 1996 Brigham decision, which forbids the wealthier towns from spending their own tax dollars on their own schools without some form of sharing. This plan passed the Senate on May 16, but the bill is not likely to be considered by the House in the remaining week of the 2001 session.

Apparently efforts to "reform" Act 60 have ground to a halt. And yet Act 60 has increasingly serious fiscal and political problems.

The 2000 legislature decided to shift from the original idea of "equalized yield" - where all the towns separately voted their school budgets and together paid the bills - to "predictable yield", where the sharing pool spending was underwritten by the state budget. Gov. Howard Dean correctly noted a year ago that this shift will "be the end of Act 60". He has repeatedly expressed concern about cost controls in a system where towns vote inflated budgets in the expectation that somebody else will pay the extra costs, and where property wealthy towns raise tax deductible donations to avoid having to share their tax bases with the poorer towns.

What happens, then, when the next fiscal crunch comes, either from a flagging state economy, or from growing costs of other programs, notably Dean's Vermont Health Access Plan? The timid "reform" plans of this year's House and Senate are unlikely to appear as much of a solution. Bailing out Act 60 as presently defined will require raising the sales tax, or the income tax, or the state property tax, or all three, plus imposing state spending controls on local school districts and perhaps a statewide teachers contract. Each of these ingredients has a legion of enemies.

Real reform will require going outside the present Act 60 box. One way would be to simply give up the increasingly fictitious notion of "local control" and recognize that the Five Supreme Legislators have put the state on the path to One Big School System. The state would raise all the money for education, distribute it, and police its use. Local school boards would eventually have little to do, and wither away. New Brunswick, which went through this evolution since enacting their version of Act 60 in 1967, abolished local school boards four years ago because they had no remaining responsibilities and merely groused about the provincial management of their school systems.

If the Brigham decision is accepted as a constitutional requirement, there are only two realistic alternatives to watching Act 60 slide into One Big School System.

One is a radical reorganization of local government into 40 largely self-governing shires, as proposed in The Vermont Papers (Frank Bryan and John McClaughry, 1989). That proposal was built upon a shire financing scheme which, ironically, would be in compliance with the Supreme Court's Brigham requirement. The shires would have an equalized per capita tax base, from which shire governments could raise such funds as they found proper to fund such public programs as their citizens found desirable.

The other alternative, slightly less radical, would be to have the state raise all of the funds for education, and distribute those funds directly to the parents of Vermont's 113,000 school age children. Those parents would in turn choose the schooling they found most suitable for their children from a wide range of providers: traditional public schools, charter schools, independent schools, religious schools, alternative schools, company schools, mentoring, home schooling, and who knows what else. This alternative would create healthy competition among providers to attract and retain customers, in place of the present government monopoly schooling. "Local control" would shift from increasingly impotent local school boards (under act 60) to increasingly empowered parents.

Act 60 is not dead yet. The effort to tinker with it will resume next year. But Vermonters should really start thinking ahead now to the day when the Act 60 "reformers" give up, and a wholly new system comes to life.

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May 2001