Commentary: The Annual Education Finance End Game (April, 2018)

April 24, 2018

by John McClaughry

The Vermont General Assembly is in its final weeks of trying to assemble a school finance “reform” bill. Their product so far has become an ever-shifting grab bag of proposals that even veteran legislators must be struggling to follow from day to day.

The longer this goes on, the more it reminds us of the memorable closing words of Gov. Scott’s explanation of why he signed the gun control bill on April 10: “We choose action, over inaction. Doing something, over doing nothing.”

Admittedly, “doing nothing” about school finances for 2019 will lead to some unwelcome consequences, mainly thanks to unwise actions of the 2017 session. But “doing something” doesn’t assure any better outcome, unless the doers start thinking creatively about the problem.

Everyone agrees that the problem is steadily rising public school spending, paid for by a mechanism that jacks up school property tax rates on the third of the residential taxpayers who don’t qualify for income sensitivity.

Finding a solution is necessitated by the fact that our K-12 school population has dropped by a thousand a year for twenty years, our pupil to staff  ratio (4.8:1) is the lowest in the nation, and our per pupil spending ($18,066) is the fourth highest in the nation. And to top it off, dealing with these problems is made much more difficult because of the ongoing state-forced consolidation of schools under Act 46, which, alas, is not likely to produce any lasting cost savings.

The various actors in Montpelier have vastly different views of what do about the problem.

Since at least 2014 (actually, since 1997) the Democrats have vowed to shift education costs to the income tax. This year they’re offering a $59 million opening wedge, in addition to protecting the current income sensitivity option that very generously lets two thirds of residential property taxpayers pay school taxes based on their household incomes (of up to $147,500).

The Democrats are also committed to defending the interests of the Vermont-NEA teachers union, whose (unspoken) watchword is “public monopoly, more spending, and more people paying union dues”.

The Republicans are commendably resistant to high taxes, runaway spending, and keeping the union-influenced Democrats and Progressives from snuffing out Vermont’s independent school choices. But they don’t exist in numbers sufficient to advance their goals.

Thanks mainly to Rep. Scott Beck, they have pushed for a built-in tax disincentive to spending above a proposed Base Spending Amount of $11,916 per pupil, which is well below every district’s spending.  But they have never, in the past decade, attempted a serious reconsideration of how children are educated – where, by whom, at whose expense.

Then there’s Republican Governor Phil Scott. In January he sent the legislature a lengthy list of suggestions for containing education spending, in the nature of “something for you folks to think about”. He left it to the legislative leadership to assemble a compatible “no new taxes” package, which they have been largely unable to do.

The governor wants to see residential school property taxes reduced by $40 million, but he will assuredly veto the $59 million – or any – income tax “surcharge” on “the rich” that the Democrats have seized upon in an attempt to reduce school property taxes, but he has no plan of his own.

A Scott veto will require an override vote. If the Democrats find the votes to override the veto, the income tax surcharge will become law. If they fail to override, there is no education finance bill at all. Unless the legislators can find $40 million in one-time funding to avoid a veto and kick the can down the road for yet another year, school residential property tax rates will increase to cover a $40 million shortfall in the Education Fund.

During this crucial period, Scott has been hampered by not having an experienced and respected Secretary of Education like Rebecca Holcombe, who resigned on March 27.

There are plenty of good ideas for improving education and containing its cost. However the governor and the legislators aren’t willing or able to broaden their thinking beyond shifting the tax incidence around and (the Governor’s favorite) imposing more centralized spending controls on the existing public school system.  That’s regrettable, because our unthinking focus on feeding the increasingly expensive public school system is itself the problem.

John McClaughry is vice president of the Ethan Allen Institute (


{ 2 comments… read them below or add one }

Patti Pusey May 1, 2018 at 11:14 pm

thank you so much for this article. I live in the tiny town of Halifax which is on the Mass. boarder half way between Bennington and Brattleboro. We have a 4 room school house that educates about 55 students a year. Our 7 children attended the school in the 70’s and 80’s when it was a 3 room school house. At that time there were 4. cars in the driveway…not 24 but 4… one teacher for three grades and a speech and language para. They received an outstanding education in a building that did not have a library, gym, or cafeteria. I fixed lunches for our kids for 36 consecutive years. The kids graduated from Wilmington High School and attended Boston College, UVM and Southern VT College. More money does NOT guarantee better education. We need to get back to basics… and parents need to value education and realize they are the primary educators. We also have a small working farm Bed and Breakfast and work three full time jobs to pay out outlandish taxes. soon, we are both in our 70’s we will have to leave Vermont because we can not continue to pay the high costs on business in the state. We are the poster child for all that is good and all that is challenging in this beautiful state to look at but increasingly hard to feel beautiful in… thanks for you conservative voice in a socialist state…it is refreshing for us and gives us hope…sadly there are few to none who will run with that view and until we find some GREAT candidates the democrats will continue to run and win and destroy this great state… Socialism just does not work…thanks for taking the time to read my words but know we are so happy for your presence in the state. We were sorry to miss the meeting last week, those of us who work in the ski industry get out of dodge last two/three weeks of April once the slopes close … Patti


Karin S Hardy May 15, 2018 at 7:36 pm

It is so sad that good people like Patty Pusey get forced out of this state by people who seem to have no real connection to the Vermont we Old Timers remember. It used to be the state we were proud to say we lived there. Now it is the socialist state of “Bernie”. I do not know anyone who can tell me how you can afford to give everybody everything they want for free without everyone ending up broke. The Golden Goose can lay just so many eggs! Unfortunately we may be next to leave Vermont unless there is a drastic change.
Karin S Hardy


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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.

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