ISSUE BRIEF: EDUCATION FINANCE & PROPERTY TAXES

BACKGROUND

In 1996 the Vermont Supreme Court issued the Brigham Decision, which required that there be “substantially equal education tax resources in every district.” (Note: It does not guarantee equal spending on or opportunity for students.)

In response, the legislature passed Act 60 in 1997, which, in simple terms, gives the voters of 256 school districts the responsibility for approving local school budgets, and a (then) newly established state education fund the responsibility for funding them.

Money sources for the education fund include property taxes (homestead and non-homestead), a general fund transfer, sales & motor vehicle purchase taxes, lottery profits, and some miscellaneous funds.

However, homestead property taxpayers with household incomes of less than $90,000 are “income sensitized” and are allowed to pay their property taxes as a percentage of income (1.8%). Roughly 70% of Vermont homesteads are income sensitized.

The major consequence of Act 60 has been breaking the link between what local voters choose to spend on their schools, and the responsibility for paying those bills.  Now the school money drops from the sky (the Education Fund), and the costs may bear little relationship to the amount of taxes levied on local homestead owners.

IMPACT

  • Since the passage of Act 60, annual education spending has risen from roughly $780 million to over $1.5 billion.
  • Public K-12 student population has dropped from 106,000 to under 87,500.
  • Public K-12 staff has grown 17.1% from 15,783 (1997) to 18,482 (2012). According to NEA statistics, Vermont has the lowest student teacher ratio in the nation at 9.2 to 1. The national average is 15.9 to 1.
  • Despite all of this, student SAT scores have remained largely flat, NECAP scores show that an alarming number of students remain “below proficient” in Math, Reading and Science, and no progress has been made in bridging the achievement gap between poor and more well off students.

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