Commentary: Dubious Remedies for Restraining Education Costs (December, 2014)

by John McClaughry 

The House Speakers’ task force produces three dubious plans to hold the line on property tax rates – but it ignores the one promising solution: parental choice and provider competition.

John McClaughry*          *          *

Governor Shumlin and the legislative leadership have recently discovered that Vermonters are really, really unhappy about ever rising school property taxes. In a commentary published December 3, the governor observed quite correctly “We all know that rising property taxes to fund education have put an unsustainable burden on Vermonters. Despite a steady decline in school enrollment over the last two decades, property tax payers have not seen a decline in their property taxes; they’ve seen the opposite.”

He didn’t think to mention that education property taxes do not just “rise”, like cream to the top of a milk pail. Somebody has to “rise” them, and the signature on the bills that increased the homestead property tax rate from $.89 to $.98 per $100 of fair market value – and will soon increase it to $1.00 – is and will be Peter Shumlin’s.

Recall, it was Sen. Peter Shumlin who in 1997 steered Act 60, the education finance “reform” law, to enactment. At the time, critics argued that the funding mechanism for that Court-driven state takeover of public education would break the essential restraining link between voters and spending. Some of the supporters scoffed at that possibility; others welcomed the state takeover.

Eighteen years later we have come to a situation where not increasing the homestead school property tax rate would be more painful than increasing it another two cents. Not raising the rate, by itself, would cause a $42 million shortfall at a time when the General Fund is facing a deficit of $100+ million. Either that shortfall has to be made up by other taxes – very painful – or the Agency of Education must be given the power to force school districts to reduce their voter-approved budgets. That “solution” has never been attempted in the past 227 years.

House Speaker Shap Smith created a working group to find an exit ramp from this politically dangerous highway. The ten-member bipartisan group has produced three exit ramps.

The first is the “renovation plan”. The core of that plan is state mandates to increase local pupil-teacher and pupil-staff ratios, both of which are the lowest in the nation.

Or, alternatively, make local taxpayers financially liable for the high costs of a low pupil-staff ratio. That would violate the redistributive principle of the Brigham decision underlying Act 60.

The second model is a “variable income tax”. This alternative features uniform state-set property tax rates. District voters who wanted to spend more than the state-provided amount would have to raise the funds through a local income tax surcharge. This also flies in the face of Brigham and Act 60.

Then there’s the “regional block grant” model advocated by Rep. Oliver Olsen. This is based on complete state responsibility for education spending. The state would distribute the tax dollars it raises to “regional entities” (no further information available), through which it would flow to local school districts.

Doubtless unbeknownst to Olsen,  in 1967 New Brunswick had a public school system almost identical to Vermont’s in 1996.Then it started down Olsen’s Highway by enacting its “Equal  Opportunity Program”.

The result (from my commentary of July 1998): “A province-wide education property tax…The installation of local ‘Directors of Education’ accountable to and removable by the Ministry. The statewide teachers’ contract. The conversion of superintendents to state employees. Abolition of local school boards as wasteful overlapping bureaucracies. Reduction of “local control” to input sent to the Ministry from PTA meetings.”

“The only curious part of this story is that it took New Brunswick 30 years to achieve the centralized, unitary school system that is the inevitable result of full state funding of local schools. Barring a political revolution, the same results should be attained much more quickly in Vermont.” We are now 18 years into Act 60, and – if Olsen is successful – it looks like we will reach New Brunswick’s condition sooner than they did.

Fortunately, there is an alternative path for Vermont (from 2006): “Give up the bureaucratic, centrally controlled public school monopoly system, which guarantees steadily rising taxpayer costs regardless of the number of pupils, and regardless of their mediocre achievements.”

“In its place, empower all parents with scholarship money to pay for their children’s education at any of a wide range of competing programs: public schools, independent schools, faith-based schools, charter schools, Internet-based virtual schools, employer- and union-run schools, mentoring programs, career-study programs, whatever arises to meet the demand in the marketplace, many of them at lower cost than the public school system.”

The “parental choice and provider competition” model is gradually becoming the future of 21st Century American education. Why not here?

– John McClaughry is vice president of the Ethan Allen Institute (


{ 1 comment… read it below or add one }

Mike Empey December 11, 2014 at 12:38 am

Wise advice but fools seldom if ever heed wise advice!


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