The “Diner’s Dilemma” and VT Education Spending

June 4, 2018

by Rob Roper

There is a phenomenon in behavioral economics called the “diner’s dilemma” which tracks how people act when evenly splitting a dinner check versus paying individually. The conclusion of these experiments shows that when people pay for their own consumption they spend less than when sharing the cost with others. As several studies show, roughly 30 percent less.

Vermont’s education financing system is built on a dynamic very similar to splitting the check. Local districts order what they want for their “meal”, the state collects the money in one large pool and redistributes it to cover the total bill. The psychological incentive is for districts to spend more so that other districts will end up subsidizing their portion of the bill and not the other way around. The result is a bigger total bill, much to the NEA’s delight, which is why the system is designed as it is.

Adding to the problem (and also by design), under our current system there is no real accountability. The legislators who set the tax rates blame the local voters for passing high school budgets, local officials blame the legislators for the funding system that leads to high property tax bills. So, whom do you vote out of office if you don’t like the results? Who’s really accountable? Hard to say.

This is the dynamic that must be broken, but Act 60, which guarantees students have equal access to education funding, makes “separate checks” illegal. So, what do we do?

Governor Scott is proposing to increase mandates from Montpelier for, specifically, things like staff/student ratios. The legislature is implementing mandated mergers under Act 46. All of these solutions are serious infringements on local control, a concept that since Act 60 has become largely a myth.

Here is a proposal to reign in costs, reinstate some measure of local control, and inject accountability into the process: have the legislature set a uniform per-pupil spending level (with some allowances for special needs students), but allow local school boards full reign over how to best spend the money, free from state-level interference.

Under this system, a school’s budget would be determined by the number of students in the school times the set tuition rate. There would be some loss of local control as to how much to spend, but far more local control over how to spend. (Would you prefer a thirteen dollar meal I choose for you, or ten dollars to spend on whatever you like?) If you don’t like your tax bill under this system, fire your state Representatives and Senators; they are responsibly for how much or how little is being spent. If you don’t like how the local school is being run, fire the local school board; they’re the ones calling the shots. Accountability.

This is pretty much the model under which Vermont’s independent schools that accept tuitioning students operate, and they, for the most part, get tremendous results for fewer taxpayer dollars. We know this works as the model has a century-and-a-half long track record in Vermont. Moreover, it would be a much fairer model, complying with and even exceeding the equal access to funding Act 60 demands. Whereas now students only have equal access to funds but extremely unequal per-pupil funding from school to school across the state, under the proposed system they would have equal funding.

Rob Roper is president of the Ethan Allen Institute

{ 2 comments… read them below or add one }

nick nikolaidis June 9, 2018 at 12:40 am

how many of these green people are property owners? and how many are willing to pay higher taxes for there programs,and most important HOW?
many small business are closing their doors and leave the state because of high taxes,but vt must save the planet

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Deanne June 9, 2018 at 4:37 am

Act 60 was one of the determining factors in our family’s decision not to move back to our home state of Vermont when we were looking for a place to settle down to homestead in 1998-2000. It was, and is, evidence of the direction Vermont was/is heading, and we hoped to find a more “pull yourself up by your own bootstraps” mentality in New Hampshire, the state where you “live free (or try).”

Well, it’s not much better over here. In the past, I have had quite a bit to say about the injustice to homeschoolers in having to pay for their own children’s education as well as having to chip in for everyone else’s as well, under threat of losing their property if they refuse. Many years ago, I wrote a letter to the editor of the town crier about this issue. When I tried to read it at the annual school board meeting, I was cut off before I finished. One of the school board members came up to me afterward and thanked me for what I had said. That was some consolation. (I no longer bother attending the school meetings. It does no good. They only want bigger budgets and don’t want to listen to people who question government funding of education.)

It is unbelievable what passes for “freedom” in this country. I wonder what will have to happen to snap us out of this “get more than I put in” mode. Way too many people are trying to milk the system for all they can get, figuring there is money there and they should get as much as they can.

The government never will, and never can, give back as much as they take. So much is lost in the collection, processing, and redistribution of the funds, it is impossible. When will people realize this and start taking back control of the “services” the government has taken over? Is this such a difficult concept to grasp?

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