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EAI Education Finance Briefing

EAI Education Finance Briefing. August 2014 John McClaughry. How Vermont Finances Education. Brigham Rule (1996) “substantially equal education tax resources in every district” Act 60 (1997) – shark pool; Act 68 (2003) School district voters adopt budgets

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EAI Education Finance Briefing

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  1. EAI Education Finance Briefing August 2014 John McClaughry

  2. How Vermont Finances Education • Brigham Rule (1996) “substantially equal education tax resources in every district” • Act 60 (1997) – shark pool; Act 68 (2003) • School district voters adopt budgets • Education Fund MUST pay those budgets – not negotiable; no state control over voters

  3. Ed Fund Sources (FY2015) • General fund transfer $295 m • Non-Homestead property tax $595 m • Homestead property tax $580 m • Sales and MV purchase taxes $160 m • Lottery profits $ 23 m Miscellaneous $ 6 m • TOTAL $1,506 m

  4. Homestead property tax adjustment • Taxpayers with household incomes below $90,000 can choose to pay homestead school property tax with 1.8% of their incomes • About 70% of homestead filers do this • So they don’t care what the property tax rates are • This will require $158 million in FY 2015

  5. Computing Homestead Property Rate • State base rate is $0.98 per $100 FMV • Increased by % that local spending per ADM exceeds state “Basic Education Amount” -$9,285 (FY2015) • Example: District votes $11,820 per ADM • That is 20% higher than BEA • Local homestead tax rate is 120% of $.98 = $1.176

  6. Vermont Pupil Count • Public school pupils peaked at 106,000 in 1997 • Count has now dropped to 88,000 in 2014 • Steady decrease of 1,000+ per year • But spending per pupil has increased from $10,888 (1997) to $17,700 (2011) • This is inflation-adjusted

  7. Vermont Education Spending

  8. Why? • Low pupil to teacher ratio (2nd lowest in US) • Low pupil to “staff” ratio • Large bureaucracy from Montpelier down • Increased state and federal requirements • High fixed costs for underutilized buildings • Health care costs (but not pensions)

  9. One current “solution” • Regional Education Districts (REDs) • Consolidation voluntary at first, but ultimately mandated by Secretary • Savings from closing smaller schools • Savings from “administrative efficiency” • Greater transportation costs • Superintendent staffs will mushroom • No political accountability over RED

  10. Real Solutions • Let money follow the child • Pupils can choose to attend lower-cost schools they prefer – universal school choice • Move to parental choice and provider competition • Make public schools compete for pupils • Consider Educational Freedom Districts to stimulate transformation

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