Education Spending: Getting Down To Basics

Hugh Kemper Rides Again
a detailed plan for reforming education spending in Vermont

(It has been almost a year since we published Hugh Kemper's exhaustive report on education spending in this state.  Mr. Kemper undertook the heavy lifting required to establish that there is nothing especially mysterious about the "cost drivers " that are making education so expensive in Vermont.  As Kemper demonstrated, blaming forces beyond our control for increasing spending, as enrollments decline, is a way of masking a lack of political will.  That report generated a lot of interest and discussion around the state and we were pleased to have served as middleman between Mr. Kemper and the public.  So when Mr. Kemper told us that he was working on a follow-up study, one that would offer an alternative to the disastrous status quo, we asked, eagerly, if we could publish.  Mr. Kemper graciously consented.  The report may be viewed here; with the accompanying spread sheet here.  We will maintain  permanent links under the heading of "essential reading," in the right-hand column of this site.  Before diving into the report, readers might be interested in the following interview in which Mr. Kemper answers a few questions about his motives and methods.  Finally, we'd like to thank Mr. Kemper for his time and hard work and for his many contributions to Vermont Tiger.)

VT: What led to your interest in Vermont public education spending?

HTK: Basically, two reasons. Firstly, as a local school board member, I felt the need to be fully informed in order to cast my vote responsibly.  A school board’s job is basically to provide our children with the education they need in a fiscally responsible manner. To do so, I felt I needed to know a lot more than I did about spending- not only by my local school but also by Vermont, and, as my research evolved, by the US. Secondly, as a resident confronted by ever rising property taxes, I wanted to understand better whether the spending made sense. Many of my neighbors and I are the principal victims of this spending.  We’re not sheltered by income-sensitivity and we’re not so well off that the size of our tax bill doesn’t matter—particularly as many of us are retirees living on fixed incomes.  You can count us among those who are thinking seriously about voting with our feet, i.e. leaving Vermont if our aggregate tax burden doesn’t return to more sensible and affordable levels. 

VT: You clearly think addressing education spending is an urgent issue. Why?

HTK: I’m not an economist. However, having spent my entire 31 year professional career as a corporate banker, I’m comfortable with economics. And, to give credit where credit is due, my thinking is heavily influenced by economist Art Woolf’s Vermont-Off the Rails. Simply put, it is an irrefutable fact that education spending is the 800 pound gorilla in the state’s budget. How we deal with education spending will play a major role in determining the state’s future capacity to meet Vermonters’ diverse needs. 

More specifically and according to Art’s projections, if we don’t address current trends education spending would by the year 2030 account for $2 of every $3 of tax revenues collected by the state.  The other $1 would be spent on human services with nothing available for Vermont’s infrastructure, public services, contingent liabilities, etc.

Rectifying this bleak outlook won’t be easy and containing education spending is only part of the solution. The solution will require as well enacting policies that expand Vermont’s tax base, i.e. policies that stimulate economic growth and tax-paying jobs and that hopefully encourage young Vermonters- who are currently leaving the state in droves to seek their fortunes elsewhere- to stay in Vermont. The solution will also require slowing the growth of human services spending. 

VT:  How does your current research differ from your previous research?

HTK: The current research expands upon my initial endeavor posted on Vermont Tiger last spring. That paper identified the primary cost driver behind education spending, i.e. over-staffing.  In FY97, when enrollment peaked, Vermont’s school system was the most staff intensive in the US. Notwithstanding a steady decline in enrollment since- a decline of 10.2% through FY07- Vermont’s staffing has steadily and inexplicably increased by 23.6%. As wages, salaries and benefits account for approximately 80% of current education spending, staffing levels have a direct and material impact on total education spending.

The current research proposes a very specific, detailed framework and methodology for restructuring Vermont educational staffing and resource management in a manner consistent with the Brigham decision and Vermonters’ values, i.e. the importance of education and local control of local schools. The proposed restructuring would reduce current and contain future spending within affordable parameters. The methodology is flexible. It can be adapted to changing conditions and objectives- as long as its intended purpose is not lost, i.e. to mitigate current and contain future education spending. Vermont can afford small schools if we manage the resources our kids require more efficiently and cost-effectively.

VT: How does your thinking differ from Commissioner Cate’s recent proposal?

HTK: My proposal differs from the Commissioner’s proposal in at least two important respects; namely, (1) my proposal is predicated on local control of local schools while the Commissioner argues for consolidating existing schools into larger school districts administered by a single school board and superintendent; and (2) my proposal is very specific with respect to cost savings and how they can be achieved while the Commissioner’s proposal lacks the specificity needed to weigh the attendant costs-benefit trade-offs. As David Wolk suggested in his recent interview with Vermont Tiger, proposals not fundamentally based upon local control will simply gather dust. Local control is a core Vermont value. And it is an affordable value if we change the way we manage educational resources.

VT: How do you expect your research to be received?

HTK: I would think favorably by school boards and the general public if, and this is a big if, they take the time to understand it. My proposal puts local school boards firmly in control and provides for the resources and assistance they need to address both routine and non-routine issues. The general public should respond favorably if local control of local schools is as core a value as it is generally believed to be. Resistance- probably intense – is highly likely from those with a stake in the current system, particularly superintendents and the unions representing teachers and support staff. 

The key will be how the current administration and legislators respond, if at all. They both know- particularly Governor Douglas’ administration- that education spending must be addressed and postponing doing so will just make the problem even tougher to resolve. That said- given the unpleasantness of doing so and the desire to avoid upsetting powerful special interest groups- many legislators have chosen to dodge the issue by hiding behind the purported need for more studies to identify exactly what the issues are. As this research suggests, we know what the spending issues are. The real issue is whether our elected representatives have the courage to address them and soon.  The solution does not lend itself to quick-fixes. It requires policy changes now.

Comments

[Mister Guy]

This just misses the point, yet again. Just asking for less staff and all our problems will go away skips the question as to *why* the cost of staff benefits have been going up so rapidly. While I agree that we need common sense student-teacher ratios, just looking at cost-per-pupil rates misses the point that not all education dollars are spent in the classroom per se.

Shifting special ed costs to the state of VT is just passing the buck. It's mostly a federal responsibility that hasn't been paid for by them.

I say again...get rid of all school boards everywhere & having ~250 school districts in a state with less than half a million people is crazy IMO. Get rid of the regressive property tax in favor of a progressive income tax for education.

The real "800 pound gorilla(s)" are health care and energy costs...stop ignoring them.

[anon]

Mr. Guy -

If health care and energy costs are the 800 pound gorillas, why don't you tell us what they amount to in percentage terms relative to an overall school budget.

Are we talking 800% (if it's an 800 pound gorilla)?

60%?

40%?

Are Joe Kennedy and the Venezuelan people going to ride into Vermont on a magic carpet and wipe those percentages away?

[Mister Guy]

What people always complain about in VT is the fact that education spending increases far outpace "normal" inflation. As I've said before, do you actually think that teacher's salaries, the cost of books & pencils, etc. are going up at multiple times the rate of inflation?? Of course not, some of the only things that do that are the costs of health care premiums and energy.

I would bet that you don't like what Joe's doing because:
A - he's a liberal Democrat from the Kennedy clan
B - the oil comes from Chavez's Venezuela

What he is doing is merely a bandaid on the problem that this state & this nation does not have a real, sustainable, alternative energy plan.

Spin all you want to...it's not going to change anything or fool anyone who hasn't already been fooled.

[James Ehlers]

Cap the tax?

Vermont policy has driven up the costs of health insurance. Community rating is not insurance; it is a subsidy pool.

Vermont policy now looks to prevent climate change thus increasing the demand for oil, driving up the price.

Perhaps we should consider capping the property tax. This would assist Vermont's residential and nonresidential property owners, and spenders would need to address priorities in their proper context.

[Mister Guy]

"Vermont policy now looks to prevent climate change thus increasing the demand for oil, driving up the price."

Huh? I'm sorry Mr. Ehlers, but you're living in a dream world IMO. I've seen this website rail against the use of solar power and wind energy. Our Gov. is against wind power and the expansion of hydro power. With solar, wind, and hydro off the table...that just leaves more of the same, which will get us the same, exact results.

Gimmicks like capping the property tax with do nothing put communities in a squeeze play. Would you like to have your income *and* your sales tax go up...in addition to having high property taxes?

[James Ehlers]

Dear Mister Guy,
The answer for you seems to be more taxes, regardless. The state can raise income taxes and sales tax if they like. It does not mean it will return more revenue. Capital is mobile. Virtually no new net private sector job growth in seven years, according to Paul Cillo at the Public Assets Institute. Raise taxes further and see what happens.

Sincerely,
James Ehlers

[Mister Guy]

No, the answer is certainly not more taxes regardless. Keep dreaming...

[James Ehlers]

Dear Mister Guy,
What does "keep dreaming" mean? I am sorry but I do not understand your solution. I suggest capping the property tax as Florida has done, and you refer to it as a gimmick. What is your solution?

Thank you.

Sincerely,
James Ehlers

[Mister Guy]

The idea that everyone in the state will leave eventually if the taxes get "too high" here is silly. Lots of people that move here know what they are getting into when they come here. Lots of people that grew up here leave. I left my home state to go to a good school and get a good job...so what?

Let's try this again...consolidate school districts (saving money on administration costs), eliminate all school boards (saving slightly more money), develop a common sense teacher-student ratio for the entire state based on enrollment numbers and the needs of the students/community, switch from the regressive local property tax to a progressive state income tax for school funding, and pressure the federal govt. to pay up their share of special education costs and either fully fund NCLB or end it. I'd also end the idea of having voters approve school budgets, but I think heads would explode even at the suggestion of that...lol...

You could actually do *all* of the above and merely end up with a slightly smaller amount of education employees but still have school budgets that went up from year to year at multiple times the rate of inflation. Fixing this problem, I think, can only be made by addressing the cost of health care and energy in this state. VT has lead the way many times in the past on contentious issues from slavery to civil unions, and I think it can sucessfully lead the way on reform in these two areas as well. We need bold ideas...not more gimmicks...

[Jon Harrison]

I knew that Vermont was a "liberal" state before I got here, but the mindset that seems stuck in the 1960s as regards political economy was a surprise. I was amazed to see that so many people still believed in patently absurd notions that were discredited virtually everywhere else a generation ago. My bad for not doing enough research on the state.

I love it up here and I love the people, except for the political-bureaucratic elite. And you're quite right, everybody isn't going to leave. But many productive people have left, and will contiinue to do so, if we maintain the status quo. Young people are not coming, and many of those that are here, aren't staying. That is a danger for the state and its economic future.

I myself may have to think about leaving. Actually, I promised my daughter she could graduate from high school here. After that, I'll sell my house and get a small summer place. I do love the mountains.

[James Ehlers]

Dear Mister Guy,
You state yourself you want to disenfranchise people and expand the power of a government that cannot fund its current education and health care liabilities.

I believe your solutions are the gimmick, Sir.

No new net private sector job growth in nearly 7 years, during a booming economy.

Cap the tax.

Sincerely,
James Ehlers

[Jon Harrison]

I got so wrapped up in your "everybody isn't going to leave" comment, that I forgot to say the rest of my piece.

If rising costs are the result of health care and energy, why isn't every other state that has winter weather experiencing the same pace of increase in spending for education? Or are they? Does anyone have the data for this? My impression is that Vermont sticks out like a sore thumb in this regard. But I confess I haven't studied the question in any detail.

I agree that consolidating districts and reducing school boards would help. But the fact is that remains a nonstarter for an overwhelming majority of Vermonters. How would you convince them otherwise?

The biggest expense of any enterprise is personnel. The teacher-to-student ratio is absurdly low, and I say that with a child in the public school system. Admittedly, it's not like the old days, when one matronly lady could teach and maintain order among 30 pupils. But we have ratios of what -- 10 or 11 or 13 to one? Seems to me we should shoot for an average of 17 or 18 pupils per teacher. And contracts need to be negotiated in which teachers shoulder a burden of health care premiums comparable to workers in the private sector. They should be paying at least 25%, not 10% or 15%.

I almost want to say that special education is the biggest problem of all. But that's not something that can be fixed w/o the federal government taking a hand and changing the law.

[jason]

"No new net private sector job growth in nearly 7 years, during a booming economy."

Booming? Perhaps recovering? I guess I expect more in a booming economy.

Either way, does not one expect some flatness in a transitory period of globalization.

[Paul]

I agree with school consolidation and I agree with increasing the student teacher ratio to help reduce the out of control education spending in this state.

However, to force those issues into play we must CAP THE TAX. Until we do that our legislators will not gain the courage to attack the spending problem. The NEA lobby intensity is too high for them to deal with and the common vermont is not represented by any lobbyist.

The idea of pushing the burden of education costs onto a progressive income tax is INSANE. If that happened, many of the high earners would vote with their feet and get out of here - as many have done already. Note that our neighboring state to the east does not have any income tax (or sales tax) and the geography is very similar.

CAP THE TAX.

I also do not like the idea of using the lottery lease proceeds to reduce the property tax. The second there is relief on the property tax burden the pain will be removed and the spending will rise unabated again until the pain threshold is obtained again.

Leave the funding mechanism along but cap it. CAP THE TAX.

[Mister Guy]

lol...go take a nap Mr. Ehlers...when you wake up, there still won't be a cap on your property tax. Voting over and over again on a school budget adds absolutely nothing to the process. Everyone knows that schools keep right on spending money even after a school budget is defeated.

Mr. Harrison, the convincing will happen after it has been tested out either in practice or on paper. This kind of mind-set change is the same as the mind-set change that needs to happen with respect to development in VT. The anti-development-at-all-costs lobby in VT needs to be broken. Just look at what's been going on in Burlington with respect to the Moran Plant for years now. There is a group that has formed now to say no to real, sustainable, green economic development there almost solely because a sculpture might be moved...it's crazy. We need a bi-partisan effort to change the mind-set here in VT. It's the only way that it's going to happen.

When I first came to VT, there were still many, many one-room schools here. It's time past time for VT to move into the 21st century.

[Mister Guy]

I again ask...why is it always a race to the bottom with you guys? If you think VT is messed up with the way we pay for education here, move to NH and experience something even worse. "Cap the tax" and watch you local sales and income taxes skyrocket.

[Curtis Hier]

Well, I feel compelled to jump in here.

"The idea that everyone in the state will leave eventually if the taxes get 'too high' here is silly."

It doesn't have to be very many people and we're in big trouble. Two thousand people pay 21 percent of the state income tax.

"...and pressure the federal govt. to pay up their share of special education costs and either fully fund NCLB or end it."

Wait a minute, Mr. Guy. I thought the only real inflationary problems were fuel and health care. And by the way, did you miss the post where I shattered that myth?

"I almost want to say that special education is the biggest problem of all. But that's not something that can be fixed w/o the federal government taking a hand and changing the law."

Jon, don't almost say it. Say it. Special education has gone up way more than inflation. Check out our new special ed. page at www.fcevt.com. I have to respectfully disagree about the federal government, though. There are lots of things we can do locally. I'm working feverishly on it. It'll be tangible and not gimmicky. I swear.

[G. Cross]

So many simplistic ideas and so little meaningful political action. Generally speaking each school district in Vermont is controlled by an elected (please note elected) school board. There is one school board member for every 75, or so, students in the state. Changing how schools operate, how they spend money, how they educate our youth and so on is simply a matter of electing new school board members. So, my suggestion is also simplistic - stop complaining and start acting. Clearly, everyone who posts on this site and reads this site understands the political process - use it!

[James Ehlers]

Mr. Cross is right. We need to act. Cap the tax.

Sincerely,
James Ehlers

[Curtis Hier]

George is right. People need to run. And they need to contest incumbents. I'd do it myself, but I teach in the town I live in.

[Mister Guy]

"I thought the only real inflationary problems were fuel and health care. And by the way, did you miss the post where I shattered that myth?"

They are, and it's not just "fuel" either. You probably missed when I shattered your "shattering" too...lol...

Still waiting to hear your big special ed fix Mr. Hier...it better be good, and I'm not holding my breath that it will be BTW.

I respectfully submit Rep. Cross that school boards add *nothing* positive to the process of running schools. They just add more politics to it IMO. Get rid of them and hold mayors, town leaders, and school administrators directly accountable for a school district's results.

[Curtis Hier]

Special education costs have almost tripled, in constant dollars, in the last ten years.

I wrote a while ago that fuel prices went down from 2001-2004, yet education costs went up 18 percent. They weren't a cost driver then and aren't the main one now. I don't recall a response on that.

If you'd like a sneak preview on the idea I'm developing, come to the forum in Montpelier on February 21.

[Mister Guy]

I distinctly remember you rolling out those stats about past fuel prices (again, rising energy prices aren't just "fuel" BTW) and stating that you probably knew damn well that the 18% rise in education costs over that period of time was likely due to rising health care premium costs. Keep trying to play the shell game...no one is listening.

Sorry Mr. Hier...the only thing worse than reading your comments here would be seeing you make them in person.

[Jon Harrison]

I wish it was as simple as changing school boards. Local control of education has been eviscerated . . . state and federal mandates are overwhelming.
To get results at the local level, you have to return control to the local level.

[Curtis Hier]

What shell game? Special education isn't a big cost driver?

If you don't come to the forum, how will you even be able to call my plan a gimmick? Gimmick gimmick gimmick! (Did you like my mimic mimic mimic?)