Fact Check

The Herald (Like Many Others) Gets It Wrong
by
Wendy Wilton

Vermont's education funding is complex, and misunderstandings about how it really works are common.   So much so, that a recent Rutland Herald editorial stated the following about school taxes: "When student enrollments decline, school revenues decline."

This statement is incorrect. The Education Fund directs to a school district whatever education spending amount (in dollars) it approves regardless of the increase or decrease in numbers of students. The education spending/equalized pupil calculation is only relevant for determining the local homestead tax rate.

 
For example, a district that had 100 equalized pupils in FY 2010 at a cost of $12,000 per pupil would result in a budget of $1,200,000.  This is what the school will receive from the Ed Fund via locally collected taxes based on the state assessed tax rate and direct state payments, assuming the budget is approved by the voters. 
 
Now, let's assume the district increases its spending by 2% for FY 2011, so that the budget is now $1,224,000.  The number of students declines by 1.6%, resulting in a cost per pupil increase to $12,439.  The school will receive $1,224,000, no matter if the number of students were to decline, as the budget increase of 2% is approved by the voters.  So school revenues do not decline but the mix of where those revenues come from will change.  When student enrollment declines, a district's cost per pupil usually goes up, resulting in an increase in the town's education tax rates to support the increase.  Both residential and non-residential rates will increase to make up for the increase in the cost per pupil.
 
If the Rutland Herald editor's statement were true, school districts would be more encouraged to reduce costs to match declining student enrollment.  But that's not how it works as the district and the state are "sensitized" to some degree as increases in per pupil costs are supported through the assessed education rate at the town level. 
 
Wendy Wilton
Treasurer, City of Rutland

Comments

[RFC]

David Moats, editor of the Herald's editorial page, frequently, as in this case, needs a fact checker before shooting from the hip, a procedure which he has elevated to a science. That becomes a serious problem when one allows personal biases to block out realities.

Fortunately Wendy has volunteered
to be the fact checker this time, but on whom can we depend every other day of the week? Obviously blind trust in Moatorials can lead to faulty conclusions.

[Robert Daniels]

"The Education Fund directs to a school district whatever education spending amount (in dollars) it approves regardless of the increase or decrease in numbers of students."

Exactly. That's a basic problem in Vermont's education funding system: the Ed Fund is an open purse. And because homestead taxes are only about 26% of Ed Fund revenue, there is an advantage to each district in increasing its education budget, since it will receive more from the Ed Fund than its homeowners have to pay when the local spending formula adjusts the tax rates. But when all districts act in this manner then there are no winners overall, since the total amount of tax collected, in one way or another, must rise accordingly.

For more, see our draft article "Squaring the Circle", now online for comment at http://userwww.sfsu.edu/~rdaniels/SQC/SQC2.html

mailto: rdaniels@sfsu.edu