[A] lawmaker is proposing a radical overhaul of education funding that he said should slow the growth of statewide school spending.
Rep. Scott Beck, R-St. Johnsbury, will outline the proposal to the House Ways and Means Committee on Wednesday. One of its main components is to rescind the income sensitivity feature of the current funding system. Beck said that component would be replaced with another way to help moderate- and low-income residents, perhaps through a rebate on their income tax returns.
Beck’s will be one of at least four education funding proposals the tax-writing committee will consider, according to Chairwoman Janet Ancel, D-Calais.
“If you’ve got ideas, I’ve said let’s get them out there,” Ancel said. “I’m pretty well determined to do everything I can to accomplish that … to see whether we can come up with a system that is at least as progressive as our current system and simpler.”
The total amount spent on education yearly, about $1.6 billion, would not change under his proposal, Beck said. Instead, he said, the goal would be to slow future growth. The main way he proposes to do that is by changing the base spending amount the state calculates per pupil.
If communities wanted to spend more than $13,000, an additional $1 on the tax rate would yield only $4,500, representing a disincentive.
With spending at $1.6 billion and about 76,000 students, per-pupil spending now averages more than $21,000.
Two-thirds of Vermont homeowners pay for education through the income sensitivity program, which adjusts taxes based on income. Vermont households earning up to $140,000 can be eligible. More than $185 million a year is essentially paid back to taxpayers through the program. Beck’s proposal would use that money to lower rates; some would be used to provide rebates.
Under Beck’s proposal, all of the revenue from the sales tax would be dedicated to education spending, and the amount transferred for education from the general fund would be greatly reduced. The swap, he said, would make spending easier to follow. Currently, roughly a third of the sales tax revenue is dedicated to education.
As a comparison, Beck said that if a community spent $17,500 per student, it would currently have a homestead tax rate of about $1.72 per $100 of assessed value. Under Beck’s proposal, a community spending $17,500 per pupil would have a tax rate of about $1.49, he said.
Beck said his proposal would comply with the Brigham decision, a 1997 Vermont Supreme Court ruling that said students in property-rich communities must receive the same educational opportunities as students in towns with less property value to tax. That decision resulted in Act 60 and later Act 68.
Beck said the current system penalizes low-spending communities and benefits higher spending ones. He said high-spending communities don’t bear the full cost of their choices, meaning they essentially receive subsidies through the statewide sharing mechanism of the current formula. The current system also has penalties for towns that go above a certain threshold. Beck said his approach would create an incentive instead of a penalty to spend less.
One of the biggest unknowns in his proposal is how to redistribute the savings that wealthier taxpayers would see from lower rates toward moderate- and lower-income residents in a new rebate program.
He said his proposal overall aims to be revenue-neutral and not require additional funding.
Beck’s proposal, he said, “will force districts to look much more closely at how they’re spending money, both in their staffing, maybe consolidations, energy efficiencies. When you make that money more expensive, districts are going to look for efficiencies.”
Tax rates in towns would be “equalized” under Beck’s proposal, meaning they would continue to vary town by town to adjust for factors such as how up-to-date property appraisals are.
Beck — who played a key role in last year’s teacher health care controversy — said he has shared his education proposal with the Scott administration but does not have its official imprimatur on his upcoming bill.
Scott spokesperson Rebecca Kelley said the governor looked forward to learning more about Beck’s proposal.
“The governor’s policy team has seen, and the governor is familiar with, Rep. Beck’s proposal,” Kelley said. “He appreciates the work and thought Rep. Beck is putting into this proposal and the issue as a whole. They share a commitment to bending the cost curve on education spending, and as the governor has said, all ideas need to be on the table. He looks forward to learning more about the details of the proposal and working on a range of ideas with the Legislature.”
Beck said that under his proposal, “by and large, the losers … are going to be the people getting enormous adjustments” through the income sensitivity program now. The maximum adjustment allowed is $8,000 per year.
Basing the entire system on income, Beck said, would beg “a lot of gamesmanship,” and he said a lot of people make money under the table that they don’t pay income taxes on.
House Speaker Mitzi Johnson, D-South Hero, has said she would like to see an education funding system based more on income and less dependent on property taxes.
