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November 15th, 2018

Governor’s Plan Would Raid the Education Fund

By Jack Hoffman

Public education—pre-k through 12—has become a coveted source of revenue in recent years. People look at the $1.7 billion Education Fund and imagine how some efficiencies here, a little school consolidation there, could free up hundreds of millions of dollars.

Now Gov. Phil Scott has proposed his “Five-Year Education Revitalization, Tax Stabilization, and Investment Act.” It dangles the prospect of improving education, but the real aim appears to be a raid on the Education Fund.

Scott says the plan will produce almost $300 million “available for investment” from fiscal 2020 to 2024. It’s really $277 million, and what the administration calls “savings” are both budget cuts and property tax increases. According to the administration’s figures, about a quarter of “investment” funds would come from property tax increases: tax penalties on towns that exceed spending thresholds and higher property taxes on Vermont homeowners who pay a portion of their school taxes based on household income.

About 75 percent of the money the governor has his eye on would come from cuts to school personnel, special education, and teachers’ health insurance.

And while he hints at ways the money might be used, his plan doesn’t commit to anything.

In his May 1 memo to legislative leaders about the plan, the governor said it was time to “create investment opportunities through savings to improve the quality of education” and “these savings could be reinvested in better educational opportunities and outcomes….”

But the memo also says “…we will increase our investments in education each year and generate nearly $300 million in total savings that can be invested in lower tax rates, early care and learning, career and technical education, and higher education to achieve a quality and affordable cradle to career education system for Vermont children.”

Reinvesting in public education makes sense, but it’s not clear how he can do that and still have $300 million left to lower property taxes and invest in child care and higher education. Besides, the governor repeatedly complains that Vermont spends too much on pre-k through 12 education and that property taxes are too high. Freeing up money to put it back into education wouldn’t reduce the overall cost or lower property taxes. While reinvesting in education is something that Vermont could do if more money were available, it’s not anything the governor is likely to support.

What the administration has advocated is cutting education costs and putting the money into child care and higher education. But two-thirds of the money in the Education Fund comes from homestead and non-residential property taxes. As much as Vermont needs to invest more in early care and higher education, it doesn’t make sense to divert property taxes from the Education Fund to pay for those things.

And if the real plan is to cut teachers and staff, special education, and health insurance without reinvesting in pre-k through 12, that won’t improve the quality of education or provide the opportunities Scott says some students are still lacking.

The governor has correctly identified areas where Vermont needs to make investments: early care and learning, career and technical education, and higher education. He’s also right that we need to reduce our reliance on the property tax. But raiding the Education Fund is not the silver bullet the governor would like it to be.

Jack Hoffman is a policy analyst for Public Assets Institute (www.publicassets.org), a non-partisan, non-profit organization based in Montpelier.

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