Chair Conlon and members of the House Education Committee,

The education finance crisis before you today is the gravest in decades and eerily similar to the crisis we faced a decade ago. You have difficult choices ahead of you around overhauling the entire education finance system or making targeted reforms to inject more transparency and accountability into the incentive structure.

The basic facts are that we have We have seen steady long-term spending increases[1], while staffing levels have persisted (despite Act 46). Further, and more alarming, test scores have declined compared to other states that spend less and have larger at-risk student populations.[2]

This year alone, school spending is set to increase up to $230M. This is not a new problem. We have added $900M in education spending over the past decade. You have heard all the reasons why FY2025 is “unique” or a “convergence of factors,” but the reality is that we have a spending problem that has persisted for decades. The opaqueness of our education financing system has allowed all parties involved to avoid making tough decisions. Double digit annual spending increases are not sustainable.

This is not a revenue issue. Vermont has the best resourced public education system in the country. The real question is how those resources are deployed. These decisions are generally made locally, and school boards have been reluctant to redeploy staff instead of adding more.

Because FY2025 is largely settled, this Committee must now shift attention to the long-term. While we still support Act 127, it was always going to increase overall spending. Two-thirds of districts gained taxing capacity (aka “free money”) and a third of districts were going to have to make deep cuts to get back to a net-zero impact on the Education Fund. It was always unlikely that the high-spending districts were going to cut spending enough to offset the increase from low-spending districts. Taking a close look at all the incentives in the system and how they interplay with each other will be necessary to incentivize cost-containment and quality outcomes in the long term.

While looking at this incentive structure, the Legislature should find ways to clarify lines of responsibility and accountability. One of the inherent challenges of the Act 60/68 framework is that spending decisions are made locally but taxing decisions are made statewide. This disassociation allows for districts and the Legislature to point the finger at each other as the responsible party for increasing tax rates. Voters are left wondering who to believe. Moving to a $1.00 base rate was a step in the right direction, but much more remains to be done.

The Legislature should commission an outside review that offers an in-depth and politically disinterested analysis of our education financing system and its incentive structure (something along the lines of the blue-ribbon commissions). Too often the people driving the conversation have a financial stake in the system and their agenda is to protect their “slice of the pie.” If we are to make progress, an outside perspective is needed.

The last time we had this type of crisis your Committee commissioned the 2016 Picus report: “Using the Evidence-Based Method to Identify Adequate Spending Levels for Vermont Schools”. Several Picus recommendations have been adopted in legislation, others haven’t. Re-examining the Picus study and recommendations would be a good first step forward for the Committee.

For the 2014-15 school year, Picus found that the state as a whole was spending 10% above what was adequate to meet proficiency standards. We have added hundreds of millions of dollars in spending since then, with a student population and outcomes that continue to decline.

Another long-term option for reductions in spending is a concept we proposed back in 2014 called the READ model. While the results of district consolidation are dubious, this supervisory union consolidation plan would reduce administrative redundancy, offer better post-secondary alignment, and create more stable local tax rates. Incidentally, Picus had a similar recommendation. We believe now is a good time to revisit this concept.

I am encouraged you are having conversations around class size. This is a worthwhile avenue to pursue as it is clear that our state is a significant outlier. Moving towards class sizes and accountability mechanisms like our neighbors in Massachusetts would serve Vermont well. Currently there is little to no incentive for schools failing students and/or taxpayers to improve.

The claim that small schools are the problem has never been supported by the data. There are high performing schools of all sizes. What really matters is the quality of the educators and the quality of the decision-making about how to deploy resources. Those are things that are fixable from a policy standpoint, but creating a robust accountability framework for outcomes and spending is necessary.

CFV’s goal is to build a thriving middle class in our state. Unsustainable increases in the cost of public infrastructure and institutions threaten that vision, as do our declining student achievements.

It is unfortunate that these factors have come to a head in this way, and it will be a painful process to resolve them. We must hope our political process can rise to meet this challenge.

Ben Kinsley
Board Member
Campaign for Vermont

Ben has worked on Vermont education finance and policy issues since 2013, including navigating the leadup to Act 46 and its aftermath. Based out of Burlington, he consults with non-profit organizations on a number of policy issues, including education, government transparency & accountability, human services, and economic development.

[1] See page 13 of the 2023 JFO Report on Vermont’s Education Financing - https://legislature.vermont.gov/assets/Legislative-Reports/GENERAL-366459-v2-2023_Report_on_Education_Financing.pdf

[2] See both https://vtdigger.org/2023/09/11/state-education-snapshot-a-mixed-bag-for-vermont-schools/ and https://www.nationsreportcard.gov/profiles/stateprofile?chort=2&sub=MAT&sj=AL&sfj=NP&st=AP&year=2022R3