Pending Changes to School Funding

Changes are on the horizon for how we fund Vermont schools, changes that may result in a higher homestead tax rate in South Burlington. A task force is currently at work developing a plan to implement funding changes recommended in a 2019 report to the legislature. The legislature will consider the task force’s plan next year.

To begin with a brief overview of State education funding, Vermonters decide in local votes how much their schools will spend by approving or rejecting budgets proposed by their school boards. Most of the money for the approved local budgets comes from the State’s education fund, which consists of revenue from the sales and use tax, vehicle purchase and use tax, meals and rooms tax, lottery revenue, non-homestead property taxes, and homestead property taxes. To ensure that voters have a stake in how much a district is spending, the local homestead property tax rate is based on how much the district spends per pupil. The more a district spends per pupil, the higher its local homestead tax rate.

But not all pupils are counted equally in this calculation. The education funding system looks instead at weighted or equalized pupils. Weighting or equalizing pupils accounts for the fact that certain categories of students cost more to teach. Students with different learning needs and socioeconomic backgrounds require different types and levels of educational support to achieve equitable educational outcomes. Different educational supports, in turn, lead to different costs for different categories of students. For instance, it costs more, on average, to ensure that economically disadvantaged students or English language learners (ELL) meet education standards. Under the current system, these students are weighted as 1.25 pupils, which means that these students presumably cost 25% more to teach.

The 2019 study considered whether the current weighting factors, which were put in place over 20 years ago, accurately reflect the cost to educate certain categories of students. It found that there was scant empirical evidence to support the weights. Through a complex statistical analysis, it concluded that it is far more costly to achieve equivalent educational outcomes for students in poverty and ELL students than the system had assumed. The study therefore recommended that these students be given substantially higher weights than under current law. It also recommended adding population density (rurality) as a new weighting factor because it found that rural districts pay more to educate students.

By changing the weighting factors, districts with more impoverished or ELL students and districts with more rural schools would be able to spend more to achieve appropriate educational outcomes without significant changes in their homestead tax rates. Statewide, this would be a positive outcome, providing equitable education opportunities at an equivalent cost across all schools.

But there may be a downside. Due to the way the State’s school funding formula works, non-rural districts such as South Burlington with fewer students in poverty and fewer ELL students could find that their local homestead tax rates will need to be higher to maintain their current spending levels.

The task force will recommend how to transition to the new weights in a manner that eases the financial impact on school districts during the transition. It will also recommend ways to mitigate the impacts on residential property tax rates and to consider tax equity between districts. And the legislature could then amend the task force’s plan. So it is not yet clear what the impact will be on districts such as South Burlington.

I will be following the efforts of the task force to see how it addresses these and other concerns that I have regarding a transition to a new pupil-weighting system for our public education. My main concern is that our efforts to update the equalized pupil calculation may not translate to increased levels of spending in districts with higher needs, as intended, but will instead be used to reduce taxes. The changes must focus on ensuring that students in poverty and ELL students receive equitable educational opportunities so they can achieve appropriate educational outcomes.