Woolf questions school consolidation savings

In the spring of 2014 an unexpectedly large number of school budgets were defeated and Vermont legislators got an earful about rising property tax burdens.  In response, the 2015 legislature passed Act 46, a law based on the assumption that Vermont’s high level of property taxes could be reduced by consolidating school districts.

Act 46 offered towns incentives — carrots and sticks — for smaller districts to consolidate.   The carrots were monetary incentives—reductions in property taxes for a few years — to districts that consolidated voluntarily.  The stick is forced consolidation for small districts that don’t voluntarily combine by 2018.

It’s not surprising that people were, and most likely still are, concerned about high property taxes.   According to the U.S. Department of Education, Vermont’s per pupil spending of $17,600 in 2012 was 50 percent higher than the national average of $11,400.  The National Education Association estimates that in 2014 Vermont spent nearly twice as much as the national average.  There aren’t enough administrators in Vermont schools to account for a gap of that magnitude, which means Act 46 can’t meaningfully reduce property taxes.

That’s evident when I look at my own school district, Westford, which is now considering consolidating with the larger neighboring districts of Essex Town and Essex Junction to form one large school district.  The group studying the merger assumes, or guesses, that the merger could potentially lead to $1 million in savings.  About half of that comes from reductions in administrative staffing at the centralized district office which, according to the study group, “could eventually” be realized.

The other half million dollars comes from the elimination of high school choice in Westford. Under the consolidation plan, all Westford high school students would be required to attend Essex High School.  Today the parents of 40 percent of Westford’s high school students choose, for a variety of reasons, to send their high school students to Mt. Mansfield and BFA Fairfax high schools.  The consolidated school district would save the tuition money that is now spent at those other schools.  Since Essex High School is not at full capacity, it can absorb those students, although it would probably have to hire two more teachers.  That would reduce taxes in Westford, Essex, and Essex Junction. But with fewer students at Mt. Mansfield and BFA Fairfax, taxpayers in those two districts will most likely see an increase in their property taxes due to way Vermont’s educational funding system works.

Suppose the anticipated $1 million in savings does materialize — although I’m skeptical that it will. What does that mean to an average taxpayer in Essex Town or Junction or Westford?  Let’s consider two different taxpayers.  The first is a homeowner who earns over $110,000 and is therefore not covered by the state’s income sensitivity program.  Suppose the family owns a $350,000 home.  If the three school districts merge, that family would see a decrease in their property taxes of about $100 to $150 depending on whether they live in Essex Town, Essex Junction, or Westford.  I’ll leave it to the family to decide whether that’s a lot or a little, given their current school property taxes of about $5,000.

The second family earns the median family income and currently pays about $2,500 in income-sensitized school taxes in each of the three towns.  Under the merger, their property tax bill would go down by somewhere between $50 and $75, depending on which town they live in.

The dark secret of Act 46 is that there is not much money to be saved by merging or by cutting administrative costs. The largest single cost saving in Westford’s proposed consolidated district comes from ending school choice.  For districts that don’t have choice, the savings would be even smaller than I’ve estimated.

The reason Vermont has such high property taxes is that we spend a lot and have the lowest student to teacher ratio in the nation.  The only way to significantly reduce Vermont’s high cost of education is to bring Vermont’s ratio more in line with the national average.  And the only way to do that is to consolidate schools, not just districts.

But closing schools steps on the third rail of Vermont politics.  No legislator or public official is willing to support it or even suggest that small class size is the root cause of our high spending level and our high property tax burden.  Vermont’s school funding law has made it far too easy for taxpayers to continue to support the status quo.  The likelihood of any significant reductions in property taxes, Act 46 nothwithstanding, is slim to none.

Art Woolf is associate professor of economics at the University of Vermont.