In Vermont's Funding Shakeup, A Bitter Pill for the 'Gold Towns'

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When Dorset Elementary School opened its doors this year, the parents and faculty were braced for the cutbacks.

In the absence of closets and cupboards stocked with supplies, students arrived with shopping bags full of pencils, note pads, and glue sticks donated by their parents. The music, art, and computer classrooms were empty, as those teachers would now teach only part time.

A new principal, Kate Foster, greeted the 225 students and their parents. Her predecessor had resigned in protest.

And the property taxes people in this resort community pay for their schools rose 35 percent this year, the first of several increases to come in the next few years. Still, residents were grateful. The cuts in services could have been worse.

Over at nearby Rutland Intermediate School, the back-to-school picture was much brighter. Students traded in their 1978-edition science textbooks for new ones, surfed the Internet for the first time on new computers, and were greeted by teachers thrilled to see fatter paychecks and well-equipped classrooms. The town's property taxes, meanwhile, dropped 7.5 percent.

It's all part of Act 60, Vermont's new school finance law. The legislation seeks to even out per-pupil spending in a rural state where the level of wealth varies drastically from town to town.

After more than a year of fury and fear, people in the Green Mountain State are beginning to find out what the changes mean for them. Most districts--229-- received more money for schools from the new education fund created under the law, according to the state education department.

But for those in the 23 wealthy districts--including Dorset--that are footing the bill for a more equitable system, the wounds are far from healed.

Quick Passage

In Vermont, local control is as much a part of life as maple syrup and country stores. And the state's 580,000 residents aren't about to let that change.

Lawmakers in Montpelier pushed through Act 60 four months after the state supreme court declared the school finance system unconstitutional in February 1997. ("Court Orders Lawmakers To Fix Vermont School-Funding Formula," Feb. 12, 1997.)

Reactions to the new plan ranged at first from reserved to wary to outraged.

Most other states that have revamped their funding systems have taken at least a year, and sometimes much longer, to come up with a structure that is both equitable and politically palatable, said Mary Fulton, a policy analyst with the Education Commission of the States in Denver.

About 33 states have been sued or have taken legislative action to restructure their school finance systems in the past two decades, according to the ECS.

"I don't think I've ever seen this intense of a response by citizens to changes in a school finance law," Ms. Fulton said of the outcry in Vermont. "Folks were very put off by the perceived lack of input at the local end."

The notion of overhauling Vermont's method of paying for its schools had been discussed for nearly two decades, but supporters had never been able to gather enough political support. The supreme court ruling last year forced the issue.

The ensuing law was backed by Gov. Howard Dean, a Democrat, and both of the Democratic-controlled chambers of the legislature. Act 60 abolished the existing local property tax and set up a new statewide property tax in an attempt to equalize funding in all public schools.

The residents of the "gold towns"--property-wealthy communities of ski resorts and second homes--were hit hardest. This year, many saw their taxes soar while funding for their schools dropped.

In some cases, districts that had been spending upwards of $10,000 for every student had to make drastic changes to adjust to the new state block grant of $5,010 a pupil.

"Traditionally, most states seek equity by bringing people up, not bringing some down," said John Myers, a partner with Augenblick and Myers, a Denver-based school finance consulting firm.

Alternative Funding

Act 60 allows towns to raise additional money for schools through local property taxes. But there's a catch: Those funds are also sent to the state and reallocated by wealth.

Officials in the property-wealthy towns call the new state fund "the shark pool." Poor towns consider it a lifesaver.

At Dorset Elementary, a no-frills, 1960s-era facility with prime views of Mount Equinox and the Green Mountains, teachers and board members say they feel they are being punished for having top-notch schools.

The damage, though, is not as severe as some expected; last spring, the legislature passed "soft landing" revisions that allowed affluent districts to keep more of their locally generated tax dollars, if they put it into reserve funds.

Dorset, for example, cut its school operating budget by 20 percent, from $3.5 million to $2.8 million, but the new provisions allowed the district to recover about $800,000 for reserve funds. Those dollars can be used for such things as school construction and special education.

Little Sympathy

Dorset, Manchester, and a few other well-to-do towns have found another source of funding: private contributions. A new foundation to help the Dorset school has raised $50,000, said board member David Sirak. Administrators there hope to raise $350,000 by the end of the school year.

Still, Dorset's teachers say their spirits have dropped. "It's a disaster, an absolute disaster," 4th grade teacher Francis Dechame said. "We had a great little school."

Morale sank even lower with the departure of one kindergartner--the son of author John Irving. The novelist, an outspoken critic of Act 60, founded his own private school a few miles away.

School leaders in the better-off towns say they are being unfairly portrayed as greedy. "People think the schools in the so-called gold towns are living in the lap of luxury," said Ann Smith, a school board member in Manchester. "'You need to feel pain' is all we ever hear, over and over," she added.

In the less tony, working-class town of Rutland, however, teachers shed no tears for the woes of Manchester.

"We've bit the bullet all these years," said George Hooker, a biology teacher at Rutland High School. "Now, if they have to bite it a little bit, they'll see what it feels like."

Colorful Protests

Diane Wolk, the chairwoman of the state school board, predicts that the gold towns will be fine if they'll learn some fiscal restraint and budget savvy.

"What they're going through now is what 90 percent of towns have gone through for years and years--having to make choices," she said. "They'll still have a quality education."

From his office overlooking the state Capitol, Marc E. Hull, the state commissioner of education, has a prime view of the steps where dozens of Act 60 protests have taken place.

Some of the events are as colorful as the state's famed fall foliage. On the opening day of the legislature in January, a local timber logger brought a station wagon once owned by state Rep. Cheryl Rivers, a chief Democratic sponsor of Act 60, and urged passersby to vent their anger with sledgehammers.

Mr. Hull has faced protesters carrying signs declaring him a "Communist Dictator," among other things. And the eighth-generation Vermonter said he has been called "names your father wouldn't have tolerated."

Though says he isn't bothered personally, he acknowledges that the repeated criticisms have had an effect--notably in the passage of the "soft landing" revisions this year. More amendments to the law may be on the way.

In addition, the education department will be watching next month's elections to gauge opposition to Act 60. While Gov. Dean is favored to win re-election to a fifth two-year term, his GOP opponent, state Rep. Ruth Dwyer, has focused her campaign on overturning Act 60.

'Underlying Angst'

Two of the law's most vocal opponents in the legislature, GOP Reps. Walter E. Freed and Judith M. Livingston, say they expect their party to gain enough seats in both the House and the Senate to enhance Republicans' bargaining power.

They plan to promote economic-growth incentives to ease the tax burden Act 60 has placed on small businesses.

"If we had a policy of economic growth, we wouldn't need all these schemes," said Mr. Freed, the House minority leader, who represents Dorset.

Mr. Hull, though, maintains that Act 60 is gaining support and that it will not be repealed.

"There's still an underlying angst, but also a lot of enlightening conversations," he said. "People are talking more realistically about what's happening in our communities."

Vol. 18, Issue 9, Pages 1, 23

Published in Print: October 28, 1998, as In Vermont's Funding Shakeup, A Bitter Pill for the 'Gold Towns'
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  • Read the complete text of Act 60 from the Vermont State Department of Education.
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