The magical, mythical equalized pupil is expensive shell game

The Vermont Legislature is playing an expensive shell game — and planning worse. The “equalized pupil” is the shell under which the pea is hidden.

There are only two ways to avoid gargantuan property tax increases — raise other taxes and create new taxes to support education. But there are many claimants for new revenue, and few people want to pay new taxes just so they will have a slightly smaller increase in property taxes.

Reduce spending on education. Legislators say they can’t because school budgets are set locally. However, the odds are stacked by statute against local thrift. Because of the way education funding currently works, all the gain of an extra dollar spent is local and the pain of paying that extra dollar is spread statewide. The pain of a dollar saved is local and the gain is statewide. How can a responsible local school board ever cut a program?

How do we change incentives so school districts become thrifty?

We can’t go back to having each district use its own tax base to pay for whatever education it wants to provide. In 1997 the Vermont Supreme Court ruled:

“We decide that the current system for funding public education in Vermont, with its substantial dependence on local property taxes and resultant wide disparities in revenues available to local school districts, deprives children of an equal educational opportunity in violation of the Vermont Constitution.”

It’s acceptable that it is a state responsibility to give every student an opportunity for a good education. Let’s assume that those dollars will largely come from property taxes and be assessed (as they are now) so the burden is apportioned strictly by the value of individual real estate. A half-million-dollar residence pays the same rate for education no matter what district it’s in.

A suggestion, which preserves some local control, is that the legislature determine the cost per student for a quality education and give that amount to each district. A district that wants to spend more must raise the extra money locally.

If you don’t listen closely, it sounds like many legislators are proposing exactly this. But most are not. You have to look for the fine print: it’s the word “equalized” before the word “pupil.” This little modifier makes all the difference.

What’s an equalized pupil?

Vermont has 84,000 actual students; it has 132,100 equalized pupils! Stowe and Winooski have about the same number of actual students; Winooski has almost twice as many equalized pupils. The concept of equalized pupil was introduced to account for the higher cost of educating a highschooler than a kindergartener. Then small adjustments were added for poverty and students for whom English is a second language. With Act 127, whose implementation caused this year’s chaos, the Legislature made these weightings into a hidden welfare system. They declared that it costs more than twice as much to educate a student from a family below 185 percent of the Federal Poverty Level as a wealthier student and that it costs 2.5 times as much if a student is not a native English speaker. One actual student from a poor immigrant family counts as 4.52 equalized pupils when doling out funds from the statewide pool.

If the cost for a good education in Vermont is $20,000 per actual student and each district receives this much per actual student, and must tax itself to spend more, no student is denied the chance of a good education, and each district has an incentive to save, but none have an incentive to spend less (they would not be allowed to put unspent money to other town uses). Stowe would receive $15,400,000 for 770 students and Winooski $15,720,000 for 786 students.

However, that’s not what will happen if the money is allocated per equalized pupil. $20,000 per actual student is $1.68 billion statewide. The legislature would divide the $1.68 billion by 132,100 equalized pupils and declare a cost of $12,718 per equalized pupil. Stowe then gets $12,921,488 for 1016 equalized pupils and Winooski gets $25,715,796 for 2022 equalized pupils. Stowe receives only $16,781 per actual student and must tax itself to reach the $20,000/student cost of a decent education. Worse, most legislative proposals and current state law (temporarily suspended) penalize districts which elect to spend more than the declared statewide cost per student. Meanwhile Winooski has $32,717 to spend on each one of its actual students and no incentive at all to be frugal nor any requirement to deliver good results with this windfall.

It’s hard to feel sorry for Stowe (where I live); but, the education tax is already levied on a statewide basis. Stowe has more valuable property than Winooski and will and should contribute much more to the statewide fund. But, if property taxes are higher in Stowe per dollar of assessed valuation because Stowe must make up for a shortfall in educational funding, it means that someone in Stowe in a $500,000 house pays more than someone in Winooski in a house with the same value.

It does cost somewhat more to educate students for whom English is a second language. It arguably costs more to educate students living in poverty. If state education dollars are allocated per actual rather than per equalized student, it may be necessary to make some extra allocation to districts with many such students, but that should be by honest appropriation rather than the shell game of the equalized pupil, and outcomes must be monitored to make sure extra money results in better-educated students.

(Tom Evslin, of Stowe, is a retired high-tech entrepreneur. He served as transportation secretary for Gov. Richard Snelling and stimulus czar for Gov. Jim Douglas.)