Rapid response, radical reform: The story of school finance litigation in Vermont

Journal of Law and Education, Apr 2002 by Rebell, Michael A, Metzler, Jeffrey

INTRODUCTION

In February of 1997, barely four months after the Vermont Supreme Court declared that the state's education finance system violated the state constitution,2 the state legislature enacted the Equal Educational Opportunity Act of 1997, known generally as "Act 60."3 The new law replaced most local property taxes with a uniform, statewide property tax, and established a per-pupil block grant for every district. Act 60 also established a controversial "sharing pool" requiring affluent districts that chose to spend amounts above the base block grant to share part of their excess revenues with property-poor districts.

While some observers praised this approach "as one of the most aggressive and fairest ways to achieve educational equity,"4 others dubbed the sharing pool "the shark pool,"5 and some have described Act 60 as "Marxism." The majority of Vermonters appear to support the new law, but there has also been considerable opposition in the form of lawsuits, civil disobedience, and attempts to circumvent the law through private funding stratagems.6

Court hand down a powerful decision on the merits barely four months after initial filings without requiring any of the facts to be developed at a trial, and why did that decision establish important new precedents for defining an "adequate education" when plaintiffs did not even raise an adequacy claim? Finally, given the history of extensive town-meeting democracy in Vermont, what role did public engagement processes play in this rapid remedial response? These are the intriguing questions that this article will attempt to answer.

I. EARLY LEGISLATIVE REFORM ATTEMPTS

Like most states, schools in Vermont traditionally were funded primarily through local property taxes. Each district determined its own school budget and set its own property tax rate. The funds generated by the local tax rate depended on the property values within the district. Thus, in districts where property values were very high, a given tax rate could generate substantially more revenue for education than in districts where property values were low. A major purpose of state aid was to attempt to partially offset this disparity.

In 1969, the Vermont legislature passed a law that required the state's contribution to education spending to be at least 40% of total state wide education expenditures.7 However, the law provided no mechanism to ensure that the state legislature would actually meet this target. Education spending was subject to annual budgetary struggles, fiscal pressures, and competing budgetary priorities. As a result, funds allocated for education generally fell substantially below the required 40% level. In 1997, for example, less than 30% of educational funding came from state sources, compared with a national average at the time of over 50%.8

While the measure was hailed as an "historic" reform at the time, its weaknesses soon became apparent. The advent of a recession in the late 1980s resulted in a leveling of state aid for education, despite increasing needs. As localities came to rely more and more on local property taxes, legislators from wealthy districts lost any incentive to approve substantial increases in foundation funding. Legislative leaders soon came to the conclusion that "unless you had a formula in which every representative had something at stake, there never would be adequate funding."I Failure to maintain an adequate foundation level acccelerated the disparities between property-rich and property-poor towns. In 1995, for example, the town of Richford's $140,000 per-student tax base limited spending to $3,734 per pupil, while the town of Peru spent $6,476 per student from a $2.2 million per-pupil base.12

By 1992, five years after the implementation of the foundation formula, it was clear that further reform was necessary. In an informal poll of the Democratic caucus following the '92 election, approximately 90%Io of legislators identified education finance reform as their number one priority.13 Various legislative committees began to develop reform concepts, and formal and informal hearings were held throughout the state. 14 Governor Howard Dean appointed a Commission on Educational and Municipal Financing Reform, which he charged with proposing alternative education finance plans.15 The leadership in the Vermont House of Representatives also began to focus on developing reform proposals.

to education would equal at least the proportion of school budgets represented by teachers' salaries, which at that time was 53%.17

The bill underwent significant changes in the Republican-controlled Senate, where both the wealthy towns and the teachers' union teamed up to oppose the House plan. All three major provisions of the House plan were dropped and replaced with a "regional equity" approach. Property tax rates within a region would have been constant, but each region in the state could have imposed a different property tax rate. In conference, the House and Senate representatives were unable to find an acceptable compromise, and the legislature adjourned that year without enacting any school finance reform measure.18