Isaac Chavez, the CEO of the Vermont Realtors, called on Statehouse leaders to begin reforming the state's education delivery and finance systems this legislative session.
The realtors association says the rising cost of education is hurting the economy. Lowering property taxes, realtors say, would make Vermont a more attractive place for business and more affordable for young people who want to live and work in Vermont.
The report, conducted by Art Woolf and Dick Heaps of Northern Economic Consulting, looks at Vermont's education spending trends.
Analysis: School boards weary of blame game
State's low student to staff ratios related to small school sizes
Vermont Realtors report
Woolf and Heaps say that Vermont's overall school spending was 20 percent above the national average 15 years ago; now it is 70 percent above the average. The two consultants compared education spending and health care expenditures to median family income growth. Total spending on education in 2011 was $1.5 billion; health care cost the state $5 billion that year. The gross state product was $26 billion in 2011.
"Vermont spends a lot more than other states in the U.S., and the gap has been growing since the late 1990s," Woolf said.
Vermont's low student to teacher ratio (9.4 students per teacher) is the biggest cost driver, Woolf said. The national average is 16 to 1. Though Vermont school boards pay below average salaries to teachers, the state's per pupil spending was about $18,571 - the second highest level in the nation, according to a 2013 National Education Association report. The national average was about $11,068.
Heaps said taxes are based on total spending, and "because we've spent so much our spending has gone up so much our taxes are going to be high." Leadership is needed to "change the course of what's going on with education spending.
"This isn't a new problem, this is something that has developed over the last 15 years," Heaps said. "We've had good economic times, a housing boom that increased the tax base for schools, a recession early in the decade, the Great Recession, a whole mix of economic times. What has happened is spending marches ahead.
"In order to change that, someone has to step forward," Heaps said. "If we don't do something we'll see more of the same."
Woolf and Heaps say the state has several options for reducing spending and property taxes. They say that the state could "capture savings" from falling enrollments. Schools can also save an average of $15,000 a year, they said, by replacing older retiring staff with less experienced teachers. They also suggest expanding the two vote provision for local school budget approvals, which penalizes high spending school districts.
Reducing the income sensitivity tax break would put downward pressure on property taxes, Woolf and Heaps say. The current income cutoff is $90,000. Lowering the cutoff would reduce the state's tax expenditure for income sensitivity, which currently reduces the Education Fund by roughly $150 million per year or 15 cents per $100 of assessed property value.
The Vermont Realtors blame the growth in school spending on the state's income sensitivity program, which gives property taxpayers who qualify a tax break. More than 60 percent of households participate in the program, and the realtors say the program "de-sensitizes" voters who approve local school budgets to the real cost of education.
The Vermont Realtors also want to see cuts to the small school grant program. The state spends $7 million a year to support schools with fewer than 100 students. The realtors say the program should reduce overall support for the program and award grants competitively to schools based on geography and need.
House Speaker Shap Smith says it would be imprudent to make changes to the education finance system without addressing cost drivers, such as student to teacher ratios first.
"We ought to look at small schools and ask is the quality what we might hope for in the education system and think about it in terms of the quality not necessarily the ratio," Smith said.
The Legislature will consider a proposal for a new school governance model, he says, that would phase in the elimination of supervisory unions and the state's roughly 285 local school districts. The unions would be replaced by larger districts governed by one board that would oversee a large pool of students and a number of facilities. The Burlington School District has been cited as an example by lawmakers. The district has 4,000 students, eight buildings and one board.
"I don't think it's the model because it's Burlington," Smith said.
He says a different organizational structure could streamline governance and continue to allow communities to have a say in how schools operate.
Editor's note: This story was updated at 6:32 a.m. on Jan. 29.