SOUTH BURLINGTON — There was a lot of information about one of the state’s most vexing issues – education taxes – but no solutions at a gathering of roughly 100 municipal and school officials here on Thursday.

Rising education costs are closing out other opportunities, as education consumes more of the available tax base, suggested Steve Jeffrey of the Vermont League of Cities and Towns (VLCT) and municipal officials.

The conference, organized by several Chittenden County municipal officials, was held at the South Burlington High School, with speakers exploring the current state of Vermont’s education funding and the history of how it evolved.

Increases in the state’s gross state product – the total value of goods and services produced in the state – has been outstripped by tax increases. “We’re running out of capacity,” said Lisa Ventriss, president of the Vermont Business Roundtable. “Our economy is growing very slowly… and it is unable to keep up with the demand for services.”

With costs rising, “People get pissed off at the education community and cut school budgets,” said Ventriss.

The Roundtable, a group of Vermont CEOs has been and remains an advocate for education in the state. “Education is and should be the state’s number one economic development strategy,” said Ventriss.

The question, she suggested, is how to spend the available funds most effectively.

Vermont is caught in a contradiction. School spending is determined by local voters approval of local budgets, but Vermont has a statewide school tax system. At the same time, local budgets are shaped by state and federal requirements.

Actual tax rates are determined by a complicated formula, portions of which are beyond the control of local school boards, including the common level of appraisal and the equalized per pupil count, both set by the state.

The idea that if voters approve a budget increase they will see a tax increase and if they approve a budget decrease they will see a decrease may still be true in the abstract, but twice in recent years Fairfield Center School has decreased its budget while having an increase in the tax rate. This year a decreased budget still resulted in a double-digit increase in the tax rate.

That disconnect is sharpened by the income sensitivity program and tax exemptions such as the current use program, which further sever local school budgets from local taxes.

The Brigham decision

The statewide tax system is a direct result of the Vermont Supreme Court’s 1997 Brigham decision finding that the state, not local communities, had an obligation to supply equal educational opportunities to all Vermont students.

The decision rested, in part, on the fact that education is the only state function mentioned specifically in the state constitution, leading the court to conclude it is a fundamental function of state government.

“Public education is a constitutional obligation of the state,” said John Nelson, the former executive director of VBSA. “Funding education through the property tax is not.”

At the time of the Brigham decision the state provided a base per-pupil amount to each community, but towns could then raise additional funds to support their schools.

Richford, which had a tax base of just $140,000, was spending $3,700 per student. In Peru, Vt., however, the tax base per student was $2.2 million, with per student spending of $6,500.

Education property taxes also varied widely between communities. Taxes on an $85,000 home were $200 in one town and $2,000 in another, explained Nelson.

Following the Brigham decision, the Vermont Legislature considered shifting to an income tax for funding education, explained Rep. Charles Goodwin of Londonderry, but out-of-state residents who don’t pay income taxes in Vermont own 40 percent of the state’s land. “We have to tax property because that’s the only way we can get at those resources,” he said.

Currently, Vermont funds education through three pots of money. Non property tax revenues make up a third of the education fund, explained Steve Jeffrey, director of the Vermont League of Cities and Towns (VLCT). Those taxes include the transfer of money from the general fund to the education fund, and portions of other taxes, such as the sales tax.

Another third comes from property taxes on businesses, second homes and other non-residential property. That rate is set by the state.

The remainder comes from the residential property tax, which is the only cost that varies based on the local school budget.

As costs have increased, more of the burden has gotten shifted to the property tax. In 1999, 55 percent of the cost of education was paid with property taxes. It’s now 68 percent.

Increased spending

In the wake of the Brigham decision, spending in Vermont’s schools has increased dramatically, in part by design as lower spending schools caught up, explained Stephen Dale of the Vermont School Boards Association (VSBA).

That increase has now slowed. In the last six years, school budgets increased an average of 2.2 percent. One year the average increase was zero and another budgets were down on average.

Costs have continued to rise per pupil as the number of students across the state declines by roughly one percent each year. As of 2012, Vermont had the highest per-pupil spending in New England and one of the three highest in the country, said Dale.

Driving costs are new federal and state initiatives, said Dale, including the new Common Core standards, and an end to state funding for school construction and repair.

Health care costs for school staff are also driving spending with health care costs up 14.5 percent at schools in just two years. In fiscal year 2014, health care increases at some Franklin County schools were in the $250,000 range, making it nearly impossible for school boards to level fund budgets without cutting education programs.

Special education costs are also driving costs.

While enrollments in most of the state have decreased, staffing levels have remained steady, driving down the student-to-staff ratio. “It is very difficult when you’re in a relatively small school to figure out when to downsize,” said Dale.

At what point does a school cut its music teacher, for example. If schools cut programs, they risk having more affluent families relocate to communities with more opportunities, Dale explained.

“We’ve got to find ways to maintain quality and reduce staff,” said Dale.

Dale suggested schools will need to come together with their neighbors to better deploy fewer staff, but did not use the ‘C’ word – consolidation.

Merging school districts would make sharing resources such as foreign language and arts teachers easier, according to consolidation advocates such as Franklin Northeast Superintendent Jay Nichols.

“It’s one of those things we need to take on and ideally it’s taken on locally,” said Dale.

John Gifford, a Milton Selectboard member and school business manager who has worked on consolidation studies, said, “What I’ve seen is a bunch of people who want to do things their way and not work together.”

He also described his unsuccessful efforts to get the town and school sharing custodial and landscaping services.

Unanswered at the end of the meeting, was the fundamental question of what skills and knowledge students need to be successful citizens in the 21st century, although several speakers did suggest that it is impossible to separate a discussion of costs from a discussion of outcomes.

Absent a clear vision of the desired outcomes, it is impossible to know what expenditures are needed to achieve them.