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LAWS
& REGULATIONS:
ACT
60 - THE EQUAL EDUCATIONAL OPPORTUNITY ACT: FACT SHEET |
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INTRODUCTION
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Act 60, also known as
the Equal Educational Opportunity Act, was signed into law in June 1997. The Legislature
drafted the law in response to a Vermont Supreme Court decision that said Vermont's
existing educational funding system was unconstitutional. The court, in Brigham v.
State of Vermont, concluded that the state must provide "substantially equal access"
to education for all Vermont students, regardless of where they reside.
This fact sheet is designed to address some of the questions frequently asked about
Act 60. Although it may not answer all questions, it should serve as a starting point
for understanding the state's educational funding system. |
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OVERVIEW
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By design, Act 60
has been phased in over a four-year period. Its first full year of implementation
is the current 2000-2001 school year.
- Act 60 eliminates
the wide variations of tax rates that were based on local grand lists. Under Act
60, tax rates are directly tied to per pupil spending. Act 60 assures that when districts
spend the same amount per pupil, residents will have identical tax rates regardless
of the town's property wealth.
- All towns now have
a statewide education tax rate of $1.10, regardless of whether they operate a school
or have students. It is a statewide property tax rate that every property owner pays.
- Equal access to revenues
per pupil is now provided to all towns through state block grants. In 2000-2001,
the state block grant per pupil is nearly $5,200. Any spending above the block grant
is a local decision made by voters when considering school budgets. Local tax rates
will go up according to how much the voters decide to spend above the block grant.
The per-pupil spending gap between towns has closed by 20 percent under Act 60.
- Under Act 60, the
state's share of special education costs has increased, from approximately 40 percent
to 60 percent. The law also created new grants to support small schools and transportation.
- Act 60 includes provisions
that will ensure overall educational quality in Vermont schools. These include:
a. |
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adoption of rigorous
statewide and local academic standards; |
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b. |
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state and local assessments
based on standards; |
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c. |
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early literacy programs; |
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d. |
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school action plans based
on assessment results; |
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e. |
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reporting educational
results to communities; |
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needs-based professional
development; |
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g. |
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staff evaluation; |
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h. |
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access to technical education; |
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i. |
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compliance with the School
Quality Standards on conditions, practices and resources of schools; |
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j. |
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technical assistance
to low-performance schools based on assessment results. |
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THE
BALANCE SHEET
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Where the money comes
from:
The Education Fund will receive $922 million for the current school year from a variety
of sources, the largest portion coming from state and local property taxes, which
raise $579 million. Act 60 redirected other tax revenues and created some new taxes
to support the Education Fund. Collectively, these raise an additional $73 million.
(Examples include rooms and meals, gasoline, corporations and telecommunications
taxes). Revenues from the state lottery, federal Medicaid receipts and interest generate
another $32 million. Finally, there is a General Fund transfer of $238 million, an
amount that increases annually by an inflation factor.
Where the money goes:
Commitments to the state block grant and from the sharing pool total $756 million
this year. Grants created by Act 60 (small schools grants, transportation, and capital
debt aid) account for another $20 million, while $61 million will fund Special Education.
Technical center programs, state-placed students and other costs account for $19
million. Add the projected $78 million taxpayers will receive in some form of income
tax adjustment, and the total amount of money paid from the Education Fund this year
is $934 million, $12 million more than was taken in. This deficit is offset by a
$16 million surplus from the prior year. |
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INCOME
SENSITIVITY
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Income tax adjustments
were created by Act 60 to help homestead owners pay their education property taxes.
It was designed to work with the pre-existing renters rebate program. The tax adjustments
come either in the form of a prebate check received by eligible taxpayers 30 days
prior to their first tax bill, or in the form of an adjustment when income tax returns
are completed by April 15th of the following year.
Two options are available for eligible homestead owners when calculating the amount
of education tax owed to the State. The first option is a percentage of household
income paid as the maximum education tax, with the percentage being determined by
the level of spending per pupil in the taxpayer's school district. The second method
is to take a fixed deduction on the taxpayer's homestead and then calculate the tax
owed on the reduced property value. The taxpayer may choose to pay the lesser of
the two amounts. |
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SHARING
POOL
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Any school district choosing
to have a level of per pupil spending above the block grant enters the sharing pool.
The sharing pool is the mechanism Act 60 uses to ensure all pupils in every town
have equal access to education revenues. The purpose of the sharing pool is to remove
the inequities caused by raising a tax dollar based on local education grand lists.
In order to raise the same amount of money, towns with a strong grand list per pupil
had a lower tax rate than towns with a low grand list per pupil prior to Act 60.
Now, the law has essentially given every town the same tax base, equalizing the effort
to raise a tax dollar. All towns with a given level of spending per pupil now have
the same tax rate, regardless of the local tax base.
This is accomplished by a concept known as the equalized yield (also known as the
guaranteed yield). The equalized yield is an amount of money the State guarantees
each pupil, regardless of how many tax dollars can actually be raised on the local
tax base. Local tax rates are directly tied to the per pupil spending level. Two
neighboring towns with the same level of per pupil spending may have different education
grand lists per pupil but both now have identical tax rates. The town with a strong
education grand list per pupil will raise more local tax dollars than its pupils
require, while the town with the weaker grand list will not raise a sufficient amount
of tax dollars. The sharing pool does exactly what it implies - it "shares" the tax
dollars from the town that raised more than required with the town that was unable
to raise the necessary amount.
On the state level, this redistribution of local tax dollars translates into approximately
80 towns paying into the sharing pool, as they raise more tax dollars on their education
grand list than their pupils require. The remaining towns (roughly 160) are unable
to raise the necessary amount required for their pupils on their local tax base.
The sharing pool directs money to these towns to make-up for the shortfall of local
tax dollars. |
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COMPARISON
OF TAX RATES TO PER PUPIL SPENDING, BEFORE AND AFTER ACT 60
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Education tax rates prior
to Act 60 were dependent not only on the level of spending per pupil, but also on
a town's grand list. Two towns spending the same amount per pupil could have widely
disparate tax rates if one town had a low grand list relative to the second town.
The first graph below ("All Districts Before Act 60") shows this tax rate
disparity. Levels of per pupil spending are on the bottom with tax rates on the left-hand
side. It can be seen that there is little correlation between education spending
and tax rates.
Act 60 addressed this tax rate inequity by tying spending per pupil directly to tax
rates. All towns have a state education tax rate of $1.10, regardless of whether
they operate a school or have students. It is a statewide property tax everyone pays.
Most towns also have a local education tax rate to support the level of spending
passed at town meeting. It is this spending level per pupil (above the state block
grant of $5,200 per pupil) that is directly tied to the local tax rate. For the first
time, any town spending at a certain level per pupil has the identical tax rate as
any other town spending at the same level, regardless of grand list value. This can
be seen on the second graph below ("All Districts After Act 60") where
tax rates now show a linear pattern. Anybody can see the tax rate a given level of
spending causes for any town. If a town chooses to increase the level of per pupil
spending, the tax rate goes up. If a town chooses to decrease the level, the tax
rate also decreases. What is new under Act 60 is that the rate of increase or decrease
for a tax rate is the same for every town in the state. |
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