America's Newest Class War

An innovative Vermont law designed to equalize school funding has pitted the haves against the have-nots

The landscape of my home state of Vermont is speckled with red barns, spotted cows, and rusting pickup trucks held together by Bernie Sanders bumper stickers. A friendly wave is standard country-road etiquette, even when you don't know the person you're greeting. It's just what neighbors do around here.

But lately, this iconoclastic melting pot of aging hippies, struggling farmers, rich urban refugees, and taciturn natives has been transformed into a battlefield. At the heart of the conflict is a simple question: Should rich kids be entitled to a better education than poor kids? Lob this question into any room full of affluent parents and watch them start to squirm. After all, moving to a town with good schools is a time-honored rite of yuppie passage. Wealth does have its privileges.

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Or it did in Vermont until February 5, 1997, when the state Supreme Court ruled in a class-action suit that Vermont's method of paying for education was inequitable and unconstitutional. The Vermont case followed a national pattern: Since 1971, when the California Supreme Court declared in Serrano v. Priest that using property taxes to finance public education was a violation of the state constitution's equal protection clause, all but six states have been sued over educational equity. To date, school financing systems in 19 states have been deemed unconstitutional, and the courts have ordered these states to restructure their systems to improve the quality of education for all.

The implication is clear: School funding and student performance are believed to be directly and inextricably linked, and wide variances in school funding are thought to both promote and maintain inequality of educational opportunity.

Indeed, Vermont schools in 1997 offered a case study in inequality. Under a system dating back to the 19th century, school funding was primarily derived from local property taxes. Property-rich towns such as Winhall, near the Stratton ski resort, were spending nearly $12,000 per year on each K-12 student -- almost double the statewide average -- while enjoying a tax rate of 30 cents per $100 of the assessed value of a home ($300 yearly on a $100,000 home). Meanwhile, the rural community of East Haven could muster only $5,800 per pupil, though the tax on a $100,000 home there was nearly $2,000. It was a topsy-turvy world: Towns boasting expensive homes and large businesses had the lowest tax rates, while rural towns with modest homes had to levy astronomical taxes to raise enough money to run their schools.

In Brigham v. Vermont, the state Supreme Court declared that the perks of being rich end at the schoolhouse door. "The distribution of a resource as precious as educational opportunity may not have as its determining force the mere fortuity of a child's residence," the court asserted. Its directive -- that the state legislature devise a plan to "ensure substantial equality of educational opportunity throughout Vermont" -- followed six years of attempts by the Democrat-led House in Montpelier to reform school funding. The Republican-dominated Senate's opposition cost that party dearly: Democrats won control of both houses in the November 1996 elections and, three months later, the Vermont Supreme Court forced the reform that wealthy towns had confidently blocked for years. Within months of the Brigham verdict, the legislature passed Act 60, the Vermont Equal Educational Opportunity Act, which Democratic Gov. Howard Dean signed in June 1997.

That's when America's newest class war began in earnest.

Though the language of Act 60 is numbingly complex, its vision is simple: The resources and wealth of the entire state shall be used to educate every child in the state. To accomplish this, Vermont replaced dozens of wildly varying local school-tax rates with one statewide property tax (also known as "the school tax") to be phased in over three years. By next year, all Vermont homeowners will be paying $1.10 per $100 of their assessed property value ($1,100 on a $100,000 home). In return, the state will distribute an inflation-adjusted block grant to each school district. Currently, the block grant is $5,100 per K-12 pupil -- a sizable proportion of the $6,480 per pupil the average Vermont town spends annually. Towns may impose further taxes to increase per-pupil expenditures -- though, under Act 60, exercising that privilege obliges rich towns to make further contributions to the state's poorer towns. The law also stipulates that Vermont students meet statewide performance standards and be regularly assessed; schools must, with community input, develop "local action plans" to address any schoolwide performance problems.

By 2001, when Act 60 is completely phased in, an estimated 89 percent of Vermont school districts will see their property taxes drop. Of Vermont's 252 towns, 198 are "receiving towns," which means their schools will get more money back from the state than the townsfolk pay. Act 60 "could be held out as a national model" as one of the most aggressive and fairest ways to achieve educational equity, observes Lawrence Picus, director of the Center for Research in Education Finance at the University of Southern California. And with so many beneficiaries, Act 60 looked like a politician's dream.

But looks can be deceiving. "It is technically the most perfect way of achieving equity," declares Democratic state Rep. Val Vincent, chair of the Education Committee in the Vermont House of Representatives and a staunch Act 60 supporter. "But it has been problematic politically."

That is a spectacular understatement. The backlash in the "gold towns" -- the 54 wealthy communities now expected to send more money to the state than they will receive back in school funds -- has been overwhelming. Rather than focus on Act 60's goal of improving educational quality statewide, gold towns have decried it as an assault on good schools -- in the words of one gold-town parent, an "equality of mediocrity."

In the past 18 months, the battle has taken on a distinctly poisonous edge. Gold-town residents have fought back with 11 lawsuits challenging Act 60, privatized one school, launched numerous anti-Act 60 committees, and exploited a legal loophole that enables them to privately fund their public schools. In the most pointed protest yet, three gold towns have revolted and refused to send their property taxes to Montpelier. In response, the state has sued the rebel trio and is withholding all state funding to the towns.

The raucous backlash came as a surprise to the beneficiaries of Act 60 -- the vast majority of Vermont residents -- and stunned many Vermonters into an awkward silence. Though I live in the receiving town of Waterbury, where my daughter is in second grade, I've found myself uncharacteristically ambivalent, vaguely confused by the sight of friends in neighboring Stowe who have recast the debate to be about saving good schools rather than improving disadvantaged ones. These people aren't robber barons. Many of them wear their liberal badges proudly -- while driving cars that sport bright-red bumper stickers proclaiming "Another Democrat Against Act 60."

What sacred turf have reform-minded Vermonters transgressed with Act 60? "We're essentially talking about redistribution of wealth," observes USC's Picus. "And redistributive politics are among the most difficult and controversial that we deal with in this country."

Writer Jules Older -- one of my receiving-town neighbors -- has a less academic take on the situation. "It's bad behavior from good lookin' people," he sneers about the anti-Act 60 crusaders. "And it's the clearest case of the rich screwing the poor that I've ever seen."

How has the long-cherished goal of attaining educational equity played out in my state? Has this been a just war, or, as gold-towners insist, a misguided modern-day effort to save the village by destroying it? Two years into the implementation of Act 60, I toured three Vermont towns in an effort to see the human face of school reform.

The red brick schoolhouse strikes a charming pose in the middle of Randolph, a town of 4,816 located 20 minutes south of Montpelier. Laura Soares, chair of the Randolph Elementary School Board, is to be my guide on a tour of the Village School. The soft-spoken mother of three is wearing dangle earrings, bright red socks, and Teva sandals -- the popular fashion of the "flatlanders" who have moved into Vermont over the past 20 years.

Built in 1911, the Village School is one of the community's three elementary schools, home to 285 students spanning kindergarten through sixth grade. Of the other two schools, one is a decade older still, while the youngest dates back half a century.

Soares ushers me downstairs for a peek at the cramped guidance office -- a converted boy's bathroom. Back upstairs, strolling along a wide corridor, she says, "This is the main hallway, and fire officials say we can't hold classes here. But we have to." Tutoring and testing take place in the hallway, because the classrooms are all occupied. The auditorium has been converted into two classrooms: "So we have no common space now," she says.

We walk into a large room with a rotting wooden floor. "This room doubles as a gym, a cafeteria, and a hallway," Soares notes matter-of-factly. No need to dramatize the point; the deplorable state of the school speaks for itself. Basketball nets dangle limply above cafeteria tables, which are pushed aside for the limited gym program that can be accommodated here. Soares adds casually that the school has been closed twice (once after being condemned), and it remains in violation of state fire codes. Only one of the town's three schools is wheelchair accessible. I didn't expect to find things this bad so close to the state capital. The school looks less like something from bull-market America and more like an artifact of Stalin's Russia.

Randolph has been trying for four decades to pass a school construction bond to replace its three ailing facilities. But the voters, saddled with high property taxes, rejected bond issues three times since the 1960s. In 1997, Act 60 designated Randolph a receiving town; in the space of one budget year its taxes dropped 16 percent and per-pupil funding rose more than 10 percent. Then, in March 1998, Randolph voters finally approved a school bond. A new school is under construction, scheduled to open in February 2000.

This pattern has been repeated in many poorer towns across Vermont. As tax pressures ease, bond issues have become affordable -- or, at the least, school budgets, previously the focus of much hand-wringing and nickel-and-diming, have passed on the first try. Though most receiving towns are not building new schools, many have used Act 60 monies to improve programs, renovate old facilities, and hire teachers. One full-time reading teacher was hired to help first and second graders in the town of Hardwick. Worcester started a foreign-language program in its elementary school. Lowell added a technology specialist, as well as a part-time teacher to help reduce class sizes in the third and fourth grades. Some districts that were spending below the current statewide minimum of $5,100 per pupil are now able to spend more. Slowly but steadily, Act 60 has made a difference.

Soares drives me to a meadow that has been converted into a swirling dirt pile -- the site of Randolph's new school, slated to open this winter. "We had groundbreaking in April," she says proudly. "All the students were bused to the site -- it was the first time ever that all the kids of the community were together. They sang school songs and I turned over the first shovel with my kids." She pauses, surveying the backhoes and bulldozers. "It was such an emotional moment for me. And it was even more emotional for the townspeople who have been working on this for 30 years. Now we are going to have a real art room, a real music room -- all the things that we haven't been able to provide our kids. That's what's exciting."

I interrupt Soares' reverie to ask about the Vermonters who oppose Act 60. Her smile fades, and she falls silent for a moment.

"They are missing the point," she finally says quietly. "The point of Act 60 is that all of us are responsible for educating all the students in the state. Not just for educating the students in Stowe or Manchester, but everywhere. We should be proud to support it."

Stowe is vermont's best-known gold town. Stowe Mountain Resort, seven miles from the picture-postcard town center, is one of the East's oldest and most storied ski areas, and the place where I and many of my neighbors can be found on big-snow days.

In addition to fine skiing and upscale amenities, Stowe enjoys one of Vermont's highest median family incomes -- more than $50,000 a year, 25 percent above the statewide average. Until recently Stowe also enjoyed one of the state's lowest school-tax rates -- 70 cents per $100 -- as well as some of its highest property values. (The average home price here in 1998 was $236,365, compared to $99,589 in Randolph and $114,187 statewide.) Stowe's low taxes thus yielded one of Vermont's highest per-pupil spending rates -- around $9,000 per student. Now, as a result of Act 60, Stowe residents pay 50 percent more in school taxes while receiving just 58 percent ($5,100) of their customary per-pupil budget back from the state.

Under Act 60, Stowe is free to levy additional property taxes to continue generously funding its schools. But there's a catch: Of every dollar in additional funds that Stowe raises, 70 cents goes into a statewide "sharing pool" -- dubbed the "shark pool" by gold-towners -- to pay for education elsewhere in the state. This element of the Act 60 formula ensures that rich towns do not simply re-create the disparities of the past by plowing their financial resources only into their own schools.

Stowe now has a responsibility to educate kids in poorer towns, an obligation that sticks in its craw. Stowe residents have led an angry charge against Act 60, viewing opposition to the law as a matter of gospel. At least three anti-Act 60 groups are based here. The weekly Stowe Reporter runs a steady diet of furious editorials and letters that rail against the unfairness of the law. The place has taken on the aura of a town under siege from an envious and hostile outside world. Like most of my neighbors in Waterbury, I avoid discussing Act 60 when I'm in Stowe. Coming from the receiving town next door, it's an uncomfortable topic.

"We've never aspired to be average here," says Becky Graddock, a mother of four students and chair of the Stowe School Board. Like many local parents, Graddock is justifiably proud of the town's combined middle and high school. With a graduating class of 38 students this year, Stowe boasts the lowest dropout rate and the highest SAT scores in the state. (A full 97 percent of its seniors take that college-qualifying exam.) In May, Stowe High School received an award from the Vermont Business Roundtable as the state's best high school.

Says Graddock: "If our costs are a little high, it reflects the fact that we want our kids to be able to compete."

I make my way past the imperious white steeple of the Stowe Community Church onto the high meadow where the high school is located. The picturesque campus is cradled by the highest peaks of the Green Mountains. Verdant sports fields lie alongside a well-kept, two-story school building. Inside, I visit a jewelry class where students busily craft necklaces and bracelets under the tutelage of a local craftswoman. In the next room, I find four pottery wheels and a kiln; students also have access to photo equipment and a darkroom as part of their fine-arts curriculum. The technology teacher shows me through a room of 30 PCs, where 16 laptops for students to borrow are also stored. The cafeteria is a breezy, sun-soaked open space whose plate-glass windows on the day of my visit announce the names of prom couples in blue and pink letters.

My tour guide, administrative assistant Anita Roberts, explains how Act 60 obliged the local school board to cut 8 percent from this year's budget. While other districts are routinely forced to trim their budgets, such belt tightening is a new trauma for Stowe. The casualties have included a middle school principal who was reduced to part-time; the school also lost a librarian, nurse, and custodian, and funding for extracurricular activities was cut in half, forcing parents to hold fundraisers to maintain the after-school programs. An elementary school foreign-language program was also cut, but was later revived by parent volunteers.

Roberts, whose office wall sports a bumper sticker that declares "Act 60 -- Not the Vermont Way," insists that it's not just the cuts that trouble her. "I think the way [Act 60] affected kids is horrendous," she says, recounting a sports game in a neighboring town where Stowe kids were taunted about Act 60. "There's a bunker mentality. I'm a sixth-generation Vermonter, and this shouldn't be happening, turning one community against another."

Though some say that the resistance of wealthy towns to helping finance education in poor towns is itself a kind of bunker mentality, John Steel sees it otherwise. Steel, a local developer and lately a crusader to save Stowe's schools (where his two children are students), is chair of the Act 60 Action Committee, a group that meets biweekly to strategize about how to counter what its members feel is a frontal assault on their community. The parent-cum-activist describes for me the vicious cycle that could consume Stowe's schools if taxes go up even more dramatically than they have, and school budgets get cut still further. "As you lose programs in the school, you will lose students. They will opt for alternative schools. As you lose students, you lose the [state] funding. As you lose the funding, you lose more programs and you lose more students. This downward spiral risks not only the school, but the community as a whole, because the school is one of the building blocks of the community."

In fact, the disaster scenario Stowe residents fear -- a tax rate of about $1.88 per $100 of property value if they continue spending more than $8,000 per pupil -- would merely raise Stowe's taxes to about the same level that less-wealthy nearby communities have been paying for years. As many of my neighbors snip, Stowe had it good for a long time while other schools struggled. Act 60 does not prevent Stowe from funding its schools as lavishly as it pleases -- residents simply have to pay as much for the privilege as other towns do.

For now, Stowe has come up with an alternative to doubling its taxes: It found a sugar daddy. In May 1998, the Freeman Foundation, a Stowe-based $1.25 billion fund built with a family fortune amassed from selling insurance in Asia, announced that it would provide matching funds to help Vermont schools. Local parents and citizens formed the Stowe Education Fund and raised $1 million, which the Freeman Foundation promptly matched. Fund chairman Houghton Freeman -- the father-in-law of a Stowe School Board member -- slammed Act 60 in the Wall Street Journal as "deplorable" and decried what he called "robbing Peter to pay Paul." With $2 million in private funding, Stowe has been able to maintain a generous school budget while -- to the ire of other Vermont communities that see the grants as an effort to undermine Act 60 -- opting out of the state sharing pool, a key source of funding for other receiving-town schools.

Following Stowe's lead (and frequently benefiting from its advice), numerous other gold towns around the state have applied for grants. The Freeman Foundation is contributing approximately $19 million over two years to 57 Vermont communities, with most of the money going to schools in gold towns. This end run, which some legislators charge is illegal, will cost the state of Vermont some $30 million in revenue from rich towns, according to Vermont Commissioner of Taxes Sean Campbell; the funding loss is being made up by taxpayers out of the state's education fund. It has been a stunning display of how the rich take care of their own.

The Freeman money has given Stowe a two-year reprieve. The town could use the extra time to gradually phase in the large tax increase needed to continue its high level of school funding, and parents could campaign for the school budget in the community. Instead, town leaders have kept school taxes near the statewide minimum level of $1.10 per $100. They are apparently gambling that they can somehow defeat or dilute Act 60 -- in the courts, perhaps, or by electing anti-Act 60 legislators -- before the foundation money runs out in a year and they are once again confronted with a tax increase as drastic as the one John Steel and his colleagues fear.

Stowe residents are justified in complaining that Act 60 is far from perfect. Even Lt. Gov. Doug Racine, an uncompromising defender of Act 60, acknowledges that reform could have been handled better. He says the school-tax rate should have been higher -- $1.30, say, instead of $1.10 -- which would have increased the state contribution to local schools and decreased reliance on the controversial sharing pool. And the rate shock for gold towns should have been staggered over five years, instead of having 90 percent of the tax increase occur in the first two years. "Not only did we throw people into the deep end of the pool," Racine says, in a rare concession to gold-town grievances, "but the water was cold. At least if the water was warmer, maybe it wouldn't have been so bad."

If Stowe is in fact wagering that it can derail Act 60 before it takes full effect, it faces stiff odds. State Rep. Val Vincent, insisting that Act 60 is here to stay, points out that no fundamental changes to the law were even considered by the Vermont legislature in its 1999 session, which ended in May. "Stowe is in denial," snaps the legislator from neighboring Waterbury. She fumes that gold-town activists "use their talents to complain loudly about having to provide fair and equitable education to all kids in Vermont.... It is unbelievable the effort that some people put into holding onto their bags of money and not caring about children."

It would be easy for me to dismiss the concerns of my Stowe neighbors as the carping of greedy rich people. But I confess to feeling a twinge of sympathy for the parents there. They have played by the old rules, however unfair those rules may have been to other towns. Now the rules have changed, and parents are suddenly caught between the desire to fund an expensive school and the sentiments of a wealthy community that objects to high taxes.

Stowe parent Donna Carpenter, wife of millionaire Burton Snowboard founder Jake Burton Carpenter, and co-chair of the Stowe Education Fund, captures the dilemma. The sandy-haired young mother of three ran Jesse Jackson's 1984 presidential campaign in Vermont, and still calls herself a liberal. "I sympathize with the argument of other towns when they say, ÔWe've been paying for this all along,'" she says. "But when someone tells me, ÔNow it's your turn to feel the pain' -- these are my kids! Sharing the pain...." She shakes her head in disbelief. "I do sympathize with parents of kids in other towns," she insists. "But I don't think we should ruin our school system in the process."

I drive through touristy Stowe on my way home to Waterbury. Everybody in these towns says they care about kids, and about quality education. I don't doubt their sincerity. But I am bothered by the sense that my gold-town neighbors are stunningly out of touch with the reality of what is going on in communities all around them.

In fact, Stowe residents don't need to travel far for an illustration of all that has long gone wrong in Vermont education, and that is finally starting to go right. Neighboring Morristown is home to many of the employees who work in Stowe's tourist establishments. Morristown and Stowe share the same school district, but not the same school. That's because Stowe long ago opted not to send its older students to the Morristown middle and high schools, in part to avoid a merger with its poorer neighbor. (Most Vermont secondary schools are "union" schools that serve students from a number of communities, thereby minimizing redundancies and costs.) That decision ensured that Stowe schools would remain small and expensive to run.

Peoples Academy in Morristown lies just 10 miles up the road from Stowe High School. "Poor People's Academy," as it was named when it was founded 151 years ago, remains true to its historic name: Half the student body is considered to live in poverty, and the school receives federal Title I funding for schoolwide support. Peoples Academy and Stowe High School differ vastly in their resources. Before Act 60, the Morristown schools spent $5,277 per student (nearly 20 percent below the statewide average), compared with Stowe's nearly $9,000 per pupil. Peoples Academy is housed in an ailing 70-year-old building; the Stowe schools were built about 25 years ago and are in excellent shape.

Act 60 has given Peoples Academy a reprieve. As in Randolph, Morristown responded to lower tax rates by approving a construction bond in 1998 to renovate all three of its schools -- something that had been voted down three times in the past. The gym has a new floor, and the crumbling ceiling has been replaced. The cafeteria has been expanded, and the elementary school has added a wing. And, notes principal Jeff Place, the school has bought new textbooks for the first time in 12 years.

Place, an earnest man with a fringe of silver hair, shows me into an old science lab. "Look familiar?" he asks cheerily. Yes, I tell him -- it looks like the labs I used in high school.

"That's the problem," he retorts. "Science classrooms don't look like this anymore." He explains that Peoples Academy is now replacing its lone 1929-era science lab with four modern labs. Place then walks me down the creaky wood corridors of the old building into the gleaming new wing. We stop outside an airy classroom lined with a half-dozen computers. The teacher is projecting notes from his laptop computer onto a large-screen television. "This is what a science class should look like today," he asserts. "These changes are not just nice things to do -- they were fundamentally necessary changes." I wander back through the old building. Class photos from the turn of the century adorn the corridors. There is an unmistakable sense of community history here, albeit a hardscrabble one. Now, a new history is rushing in: Brick by brick, book by book, "Poor People's Academy" is finally getting a long overdue fresh start.

My musings are interrupted when I bump into 15-year-old Kaili Goslant in the hall. Dressed in a flowing peasant skirt, her blond hair pulled back from her face, she sports a small rhinestone nose stud. She talks enthusiastically about the improvements in the school. I ask her what she thinks about the fact that rich towns like Stowe must now help poor towns like Morristown.

"I don't wanna feel like we're charity," she snaps back, crinkling her nose. "But there are things we need, like books, new curtains, and paper. It's not like we're using it for something stupid.

"I know they wanna spend on their kids," she adds, suddenly striking a more sympathetic tone about the folks next door. "But maybe they could just spare a little."