with additional reporting by COURTNEY LAMDIN

SO. 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 last Thursday.

The conference, organized by Chittenden County municipal officials, was held at South Burlington High School, explored Vermont’s education funding system and its history.

Keynote speaker Steve Jeffrey, director of the Vermont League of Cities and Towns, said rising education costs close out other opportunities by consuming more of the available tax base.

Increases in the state’s gross state product – the value of Vermont goods and services – are outstripped by this growth.

“Education is and should be the state’s No. 1 economic development strategy,” said Lisa Ventriss, president of the Vermont Business Roundtable. With costs rising, “People get pissed off at the education community and cut school budgets.”

Higher school budgets can put conservative municipal budgets at risk, said Milton Town Manager Brian Palaia, who organized the gathering with three other municipal leaders.

“[Education spending] affects how much we can ask our local taxpayers to pay for municipal needs, many of which are just as important as education needs,” he said.

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 school board control, including the common level of appraisal and equalized per pupil count, both set by the state.

The idea that if voters approve a budget increase or decrease, they will see a commensurate tax rate may still be abstractly true, but twice in recent years, Fairfield Center School has decreased its budget and saw an increased tax rate, this year, in double digits.

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

Vermont’s tax system resulted from the Vermont Supreme Court’s 1997 Brigham decision, which found the state, not local communities, must supply equal educational opportunities to all students.

The decision rested, in part, on that education is the only state function mentioned in the state constitution.

However, “Funding education through the property tax is not [a constitutional obligation],” clarified John Nelson, former executive director of VBSA.

At the time, the state provided a base per-pupil amount to each community, but towns could raise additional funds.

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

Education property taxes also varied widely. 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 an income tax funding structure, 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.

Vermont funds education through three pots of money: non-property tax revenues from transfers from the general fund to education fund plus other levies like sales tax; property taxes on businesses, second homes and other non-residential property, set by the state; and residential property tax, the only cost that varies based on school budgets.

As costs increased, more of the burden is shifted to the property tax. In 1999, 55 percent of education costs of were paid with property taxes. It’s now 68 percent.

Since Brigham, Vermont school spending has increased dramatically, in part by design as lower spending schools caught up, explained Stephen Dale of the Vermont School Boards Association.

That increase has 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 risen per pupil as enrollment declines by 1 percent annually. As of 2012, Vermont had the highest per-pupil spending in New England and one of the three highest in the country, Dale said.

New federal and state initiatives, like the new Common Core standards, and ending state funding for school construction projects, also drive local costs.

Health care is also a driver, increasing 14.5 percent in just two years. In fiscal year 2014, this amounted to $250,000 at some Franklin County schools, making it nearly impossible for school boards to level-fund budgets without cutting education programs.

“It is very difficult when you’re in a relatively small school to figure out when to downsize,” Dale said, and risk affluent families relocating to communities with more opportunities.

Dale suggested schools come together to better deploy fewer staff but did not use the taboo word – consolidation – which would make sharing staff easier, according to advocates such as Franklin Northeast Superintendent Jay Nichols.

John Gifford, Milton Selectboard vice-chairman 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 Milton School District and town to share custodial and landscaping services.

Unanswered was the fundamental question of what skills and knowledge students need to be successful, although several speakers suggested it’s impossible to separate a discussion of costs from one about outcomes.

Palaia said the group made a list to distill and forward to the League, which will include property tax reform on its legislative platform, published and distributed to lawmakers each session. It’s available at bit.ly/1sSNEde.

“We generated a lot of ideas, and I think we’re going to take that back and discuss it at a local level,” Palaia said, noting the topic could be presented at a future legislative breakfast in Milton.

The Chittenden County managers meet monthly.