5 Limitations of Categorical Aid for Education Funding in VT

5 limitations to the “Option 2 scenario” (Reverse Foundation Formula, AKA: Cost Equity) according to Tammy Kolbe

  1. Foundation grants or categorical aid – 
    • They are challenging to calibrate and maintain – it is difficult to get the grant right. What should the amount be? The grants will mean something different in different districts and schools, and they will need to be frequently updated. 
    • They Cause legislative burdens – will require work on the part of the legislature, AOE and Joint fiscal office.
  2. There are equity concerns –  could widen the gap between top and bottom spenders in the state. 
    • Average grant amounts – Run counter to local control – They bring additional dollars, they don’t adjust for spending. They don’t adjust for local spending decisions. (Some districts might get more dollars and spend up to that amount.) 
  3. Cost containment – Categorical grants will increase average spending per pupil statewide. 
    • Some grants will overadjust cost for districts to spend more. There are insufficient disincentives to contain costs. (Weights are designed to help contain spending.) Districts will maximize spending with grants. 
  4. Potential for political manipulation – categorical aid opens up appropriations for cost differentials to legislative discretion – small schools grants as an example. 
  5. Issue of competition of resources – they are viewed as supplemental, they should not be! These should be cost adjustments to general education spending. 
    • The fact that there would be tinkering or competition for resources in the ed fund is a huge flaw. Tradeoffs undermine the intent of this work. The idea of weights is to Adjust for cost factors that are outside of district control to Equalize spending ability and to tax capacity! 

(With categorical aid, you are subject to the whims of politics, the health of the education fund and years from now you will be back in this situation. Also, it takes control of budgets out of the hands of local school boards. To quote Alex Yin of the Winooski school board: We can hold our school boards accountable much more easily than legislators in Montpelier.)