Wednesday, December 5, 2007

Public School Educational Trusts: A DC & H Policy Idea

Hate to say it, but we're all still broke. We can't really climb into holes and hibernate until we're not broke anymore, so we have to face some of our financial problems. That'll take some creativity. One problem that confronts people from all over the country is the problem of funding public education. I'd like to talk about that one now.

I'm going to address this in a Vermont-specific context, firstly because I'm familiar with it and secondly because I think the problem is particularly acute here. Vermont's state constitution mandates that every child have access to a public school education. It wasn't some liberal, New Deal idea: the mandate was included in our first constitution back in the days when we were an independent republic. To fund this mandate, Vermont uses a system of both state funding and local property taxes. The taxes are getting out of hand, and people (mostly misinformed about the debate) are basically trying to overthrow the tax system without proposing a funding system to replace it.

So, taxes are a problem. Rather than complain without proposing a solution, I'm going put forward my idea, one that might work in Vermont and elsewhere. I'll call it the public educational trust.

A trust is a simple legal device that allows one person (the trustee) to hold and invest money for the benefit of another person (the beneficiary). The trustee has to follow the instructions of the person (the grantor) who gave her the money or property she holds for the beneficiary. Unless the document establishing the trust (the trust instrument, which can be a freestanding document or something like a will) is vague or otherwise unenforceable, the beneficiary has enforceable rights under the trust, meaning she can sue the trustee if the trustee fails in her obligations.

There are several different subgroups within the trust category, including the so-called charitable trust. The charitable trust allows a grantor to give not necessary to a person but to a cause, such as the advancement of science, education, or religion.

Trust me (sorry), my idea is not revolutionary. My idea is that we create charitable trusts for our schools, and encourage our communities to donate to the trust. I'd structure the trust so that it pays out the interest gained from the trust each year, and I'd specifically include as one of its goals the goal of reducing the public educational tax burden. I might even go so far as to encourage local legislative bodies to reduce the tax burden as the trust grew. The trust could have the benefit of both funding education and reducing the need for public money.

The power of private giving is huge, probably because it lets people feel good about themselves, feel like they are making a difference. Why not use this for public education? Or, in the alternative, for reducing taxes? This is why I think my idea could work. It would appeal to liberal-minded folk who want to help kids get an education, and it would appeal to conservative-minded folk who want to reduce the tax burden. Everyone wins.

But, like I said, it's not a earth-shakingly brilliant idea. I've just not heard it discussed in this way. What do you think?

Discussion in the comment thread.


SayHey Kid said...

This idea sounds similar to Hillary Clintons "School bond" idea she concocted not to long ago. Basically, it says every child who is born when the bill is amended, gets a 10k bond, provided by the federal governement (i think). This bond is put forth for education only.

Not sure if your plan is soley for k-12 graders or only college. I think Clinton's was for college only.

Dewey, Cheatem, & Howe said...

I think that her idea is quite different. I read about that in Time magazine a while ago. From what I remember, under her plan, when a child is born, the government puts $10K into an investment account. When the child reaches a certain age, in return for some public service, the kid can get this money.

My idea is to establish a trust, allow community members to add to the principal, and use the money to pay for school budgets, possibly off-setting the community tax burden. It would benefit a school or school district, not an individual child.

Shane Rollins said...

The only problem I see with your idea wouldn't really be in Vermont but in other states that have more...racial issues. You'd have to have many checks in this to prevent the trustee from giving one school more money then the other school. Even then, if you gave individual school districts trusts, you'd still have the problem of schools in "better neighborhoods" still getting more money then lower income neighborhoods.

The trick would be to make it a state wide trust, and that all schools would have to be given the same amount of money every year.

SayHey Kid said...

I have to agree with Shane on this one. I dont think certain states are prepared to buy into a privatized tax system.

I like where your ideas are tho. This would eliminate the No Student Left Behind Bill and put schools tax burden back to the states.

Citycat said...

I agree with Shane too, but on an even larger scale. The "beneficiary has enforceable rights under the trust". So... does that mean that in Kansas, some schools will only teach intelligent design? And, in general, schools are funded and taught according the the beliefs of the few that have enough money to fund them? It's a great theory in a benevolent universe, but I don't see that here.