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.