The most important things that happened on Town Meeting Day were the things that did not happen.

Actually, not much happened. With the exception of that vote about how Burlington votes (tune in Monday for an examination of the Burlington brouhahas), the voters of Vermont last week endorsed: (1) The status quo; (2) the love of money (part of the status quo); and (3) their public schools, even if those schools cost some of that money they love.

So Mayor Mary Hooper of Montpelier presided over an administration that got bilked out of 400 grand. She gets re-elected anyway. So Coventry Town Clerk Cynthia Diaz has been charged with income tax evasion. Leave that to the feds, said the voters of Coventry, re-electing Diaz by a 3-1 margin.

Roughly the same margin by which voters in neighboring Lowell endorsed a wind power project in their town, either because they are committed to renewable energy or because the wind company will lower their tax bills, or both.

But peanuts compared with the almost 5-1 margin by which voters in Island Pond approved of selling the state airport in town to make way for a pellet plant that could provide more than 30 jobs. Both the Lowell and the Island pond votes are advisory, and do not officially decide either issue.

But the main thing that did not happen was a “taxpayers revolt” against school spending. Au contraire, as they say just north of here, despite the Great Recession, despite objections from no less than Gov. Jim Douglas that the current school financing system was “broken” and “twisted,” despite the tax commissioner’s official advice to raise the property tax rate and warnings that more tax hikes are in store, the voters overwhelmingly supported the school budgets.

According to the Wednesday afternoon count by the Vermont Superintendents Association, 228 budgets were approved as submitted, four passed after reductions from the town meeting floor, three were  postponed, and only 14 were defeated.

It was the smallest number of rejections since 2004.

Furthermore, most of the approvals were by large margins, while several of the rejections were by razor-thin majorities.

Always beware of over-interpretation. The results do not mean that voters are indifferent to their tax bills, or to the cost of public education. One reason the budgets were approved was that they didn’t go up much, if at all. Though final figures are not in, Brad James, the Education Finance Manager for the Education Department said that, “as of 23-Feb, we had received 261 proposed budgets out of roughly 280.” Based on those districts, James said, “overall budget increase for the State was up (one half of one percent).”

Furthermore, said James (via email), “education spending, which is the lion’s share of the Education Fund and is the figure that drives tax rates for individual districts, is down (by one tenth of one percent).”

In other words, all those warnings from Douglas, Education Commissioner Armando Vilaseca, and others had an impact. So did the Recession. As a result, said John Nelson of the State School Boards Association, local boards made a major effort “to keep budgets in line.”

Board members knew that “people in their communities weren’t getting raises and were being laid off,” Nelson said, so understood that spending would have to be restrained “ if they were going to get support for budgets.”

But also beware under-interpretation. The budget votes prove that the current school finance system is not “broken.” It is not perfect. But no school finance system is, not in any state. Vermont’s present system – Act 60 of 1997 as amended by Act 68 in 2003 – works. The schools function. They are, according to the (possibly flawed) standards by which Americans judge their schools, rather good.

They are also rather expensive. But obviously they are not too expensive. According to whom? According to the people who pay for them. If those people thought the schools were too expensive, many more budgets would have been rejected.

In a sense, the effectiveness of the criticism from Douglas et al only prove that the system works. Those criticisms are part of the system. The complaints of politicians (including their hyperbole) are part of any school finance system. Rhetoric, however overblown, neither can nor should be eliminated from any public policy process.

Less certain, but potentially more significant is the possibility that this year’s hold-the-line school budgets signal the start of a long-term spending moderation resulting from declining enrollment.

For years, one theme of the school spending critics has been that costs kept going up, and the number of teachers and teachers aides kept rising, even as the number of pupils fell by more than 10 percent in the last decade or so.

On the surface, not an unreasonable objection. Below the surface, matters get more complicated. A kindergarten-through-sixth grade school with 100 students, evenly distributed among its seven grades, has about 14 kids per class. If a few years later it has only 90 students, still evenly distributed, it can’t get rid of a teacher by combining classes unless educators (and parents) are willing to accept 24-pupil classes, which most educators consider much too big, especially in the lower grades.

So cutting staff in response to falling enrollment – without sacrificing quality – takes time. As Jeff Francis of the Superintendent’s Association said, “you don’t ever decrease capacity at the same rate that you increase it.”

But as enrollment continues to decline, more schools may be seeing an opportunity to reduce staff. There has been a small decline in the number of teachers over the last few years. A few very small schools have closed their doors entirely. There is more talk, encouraged by Commissioner Vilaseca,  of consolidation of schools, districts, and supervisory unions, highlighted on Town Meeting Day by the decision to merge four Addison County districts into one.

All small steps, and perhaps reversible. Brad James at the Education Department said he thought the poor economy “moved ahead the time when some boards planned on reducing staff due to declining enrollments,” while acknowledging that this was “merely a supposition.”

But John Nelson of the School Boards Association said he thought the falling school population was “beginning to kick in,” and that this year’s budget “reflected that there is a response from the school boards.”

Even the teachers union – the Vermont-NEA – acknowledged that there might be fewer teachers in the state’s schools a few years from now. Darren Allen, the union’s spokesman, said that while obviously the NEA did not want to lose members, “if there aren’t the kids to teach, then there aren’t the kids to teach.”

It would take at least another year or two of little or no school spending increases to determine whether this year’s moderation was a fluke,\ or the start of a long-term trend. But if it is not a fluke, it is a political tectonic plate shift. Public schools are the state’s biggest expense. The steady increase in school spending has been a contentious issue both in the Legislature and for local school boards. If that increase really abates as long as school enrollment drops (which won’t be forever), pressure on officials and policy-makers would substantially ease.

Not that schools won’t continue to be a political issue. They will still spend a lot of money. Some of the cuts the boards have made arguably lower the quality of education, so when the economy improves, educators may well seek more funds, perhaps arousing opposition. And some Vermonters don’t like Act 60 because it does what it was designed to do – make school taxes and (to a lesser extent) school spending, more equitable among richer and poorer districts.

For at least another year, though, the politicians who try to argue that Vermont’s public education sky is falling don’t have much of an argument. This week, the sky stayed right up there where it belongs.

The Douglas Administration just blinked.

Not that that it gave up much. It surrendered but one point, and did it as belligerently as possible. Expect it to return to the fray wide-eyed and armed with fact (or at least its version thereof) and rhetoric for what looms as Vermont’s biggest battle of 2009-Gov. Jim Douglas’s fight to reduce spending on public schools.

Yes, the word was ‘reduce.’ Not just ‘hold down the increase,’ or ‘restrain growth,’ but ‘spend less,’ as in, spend less next school year than this one.

Douglas himself hasn’t yet put it quite that bluntly, though it’s hard to see what else he meant when he contrasted  the spending cuts being forced on most state agencies with the projected increases in school spending.

But one of his senior administration officials, Tax Commissioner Tom Pelham, said in an interview that he thought there should be an actual cut in school spending, and that he was trying to make that case in one of the two letters he sent to the leaders of the Legislature.

The other letter was the blink. Monday afternoon, a day before a Washington County Superior Court judge was going to hear arguments on a lawsuit trying to force Pelham to recommend a two-cent tax decrease in next year’s statewide education property tax rate, the tax commissioner did just that.

“I hereby recommend a two-cent reduction,” he wrote.

That’s what he refused to recommend on December 1, in defiance of a law. The law is something of a technicality-Pelham doesn’t set the tax rate; the Legislature and the governor do-but the State School Boards Association and four school districts went to court over it.

Pelham called the suit groundless and another administration official called it “frivolous,” but on further review, as they say in the National Football League, Pelham decided, “it’s not worth fighting over,” perhaps because he might well have lost.

So the lawsuit is off. But the battle is on, and it’s a little confusing. The administration, which wants to cut school spending, resisted making the recommendation to cut the tax. The School Boards Association,  which usually wants more revenue for schools, insisted on it, painting itself as the taxpayer’s friend. What’s going on?

Part of the explanation lies in the simple fact that there’s a difference between a property tax rate and the amount of revenue collected. If the total value of taxable property goes up, even a lower rate can bring in more revenue.

That’s what’s happening, Pelham said, arguing that the rate should go down even more.

“The value of the equalized grand list (that’s the value of taxable property) is going to grow 6.9 percent,” Pelham said.” That’s not conjecture. That’s fact. With the grand list value growing almost seven percent and tax rates only going down by two cents , that leaves the School Boards Association and their constituencies in the position of having millions more to spend.”

Pelham said he thinks the schools have been spending too much for years. Decrying a “spending expansion,” he pointed out that even as “Vermont’s school enrollment has dropped by almost 10,000 students since 1977, school staffs have increased by 3,500 positions, or 22 percent.”

In his letter to outgoing House Speaker Gaye Symington and Senate President Peter Shumlin, Pelham specified that “a two percent reduction…”results in a $31.2 million property tax increase,” a result “Vermonters will not welcome.”

“I don’t know what he’s talking about,” said School Boards Association Executive Director John Nelson. “It’s just baloney. He’s trying to say it in a way that makes the reader think this two-cent reduction will be responsible for a $31 million  increase. It doesn’t give (schools) more to spend. It gives them $20 million less.”

Can they both be right? Sure. Cutting the residential property  tax rate from 87 cents to 85 cents per hundred dollars of assessed value, and the non-residential rate from $1.36 to $1.34, would bring in some $20 million less than not cutting them. But even the lower rate would bring in more money when applied to a higher base.

Calling that a “tax increase,” as Pelham did, is technically accurate, but misleading if people interpret it to mean their taxes will go up. The grand list rises largely because of development; houses and stores built on empty lots, rooms or garages attached to existing homes. Most home-owners would probably end up paying less if the rate is cut by two cents, even as the total take goes up.

Making the argument politically more difficult for Douglas, Pelham et al. It’s harder to get taxpayers upset if their own taxes aren’t actually going up. The argument that  keeping the rate at 85 cents is the functional equivalent of a tax increase because a steeper cut might mean that many a  homeowner’s property tax would actually go down, is not frivolous. But it lacks the punch of screaming against an actual tax hike.

Politicians who put pressure on schools to cut costs have another difficult challenge: figuring out how to do it.  Nelson said that neither Douglas nor any of his associates have  “indicated in any respect where they think reduced spending ought to happen. They have not had one idea.”

About a year ago, Nelson said, he and his board of directors asked to meet with Douglas  to talk about ideas for reducing school costs.

“We said if you can’t come to us we’ll come see you. His office called and said, ‘we have your invitation and we’re going to decline.’”

The combatants here seem far from a meeting, much less a meeting of the minds. The fight goes on.–Jon Margolis

Most adroitly, Gov. Jim Douglas turned the screws on Vermont’s school boards—and on the voters who accept or reject school budgets—the other day.

“I think Vermonters have to ask themselves if it’s fair to have eight percent reductions in some critical state services when the caseload is increasing, while at the same time we’re going to have a 4.6 percent increase on average in local school spending at a time when we’re going to have 1,400 fewer kids to educate next year,” Douglas said. “We need to have an honest discussion about our priorities.”

An honest discussion he will lead? Perish the thought. “I don’t want to be that direct,” he said.

Or responsible, as it is sometimes known. But responsible and adroit are often not the same thing.

A really responsible governor who wanted his state’s schools to spend less would say something like, “and here’s what I propose to cut,” or perhaps “here is the process I am putting in place to decide what to cut,” or at least, “here is the commission I’m going to appoint to advise us on what to cut.”

But a politician who acts responsibly risks…well, being held responsible. Any specific plan to cut school spending would be opposed by one faction or another: Teachers, administrators, school board members, parents, ideologues of the left or right. Or maybe all of the above.

Governors don’t like to get those folks mad at them. Far better to say, “the schools ought to spend less,” and leave it to others to figure out how.

From a politicians’ perspective, this has two advantages: (1) If anything is done, the politician is less likely to get blamed than whoever actually came up with the unpopular (to some factions) specific proposal; (2) If nothing is done, the politician can claim he or she tried to get something done, but was thwarted by “special interests.”

But Douglas should not be condemned. First of all, most ofthe other 49 governors would do the same. Besides, Douglas is taking the lead in proposing those other budget cuts he talked about. On Monday, the governor and key legislators announced agreement on almost $20 million in cuts in mental health services, environmental programs, and college scholarships, not to mention shutting down rest areas on the Interstate highways. All of that will be unpopular.

But not comparable to the political peril of messing with the public schools. And anyway, the Democrats who dominate the legislature share whatever blame the Republican governor gets for these cuts in the state budget. They cover each other’s backside.

Or course, the other reason Douglas should not be condemned is that he might be right, On the face of it, he has a strong case. Thanks to the recession, the state has to cut programs that help an increasing number of low-income people while the schools teach fewer children every year. Why should the public schools keep spending more to teach fewer while other government agencies have to spend less to serve more?

John Nelson of the State School Boards Association says the comparison is invalid.

“It doesn’t quite work that way.” Nelson said. “You can lose ten or 11 kids, maybe spread out over five grades. Does that mean you’re going to be able to cut a teacher?”

Besides, Nelson said, schools and school financing run under “an entirely different process” than the ones that prevail in state government.

“By that I mean that the process of developing and approving school budgets happens locally on the part of people who are going to pay the bill.”

Well, yes and no. In many ways local control of public schools has been attenuated. State (and, increasingly, federal) requirements help determine what is taught, and effectively, if not officially, how it is taught. Teacher salaries are negotiated with a union organized on a statewide level.

Furthermore, the statewide property tax and its income sensitivity provision, which holds down most people’s property tax, mean that local taxpayers may not save all that much from a cut in the local school budget.

“Our tax burden is more driven by the statewide tax rate, so only a small portion is based on our local spending,” said Tax Commissioner Tom Pelham. “There’s no incentive to control cost.”

Nelson, not surprisingly, does not agree.

“I can’t see any evidence that people vote yes (on the school budget) even though they think it’s too much money because , ‘I have incomesensitivity so what do I care?’ I never heard anybody say that , or heard that board members argue that to their voters.”

Who’s right? Who knows? It’s all conjecture, and will remain so unless some economics graduate student tries to collect and analyze real data.

What is not conjecture is that most Vermonters think their schools are worth it. Last year only 12 of the 263 school districts voted down their budgets at town meeting, according to figures provided by Darren Allen of the teachers union. Sometimes voters forced school boards to cut programs. Sometimes they forced them to put back programs the board had proposed cutting.

It isn’t that Vermont schools aren’t expensive. By any objective standard, they are. Thanks simply to the lay of the land, they will probably continue to be expensive if they are going to continue to be good, which, by those same objective standards (test scores, for what they are worth, which is something) they also are.

That doesn’t mean there is no way to save money on the schools. But as John Nelson said, “ it’s not as though people aren’t looking for it.” Even a re-elected and politically adroit Jim Douglas could have trouble convincing Vermonters to slash their school budgets. Perhaps that explains why he doesn’t want to be “that direct.”—Jon Margolis