February 6, 2001
Page One Feature
By ROBERT TOMSHO, Staff Reporter of THE WALL STREET JOURNAL
MANCHESTER, Vt. -- Months after her school fund-raising campaign ended, Jenny Davis still sees only two kinds of people when she drives around town: those who donated and those who didn't ante up a dime.
She knows who's who because the campaign maintains a file on every property owner in town. "There are people who are just freeloaders," says the 38-year-old mother of two. "It's hard to look at those people in the same way."
School fund-raising in this mountain resort town of 3,600 is anything but a friendly drive for new band uniforms. For parents such as Ms. Davis, it is a crusade to protect the town's children and keep local tax dollars out of the hands of state bureaucrats.
Manchester's no-holds-barred campaign for private donations to the public schools is making it an unusual battleground in one of America's great debates: what to do about unequal school funding. Property taxes, the main revenue source for local governments, have traditionally provided the primary funding for schools. But since the early 1970s, lawsuits in 45 states have argued that districts where property is expensive end up with the best-funded schools, creating illegal inequality.
In 20 states where judges have agreed -- and in a handful of others -- legislators have tried to share the wealth. Some states now use statewide property or sales taxes to pay for a greater proportion of their school costs. Others, facing the added pressure of antitax initiatives, cap the amount of local property taxes that a district can raise.
But those steps, rather than settling the matter, typically set off a tug of war between state officials and parents in better-off areas like Manchester. One popular tactic, adopted in about 2,000 of the nation's 14,000 public-school districts, is to bolster school budgets with private funds. While the total amount raised privately is only a small percentage of the $350 billion spent annually on public schools, big donations now play a major role at some schools. Cincinnati's Walnut Hills High School has built a $10 million wing with private money, and a foundation affiliated with the Boston Latin School has started a drive to raise $50 million.
Vermont, under pressure from a state court to equalize school funding, won national attention with an unusual mechanism for districts that still want to raise extra money through taxes. Act 60, passed in 1997, gave all districts the same basic level of state funding, starting at about $5,000 per pupil the first year. It also set up a "sharing pool.'' If affluent towns such as Manchester decided to raise additional money for schools through a local property tax, they had to place a hefty slice of the money into the pool, where it would flow to less-well-off districts.
In a region known for its distrust of state meddling, these so-called gold towns rebelled, and few did so more angrily than Manchester.
Retreat for the Wealthy
Tucked among the Green Mountains in southern Vermont, the town was already a tourist destination when Mary Todd Lincoln and her two sons began vacationing here during the Civil War. These days, outlet stores in restored clapboard buildings and ski resorts pull in so many visitors that locals call the town's clogged main intersection "Malfunction Junction.'' Wealthy executives from Boston and New York relax in second homes in the surrounding highlands.
In the elementary grades, Manchester maintains a student-to-teacher ratio of 11-to-1 and offers classes in computers and foreign languages. With no high school of its own, the town pays about $8,000 a year each for most of its teenagers to attend a local private high school, the 172-year-old Burr and Burton Academy.
High property values made such spending seem like a bargain. In 1997 -- the last year before Act 60 went into effect -- Manchester raised roughly $7,600 per pupil with a tax rate of 95 cents per $100 of assessed property value. Whiting, a blue-collar town near the New York border, raised only about two-thirds as much even though its tax rate was 65% higher.
When Act 60 passed, Manchester feared that it would have to nearly double property-tax rates to keep its schools' budget at the same level. Locals started calling the sharing pool a "shark pool.'' So an ad hoc committee of local officials decided that the town would give up on boosting property taxes and instead raise the extra money through voluntary donations -- none of which would have to be passed on to poorer districts.
There was little opposition at first. "I can't remember anybody who said it was a bad idea," says Town Manager Jeff Wilson. Like other gold towns, Manchester got help from the Vermont-based Freeman Foundation, controlled by the heirs to a large insurance fortune, which offered to match local fund-raising dollar for dollar for two years.
Instead of searching for a few big donors, Manchester fund organizers aimed to collect from every homeowner and business operator in town. Working with local tax rolls, they calculated an annual "fair share" for each plot of land. The suggested donation: $350 for every $100,000 in assessed property value.
The mailings that began in the summer of 1998 included a mock tax bill detailing how much individual property owners were expected to contribute and how much they would save as a result of the town's avoiding the sharing pool. Fliers warned that without full participation, the campaign would fail. "We cannot sit back and wait for our neighbors to carry the load," one flier urged.
"There was a lot of pressure to give and not let your neighbors down," says lawyer Mary Welborn, a mother of two who stood up at a town meeting to support sharing Manchester's money with poorer towns. "The mailings gave the impression that if you weren't giving, you were a stingy person."
After Kay Bauer sent a check for $2,000, instead of her full "fair share" of about $7,200, a campaign volunteer called to warn that the Bauer family's 20-acre country inn would be left off the list of commercial donors printed in the local newspaper. Tactics like that "turn some people sour," says Ms. Bauer, whose children are grown. She vowed not to give another dime.
About 82% of the town's 2,700 property owners did give that first year, however. By the time Ms. Davis took over as campaign chairman in October of 1999, the school fund had raised $1.8 million, while collecting an equal amount in matching funds from the Freeman Foundation.
Asking for More Money
The fund had taken in enough to finance Manchester's schools at the level the town wanted until the school year beginning in September 2001. But with the Freeman Foundation contributions coming to an end, the organizers decided to start raising an additional $1.9 million almost immediately so that school officials could plan future budgets. Eager to assert its permanence, the school fund hired an executive director, had a logo designed and rented space above a local insurance agency. "We had to come across like a town office," Ms. Davis says.
Thin and blunt-spoken with a spiky thatch of blond hair, Ms. Davis had moved with her husband to Manchester from New York eight years earlier to help his parents open a barbecue restaurant. The couple picked out a three-story white frame house within Manchester's city limits because of its schools. Ms. Davis was determined that her son and daughter in elementary school receive a solid public education like the one she had known growing up in Indiana.
"As much as I wanted every student to have equal access to quality education, I didn't want it to happen at the expense of my kids having a quality education," she says. "I never wavered on that."
But some Manchester residents couldn't understand why the school fund, with money in the bank, needed to raise more right away. Others complained about neighbors who hadn't pledged the first time around. "Some people were getting off scot-free," grumbles carpenter Peter Cone, who decided to hold off on making another $400 donation.
With donations flowing in at a trickle, the school fund's efforts intensified. During a three-night telephone drive in April, campaign volunteers called the holdouts, most of whom had already been contacted many times.
Frustrated fund leaders also began quietly distributing a list of nongivers and encouraging people to call or visit those on it. Steven DeMaggio, a New York lawyer and avid skier, owns a second home in Manchester with fine mountain views. He was furious when one of his neighbors showed up one day to lobby him. "They are just fiddling around with this thing to try to extort as much money as possible from people who are not up there very much," he says. "It's greed, plain and simple."
Donations did pick up when campaign volunteers stopped talking so much about education and began emphasizing that if everyone pitched in to the private fund, property owners would save a lot in taxes. Still, the campaign didn't succeed until the school fund extended its Oct. 15 deadline by a month and went back to residents who had already given to ask for an additional $150,000.
Vermont's state department of education estimates that, with their private fund-raising, Manchester and six other gold towns have so far kept about $22 million out of the sharing pool. The movement has been so effective that the state legislature is weighing several proposals to abolish the sharing pool. So far, the state has made up for the loss from other revenue sources, thanks to a healthy economy, but the situation could worsen if recession sets in.
Things may also get tougher for the rebellious gold towns now that the Freeman Foundation grants have stopped. The gold town of Stowe, for example, relied on several tactics to raise money, including a "pennies from heaven" campaign in which local students were encouraged to contribute spare change. Lately, though, Stowe and other gold towns have adopted "fair share" campaigns similar to Manchester's.
Manchester School Fund officials estimate that they will have to raise their goal to about $2.5 million next time -- and that could deepen bad feelings around town.
A Protest Call
Dry cleaner Patrick Monroe still keeps an eye on the lists of individual and commercial school-fund donors that recently were published in the local paper. "It's a small town and you go down the list," says Mr. Monroe, a staunch school-fund supporter. "If there is a restaurant that didn't pay, I know that I'm not going to eat there."
Mary Folsom won't be around for the next fund-raising drive. She owns a store here that sells traditional board games such as Monopoly and Sorry. During the last campaign, a woman showed up and announced that she wouldn't shop in a store that didn't display a window decal showing it had donated to the school fund. Ms. Folsom, who is moving her store elsewhere, called the fund's office to protest. "People have complained that Act 60 divided Vermont," she said, "but you're doing the very same thing."
Ms. Davis offers no apologies. At the school-fund office, she keeps a file marked "unpledged.'' It lists more than 400 of the town's 2,700 property owners. Whether it takes more persuasion or pressure, she is determined to bring them into the fold.
"I have school-age children," she says. "It's personal for me."