Freeman Foundation’s school grants seen by critics as slap at state law
Vermont’s wealthiest foundation has committed more than $15-million in the past few months for education programs at dozens of public schools around the state -- but many residents, far from being grateful, are incensed.
Critics say the Freeman Foundation, a $1.25-billion philanthropy in Stowe built with a family fortune that was made selling insurance in the Far East, is using its financial clout to derail a controversial school-financing statute that is wildly unpopular among many affluent Vermonters. Its grants, critics say, allow wealthy towns to sidestep key provisions of a 1997 law -- commonly known as Act 60 -- that was passed in an effort to make the financing of public education more equitable.
Critics question whether a private foundation, which is barred by law from trying to influence legislation, should be making grants that have the effect, they say, of defeating the implementation of public policy.
“I’m concerned that a foundation is using its money to effectively undermine a law that was passed to fulfill a constitutional requirement,” says Allen Gilbert, chairman of the school board in Worcester, Vt. “It’s like a foundation telling the Birmingham schools in the 1950s, We’ll help you set up private academies” in an effort to elude the federal mandate for public-school integration.
The Freeman fund, which primarily supports land conservation, historic preservation, and Asian studies, contends that its new program is not directed at scuttling the law but that it reflects the foundation’s long-time interest in promoting educational excellence. Graeme Freeman, the fund’s executive director, says the school grants respond to repeated requests from towns that faced the prospect of having to slash their school budgets -- or pay much higher school taxes.
“Some communities came to us and said, There’s this new law that’s been enacted. We feel that our school is in jeopardy of having to close many of its programs. Can you help us?” recalls Mr. Freeman, a grandson of the philanthropy’s founder. “We thought long and hard about it. We understand that this is a controversial law, but we don’t think that school programs should be cut. If we can help them in any way, we’d like to.”
Spurred by such requests, the foundation last year announced a new, two-year matching-grant program to help support public schools. So far, some 30 towns have taken advantage of the program and have been scrambling to raise matching funds. Applications from 26 more will be considered at the foundation’s spring board meeting.
Because Act 60 tinkers with several touchy issues -- taxation, education, and local control -- the law has become the most divisive issue in Vermont politics in years. And the Freeman grants have sparked heated debate about the proper role for foundations in helping to shape -- or to confound -- public policy.
Although views on Act 60 vary widely, some observers say that the proper forum for resolving the matter is in the State House in Montpelier rather than in a foundation office in Stowe.
“I elected my legislators and ask them to be very thoughtful, to consider all the complexities of different issues, and to do the best they can to solve problems,” says Lorna Jimerson, who presides over the Vermont School Board Association and also has a research grant to study the influence of Act 60 on education. “A lot of people aren’t happy with Act 60, but others are. I’m not sure I want a private foundation to dismantle public policy. I didn’t elect them. I don’t know these people.”
The association has not taken a position on Act 60 or the foundation grants, Ms. Jimerson observes. But her own view, she says, is that “we depend on our elected officials to make wise decisions, and if we don’t like them, we throw them out of office. This seems to circumvent that whole process.”
Other critics of the Freeman grants are less outspoken, however, perhaps out of concern for alienating the state’s most generous private grant maker. “People have been almost completely unwilling to speak out,” says Mr. Gilbert, the Worcester school board chairman, who also runs Concerned Vermonters for Equal Educational Opportunity. “I think it’s because you don’t bite the hand that feeds you.”
Public-school financing has been a thorny issue in Vermont for decades. Until recently, its schools were supported entirely through local property taxes. While some towns grew rich, however, others did not, which created a widening disparity between what different towns spent on education.
A score of Vermont’s 251 towns had a decided advantage over the others: Their coffers bulged with tax revenue from ski resorts or from lakefront vacation properties within their borders. That revenue enabled such towns to spend more on schooling than other towns could afford to do, while also keeping property taxes unusually low.
By the mid-1990s, the gap in per-pupil spending and residential school-tax rates between Vermont’s wealthiest and poorest school districts had grown so large that the state’s Supreme Court ruled in 1997 that financing education with local property taxes was unconstitutional. Annual spending per pupil ranged from less than $3,000 in some towns to more than $9,000 in others; property tax rates, meanwhile, were as low as 5 cents per $1,000 in some affluent towns, and more than $3 per $1,000 in others. The court invited the legislature to fix the problem.
The Equal Educational Opportunity Act of 1997 (commonly called Act 60) established a statewide property tax of $1.10 per $1,000 valuation, which currently generates enough revenue to provide about $5,000 per pupil in every school in the state.
The law also permits any town that wishes to spend more on its schools to participate in a sharing pool. The pool was created to insure that any additional dollars spent on education by participating towns would affect their tax rates equally.
Wealthy towns that want to spend more money might have to raise $3, for example, for every $1 they can keep for their schools. The extra money they raise is then divided among the participating poorer towns. The law’s backers intended that rich towns would pay in to the pool and see their property taxes rise accordingly, while poorer ones would draw from it and see their tax rates decline. The result, the law’s advocates hoped, would be more equity statewide, insuring that students were not unfairly penalized with substandard schooling because they happened to live in poorer towns.
Those most upset by the law include residents of so-called gold towns like Ludlow, Stowe, and Stratton, who face the prospect of seeing their school tax rates increase several-fold as the law’s provisions are phased in over several years.
Those towns and others have seized upon a provision in the law that excludes from sharing-pool calculations any money that towns raise privately. Act 60 supporters say that clause was included so that schools accustomed to raising a few hundred dollars from bake sales to buy band uniforms, for instance, could continue to do so.
But the Freeman grants have stimulated fund raising on a much grander scale. Coupled with the money raised to match them, they have yielded hundreds of thousands of private dollars for some schools -- enough to allow wealthy towns to maintain spending levels significantly above $5,000 per pupil without having to enter the sharing pool. The matching private donations are tax-deductible -- and none of the money that towns are now scrambling to raise must be shared with other towns.
In response to charges that its grants favor wealthy towns, the foundation notes that the money is available to any school district in Vermont. It points out that about half the applications so far have come from so-called “receiving” towns, which qualify for net withdrawals from the sharing pool because their tax rates are so high.
Because the grants have enabled wealthy towns to opt out of the sharing pool, however, the receiving towns that participate in that pool are finding far less money to share than they had counted on, say Act 60 supporters. What’s more, they add, although all towns are eligible for Freeman grants, the wealthy ones are able to qualify for much larger grants because they have much greater success in raising matching funds. As evidence, they point to the list of the grants announced so far: $457,500 to Ludlow, for example, worth $2,434 per pupil, compared with just $3,500 ($45 per pupil) to Bridgewater and $10,000 ($9 per pupil) to Morristown.
“This is a deliberate attempt to make an end run around the law,” says state Senator Mark MacDonald, who sits on the Senate Finance Committee, which helped to draft Act 60. “The requirement that there be a match virtually guarantees that wealthy school districts that have a varied and plentiful curriculum will benefit from this, and that poor districts that the law was designed to help will be adversely affected.”
Thomas J. Amidon, the foundation’s lawyer, points out that the Freeman grants may not be diverting any funds from the sharing pool, as some critics allege, because it is not clear that wealthy towns would have agreed to participate in the pool if it involved taxing themselves $3 for every additional $1 that goes to their school budget.
“I can’t address that assumption,” Mr. Amidon says. “But let’s assume that the Freeman Foundation didn’t do this at all. That’s $15-million off the table,” and therefore unavailable for any public schools.
The foundation never anticipated that its school grants would cause such a furor, Mr. Freeman says. Despite its large size, the foundation remains very much a low-profile family affair, focusing its attention on two places -- Asia and Vermont -- to which the family retains strong ties. Mr. Freeman’s father, Houghton (Buck) Freeman, who was born in China and who speaks Chinese, chairs the board of trustees, on which he is joined by his wife, Doreen, and a long-time family associate.
All three Freemans spend much of their time reviewing grant applications and conducting site visits -- including many in Asia. Graeme Freeman, with a part-time lawyer and full-time assistant, runs the foundation out of a modest office above a liquor store in a Stowe shopping center. Its investments and much of the program administration are handled by J. P. Morgan in New York.
“We have a lot of faith in many of the non-profits we work with,” Mr. Freeman says, in explaining how the foundation manages with so few employees. “We feel they can do a lot of the administrative work themselves. We don’t need to duplicate their efforts.”
In Vermont, the foundation works closely with the Vermont Land Trust and the Preservation Trust of Vermont. Each of those statewide organizations acts almost like a program officer of the foundation, helping to recommend and monitor local grantees in the areas of land conservation and historic preservation, respectively.
“Their grants have been a tremendous boon to historic preservation,” says Paul Bruhn, executive director of the Preservation Trust of Vermont, in Burlington. Freeman support has helped to save Abenaki Indian burial grounds, historic dams, and a renowned geological site, as well as libraries, museums, town halls, and other historic structures, says Mr. Bruhn.
“They have deep roots in Vermont, and care immensely about the character of this place,” he adds. “They’ve been very open to the whole range of preservation activity that goes on in the state.”
Since the Freeman Foundation began making grants in earnest six years ago, it has channeled more than $50-million to organizations and programs in Vermont. Given that kind of philanthropic commitment to the state, even some of the strongest supporters of Act 60 are cautious about doing anything that might jeopardize the flow of grant money.
Bob Gensburg, a lawyer with the American Civil Liberties Union who argued the case that led to the 1997 state Supreme Court decision on school funding, has little sympathy for the affluent towns that benefit most from the Freeman public-school grants. “The sudden shock in the gold towns that they were going to have to start paying taxes at the same level as everyone else created great consternation and distress,” he says. “Privilege dies hard.”
Yet even as he argues that the gold towns must share some of their wealth, Mr. Gensburg adds: “I would desperately not want this very philanthropic organization to say, We’re going to take our marbles and go home.”
Other foundation critics are undeterred. “The Freeman Foundation is doing all of this on our nickel,” since its activities are exempt from taxes, says Mr. Gilbert. “I don’t think a foundation should be subverting public policy at the public’s expense.”