Stockbridge Select Board member Patrick White recently called to discuss a quirk in school funding economics: Berkshire Hills Regional School District (BHRSD) member towns bear a (monumental) per-student tuition cost of $36,885, but non-member towns pay a mere per-student tuition-in cost of $11,154 to BHRSD (a point also addressed in a recent letter to The Berkshire Edge). If economists had a technical term for this, it might be “ouch.” The disparity between cost and tuition begs two questions: Why do district towns subsidize the tuition for non-district town students, and is a fairness adjustment warranted?
Mr. White accounts for the disparity between actual cost and tuition-in cost by what he terms a “race to the bottom.” By that, Mr. White means that if any of the receiving Berkshire districts consider raising the tuition-in cost per student, then the sending district would simply negotiate a less costly tuition agreement with another local district. Currently, the buyers (sending districts) have all the pricing power in tuition agreements because receiving districts are hungry for tuition payments, deficits be damned.
In the real (non-governmental) world, where there are two widget manufacturers with similar cost structures and profit motives, competition forces the manufacturers to charge roughly the same for their undifferentiated products. All things being equal, the manufacturers lack pricing power due to fear that the other manufacturer will attract business, but there is a floor to the pricing pressure—no manufacturer can, for long, price its widgets at below the cost of production. If you lose money on every sale, you cannot make it up in volume (unless you can withstand the losses long enough to put the other manufacturer out of business, but I digress).
When it comes to pricing, South County school districts are not “real world” entities—divorced from profit motive, they willingly sell for less than the cost of production, relying on taxpayers to make up the difference. School districts are not concerned with making it up in volume because they are constitutionally unable to go out of business. To Mr. White’s reasonable dismay, taxpayers are forced to shoulder the loss.
Mr. White believes—and it is hard to disagree with his logic—that if all school districts agreed to a price floor (not unlike the cost to produce price floor widget manufacturers naturally face), they would no longer be subject to the tyranny of the lowest bidder. This would eliminate the “race to the bottom” that currently allows sending districts to dictate tuition rates, ultimately shifting the burden so that all taxpayers share the cost equally.
Mr. White knows—we all know—that unless we are able to rightsize BHRSD economics, there is no chance that we can ace the test we will soon face: agreeing to renovate Monument Mountain Regional High School (MMRHS). If all students paid the same amount to go to BHRSD (and all the other districts), BHRSD would raise an additional $1.5 million per year based on a steady headcount. Subject to bond interest rates, the current expected cost to fund the renovation is about $2.5 million per year, so entering into a Regional Tuition Pricing Agreement (RPTA) would cover more than half the cost of the new school. But if the RPTA caused fewer students to tuition into BHRSD, then the renovated school could be planned for fewer students. Either way, what currently (and unfortunately) looks like an unattainable goal—renovating the high school—becomes something in reach.
Any regular reader of this column (if any) will know that I have been an enthusiastic supporter of the proposed renovation of MMRHS. While my support remains steadfast, my understanding of the town’s economic challenges has evolved. The town’s recent brush with the Proposition 2½ levy in planning the next fiscal year’s budget was sobering—especially considering that the proposed budget does not yet account for major upcoming expenses: bridge repairs, the high school renovation, and the purchase of the Housatonic Water Works Company.
Financing for the high school renovation will require bond sales, which are subject to Proposition 2½. Exceeding the levy limit will require a two-thirds majority vote. If the town is already struggling to balance its budget before factoring in these anticipated extraordinary expenses, is it realistic to expect tax-burdened residents to approve further increases absent changes? At least one of the changes should be the RPTA.
Mr. White’s idea of a price floor among school districts ensures:
- Fair cost sharing — Non-member towns pay their fair share rather than shifting the financial burden to district taxpayers.
- Elimination of the race to the bottom — If all districts refuse to undercut each other, sending towns lose their ability to force artificially low tuition rates.
- Budget stability — Receiving districts no longer suffer from self-inflicted financial losses due to desperate tuition pricing.
Despite what you may have been told, “cartel” is not a four-letter word. While private industry price-fixing violates antitrust laws, public school districts operate under different legal frameworks. Districts collaborating on a fair tuition structure is more akin to regional cost-sharing agreements, which are common in public education. What is nefarious in the private sector is permissible under the state action doctrine, which gives municipalities a break to serve the public good.
If Mr. White’s proposal for an RPTA gets adopted, there will be winners and losers. One of the biggest losers is likely to be Richmond, a town without secondary education. Fortunately for Richmond, it can bear the expense. Its per capita income is $80,228, eclipsing both Great Barrington’s $54,383 per capita income and the county’s $47, 668 per capita income. If any town can share the pain, it appears Richmond is well suited to do so.
Let’s all agree that Mr. White’s concerns are well founded: Districts selling education at a loss and forcing their taxpayers to make up the difference is neither good nor sustainable in the long run. The proposed solution is not to eliminate tuition-in students but to ensure equitable funding that reflects the actual cost of education. The proposed RPTA could be the necessary safeguard against continued financial imbalance, and, critically, it may be the missing piece to keep the high school’s renovation on track.
Survey Monkey Question
Here is a link to the following Survey Monkey poll: “Should Berkshire County school districts enter into a Regional Tuition Pricing Agreement based on the actual cost of educating students in the districts?”
Survey Monkey Results
Here is the result of the following survey questions:
- “Should the Attorney General enforce the Settlement Agreement provision requiring HWW to seek alternative financing for the Phase 2 greensand filtration system?” As of publication, 100 percent of respondents said “yes.”
- “Should Great Barrington dismiss its appeal of the Superior Court’s Preliminary Injunction to remove an alleged obstacle to implementation of Phase 2?” As of publication, 61.54 percent said “no.”
Days Great Barrington has wrongfully withheld Community Access Fees: 365 [Note: On January 13, 2025, the Massachusetts Cannabis Control Commission (CCC) voted to intervene in the Community Impact Fee litigation between the town and the town’s cannabis retailers on behalf of the cannabis retailers, seeking to submit a legal brief arguing in favor of the retailer’s position. The CCC interprets the Host Community Agreements the same way as the retailers (and anyone able to read)—that is, that the town may only withhold CIFs if there is a documented impact. If you think you may have heard this before, you have again and again and again.]
