House Ed nearly runs aground on Challenges; proposes $23.2M in voluntary reductions for schools

Gov. Jim Douglas reads to schoolchildren

The Douglas administration and Vermont House Speaker Shap Smith narrowly averted a mutiny last week.

Members of the House Education Committee Thursday briefly considered, then backed off, a proposal that would have exempted the state’s educational system from Challenges for Change— the government restructuring plan enacted in February meant to save the state $109 million over the next two years.

The Challenges ship nearly ran aground on those shoals when Rep. Duncan Kilmartin, R-Newport, floated language for a bill that would have freed the state’s 280 schools from meeting the Challenges for fiscal year 2012 that require districts to find $23.2 million in savings. (Armando Vilaseca, commissioner of the Department of Education, had already given schools a pass on meeting the mandated fiscal targets for administrative and special education savings in 2011 because districts had, on their own, reduced education spending overall by 2 percent, or $22 million.)

The committee discussed the exemption as an option, because they said state spending mandates wouldn’t work for a system that is controlled at the local level: the Legislature doesn’t control educational spending, local school boards and voters have that authority.

Passage of the second Challenges bill – which provides the changes in statute necessary to implement restructuring proposals – is scheduled to be debated on the floor of the House on Wednesday.

This looming deadline heightened the frustration of lawmakers who had one week to write legislation. There wasn’t adequate time to take testimony from superintendents and school board members, let alone think through unintended consequences of the law.

But when House Speaker Shap Smith and Tom Evslin, the administration’s point man for the Challenges, caught wind of the defection, they each paid a visit to the committee and tried to steer lawmakers back on course.

Under the circumstances, committee members said all they could do was recommend that boards voluntarily lower spending again next year.

The committee had qualms about mandating school size, a cap on spending, across-the-board percentage cuts and student-to-staff ratios, because they didn’t want savings to be applied unequally from one district to another. Members were also concerned about running afoul of the Brigham decision – a Vermont Supreme Court decision that ordered the Legislature to ensure that all state students have equal access to a quality education.

The proposed exemption garnered unequivocal support from two unexpected quarters – Public Strategies Group (the Challenges consultant itself) and the state commissioner of education, Vilaseca.

But when House Speaker Shap Smith and Tom Evslin, the administration’s point man for the Challenges, caught wind of the defection, they each paid a visit to the committee and tried to steer lawmakers back on course.

Their efforts seemed to work. By Friday morning the committee had figured out a way to negotiate the shallows of both local control and the state’s fiscal crisis. It submitted a proposal to the House Appropriations Committee that includes a savings target (of) $23.2 million for statewide school spending. The recommendation to school boards represents a 2 percent reduction in spending, or a loss of about $386,000 on average for each of the state’s 60 supervisory union districts. The proposed reduction target is for general education; it does not include the special education Challenge.

An unenviable task

Rep. Joey Donovan, D-Burlington, chair of House Education, said her committee had “struggled mightily with this because of the makeup of the 280 schools in Vermont.”

“What we’ve come up with here asks the commissioner to establish (financial) targets around the state with some criteria,” Donovan told House Appropriations. “We were searching for some equitable way for schools to bear this burden.”

The draft legislation asks the commissioner to develop specific spending reduction targets for each supervisory union district for fiscal year 2012. The commissioner is obliged to consider a number of factors in determining the targets, including: a district’s level of fiscal restraint over a three-year period, student poverty rates, the percentage of non-English speaking students, low per-pupil administrative costs and high student-to-staff ratios.

Once the targets for each district have been approved by the joint House and Senate education committee, the commissioner is obliged to notify districts, which have 30 days to respond in writing with comments. By Sept. 10, the joint committee is to meet with the commissioner to review the comments and then issue final approval of reductions for each district.

“It is voluntary,” Donovan said, after she outlined the process. “We are depending on the good work of our local districts. We are hoping that they are going to be able to use these targets and achieve the saving. Our committee felt these decisions had to be made at the ground level of our school districts.”

Martha Heath, chair of the Appropriations Committee, questioned why strategies for reducing education costs, such as parameters for student-to-staff ratios, were omitted from the legislation.

“We can’t come up with a gift card idea,” Donovan quipped, in reference to a Liquor Control Board suggestion for bringing in more state revenues by selling gift cards at liquor stores.

Rep. Linda Waite-Simpson, D-Essex, explained that a parallel bill, H.782, calling for voluntary consolidation of school districts, includes more specific proposals for saving administrative costs.

Heath asked Donovan to make sure that if H.782 doesn’t look like it’s going to pass that the proposal be folded into the Challenges 2 bill.

“How are we thinking about the outcomes?” Rep. Sue Minter asked. “To me this is asking school boards to cut costs.”

Donovan said lawmakers have to bring school districts on board with Challenges for Change because they control education decisions. Helping schools reduce expenditures, while improving outcomes – higher graduation rates, higher numbers of students who go on to post-secondary education – will be a “struggle,” she said.

“Your task is frankly impossible,” Minter said. “Some of the agencies and areas of government have been able to think very broadly, and some are understandably seeing it as spending reductions. It’s a huge shift in thinking.”

Simpson said the Vermont Department of Education recently finished a study of school transformation and concluded that reorganizing schools is a 10-year process.

“We can’t come up with a gift card idea,” Donovan quipped, in reference to a Liquor Control Board suggestion for bringing in more state revenues by selling gift cards at liquor stores.

No easy target

The presentation of the bill on Friday was a study in contrast to the long day of arguments, handwringing and admonishments members of the House Education Committee endured on Thursday.

Members were flummoxed by the advice they had been given since they had received Vilaseca’s Challenges proposal on March 31.

In spite of their anxiety about not being able to circumvent the law of unintended consequences in their five-day window to come up with Challenges 2 legislation, committee members seemed to have a good grasp of the impact on the state’s educational system of mandating spending caps, percentage reductions, staff-to-student ratios and creating spending penalties for districts. Among their concerns:

• They decided they couldn’t put a cap on school spending, because they believed that would penalize schools that had tried to be fiscally responsible over the last three years.
• An across-the-board percentage cut would violate the Brigham decision.
• They didn’t want to mandate administrative cuts, because they were worried it would have an impact on guidance and substance abuse counseling services for students, which are rolled into administration.
• They said lowering the staff-to-student ratios by outsourcing busing, food services and payroll would not reduce costs. Some school districts, committee members noted, aren’t losing students and need to increase staff; some have decreased workers as enrollments have declined. Sometimes additional staff is necessary for special education students and pupils who need English as a Second Language services.

Discussion about outcomes for students was lost amid arguments about targets, reductions and ratios, said Rep. Anne Mook, D-Bennington. “There has been almost no discussion about outcomes and effects on kids. To me that’s what it’s all about. We’re so focused on the money piece that we’re forgetting the valuable outcomes we established several months ago.”

What drove them to the exemption proposal, in the end, was a bugaboo outside their purview — local control. As they mulled the administration’s proposal, committee members batted around this essential
fact: The state doesn’t control schools; local school boards do.

“To think we can sit here in Montpelier and figure out what’s going to happen at the local level is ludicrous at its core,” Simpson said.

Experts and officials proffer advice

Committee members then sought expert advice from the state’s Challenges consultants. Babak Armajani, of PSG, the Minn.-based company advising the Legislature and the administration on the restructuring project, suggested in a conference call with the committee that since the state doesn’t have the authority to tell locals what to spend on education, the committee should try to exempt the state’s school districts from the Challenges.

Another blow to the committee’s original proposal, which included a mandatory 2 percent reduction in school spending came from attorney Robert Gensburg. He told lawmakers, the state couldn’t impose an across-the-board 2 percent reduction on schools without throwing the state’s equalized education funding formula, Act 60, out of whack.

Gensburg warned: “This kind of attempt to reduce school district funding is probably going to run afoul of Brigham” — the Vermont Supreme Court decision that Gensberg won, which requires the state to provide equal access to education.

Gensburg warned: “This kind of attempt to reduce school district funding is probably going to run afoul of Brigham” — the Vermont Supreme Court decision that Gensberg won, which requires the state to provide equal access to education.

Shortly after Gensburg gave the committee his opinion on Thursday, Simpson and Kilmartin introduced the Challenges exemption provision.

This turn of events led to a parade of impromptu visits from Vilaseca, Smith and Evslin. Vilaseca told the committee that he wholeheartedly supported the exemption proposal. This sudden change of heart came as something of a shock to committee members because just last week, when the Douglas administration rolled out its progress report on Challenges, the commissioner had proposed a set of four recommendations that included mandatory district consolidation, an increase in the staff-to-student ratio, block grants for special education and a study of the viability of small schools.

“I like the exemption from Challenges for Change for fiscal year 2012 part (of the draft bill), and I do believe, I do know, boards have done a really good job of managing their budgets at the same time we cannot ignore the fact that our enrollment continues to drop,” Vilaseca said. “Any cuts school boards make are not going to be strategic. We all fear that the arts, extra-curricular activities are all going to be reduced if we don’t provide a plan.”

Vilaseca agreed there is no way around the target, and he voiced support for H.782, the voluntary school district merger bill as the “best option on the table if there was not a 2012 Challenge.”

Donovan said: “We’re not saying we’re not going to provide a plan. We’re saying education should be exempt from Challenges for Change.”

“How could I not support that?” Vilaseca said.

“My concern is just because we take this position in this committee,” Donovan said, “the reality is the dollar figures are still out there, and I don’t know who takes control of the process.”

Vilaseca agreed there is no way around the target, and he voiced support for H.782, the voluntary school district merger bill as the “best option on the table if there was not a 2012 Challenge.”

“If I had my druthers, if money wasn’t an issue with some recommendations, that would be the way to go,” Vilaseca said. “(But) they still have to find $20 million.”

That $20 million, the commissioner said, is going to be even harder for schools to find next year. In November 2009, he asked school boards to keep their spending below 2 percent growth, or about $20 million.

“To ask schools to cut $20 million is really more than $20 million,” Vilaseca said. “They came in at zero. In order to get there next year, they’re going to grow. They have teachers, bus contracts — everything is going to go up. So they have to get that down and get 2 percent below that. My fear is that what will happen is that boards that don’t have the larger numbers to draw from will start making reductions to meet that goal, and that will hurt kids.”

Simpson argued that tax-rate increases are naturally prodding local communities to reduce their spending and will in future drive them to collaborate or merge. “We are suggesting that you let that process continue to happen,” she said. “I don’t see that as any less strategic than any of the work we’ve done.”

Vilaseca didn’t think the status quo would be enough.

“I may not have as much confidence as all of you that that will happen without some urging and some pushing and some pulling,” Vilaseca said. “I think H.782 is the optimal way to go, which is reducing administrative costs and improving student outcomes.”

In the next few years, the department expects student enrollment to drop from 92,000 to 85,000, or about 6,000 students per grade, preschool through 12th grade.

Rep. John Zenie, D-Colchester, said in order for schools to continue to do more with less under the Challenges, they have to provide support for local boards.

“In my view, the Legislature failed to come up with a new vehicle,” Zenie said. “We’ve got the same vehicles — cut, cut, cut — and then you have the time frame by 2012, which is too quick. We’re doing away with the authority of the locals, and we’re doing it too quickly.”

Smith: “It’s important for you to define the direction you want to go instead of having it defined for you.”

House Speaker Shap Smith told the committee, however, they had no choice but to move forward with the Challenges in spite of their doubts about the process.

“We face an environment where we have declining enrollment,” Smith said. “What we have to acknowledge is, we also have declining money, and we have to figure out how to give people the tools to work within that context to meet the fiscal constraints that we have.

“Abdicating that responsibility I don’t think is the appropriate way to go,” Smith said. “Do with that what you will. You may decide that’s not as a committee where you want to go. I would say there are other steps along the way, and that it’s important for you to define the direction you want to go instead of having it defined for you.”

Tom Evslin, the administration’s Challenges chief, was also on hand to persuade the committee. He urged them to consider a student-to-staff threshold of 4.75 to 1. (The current ratio is 4.55 to 1, and that figure includes all adults who work in the state’s schools.)

He described the ratio mandate as the “opposite from a one-size-fits all” approach.

“Since we do have statewide funding of education, we have a responsibility to set some parameters – that’s not to take control of it – I haven’t said that,” Evslin said. “It’s not saying how a district should achieve savings. It’s not saying how a district should organize itself.”

Rep. Gregory Clark, R-Vergennes, said the Legislature can’t renege on its responsibility to reduce education expenditures while Vermonters struggle through the recession.

“The facts as I know them are – there’s fewer kids going to school, there’s less money to work with, and the guy who’s paying the bills, whether we agree or not that they’re paying too much in taxes, are having to make changes,” Clark said. “I think we ought to do something — even if it’s wrong.”

House Education did do something; it accepted the Challenges, with caveats. In the end, committee members chose an arduous path: Instead of applying a universal solution to the problem, they decided to involve themselves directly and to enlist the department in helping schools, district by district, to reduce spending statewide by $23.2 million.