[L]awmakers are considering an alternative to a controversial cap on school spending.

That’s because a two-year, 2.95 percent school spending cap approved by the House would be unconstitutional, according to Robert Gensburg, the lead attorney in the Brigham v. Vermont education funding case.

The House based the 2.95 percent increase cap on school spending this year. The threshold is part of a package of legislative changes and incentives that would push schools to share resources and restructure governance.

The House restructuring plan is designed to broaden educational opportunities for students and save money, but it would take time to achieve. In the meantime, House lawmakers hoped to hold down spending with the temporary cap.

The Senate version of H.361, like the House legislation, phases out small school grants and phantom student subsidies. The Senate bill, however, does not yet include tax incentives or a spending cap.

Rep. Dave Sharpe, D-Bristol, said the Senate bill contains “precious little cost containment,” and he has been “exploring some ideas for what we might do to the excess spending threshold (in current law) if we cannot convince the Senate that caps are the right idea.”

Mark Perrault, senior fiscal analyst with the Joint Fiscal Office, told the House Education Committee on Friday that the Legislature could use the per-pupil education spending rate as a mechanism for controlling spending instead of the percentage spending cap.

The formula would use the statewide average per pupil spending rate as a barometer. In the examples Perrault used, the prior year average statewide per pupil spending rate was $14,009.

If a district spends more than the average rate, say $16,000 per student, the district would be faced with a penalty for spending $1,991 more than the statewide average.

Perrault’s model added 5 percent to the per pupil spending amount, or $100, bringing the total adjusted spending for that district to $16,100.

In the high spending example, the tax rate for the district would go up one penny, from $1.66 to $1.67.

Conversely, in a “low spending” district that had a per-pupil spending rate of $12,000 per pupil, or $2,009 less than the prior-year statewide average, 5 percent would be subtracted from the per-pupil spending rate.

In that scenario, the low spending district’s per pupil spending rate would drop by $100, to $11,900.

The tax rate in that example would go from $1.24 down one penny to $1.23, with the adjustment.

The formula could lead districts to change spending behaviors to avoid a higher tax, Perrault said.

“This district may decide they don’t want to go over,” said Perrault, pointing to the high spending district. “You may compress the range of spending between the highest spender and the lowest spender.”

Rep. Kurt Wright, R-Burlington, who worked on the cap provision in the original bill, asked Perrault to “compare the effect on Vermonters (with the plan) versus what we would be doing in the caps.”

“In both cases you’re intending to affect behavior … to change decisions about spending,” Perrault said.

The 5 percent figure could be higher — 10, 15, or even 20 percent, Perrault said. Higher percentages would drive more dramatic tax rate changes, he said.

The highest spending district in the state would see a 3.2 cent tax increase, based on the 5 percent adjustment, while the lowest spending district would see a 2.1 cent decrease, Perrault said.

The 5 percent adjustment formula would generate about $1.8 million more for the education fund, Perrault said.

Rep. Ann Manwaring, D-Wilmington, questioned the education fund increase.

“If the purpose of what we’re trying to do here is contain or change the dynamics of property tax payments, then I think we have to have a goal of no new property tax money going into the ed fund period,” Manwaring said. “I think we have to look at the total amount of property tax money that goes into the ed fund and not let that number go up.”

Stephen Dale, executive director of the Vermont School Boards Association, which has opposed the spending cap, was more positive about the per pupil spending formula. “On its face, it looks like it’s a reasonable approach to the situation,” Dale said.

Jeff Francis, executive director of the Vermont Superintendents Association, was less sanguine. “This has the potential to affect voter behavior in inconsistent ways,” Francis said.

“All the money is in personnel,” Francis said. “If you can figure out a way to effect the ratios, then (you can reduce) the issue of people cannibalizing programs to protect personnel when you have low ratios.”

Darren Allen, communications director for the Vermont-National Education Association, said the union objects to any “Montpelier-imposed limits on what local voters choose to spend on their children.”

“It doesn’t matter what you call it, a cap is still a cap, and it remains terrible public policy,” Allen said. “Local voters already have the most effective spending cap at their disposal: They are the ones who approve or disapprove school budgets at town meeting every year. We continue to believe that local voters are in the best position to decide what is appropriate to spend on their children’s education.”

The proposal can be seen here.

Here is a town-by-town listing showing how the proposal would impact tax rates across Vermont.