[T]he Vermont Senate on Friday gave final approval to a major education governance reform bill that encourages school districts to form larger, more cost-effective systems.
The bill, H.361, passed on a unanimous voice vote and now moves to a committee of conference where lawmakers will reconcile the differences between the House and Senate versions of the legislation.
Senators approved one last amendment, offered by Sen. Tim Ashe, D/P-Chittenden, calling for a change in the formula the state uses to calculate a taxpayer’s dividend and interest income.
A change in the income sensitivity formula made about five years ago addressed a concern that people with large assets and modest income were taking advantage of the property tax rebate program. The assets of these homeowners are now part of the income sensitivity formula, and in some cases precludes asset-rich homeowners from receiving a tax break. Homeowners over the age of 65 are exempt from the formula.
Under the current income sensitivity formula, dividend and interest income above $10,000 is doubled in value. The Ashe amendment triples dividend and interest income above $10,000 for the calculation and will block more high asset homeowners from receiving tax breaks through the income sensitivity program.
A total of 1,155 households will be impacted, and will pay, on average, $450 more.
Ashe told the Senate that the state would save $527,000 in income sensitivity payments to individuals under the new formula.
In an interview, Ashe said while the change doesn’t save much money for the state, he believes the formula change is a matter of fairness. He questioned why middle class households with few assets should subsidize property tax breaks for households with large assets.
On the Senate floor, Ashe used an example of two neighbors, one who does not qualify for income sensitivity because his or her household earns more than $90,000, the threshold for income sensitivity, and one that earns less but may hold investments and own several homes.
Under the current income sensitivity formula, the asset-rich homeowner could take up to $8,000 in tax breaks.
Differences in bills
Both the underlying House-passed bill and the Senate version include incentives, and remove some subsidies in order to push schools toward district mergers.
The Senate bill phases out the hold harmless provision, which has offered financial protection to districts with declining enrollment. The House version likewise pulls back on that subsidy program.
The Senate version of the bill — in a compromise made a day before the vote — restores about $7 million in grants the state gives to schools with 100 or fewer pupils, or that have average class sizes of 20 or fewer for two years. The House version phased out the so-called small schools grant program, except for geographically isolated schools or for schools that meet the state’s academic standards.
The Senate version calls for school systems of 900 pupils, and the underlying House bill calls for integrated education systems of 1,100 pupils.
The Senate version lays out “accelerated activity” tax breaks for five years or grants based on the number of students for districts that move into larger systems in a year’s time.
The House bill calls for districts to start merger studies and would require districts that do not become part of larger systems to obtain a waiver from the Agency of Education.
The Senate bill allows more time for voluntary action. But in the end, districts that have not made changes, as recommended by the secretary of the Agency of Education, will be part of a proposal for state-ordered restructuring. That proposal would go to the State Board of Education, which would then bring a plan to the Legislature.
It would be up to the Legislature, during the 2019-2020 biennium, to act on the report.
Vermont has 277 school districts and the state has been experiencing a dramatic dropoff in the number of school-aged children since 1997. The Agency of Education’s latest reported figures show a loss of more than 24,000 pupils between that time and the current count in Vermont’s schools.
Education costs and property taxes have increased despite the decline in student enrollments, and the demographic shift is projected to continue through 2030.
Vermont has the lowest-in-the-nation staff-to-student ratio, less than 4.7 students per staff member.
While student counts are down statewide by more than 20,000, the number of staff has dropped by hundreds.
Push for cost control remains
There was some discussion on the Senate floor Friday about the desire to add a spending control mechanism.
The underlying House bill called for a 2.95 percent spending cap, which was deemed unconstitutional; the Senate version does not include cost controls.
Sen. John Rodgers, D-Essex/Orleans, proposed, then withdrew, an amendment that would have rewarded low spending school districts and penalized high spenders.
Sen. Ann Cummings, D-Washington, chair of the Senate Education Committee, and Ashe, chair of the Senate Finance Committee, said they believe the idea has merit, but it needed some tinkering.
Rodgers said lawmakers heard loud and clear from taxpayers that they wanted containment on rising education costs, and he said the bills now coming together in conference committee do not deliver spending control.
Cummings said spending controls will be addressed by the conference committee next week.
Reaction to bill’s passage
Ken Page, executive director of the Vermont Principals Association, said after Friday’s vote that he was a principal when the Duxbury and Waterbury school districts came together in the 1990s, and the opportunities for students expanded and millions of dollars were saved for taxpayers.
“The bill isn’t about closing schools; it’s about improving opportunities,” Page said. “Kids want more opportunities, and kids don’t see where one town ends and one town begins.”
After Thursday’s 27-3 vote on the Senate bill, Rep. David Sharpe, D-Bristol, chair of the House Education Committee, praised the Senate’s efforts.
“It’s really good to see the support,” Sharpe said Thursday. “It’s a strong vote in support of the work the Senate Education Committee did.”
“The Senate has worked hard to craft a reasonable approach to addressing the challenges we face,” said Stephen Dale, executive director of the Vermont School Boards Association. “The message we are taking away is that all of us, including all school boards, need to take very seriously the dual issues of lack of equal opportunity and rising cost per student.”
“The bill is very flexible in guiding boards toward an approach to achieving those objectives,” he said. “Removing the provision that would have eliminated small schools grants seemed to be the tipping point for many senators. We will continue to work with members of the conference committee as they seek the best path forward to a final statute.”
