Leaders of several education associations told lawmakers that a controversial measure in the state’s new education law unfairly attempts to tighten spending before districts have a chance to merge and save money through economies of scale. They warned that the provision, the “allowable growth percentage” mechanism, could cause real damage to school district budgets if it isn’t repealed.
Meanwhile, some prominent education officials, including the finance manager at the state Agency of Education, are calling for a delay in imposing the “allowable growth percentage” provision.
“Many districts across the state are working hard at implementing either accelerated or conventional mergers as outlined in Act 46. To, at the same time ask boards to take on significant cost challenges 1-2 years before consolidation is putting the cart before the horse. The outcome won’t be pretty,” said Bob Mason, past president of the Vermont Association of School Business Officials (VASBO), at a recent meeting of the House Committee on Education.
The allowable growth percentage (AGP) varies from district to district and ranges from 0 percent to 5.5 percent growth in education spending. The aim is to keep any increase in statewide spending to just 2 percent. The rate is based on how much a school district spent per equalized student in the previous year. The more a district spent in the prior year, the lower the allowable growth rate for the next. If a district goes over the line, it triggers a double tax on additional spending.
Trying to reduce budgets before districts join together doesn’t just present difficult choices, it makes complying with Act 46 that much harder. Once school districts enlarge they can absorb the costs of staffing cuts without losing programing or eroding quality, according to Nicole Mace, executive director of the Vermont School Board’s Association told lawmakers.
Vermont’s student to teacher ratio of 10-to-1 is the lowest in the country. The student to staff ratio is 4.67-to-1. Lawmakers hoped to address the very low ratios as part of Act 46. Last January, Education Secretary Rebecca Holcombe told the Legislature that the state could save $74 million a year by adjusting the ratios higher.
“The ratios are behind a lot of the stuff, the whole bill,” said Rep. Bernie Juskiewicz, vice chair of the committee, “At that point in time, (that they approved the AGP) we were looking for a mechanism to try and control the costs.”
Consolidating school boards and districts will take several years and the savings from it will take longer to materialize while the allowable growth percentage (AGP) will deliver more immediate relief for taxpayers by holding down school budgets.
“Getting a handle on student-staff ratios is an important obligation among school officials that is difficult to accomplish in the absence of scale. Ultimately, right-sizing staffing levels must be evaluated in the context of a district’s responsibility to ensure equity, quality and cost-effectiveness. Given the interest on the part of school districts to move toward unified governance systems, the better public policy approach would be to give those districts time to complete that work so that they can address staffing levels and other cost centers in a more responsible manner,” Mace told lawmakers.
Currently 11 groups of school districts are pursuing accelerated mergers and four are moving toward conventional mergers. VSBA and VSA expect as many as 15 unification votes before June 2016. There are nearly 30 study committees that have formed to consider mergers under Act 46.
Whiting Elementary – a small rural multi-grade classroom school in the Rutland Northeast Supervisory Union – has found itself in an AGP/Merger conundrum. The K-6 school shares a principal with Sudbury County School (40 percent at each building) but needs to cut one of its three teachers in order to not cross over the allowable growth percentage for FY17. They would send fifth-graders and sixth-graders to Sudbury to comply, but then Whiting would lose its small schools grant which pays for that teacher.
At the same time, the Whiting and Sudbury schools are part of a merger process that will be voted on in January. “We are caught in this round robin for at least this year until an effective merger takes place,” explained Rutland Northeast Superintendent Jeanne Collins, “so it doesn’t make sense to reduce faculty this year and lose the small school grant before we merge.”
After the merger they can reconfigure grades without losing the small schools grant and without unstable tax increases. Last year, Whiting’s tax rate went up by 10 percent, according to Collins.
That was the point of Act 46 – to create school systems that serve a larger number of children through a larger number of facilities to create options in terms of personnel and costs, according to Jeff Francis, executive director of Vermont Superintendents Association.
Collins would like lawmakers to delay the imposition of the AGP for any group pursuing a unification merger. “For us to make changes this year in staffing when we intend to be a new unified union school district next year is silly. It is a short-term fix with a long-term impact.”
Brad James, education finance manager at the Agency of Education, agrees. He urged lawmakers to delay the AGP for one year, “To say you have everyone’s attention is an understatement…You want reduced spending, not in a hatchet manner, but in a thoughtful manner.”
As school boards dive deeper into budget preparations they are finding that a trifecta of somewhat fixed and some unexpected costs are driving them toward exceeding their allowable growth percentage (AGP) in spending.
Health care costs for teachers are rising 7.9 percent, all school districts will be required to offer pre-K to every 3-year-old and 4-year-old (not already enrolled in kindergarten) in 2016. Also, special education costs that aren’t always covered by federal or state funds are growing and are challenging for small schools, according to James.
“The AGP numbers released earlier, if met by school boards, are of a magnitude that significant dismantling of program and staff will occur, leading to diminishing favorable results in the education of our children,” Mason told them.
Mason is also the Chief Operations Officer for Chittenden South Supervisory Union, overseeing seven school boards and seven budgets.
“For most of us, we have started the budget process already, having to build in contractual obligations for salary and anticipated changes in health care cost of 7.9 percent on existing staff. To then get to an AGP of 1.3 percent to 2.5 percent will require significant changes in program and staff as 80 percent of our costs are tied to staff expense,” Mason said.
He told the education committee that assuming his boards meet AGP, make no changes in staffing, and absorb the 3.5 percent salary increase and health care costs they are already obligated to by previously negotiated contracts, then the following budget cuts will be necessary:
Champlain Valley Union High School: $957,000; Charlotte School District $429,000; Shelburne School District $64,000 and Williston School District $644,000.
Mason and the VSBO would like the Legislature to repeal AGP and allow the existing excess spending threshold to remain in place until the consolidation process is completed.
Collins agrees that something has to be done. “If you put out a law that you want us to try and meet and we are trying then don’t penalize us along the way,” she said.
