The House Committee on Education will vote on an adjustment to the spending caps in Act 46 Tuesday afternoon with the hope of having this fix before the full House the following Tuesday. In the other chamber, Sen. David Zuckerman has introduced a bill to get rid of the spending caps altogether and a committee vote is expected sometime this week putting his repeal bill on the Senate floor next week.
“We have taken seriously all the testimony, letters and emails we have received all fall and into the first week of the session,” said David Sharpe, chair of the House Committee on Education.
Sharpe’s plan would raise the amount each school district is allowed to grow spending by 0.9 percent to accommodate an unexpected 7.9 percent rise in health care premiums for school employees.
“We won’t stop taking testimony on Wednesday and Thursday, but I believe the committee is ready for a vote,” said Rep. Sharpe.
Meanwhile, the Senate Committee on Education will consider Zuckerman’s proposal to repeal the allowable growth mechanism and would bring back the old excess spending penalty. If this happens, FY2017 budgets would be based on an average per pupil spending of $16,905. Any district spending over that amount – after any allowed exclusions – is double taxed on each additional dollar.
Zuckerman called allowable growth an “imprecise tool” and said it is unfair. “Some towns that happened to have tough budgets last year will have no problem meeting the threshold, but other towns that lose a few students or add some special needs students will blow through the cap for no managerial reason. It is far too blunt a tool, it is unmanageable and we should remove it,” he said.
If the repeal goes through, most school districts will be able to absorb the 7.9 percent health care increase, according to Brad James, education finance manager at the Agency of Education.
Since an extraordinary meeting in November, the House Committee on Education has been taking testimony on how school boards are dealing with the new allowable growth mechanism that assigns an amount between 0 and 5.5 percent that each school district can grow their budget based on the prior years per pupil spending. The more you spent the less you can grow. Any district that exceeds the allowable growth percentage, or AGP is double taxed for each additional dollar.
Under the current law that includes AGP, the Joint Fiscal Office estimated that roughly 127 school district budgets would come in over the prescribed threshold. The alternative that the House Committee will vote on tomorrow would raise everyone’s AGP by 0.9, a move that the JFO estimates will help about 20 school districts stay within their AGP – they guess about 106 districts would still not make it.
“Adding 0.9 in doesn’t make this any fairer,” said Jack Hoffman, a policy analyst with Public Assets Institute. “It doesn’t recognize that there are different schools that have different circumstances.”
Sen. Bill Doyle, R-Washington, is supporting repeal. The JFO’s best guess is that only 24 school districts would be penalized for excessive spending if the old thresholds came back into play. “The caps adversely affect vulnerable towns in Vermont,” said Doyle, the vice chair of the Senate Ed panel.
School officials, boards and education associations have pushed back against the spending thresholds saying that they are unfair and contradict section 2 of Act 46 that requires localities to provide equal access to quality education opportunities.
“The allowable growth provision freezes inequality around the state and pushes our neediest and most complex students further down the equity ladder,” Sean McMannon, Winooski Superintendent told lawmakers.
Winooski has a 2.75 percent AGP and they can’t meet it because of previously negotiated salary increases, the health care bump and a rise in special education costs. “There are only so many places to cut before students feel the effects,” Julian Portilla, a school board trustee told legislators. “As it stands now, everything is on the table: field trips, dental care, technology, athletics, staff and supplies,” she said before adding, “Those of us who have been more frugal and responsible with our budgets are unable to make any meaningful changes in the support we give our children.”
Many school districts are looking at combining classes to cut staff, but that might only work because the any small class this year could have a larger class coming up behind it.
“Putting kids in a larger classroom is not a big impact, but cutting programs is,” said James.
“If they cut back and repeal the AGP then there is a question as to what will districts do?” James continued. “Will they do some of the things they should be doing anyway or just go back to decisions as usual? I know a number of districts are running one, two, three budgets. The question is: what is in those budgets and I have no idea.”
Act 46 set the tax rate at a dollar for every $9,870 (approximate – not set) that a district spends. If a district chooses to spend 10 percent more the tax rate is $1.10, if they spend 75 percent over the tax rate is $1.75.
“The more you spend the higher your tax rate is – I don’t know why they don’t think that is good enough. If the idea is that if people want to spend more money they will pay higher taxes that is exactly how the system works right now,” said Hoffman.
But AGP adds another layer on top: AGP says that regardless of your calculation if your spending went up more than the allowable percentage then the district is double taxed for every dollar spent above the threshold, according to Hoffman. “I don’t understand the point of AGP.”
As both chambers pursue different “fixes” to AGP it is unclear whether a compromise can be struck in time to help taxpayers this year. Zuckerman says the House’s plan might be better next year, “frankly, I’m not sure we have time to hammer out the details of a more complex system that takes into consideration health care, changes in student enrollment from town-to-town, special education and the complexity of creating a penalty on such short notice.”
