Inaccurate data from Agency of Education hurts school budgeting, complicates spending cap debate

Brad James
Vermont education finance manager Brad James. File photo by Hilary Niles/VTDigger

School boards have had a difficult time planning budgets under new spending thresholds, and revelations about inaccurate data from the Agency of Education will likely make that tough job even harder.

This week in testimony before lawmakers, representatives from the Agency of Education said they misinterpreted a section of the law dealing with the new allowable growth spending thresholds and unintentionally provided school districts with erroneous per pupil spending amounts for FY17 for the budgets they are currently putting together.

While the agency told lawmakers about the problem this week, officials have not yet informed school districts.

Agency of Education officials say they haven’t released new numbers to school districts because they are trying to find a way to “craft language to make sure everyone understands the new intent.”

A letter to be issued Friday afternoon or first thing next week will include a caveat about the possiblity of further changes based on what happens in the Legislature, according to Stephanie Brackin, the spokeswoman for AOE.

“We didn’t want to send it out without trying to do it appropriately, so that we aren’t upsetting these really hard working school boards, they have a heavy lift right now and we wanted to get them good information,” Brackin said.

On Tuesday, Brad James, the finance manager for the agency, Mark Perrault, of the Joint Fiscal Office, and Peter Griffin, a lawyer with legislative counsel, told the House Committee on Education that they had discovered discrepancies in the state numbers.

The Agency of Education left out exclusions such as principal and interest on capital construction expenditures, excessive special education funding over $50,000, payments districts make into the state teacher retirement fund and some others which were always included under the old system of excess spending thresholds. AOE thought they didn’t apply under the new Allowable Growth mechanism that is in section 37 of Act 46.

Michael Sirotkin
Michael Sirotkin

“The threshold will be lower. The per pupil will be lower. The numbers are going to vary but not by much,” James said on Thursday.

“Are there cases where people have been working under the wrong assumptions and will there be some instances where a school district is putting out a budget with one less teacher because they didn’t have the right information?” asked Sen. Micheal Sirotkin, D-Chittenden.

“Yes, the answer is yes, but I don’t know who they are. Conversely, it may benefit somebody who was cutting a teacher to find out they don’t need to,” James replied.

“Are school districts aware of the new numbers?” asked Sirotkin.

“No,” James said.

Lawmakers never intended for the exclusions to go away. They drafted a letter of intent between themselves and AOE to clarify this. “As you know, Sec. 37 contains the spending thresholds of Act 46, which were based on the structure of the then-current law excess spending penalty, it was our understanding that the threshold amounts in Sec. 37 would be calculated based on the definition of “education spending” that was reduced by the exclusions listed in 16 V.S.A. 4001 (6)(B).” The letter was signed by both chairs of the House and Senate education panels.

The excess spending thresholds that were in place before Act 46 was enacted allowed the agency to compare spending per pupil after the exclusions were backed out. Lawmakers thought that was what would happen under the new spending thresholds.

But AOE read the language differently and added the amount of additional spending for each district to the full FY2016 spending per pupil figure. The Allowable Growth Percentage remains the same, but it is added to a different base. This will result in a lower per pupil amount districts are allowed to spend, but any exclusions will not be counted against them.

For instance, Norwich was told in August that they should base their per pupil threshold amount on $17,450, with an allowable growth rate of 1.22 percent but the new calculation puts the school districts threshold at $15,905, with the same AGP, according to documents provided by James to the Senate Committee on Education. Norwich has capital and extraordinary special education costs – both of which are now excluded and won’t count against them.

James estimates that approximately 85 percent to 90 percent of school districts have capital construction costs. School districts that paid off a bond last year and can no longer claim it as an exclusion could find themselves in a difficult position.

“In most cases it won’t have a significant impact because you are looking at reduced numbers from both years,” James explained. “The ones who will be impacted are the ones that have a sizable swing from year-to-year in students, if you are taking on new debt or an extended debt service – we don’t know what the impact is going to be because we have not seen any FY17 data.”

It further states that the threshold amount would be added to the prior year’s education spending as reduced by those exclusions and then compared to the current year’s education spending with those exemptions. This means that school districts will be looking at a lower spending amount but that is because they are able to pull out these special costs which will not count against them.

The Vermont Superintendents Association, the Vermont School Board’s Association and the Vermont Association of School Business Officials chose not to wait any longer for AOE to inform school boards of the mess up. On Friday morning, Jeff Francis, executive director of VSA sent a letter that said: “As I understand it, the original calculation did not apply the exclusions identified under 16 VSA 4001 (6) (B) – primarily construction and extraordinary special education costs.

Francis said the agency told business managers last fall that districts “could not apply these exclusions when calculating FY2017 education spending per equalized pupil.”

“I do not fully understand the implications of this very late change on individual school district budgeting approaches, but it seems highly likely that some districts were contending with a presumed threshold amount that has now changed, in some cases significantly,” Francis said. “That, seemingly, calls into question the integrity of the entire threshold mechanism and the budget processes influenced by it.”

Francis said that lawmakers spent Friday morning trying to get their heads around the impact that the change in spending numbers will have on school districts. “The implications need to be understood from district to district and it is difficult to comprehend the effects because the calculation doesn’t affect every district in the same way,” he said.

The timing of the discovery of the inaccurate numbers couldn’t be more challenging for school districts — some of which have already finalized budgets based on the wrong information, according to Francis. “Even if you could foster an understanding on everybody’s part of what this change is and what it means the timing alone makes the situation untenable,” Francis said.

The revelations further complicate the House Ed Committee’s plans to keep cost containment controls in Act 46. The Senate wants to repeal the spending thresholds, and the House has proposed a 0.9 percentage point increase in the spending cap, but members appear to be split on the issue.

“The changes being made whether to recall the allowable growth threshold or add 0.9 percent this late in the budgeting process puts boards and administrators in an untenable position and the only responsible course of action is to repeal,” said Nicole Mace, executive director of the VSBA.

Norwich School Board Chair Neil O’Dell is not sure how the change will affect the school’s budget. “All of the items in play right now – the change in the per pupil calculation, possible repeal, possible 0.9 increase – are making it very challenging in a very time constrained environment,” O’Dell said.

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  • Greg Smela

    The only consistency in Vermont government is inconsistency.

    There sits disgrace
    Like fuzz on your face
    Of falsehood be shorn
    In liberty reborn

    —Burma Shave

    • Katherine Silta

      Absolutely. When does this end? Something everyday. Complete lack of leadership and chaos. Zero effective management. Probably just the tip of the iceburg. Hardworking people pay their taxes and they squander the funds with very little reapect or regard for the people who pay their salaries. No accountability at any level. Extremely disheartening and frustrating. The hammer needs to come down at every level.

  • Jim Christiansen

    … and confidence in State government takes another hit.

    • Peter Everett

      Confidence in Government takes another hit??? How can this be so if one has no confidence in Government to begin with? Government has shown itself to be the most wasteful entity there is. Where would you have confidence to get things down properly, the first time? Private sector or government? Me too!!!

  • Bruce Lierman

    Given the fact that budgets must be warned in less than 3 weeks, can any legislator justify any action other than repeal of the cap?

    • George Cross

      Bruce is correct, there is no other option than repeal of the caps at this point. The House Education Committee needs to join the Senate Education Committee in repealing the caps and both need to task the local districts, the AOE and BOE to work together to find ways to reduce the cost of public schools in Vermont. Then the two committees need to shut down unitil January 2017.

      • Tom Pelham

        Our state government is falling to pieces. Politics and dogma have ascended as driving forces within state government while the principles of sound public administration have been pushed to the back seat. From unsustainable budgets, to excessive no-bid contracts, to gaping holes in the implementation of health care reforms, to this feckless mess of Act 46 and much more, valuable time and state resources are being wasted across the landscape of state governance. Yes, politics and ideology are part of the governance process, but so should be competence and common sense. Governor’s Snelling, Dean and Douglas along with their coterminous legislatures properly balanced politics, ideology, competence and common sense. While the current crop, not so much and in some cases, not at all.

        From its beginning, Act 46 was fatally flawed. Some saw this while others did not.

        But now we’ve arrived. Reality bites Act 46. Brad James and Mark Perrault are not to be faulted with this calamity. The lesson here is that if these two seasoned staffers of state government can’t follow the bouncing ball of Act 68 and Act 46, how should it be expected that citizen school board members and average citizens can? The fault belongs with the lack of balance at the statehouse that allows politics and dogma to trump competence and common sense. (Using trump as a pejorative as well here).

        However, the demise of Act 46 should not be an excuse to abandon, this session, property tax relief. Tax payers are at their wits end. The choice doesn’t have to be between tweaking these fatally flawed caps vs. repeal. Below is an alternative offered in good faith, among many other possibilities I’m sure if our legislators and governor are open to listening. After all, the current caps were crafted over the last hours of the last session and this is only mid-January of the current session. Rather than abandon taxpayers once again by kicking the property tax can down the road, our legislators should step up and explore and implement reasonable solutions.

        • Katherine Silta

          Good post. This entire situation is very distressing. Big changes need to occur.

  • Jeff Nichols

    From the moment Vermonter’s property taxes were seized by the Legislature we’ve seen explosive school spending, “unintended consequences” galore and property taxes going through the roof. About 16 years of how not to run a railroad.

  • Brad James from the Vermont Agency of Education on 11/18/2015 informed the House committee on education of the fact that allowable growth percentages and figures were based on FY16 data that did not include the exclusions (16 V.S.A. 4001 (6)(B)), but the final FY17 numbers being used included all such exclusions. See, Brad James starts about the 25 minute mark, his remarks regarding the exclusions are about 28:50.

    This misunderstanding is not the fault of the AOE.

  • Cynthia Browning

    This is extremely unfortunate. But it is also an understandable result of putting in place a complicated change in an already complicated system in the last few days of last year’s legislative session. We need to repeal this mechanism and figure out another way to achieve our policy goals that supports school boards rather than punishing them.

    In addition, it is important to note that the Legislature seems to think that the solution to high property tax rates is HIGHER property tax rates. Yet the result is to punish school districts for conditions that are beyond their control. And at the same time the Legislature has REFUSED to take responsibility for its role in driving property tax rates up. For instance, multiple unfunded mandates, the reduction in the General Fund transfer to the Education Fund, and so forth.

    It is so ironic that this is all playing out after the Legislature adopted a resolution praising school boards for their work and declaring January Vermont School Board month. Nice.

    Rep. Cynthia Browning, Arlington

    • Katherine Silta

      You are right. Very predictable and it was predicted by many! Such a waste of valuable time and funds just to churn out what amounts to junk legislation.

    • Ruth Barton

      Rep. Browning, Since you seem to be interested in the knotty problems of Ed funding & are in the Legislature, where, hopefully, more info is available might you have any insight as to what the record amount of money acquired as a result of the record Powerball lottery will do for the Ed fund? Supposedly that money goes to the Ed fund.

      • Jamie Carter

        Ruth it does go to the Ed fund, but it’s a drop in the bucket. Keep in mind the Ed fund is some $1.6 billion + so even if the record powerball generated an extra million from Vermonters (doubtful) it wouldn’t even be noticed.

    • Ann Dryden

      Rep. Browning you have been a voice for reason throughout this charade. I wonder what advice you might have for the voters of Elmore who were forced to a re-vote on the holiday break, overturning our original NO vote, all under the threat of tax penalties due to spending caps being blown and NOTHING to be done about it as transportation and special education costs out of our hands. we were sore at the involvement Montpelier took in overturning our vote, you can imagine how we feel now…
      thank you for your attention to this issue.

  • John A. Castle

    I think it is fair to question the legitimacy of Act 46 in its entirety. There are those of us in the field who can see the unintended consequences reveal themselves as the various provisions of the law unfold. As a superintendent of one of the largest supervisory unions in the state it continues to concern me that public policy is made without regard for the impact on school communities. The legislature’s obvious disregard for any dissenting points of view on the allowable growth thresholds (no testimony taken last spring) is now resulting in a mess for many school districts. The distrust of the legislature of local boards to make sound fiscal decisions based on local context will now result greater problems and subsequently a greater loss of public confidence in our schools. We can anticipate more “unintended consequences” (or perhaps intended) once we get further down the road with a failed drive to centralize governance and push for the closure of community-schools. Educational leaders and citizens need to do more to question the legislative “intent” of Act 46. Repeal the caps and then take another look at the rest of Act 46.

    • George Cross

      “The distrust of the legislature of local boards to make sound fiscal decisions based on local context will now result greater problems and subsequently a greater loss of public confidence in our schools” John has hit the nail on the head. The fact is that every local school budget is approved by the voters at some point. Maybe the state budget should be put before the voters for approval?

    • Amy Alexander

      As a taxpayer in a small town where even the librarian makes over $82K, it continues to concern me that the public schools devise a budget without regard to the taxpayer. Vermont’s student-to-staff ratio is 4.67 to 1, the lowest in the nation. Student to teacher ratio is 9.2 to 1. (The national average is 15:1.) Vermont’s student population has dropped from 103,000 in 1997 to less than 80,000 but we just keep adding more and more positions. Enough is enough. Cut the fat.

      • Ann Dryden

        Secretary Holcombe was asked just this at our public meeting orchestrated to sway voters in a petitioned revote in Elmore over the Christmas school break. She replied incredulous that I was offering a brilliant suggestion from a neighboring school board to merge the Supervisory Unions in Lamoille County, rather than tear at the fabric that held together small communities. “A ‘mega’ district?!” was her answer to which I had to laugh as it would bring a grand total of 1100 students to the SU. There is too much interest in the status quo in Montpelier, and no interest in real solutions. Concerned residents will be definitely exploring the timeline as only a couple of weeks ago the threat of taxes and the inflated budget was supported by the invited Montpelier guests at our Public Meeting.

  • Mary Daly

    This is another appalling example of a State Government not doing the job right the first time. Is there anyone out there who can believe what they are told by the government agencies anymore???

    • Kim Fried

      Ready, shoot, aim. Great job as usual.

    • Bob Bouchard

      Rep. Browning mentioned in her comment about the reduction of the transfer of funds from the general fund to the education fund. This occurred several years ago under Gov. Shumlin and the democratic leadership watch. So when you reduce the transfer by 58 million, where do you think that money will come from? The property tax of course. And it has always amazed me that school boards have to build their budgets without knowing completely what the state is doing. It’s like putting the cart before the horse.

    • Katherine Silta

      Vote of ZERO confidence as far as I am concerned. simply appalling.

  • Another display of innumeracy and, lack of systems and statistical thinking. But, I’m sure everyone “felt” good when they passed all these bills.

  • Deb Tyson

    Seriously I am sick to death of all of this. First when you took our homestead taxes and gave them to the towns this was suppose to keep costs down on schools and homes. Well as you can see that didn’t work. Than we have lottery money .. we won’t go there either. Now you want to combine districts as well. Ah, NO. We have choices here in Vernon on schools and I would rather sell my home and move to Mass to ensure my children get the best education possible and its not at BUHS. We had kids transfer to Pioneer from BUHS only to be set a grade behind because they were not academically up to the challenge . I also want to know during all these years where the money not spent because parents chose Pioneer’ where the money from our taxes for athletics and drivers ed and left over has gone, because we chose a better education for our children? It cost us 90.00 to 120,00 per sport and 750 for drivers ed that we pay to VT for taxes and don’t see it used for our children , Yet , in BUHS this is provided free , its still our taxes. This is in the thousands , where is this extra surplus gone? This should be given to the school to provide for our kids from taxes we paid. Not to mention it cost less for us to send them to Pioneer than BUHS. Somebody needs to start answering some serious questions before you ask for another dime more.

  • Krista Conley

    It’s principal and interest, not principle. Who was supposed to check their numbers? Do we have folks who can?

  • I listened to some of the debate over what became Act 46 and was astounded at how few of the legislators seemed to understand the complexities of our school finance system. In a way you can’t blame them. The prior committee members and chairs were mostly reassigned at the beginning of the session. The new members were thrown into debating about merging districts without having time to study how that would affect school districts and school tax rates. How many understand that the state pays 100% of the town’s educational cost, regardless of amount? How many think they pay by the head? How many think the town tax rate is the amount needed to pay for the town’s schools? (It has nothing to do with the total cost of the town’s schools. It is the Educational Cost per student divided by the CLA. A poor town can have an expensive school with high cost per student yet collect very little in taxes, even though the rate will be high. The difference between the budgeted Ed Cost and the taxes collected will come from the Ed Fund. Or it can have an expensive school with a high tax rate and still collect far more in taxes than the cost of the school. That’s called a Gold Town. It sends the surplus to the Ed fund.
    Did you all get that? Then you’re ahead of a lot of the members of the Ed Committees, let alone legislators whose time is consumed by different committees.

    • Neil Johnson

      It shouldn’t be complex, it should be very easy. Credit default swaps were “complicated”, things are complicated often to hide what is actually going on or just shows incompetence. Or in the case of Vermont: Both.

      • Ann Dryden

        Exactly the argument many NO voters had in Elmore. patronizing looks from the Superintendent and Secretary “too complicated for you to understand”, rather the suspicion was if it were a clear ‘win-win’ as we heard said so much it wouldn’t have been such a convoluted delivery… I guess we are beginning to see why.Now Elmore needs a Champion to throw out this debacle of a re-vote result and get what we wanted in the first place, clarity and time for a reasonable approach.

  • Dave Bellini

    Congratulations Legislature…!!! You finally managed to unite Vermonters on an issue:
    You really laid an egg. To use a sports analogy, don’t you think it’s time to make some “line changes” ?? Ya know, “go to the bull pen” “Try someone from the practice squad”
    “Hit the refresh button” “juggle the line up” “Change the batting order” “Run the wild cat”
    Even Peyton Manning got benched when he “stunk it up.”

  • Ron Pulcer

    Even without this inaccurate data, Act 46 appears to this voter to be an overly complicated way to “attempt” to “control costs / lower future property taxes” (excuse me, make that “provide more opportunity” instead).

    I attended a public meeting on January 13 at Proctor HS held by the “study committee” for Rutland Central Supervisory Union (Rutland Town, Proctor and West Rutland). Before I went I read all 4 of the meeting minutes posted online for the prior study committee meetings. In addition to their normal school board duties, the folks on the study committee are spending a lot of hours to try to study and comply with Act 46.

    Rutland Town is K-8, with high school choice, while Proctor and West Rutland are both K-12. Rutland City is one of the few larger districts who don’t have to do anything regarding Act 46, yet they are contiguous to RCSU school districts. In order for RCSU to comply with Act 46, they need to find another district to partner with Rutland Town. There are at least 7 options currently that they might consider, and some of the other districts considered are not even contiguous geographically! Some possible districts are K-6 and don’t exactly match with Rutland Town’s K-8.

    In addition, other nearby districts can’t be considered (at this time), because they are already part of another study committee, so our study committee “can’t” talk to those districts while they are a part of another study committee (according to AOE we were told).

    Even if our study committee considers all the options, and decides to stay the way they are, as the best option locally, the state AOE will consider that as “doing nothing” and will penalize our property tax by 5%. Someone asked if that 5% were a one-time (one year) penalty. But it appears that the 5% penalty will be ongoing, year after year.

    It seems to me that whatever “carrots” will be given for consolidating districts, it will be spent on “implementation” of consolidation and “compliance” to Act 46, and will not necessarily be a “surplus” to our local districts.

    The RCSU pointed out where they have already been working together with districts to centralize and “consolidate” costs for transportation, common union agreement, food service, special education, curriculum, assessment, professional development, accounting, and technology systems / integration. So our local RCSU has already been ahead of our Legislature in consolidating costs.

    The Rutland Town House Rep voted “yes” for H.361 (Act 46). In looking over the roll call for Rutland County reps, it looks like both the “Yeas” and “Nays” were bi-partisan.

    I spoke with a member of local Act 46 study committee after meeting, and this person said they were at Statehouse when vote was taken. This person was approached by Reps asking them if they should vote Yea or Nay. The reps told them that they were given a long bill to read on short notice. I guess there is no surprise there. The Legislators who voted for Act 46 all went home after May 2015, feeling good that they “did something” about education property taxes / more “opportunities” for students!

  • Maybe it wouldn’t be such a bad thing to vote out every sitting elected official. Newly elected officials may pay more attention details and think more robustly about the consequences of their legislation.

  • John Grady

    28 comments and nobody pointing the finger at the NEA which runs the show.

    How about something simple like county schools and a few of the small counties combined with neighboring counties. To transfer wealth from wealthy counties to poor counties keep the statewide school tax but at a much lower rate.

    Also go back to court over the funding. Judging education spending is unfair if some wealthy towns have tons of frills that have nothing to do with education is way off the mark. I went to a High School with a indoor pool and hockey rink along with a football stadium and other frills rural America can’t afford. The Judgement in a court case about 20 years ago using a child as a VICTIM of unfair funding was probably totally staged by the NEA and should be challenged.

    Was the Judge behind the court decision educated in economics ?

    The Gold Towns probably created the mess by using their large tax base to fund tons of frills compared to poor towns. Did it have much to do with education or is it socialized entertainment for the kids and parents ?

    Other countries don’t use their school systems as entertainment centers. Get all the sports, arts, music out of the schools and put them under parks & recreation so all children in the town or county can take part even if they are home schooled or go to private schools.
    Remove the frills than the base cost of education per school will be more level from school to school. Half the local high school budget goes to the math department, science department and other education classes and no telling how much waste is in each department. Are the classes full ? The other half of the budget is the big problem.

    “National literature suggests that the
    optimal size for student learning is
    in elementary schools of 300 to 500 students and in high schools of 600 to 900

    literature suggests that the optimal size for a school district in
    terms of financial efficiencies is between 2,000 and 4,000 students.”

    National literature ? That sounds real technical and worthy of blindly listening too without the first clue what it refers to and it’s right in Act 46. It’s amazing nobody listens to that valuable advice from who knows where. Big cities have monsters schools and monster school system, it’s no wonder big city schools are so bad. They ignore National literature whatever that is. Those city folks sure are stupid not to follow National literature whatever that is.

    The scary part is the people in charge of educating kids can’t even run a cost efficient school system and people believe they are going to educate the kids. At least we have a few financial master minds running for governor so if one of them gets elected the mess will be fixed.

  • Bettina Read

    School board members in Hartland, and the other schools in Windsor Southeast SU have already voted on our budgets. Our warning deadline is Friday, as well as the deadline for letters and charts for the town report. Now it looks like our information is wrong. We spent countless hours working on this, trying to get our budgets under the spending cap, formulating a plan to educate students and have the taxpayers’ support. Getting new figures early next week is already too late, and we’re warned that there may be more changes before voting day. I’m going to have to put a disclaimer in the town report that information is accurate as of the day of printing, but may not be by Town Meeting Day. How is this right?

    • Jason Gaddis

      How is it right that Hartland is working to continue the outrageous inequity of maintaining expensive school choice while the high school to which as an existing union they belong suffers with graduating classes of thirty-some-odd students and a lack of the peer-group, faculty, finances and improved facilities that would be available if all students in the WSESU attended what ought to be the designated high school at Windsor.

      Betina, you requested the vote and the Act 46 committee approved the motion not to work toward an accelerated merger which would have saved you much of this heartache.

      See time stamp 1:39 of the video link below of the October WSESU Act 46 Committee Meeting where Bettina asks for the up-or-down vote.

      No tears should be shed given the full context.

  • Jay Denault

    Ridiculous, If these people and these Legislators worked for private businesses they’d all be FIRED!!!!! Act 46 was a disaster from the get go. and just serves to prove how incompetent Montpelier truly is…..Montpelier is becoming a bigger laughing stock that Washington…….

  • Linda Quackenbush

    Such incompetence! It’s no wonder a businessman is resonating for 2016 Presidency! Government is being run by irresponsible plunderers of our hard earned monies!

  • Ann Dryden

    I wonder if VT Digger will explore this issue further and help voters in Elmore bring to light that the AOE directly influenced the electorate with faulty calculations and threats of tax penalties verbally in the AOE presentation and by supporting Superintendent Wrend in the damning presentation of “facts” that ultimately overturned an original NO vote for a merger in a revote scheduled over the recent holiday break. Concerned Elmore residents will be working towards an investigation of this undemocratic outcome especially in light of these revelations. I myself am curious to know how long the real “misinformation” has been purposefully presented as ‘fact’.