Republican Gov. Phil Scott’s proposal to level fund local school spending is contingent on a tight timeframe that prominent Democrats say is impossible to meet.
School boards are obliged under current law to warn the public about March Town Meeting Day budget votes by the end of next week, and most have spent the past several months preparing budgets. Many school boards already have sent budgets to the printers.
Scott has asked lawmakers to adopt a new date for school budget votes — May 23 — to give boards more time to level fund budgets.
Lawmakers and state officials say Scott’s proposal will be challenging to implement.
Thursday was the first day for towns to post warnings for Town Meeting Day and the deadline is Feb. 5, according to Secretary of State Jim Condos. Some towns have already warned their school budget votes. Condos is telling towns to follow current law and warn their budgets and meetings.
“We are advising Town Clerks (and school district clerks) to follow the current law until such time that a new law supersedes,” Condos wrote. “We hope that if the legislature passes this, there will be clear guidance for towns and school districts on what to do in that situation.”
Once school budgets are warned, proposals become official. “The legislature would need to act really quickly to provide guidance to school boards and to enact the bill to get things moving,” Mark Perrault, an education finance analyst told House Ways and Means.
The Senate Democratic on Thursday urged members to tell their communities to follow Condos’ advice and warn their budgets and meetings.
At a press conference Thursday, Scott said while he understands lawmakers have misgivings about his plan to level fund school budgets, he believes there is enough time for lawmakers to consider a May date for school budget votes. “I’m not sure what the downside is,” Scott said.
“I’ve heard some of the feedback and I want to reiterate that we’re not taking Town Meeting Day away, we’re actually adding another opportunity for those to get involved in their local education system,” Scott said. “Having May 23 is an opportunity for more taxpayers to get involved in their local schools. It gives school boards another three months to take a look to see what they can do to level fund their budgets.”
Blue Dog Democrats and several Republicans on the House Ways and Means Committee have already panned Scott’s proposal. They say the timing is “damn near impossible” and the plan potentially violates the Brigham decision, a 1996 court ruling that required the state to eliminate wide disparities in school spending by district.
But Scott’s plan puts Democrats in a bind. The governor resolves the state’s $75 million budget gap by shifting more than $50 million in financial obligations from the general fund to the education fund. If lawmakers reject Scott’s proposal, they must come up with a way to fill the shortfall.
And there could be a political downside, too. Scott campaigned on lowering the property tax rate and won the election by 9 percent. Many residents across the political spectrum complain that the K-12 public education system in Vermont is too expensive and the property tax burden is too high. Since 1997, school enrollment levels have dropped by nearly 28,000 students. Meanwhile, school spending has gone up. The state now spends $1.6 billion a year on about 80,000 students. In 2011, total school spending was $1.3 billion.
Scott told reporters Thursday that during the campaign, he didn’t talk to any Vermonters “who wanted to pay more taxes and fees. Most people I talked to said they’d had enough.”
Democrats say Act 46, the school district consolidation law, will lead to efficiencies in the system that will eventually lower tax rates.
When reporters asked if he had a Plan B, he pointed to the Picus report, which he said identified $500 million in K-12 education savings. “I don’t believe the Legislature acted [on that],” Scott said. “Maybe they should look at the report they asked for and find some ongoing savings there. We can’t raise taxes and fees — that’s a bit of a line in the sand there. I don’t think Vermonters can afford any more.”
Scott urged lawmakers to agree on his vision of shifting money from the K-12 system to early childhood programs and higher education.
“Let’s see how we can get there, let’s open our minds and not be so reactive to say no,” Scott said. “Let’s figure out a way to say yes.”
It could be a while before the Vermont Legislature comes up with a counter proposal. The House Appropriations Committee is taking a go-slow approach to Scott’s plan to move an annual $35 million teachers retirement obligation to the education fund. Human services programs are on the docket for the next two weeks.
Whenever lawmakers consider ways to change the school funding formula they apply the “Brigham Test.” Perrault, the education finance analyst for the legislative Joint Fiscal Office, says he’s not sure Scott’s proposal would pass muster.
In fiscal year 2019, Scott locks in spending per pupil rates across the state. Some school districts spend $20,000 for each student and some spend $12,000. Under Scott’s plan, allowable school spending would be tied to student enrollments. If a school’s student population goes up by 1 percent, a school district can increase by that rate. And vice versa. If there is a decline in the number of students at a school, allowable spending goes down by the same percentage.
“We have one of the widest ranges of per pupil spending across the country. By freezing that in place indefinitely with only little bits of movement in there primarily down as districts lose kids, that is a big thing,” Perrault said.
There are also a multitude of concerns about tying everything to this year’s budgets. Fiscal year 2017 school spending is artificially low because school districts spent down reserves to avoid tax penalties that would have been triggered if they went over spending caps in Act 46.
“A lot of one-time money was used to get under the thresholds and now that becomes their (school district’s) starting point forever,” Perrault explained to the House education panel.
The caps were watered down and all but repealed last session after weeks of testimony revealed a number of unintended consequences. Local spending hikes were being driven by things that were out of school district control such as health care increases, special education needs that federal law requires are met and unexpected changes in enrollments.
Districts could experience some of the same problems this year and next.
“Under normal circumstances coming into FY18 school districts would have to make up that one-time money,” said Perrault adding that now they “will have to swallow that reduction in their spending that was attributable to that one time money.”
Read the JFO analysis of Scott’s education proposal here.
Perrault said that towns that tuition all grades would be in a bad place if more students show up after 2017 since they would be locked into that budget. Similarly, in a really small town if a family moves in with a child with extraordinary special needs it could significantly impact the budget.
“You will have to have reductions in force or teachers will have to take a reduction in income. There wouldn’t be any other place to go,” Perrault said.
Many of the items in the governor’s proposal remain unclear to lawmakers.
There could be other expenses tied to moving the vote to May 23, according to Perrault. It would not be “inexpensive for towns” and it remains “unclear who would pay for those – whether it is a burden for towns or if it comes out of the education fund.”
