Editor’s Note: This commentary is by John Freitag, a member of the Strafford Selectboard and moderator of the Universalist Society of Strafford. He was Facilities Manager for the Strafford School District for 33 years.
[I]t appears that the Democratic Legislative leaders and the Governor are heading for another end of the session showdown over education spending. This does not have to be the case.
From the start of his administration, Gov. Scott has made it clear that after years of spending above the rate of inflation and economic growth, his priority was no new taxes or fees. Last year he and the legislature managed to accomplish this and it looks like they are for the most part on track again this year.
The main exception is the Education Fund where last year a hole in that fund was plugged with one time funds not available this year.
Vermont School Boards have done their part. They have met the challenge put forth by the governor and have limited their budget increases to a bit less than the rate of inflation. At this point they should not be asked to do more.
It should be noted that during the Shumlin administration education fund expenditures were expanded beyond the original intent of the law to support K-12 education. Last year the legislature and governor decided to move the yearly contribution of around $7 million for teachers pensions from the General Fund to the Education Fund. These programs are beyond the control of school boards.
The total in spending unrelated to K-12 education from the education fund is now around $40 million or roughly the same amount as the budget gap. Unfortunately there seems to be little effort by either the legislature or the governor to move this spending back to the General Fund this year in order to fix the Education Fund hole. That being the case, how can we address the Education Fund budget hole without adding new taxes or requiring further cuts from schools?
The answer could be in adjustments to the income sensitivity program. Last year the state gave out $173 million to homeowners in income sensitivity payments. Prior to 2015 these payments were phased out for incomes between $90,000 and 109,000. That year the legislature and Governor Shumlin increased the income threshold by over 35% to allow the adjustments for households earning up to $137,000. For calendar year 2017 the income sensitivity threshold is now $147,500.
The $40 million hole we now face could be easily fixed without the need of complex new legislation, cuts in school budgets, or new taxes, by simply cutting back on income sensitivity for higher income households. It should also be noted that the maximum amount of income sensitivity you can receive is currently capped at $8,000 per year per 2-acre housesite. To get this much you need a house worth $400,000-500,000; this too might be cut back in order to help fill the hole. Finally, means testing for those under 65 who receive income sensitivity and get more than $10,000 a year in “passive” income from investments might be something to enact as well. It has been estimated that this change alone would save between five to seven million dollars. Lowering the income threshold enough to cover the hole, or a combination of these changes to the income sensitivity could easily fill the gap in the Education Fund. A good amount, if not all, of the hole would in fact be covered by simply going back to the income sensitivity levels of three years ago.
