Lawmakers raising the revenue for next year’s budget are contending with a $4 million gap in funding, after the Vermont Agency of Education reported an unexpected shortfall this week.
The agency told legislators on Wednesday that it needs about $7 million to cover costs related to placing students in residential treatment facilities, or schools outside of their parents’ home districts.
A large portion of the 1,700 so called “state-placed” students are children living in foster care, and about 200 of them are living in residential facilities. The state pays for the full cost of their education.
The agency says it needs the money to cover $4.72 million in unpaid costs for state-placed students in the current fiscal year, and $2.3 million next year.
Fiscal analysts predict there will be $3 million more in the state’s education fund next year than previously expected, because of a new proposed tax on third-party, online marketplaces like Amazon.
So the shortfall leaves lawmakers with two options in the remaining days of the legislative session: to come up a way to raise $4 million in new revenue, or to hike property tax rates next year.
“We either need to come up with extra money or the tax rates will change,” the chair of the Senate Finance Committee Ann Cummings, D-Washington, said Thursday.
Agency of Education officials say the state needs to find the extra money for state-placed students because it underfunded their costs last year.
This year’s budget didn’t include $2 million that the state should have appropriated to address costs from fiscal year 2018, they told lawmakers Thursday.
In addition, Vermont is seeing an increase in demand from state-placed students, driven by factors including the opioid crisis.
“We have a lot more kids with higher trauma cases, we have a lot more opioid kids coming in we have a lot more kids who have been trafficked or trafficking themselves coming in,” said Brad James, the state’s education finance manager. “There are a lot of kids with much more severe needs … and it seems to be picking up speed.”
The Agency of Education projects demand will also be up next year. But the agency didn’t have a sense of how much the state would need to spend on state-placed students until recently, officials said.
“It is not unusual for variations in special education costs to be flagged this time of year,” Ted Fisher, a spokesperson for the Agency of Education, wrote in an email. “It is difficult to predict these costs since the actual costs cannot be determined until districts submit claims for reimbursement.”
If lawmakers did nothing to address the $4 million gap created by the education funding shortfall, the state would be forced to raise property tax rates by half a cent.
For taxpayers who own property worth $200,000, that would mean spending about $10 more on property taxes in 2020.
Lawmakers are considering a variety of options to increase revenue in the state’s education fund this year, including new sales taxes on candy, clothing and software downloaded over the internet.
Asked about the education funding issue Thursday, Gov. Phil Scott suggested he didn’t want to address the funding gap by raising new revenue.
“I think there’s all kinds of opportunities within the budget that we have and the dollars that we have for revenue coming in,” he said.
