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Those K-12 schools that didn’t already have a voter-approved budget when the pandemic shut down the state may not be getting a fix from Montpelier before the next fiscal year rolls around.
That means those 19 districts without a budget will likely have to ask voters to head to the polls soon, or incur significant borrowing costs to pay the bills. (Vermont’s 97 remaining districts received approval from voters on Town Meeting Day.)
If current law stands, districts that don’t have a spending plan in place July 1 can get a loan for up to 87% of the prior year’s budget. But recognizing the difficulties of bringing a vote before the electorate in the midst of a pandemic, lawmakers had hoped to offer districts a more generous option.
However, the chairs of the House and the Senate education committees – who have had a fractious relationship in the past – have been unable to come to an agreement on a plan. And now both say a deal might not come together before the Legislature recesses in June.
The Senate Education Committee had crafted a plan that would allow schools to receive 100% of their current budget in the next year, avoiding the need to borrow funds, in the event they couldn’t hold a successful vote. Its counterpart in the House, meanwhile, had taken testimony from districts pleading for more than a level-funded budget, and had explored several options to do so.
Schools are facing double-digit health insurance premium hikes next year. And because most collective bargaining contracts require school boards to give employees notice of layoffs by mid-April (if not earlier), many districts now can’t reduce headcounts.
In the Caledonia Central Supervisory Union, Superintendent Mark Tucker told lawmakers that a level-funded budget in this context would mean his district’s three schools would simply have to freeze all discretionary spending, which would probably eliminate all extracurriculars, including sports.
“We will also have to make opportunistic cuts in some of the many contracted services we rely on to address the mental health needs that impact so many of our more impoverished students,” Tucker wrote. “This at a time when many of our returning students need these enrichment programs and other supports to restore a sense of normalcy to their lives.”
Sen. Phil Baruth, D/P-Chittenden, who chairs the Senate committee, said that, given the state’s larger budget funding woes, the Legislature could ill afford to be more generous.
“It just seems prudent to go with last year’s level-funded budget. Especially since that was the last one voters approved,” he said.
Baruth added he was “at a loss” why the House would be content not to reach a deal before recess.
“The chances that they unintentionally screw those districts goes up pretty substantially. But they’re going to do what they’re going to do,” Baruth said.
Rep. Kate Webb, D-Shelburne, who chairs House Education, said the two sides could return to the discussion in August, when the Legislature is expected to reconvene. She acknowledged that could mean some districts have to borrow in the interim, but argued they “already do that now anyway.”
“It’s not ideal,” she added. “There’s nothing in here that’s ideal. We’re concerned that the current Senate plan could be harmful.”
What to do about districts without a budget, meanwhile, isn’t the only fraught education funding debate taking place at the Statehouse. The state’s coffers have been decimated by the pandemic-induced economic slowdown, and the Education Fund, which pays for preK-12 schooling, is facing unprecedented shortfalls.
Lawmakers hope to make it through the current fiscal year, which closes June 30, and solve the Education Fund’s immediate cash flow problem by emptying its reserves and using inter-fund borrowing for the rest. But the latest estimates from legislative analysts now project the state will have to plug a $160 million hole in the fund next year.
The fund gets its revenues from property taxes and a mix of sales and use, meals and rooms, lottery, and vehicle tax proceeds. In normal times, when consumption tax revenues fall, the fund can essentially self-correct by raising property tax rates. But a reliance on property taxes to fill the expected funding gap would send the average homestead rate skyrocketing by well over 20 cents.
Rep. Janet Ancel, D-Calais, who chairs the House Ways and Means Committee, said that’s just not an option.
“I don’t think there’s any appetite in the committee to do a property tax increase to pay for the pandemic,” she said.
A solution for now remains elusive. Ancel also noted that the state’s revenue forecasts, along with guidance from the federal government regarding how states can use the funds disbursed in the federal coronavirus relief package, continue to evolve.
“There are just a lot of unknowns out there still,” she said.
Neither lawmakers nor Gov. Phil Scott’s administration, meanwhile, have told schools that they are expected to spend less next year than what voters greenlit on Town Meeting Day. But some may decide to do so anyway.
In the Addison Northwest School District, the school board last week declared an impasse during labor negotiations. And in the Windham Northeast Supervisory Union, the school board has decided to cut about $1.5 million in spending by laying off 36 paraeducators, furloughing bus drivers until schools re-open, and cutting two administrative positions. Chris Pratt, the superintendent, said he was also foregoing his scheduled raise.
Lily Jane Hart, a spokesperson for the Windham Northeast Educators’ Association, said the union was “a little bit astounded” by the scope of the cuts.
She also suggested that the layoffs could also compound the local community’s economic distress given that so many district employees lived nearby, and noted that the bulk of the spending reductions targeted those who worked with special education students.
“We’re talking about a lot of vulnerable kids that are potentially losing an important support,” Hart said.
Don Tinney, the president of the Vermont-NEA, said that it was too early to say whether the Windham and Addison districts were “outliers or canaries in the coal mine.”
“Right now,” he said. “They’re outliers.”
The union has been emphatic that now would be a particularly ill-considered time to impose austerity on school districts. Education officials have said they expect children returning to school will require more special education, academic and mental health support to make up for the time in lockdown. And social distancing could require smaller class sizes.
“In this time of uncertainty, what we are certain about is that student needs are going to be increasing,” Tinney said.
Vermont received about $1.25 billion in the coronavirus stimulus package passed by Congress at the start of the outbreak. But the funds came with an important caveat: they could only be used for direct pandemic-related expenses, not to replace lost state tax revenues from the economic slowdown. State lawmakers have sought flexibility from the U.S. Treasury, but it has not yet been forthcoming.
Another Covid-19 relief package is being debated in Washington, and funding for state and local governments, which have seen their revenues crater, are a key priority for the Democratic House. But for now the House, the Republican-led Senate, and the Trump administration remain at loggerheads over a deal.
“It’s incredibly important in the next couple of weeks what Congress does to pass a bill to stabilize education funding. And if that money comes through, then that would take enormous pressure off,” Tinney said.
