Editor’s note: This story is by Susan Bush, a freelance reporter based in Pownal.
Montpelier – A federal plan to save or possibly even increase public education system jobs may wind up boosting a state public school teacher pension fund — if outgoing Gov. James H. Douglas has his way.
A U.S. Department of Education Jobs Funding initiative is spreading $10 billion of one-time federal grant money to states hit by teacher layoffs. Although Vermont has not sustained wide-spread teaching staff reductions, the state has been notified of a $19 million grant awarded through the program.
The money seemed destined for local school districts, termed “Local Education Agencies,” or LEAs, but Douglas is advocating that state lawmakers remove $19 million in existing state revenues from the state budget and replace it with the federal grant funds. The money would then be dispersed to local education agencies but would not offer an increase in public school revenues. Subsequently, the state money pulled from the current budget would be returned and used to plump the teacher retirement fund.
The plan requires state legislative action to succeed. The action could occur when legislators convene in January.
The controversy has raised legal and ethical questions about Douglas’ plan, and has Vermont’s Department of Education Commissioner Arnando Vilaseca at odds with Douglas.
Vilaseca has said he supports routing the revenues to the state’s financially battered school districts. During an Oct. 20 BOE meeting, BOE members discussed the issue and agreed to vote their stance on the money at their November meeting. The state education board has not been charged with overseeing the funds.
Adding to public education budget woes is a looming $23 million Challenges for Change school budget cutting initiative. School directors will grapple with those cuts during the upcoming budget discussions.
Douglas maintains that the federal revenues can be used for the retirement fund. David Coriell, spokesman for the governor, said that Douglas made his intentions for the money clear in a Sept. 2 letter attached to the state’s grant application.
A copy of Douglas’ letter provides statewide statistics for student to teacher ratio (10.7 to 1) and pupil to staff ratio (4.55 to 1) and also notes a 10-year decline of the state’s public school population. Douglas has repeatedly said Vermont has the lowest ratio in the country and that has to change.
“When it comes to spending these additional federal funds, one size does not fit all,” the letter states. “Clearly, given the above context, it would not be a prudent use of public funds to financially encourage unnecessarily high levels of staffing in Vermont schools.”
Douglas’ letter goes on to say that since school budgets for the current fiscal year are already voter approved and adding more money to district budgets requires additional voter action under Vermont law, his intention is to “temporarily withhold the distribution of state funds equal to the amount of Education Job Funds distributed to the school districts that is above the required maintenance-of-effort. These retained state funds will be the subject of further consideration by the legislature when convened next January. My recommendation will be that these funds be used to support a current benefit for Vermont teachers as related to the liabilities of the teacher’s retirement fund incurred during the 2010-2011 school year [FY 11] or to lower school district property taxes.”
A 25-page point-by-point document put out by the federal DOE includes this EJF requirement: “A Governor may not direct how an LEA may use its’ Ed Jobs funds.” But the document also says that qualifying states must prove eligibility under several “maintenance of effort” formulas, and this is the basis for Douglas’ insistence that the money can be manipulated for the retirement fund, Coriell said.
“The Governor would not tell LEA’s how to use the federal money,” he said in an e-mail statement.
“The Governor’s plan would be to use State funds (freed up by the $19 million in Federal Funds) to pay for Teachers’ Retirement. Vermont is able to supplant State funds with Federal funds in this way because we surpass the Maintenance of Effort (MOE) requirement in the law. MOE basically says that a state must not reduce State Funds below previous year levels in order to receive the Federal funds. However, since education spending in Vermont has increased more than $19 million above previous year levels, we are able to reduce the State funds we send to local districts without running afoul of the federal law. The USDOE has agreed with us on this point and, as such, awarded us the funds. The bottom line is we would not be cutting State education funding; the State increase would just be less.”
Vilaseca is equally vehement that the money go to school districts.
He explained his reasoning in a memo to the board members: “My rational is that not only are schools required to reduce their spending by $23 million as required by C4C (Challenges for Change), but they will need to reduce an additional $30+ million as a result of the normal increases that occur annually as a result of inflation, contracts, etc. If schools reduce spending by $50 million in one year under the current governance structure, it will directly impact the opportunities for children in our schools.”
Under normal circumstances Vilaseca would not support using one-time money for ongoing operational expenses, he said.
“But these are not normal times,” he wrote. “Using the $19 million as I recommend and Congress intended still requires schools to make some difficult choices that will reduce staff and reduce opportunities for our students and will not eliminate the pain associated with those reductions.”
Even with the federal money, layoffs are likely, Vilaseca said.
David Carle, spokesman for U.S. Sen. Patrick Leahy, said that technically, because of the MOE formula, Douglas’ proposal is within the grant regulations. Whether the move honors the spirit of the law is another matter, he said. Carle stated that the initiative’s intent is “crystal clear” and was meant to keep teachers in classrooms and help local economies.
“The education funds were hard fought and hard won in Congress, with Vermont’s delegates always at forefront to block obstacles [to the initiative],” Carle said. “But if the [Vermont] legislature passes a budget adjustment [Douglas’ proposal] is an allowable use.”
Most studies indicate students fare better when teachers are teaching less populated classrooms, he noted.
“There is ample evidence of benefits to students with smaller class size,” Carle said.
Michael Briggs, who is the media spokesman for U.S. Sen. Bernie Sanders, referred questions about Douglas’ proposed use of the money to the federal documents referenced earlier in this article.
“So, according to the Department of Education, while retirement benefits and pension fund contributions are allowable uses of the funds, it is up to local school officials to determine how the funds are allocated – not the governor,” Briggs said in an e-mail statement.
U.S. Congressman Peter Welch’s spokesman Andrew Savage also referred questions to various EJF documents without additional comments
DOE Board member and current Swanton School Board Chairman Donald Collins said that he believes legislative inaction could prevent Douglas’ plan from moving forward. Collins said he wants to see the money delivered to the districts.
“I don’t believe that school directors will waste this money,” Collins said. “My understanding is that if the legislature does nothing, the money will go to the school districts. Perhaps, in their wisdom…”
Board Vice-chairwoman Ruth Stokes said that she believes there are enormous financial hurdles ahead for the state’s public education system, and, federal money notwithstanding, very tough challenges will likely cast long, dark fiscal shadows over the next few years. The economic climate coupled with C4C have formed a perfect storm of confusion and concern about public education services and funding, she said.
“Districts are already forced to have austere budgets, and even level-funded budgets actually mean cuts because of rising costs,” Stokes said. “And to dump Challenge for Change on top of that; we need time to figure this out. [Vilaseca] recommendation was to use this [$19 million] as a bridge during this time.”
The legislature has asked that school districts be given information about how much of the C4C $23 million in cuts their district may be required to deliver, Stokes said. That information is imperative to responsible upcoming budget discussions.
Many districts, up to now, have tried balancing student need against taxpayer wallets through measures that included reducing staff hours to circumvent layoffs, reducing the availability of certain classes such as music and art, which are both required under federal law, and eliminating field trip funding or other so-called extras. Those measures will fall short of the goals of C4C, Stokes said.
“They’ve [School directors] been nibbling around the edges [of their budgets] and it’s no longer a question of nibbling around the edges,” she said. “It means looking at class size, it means looking at things people haven’t wanted to look at.”
School consolidation is something that will be necessary, Stokes said.
“There is a necessity for complete restructuring of how we deliver education services,” Stokes said. “We’ve talked about this for years, that our underpinnings for our model of delivery is unsustainable.”
