ST. ALBANS — With 34 school budgets – four in Franklin County and two in Grand Isle County — having been rejected around the state, the House Ways and Means Committee is revisiting the question of how Vermont pays for education.
At the same time, the Vermont Legislature in a bid to reduce costs is considering a reconfiguration of the governance structure of schools.
The committee’s vice chair, Rep. Carolyn Branagan, R-Georgia, said Monday that the committee will look at three plans for changing school funding initially. “There are no shortages of plans,” she added.
This year the proposed increase in the state’s base tax rate meant that even schools with small or non-existent budget increases saw increases in their tax rates.
Fairfield Center School, with a budget increase of 0.62 percent, had a projected tax rate increase of 26 cents. In recent years, the school has seen budget decreases result in tax increases.
Voters in Fairfield rejected the proposed school budget on Town Meeting Day.
“Towns that usually pass their budgets are having a hard time and I think it’s the tax impact,” said Fairfield School Board Chair Michael Malone.
Franklin West Supt. Ned Kirsch also expressed frustration with the tax formula. “We can cut and cut and cut, and harm our schools, and still not impact our tax rates,” he said. In his supervisory union, voters rejected both the Fairfax and Georgia school budgets. Both are towns where school budgets have traditionally passed with ease.
In Fairfax, the budget was up 4.9 percent after years of very small increases, said Kirsch. “You can’t flat line your budget forever. You can’t cut forever.”
Malone favors examining other ways to fund education, including using sales or income tax revenue, in order to take pressure off of the property tax.
One of the education tax plans the Legislature will be considering does just that. Originally proposed by former West Topsham representative Harvey “Bud” Otterman when he was on Ways and Means, the plan would divide funding for schools between the property tax and a dedicated income tax that could be used for education only.
Colchester Rep. James Condon has made a second proposal based on Otterman’s idea and Stowe Republican Heidi Scheuermann also has a proposal.
In Vermont all education taxes are paid into the education fund, which then pays money to the school districts. Money comes into the fund from a general fund transfer, the state lottery, one-third of the sales tax, and one-third of the purchase and use tax. Federal Medicaid funds for education are also included.
Whatever funds are still needed to cover education costs are raised from the property tax.
In 2005, 61 percent of the funds in the education fund came from property taxes, according to Steve Dale, director of the Vermont School Boards Association. For the coming school year, it will be 68 percent. Dale asked, “What happens if five years from now we’re using 85 percent of the money from the property tax?”
The decrease in revenue from other sources has increased the burden on property owners. However, that burden is not the same for everyone. Landowners whose land is enrolled in the current use program pay taxes based upon the use of their land and not necessarily its full value. Property school taxes are also adjusted based upon income, with Vermonters who earn less than $90,000 receiving a pre-payment from the state of a portion of their tax bill by the state.
“The people who bear the burden are the ones who own houses, farms and businesses that are not covered by some kind of exemption,” said Branagan. “There’s a lot of inequity.”
In addition to K-12 education, the education fund is also used to pay for education provided through the state’s prisons, preschool, and dual enrollment. Payees into the fund also have to make up for credits given to current use program enrollees and for taxes that are not paid into the education fund but diverted to tax-increment financing districts, explained Branagan.
But spending from the education fund isn’t the only thing driving up tax rates. Across most of the state, property values have fallen since the crash of the national economy in 2008. With property values dropping, the tax rate has to be higher to raise the same amount of money, noted Branagan.
This year, tax rates were calculated using a suggested base property tax increase of seven cents as was recommended by Vermont Tax Commissioner Mary Peterson. Her projection assumed an increase of 3.8 percent in education spending.
The school budgets passed so far in the state have resulted in a smaller increase than projected.
Branagan said she expects the Legislature to come up with a stopgap measure this year to reduce the increase in the base education rate to something closer to four cents, and then to take up the question of bigger changes to the education funding system next year.
This year, Gov. Peter Shumlin once again asked school boards to keep increases low and voters to closely examine school budgets.
While the governor is asking school boards to spend less, schools are being asked to do more, noted Kirsch.
Mandatory state testing will be done on computers starting next year, forcing schools to invest in the necessary technology, pointed out Kirsch. In addition, the shift to the Common Core standards has meant increased training costs for schools.
Dual enrollment will divert funding from K-12 education to colleges, while schools are also being asked to expand pre-school and provide personalized learning plans.
Kirsch believes many of those initiatives are good for students, but asks, “How do they occur? Who pays for them?”
The Legislature is moving toward the creation of preK-12 education districts that would replace the current supervisory unions. The final language is still being determined.
Kirsch believes consolidation could provide an opportunity for cost savings. “We duplicate everything, everywhere,” he said.
For example, there are just three towns in the Franklin West Supervisory Union (FWSU). FWSU runs payroll separately for each of those three school districts and negotiates three separate teacher contracts, although it is moving toward a single contract.
Having three contracts is “good for the legal profession. I don’t think it’s good for us,” said Kirsch.
Bill Phillips, superintendent of the Grand Isle Supervisory Union (GISU), sees another benefit from consolidation—making it easier for teachers to work from a common curriculum and develop common assessments.
GISU has begun increasing teacher collaboration. “I believe teachers can be more effective if they can collaborate with other teachers across school districts,” said Phillips.
While he believes consolidation may offer some financial benefits, Phillips isn’t certain it will be enough to bend the cost curve.
“It could temper the increases … and reduce some of the volatility,” said Dale of consolidation. In other states, consolidation at the administrative level has not produced the kind of cost savings that were expected, he noted.
“If we’re going to do any reconfiguring of our structure it ought to be focused on how we can make improvements for kids and stabilize tax rates,” said Dale.