New law adds perplexing wrinkle to education budgets

ADDISON COUNTY — As deadlines for creating budgets for the next school year draw near, the county’s public school boards are juggling a slew of challenges as they stitch together barebones spending plans — not least of which are a slumping economy and as yet unknown state tax education rates and per pupil spending allotments.
Add to that list of challenges Act 82, an education funding law, also known as the “two-vote mandate,” passed in 2007 and that kicks into effect for the first time this year. Act 82 will force some Vermont school districts to obtain additional voter support for spending increases that exceed the rate of inflation — and that’s a hurdle that has some administrators worried.
“There’s a difference between an unpopular law and a poorly written one,” said Rutland Northeast Supervisory Union Superintendent Bill Mathis in Brandon. “As a piece of law, it’s just a clumsy and silly and ineffective mechanism.”
Act 82 — which was concocted last year as a compromise between Gov. Jim Douglas, who wanted to cap school spending, and the Democratic leadership in the state Legislature — is expected to come into play directly in about half of the school districts in the state. Budget writers in the other half undoubtedly are keeping the new law in mind as they go about their business, too.
School budgets will be subject to Act 82 if they meet two criteria. First, district spending per student in the previous year must have exceeded the statewide average. Then, if a school board also proposes a spending increase higher than the rate of inflation, that proposed spending plan will appear on ballots as two separate items.
The first item will ask voters to approve what will be referred to on the ballot as the school’s “total” budget — that is, last year’s spending plan plus inflation.
The second will ask voters to fund what the ballot will call the “additional” portion of the budget.
This language has some educators and administers up in arms.
“I think voters would be inclined to vote no on at least the second question,” said Lee Sease, the superintendent for the Addison Central Supervisory Union. That, he said, could happen despite the fact that the true “total” budget, as put together by school boards, is the sum of the two items.
Floor votes on school budgets in some towns will give board members a chance to explain Act 82 to town residents, as well as justify those “additional” funds presented in a potential second vote, Sease said.
That’s not the case in towns where residents will vote on local and union school district budgets by Australian ballot, which is precisely the reason why UD-3 school board members are anxious about setting a spending plan for the district’s two schools — Middlebury Union High School and Middlebury Union Middle School — falling subject to the two-vote rule, Sease said.
“(Reasons for additional funding) can’t be explained in the article,” Sease said. “You cannot monkey around with the language of the article.”
Addison Northwest Supervisory Union Superintendent Tom O’Brien agreed that potential voter confusion is one of his biggest concerns about Act 82.
“If you’re proposing your ‘total’ budget … what the hell do you need another question for?” said O’Brien. “I think that was intentional, but I also think that is the most problematic (part of Act 82).”
But it’s not just voters who might be ultimately confused by Act 82.
While wording for Act 82’s required two votes is spelled out quite specifically in the law, O’Brien said that the legislation is clumsy and poorly written — and that there is no guidance for school boards and districts to follow if voters reject one or both ballot items.
“It has the potential for some real chaos,” he said.
In his district this year, Act 82 is “absolutely” playing a role in budget discussions, O’Brien said — though he also said that, when it comes to building Vergennes Union High School’s budget, the school board is focusing on pulling together a responsible spending plan instead of escaping Act 82 rules.
It’s the high school, though, that could well fall subject the two-vote requirement in Act 82. (At this point, though he stressed this could change, O’Brien said that it looked as if spending plans for the three elementary schools in his district will not trigger the two-vote scenario.)
O’Brien said that school board members in Addison Northwest are concerned for many of the same reasons that he is.
“It’s an arbitrary mechanism to limit spending,” he said. “School boards have traditionally been in that role.”
In the past, he went on, the boards have worked hard to put together budgets that both met the educational needs of students and considered a town’s ability to pay.
“For the state to walk in and arbitrarily impose an amount kind of takes that authority out of the school board’s hands,” he said.
In this sense, according to Mathis, Act 82 “solved a problem that basically didn’t exist.” School budgets, in terms of percent increase, had been declining over the last several years — proof, he said, that school boards and voters were capable of reigning in school spending.
On top of that, Mathis argued that the law will have unintended consequences for schools already facing declining enrollments — like Otter Valley Union High School, which is facing a 65-student drop over two years — because those schools are seeing rising per-pupil costs.
“(At OVUHS) the board is trying to keep the per-pupil expenditure level,” Mathis said, “but to do that they have to cut a half-million dollars out of the budget. That’s just brutal.”
Budget decreases lag behind population decreases, he said, and under Act 82, schools are effectively punished for spending more than the state average per student.
Act 82, Mathis noted, also doesn’t take into consideration fixed expenses — let alone rising energy, health care and special education costs that can drive budgets beyond the rate of inflation.
The new education funding law, though, is ultimately just one factor weighing on school boards during what’s turning out to be a tough year for building budgets.
School boards — which still haven’t received information on the base education tax rate from the state’s commissioner of taxes, and are without firm numbers for per-pupil spending targets (also set by the state) — can put together spending plans, Mathis said, but they are having trouble drawing up the other side of the ledger — revenues. 
“We’re in the situation where we’re building the expenditure side of budgets, but at this point in time we have no way to figure out tax rates,” he said.
The Vermont House earlier this year repealed Act 82, but the state Senate failed to repeal the act in April. 
Though a critic of Act 82, Mathis said that he does not expect to see the Legislature take the issue back up in its 2009 session.
“I don’t think it’s going to happen this year for the simple reason that the Legislature is caught up in the serious game of ‘the sky is falling,’” he said. “I think the general financial climate for the state will be the story for this year. What will happen a few years out, we’ll have to see.”
So school districts are making do with the law that’s on the books.
“The biggest consideration is the quality of education that you’re offering kids,” said Sease. “That’s always the biggest concern. We’re trying to maintain that while trying to avoid Act 82.”

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