Lawmakers eye changes in Vermont school financing system

NEW HAVEN — Area lawmakers on Monday explained their latest efforts to deal with an issue on many Addison County residents’ minds during town meeting week: education property taxes, which have been escalating each year while the number of school-age children in the state has been declining.
Many Addison County school districts on March 4 proposed 2014-2015 budgets that reflected spending increases at, or below, 3 percent. But other, often uncontrollable  factors — such as declining enrollment, the Common Level of Appraisal and a surge in special education costs — prompted the tax affecting portion of their school budgets to rise by 6 percent or more.
This has frustrated many school board members and taxpayers who are seeing their tax bills rise sharply for school budgets that essentially maintain current school services.
Compounding the issue this year is that the statewide education property tax is pegged to rise by 7 cents per $100 in property value. So school directors felt somewhat hamstrung as they prepared their respective spending plans. School officials have been reluctant, to date, to lay off teachers as a way of paring back spending. Personnel costs account for the vast majority of education expenses.
The Shumlin administration urged Vermonters this winter to use the ballot box to express frustration about local school budgets.
New Haven resident Mary McGuire urged legislators at Monday’s legislative breakfast at Lincoln Peak Vineyard to recognize certain school funding realities as they visited the town meetings within their respective districts.
“The school boards have worked really hard to keep the budgets reasonable and the reasons taxes might be going up needs to be dealt with at the state level,” she said.
Rep. Dave Sharpe, is a member of the House Ways and Means Committee. The Bristol Democrat said the 7-cent increase on the statewide education property tax rate is being caused by a projected $47 million increase in school spending statewide based on draft budgets; an additional $10 million in other related expenses — primarily special education; and the absence of $20 million in federal funding that was used to lower the rates last year.
“It all adds up to $77 million — roughly a penny for each $10 million,” Sharpe said.
“Local voters — you all, and all the citizens of Vermont get to go to the polls on Town Meeting Day … and vote for the local school budgets,” he added. “Then the task falls to the Legislature to fund those budgets. So we get blamed for raising the taxes and we are sensitive to that. We are also sensitive to the fact that education is expensive in Vermont.”
Sharpe said Vermont continues to be one of the most expensive (per pupil) public school systems in the country, with student outcomes that “could be better.”
With that in mind, Sharpe said an increasing number of legislators are subscribing to the notion that Act 68, the state’s education finance law, might have run its course, and that it is time to look at a new strategies and funding sources for schools that don’t rely as heavily on property taxes. He specifically cited two strategies under debate in the Statehouse:
•  School governance consolidation.
Sharpe spoke of a bill that would eliminate supervisory union boards and create a single board within that union to handle such administrative chores as setting school budgets and negotiating teachers’ contracts.
“It would take that load of responsibility off all the school boards and allow and empower the local school boards to have a lot more to do with (promoting) excellence in education in the buildings they are responsible for,” Sharpe said. “We believe while there might not be short-term savings, there will be long-term savings, because school boards will be more able to strategically use resources in the larger community and that voters will continue to participate in setting priorities and voting for budgets.”
• Bill H.164. This would scrap the current education finance law that relies heavily on property taxes in favor of a “tiered education tax based on local spending and personal income,” according to the bill. There would remain a property tax component, though it would be a fixed statewide residential rate.
The problem is, according to Sharpe, the transition in Vermont to an education income tax would cost approximately $220 million.
“We aren’t going to be able to move there in one year,” Sharpe said.
“This is not an easy process.”
Rep. Harvey Smith, R-New Haven, called education funding reform “the largest issue that we face in Vermont today.”
He said the current, equalized system of Act 68 allowed previously cash-strapped communities to quickly and steadily ramp up spending on education. He said Vermont communities were spending an average of around $7,000 per pupil when Act 60 (the predecessor of Act 68) came to the fore around 15 years ago.
“We are at around $16,000 or $17,000 (per pupil) today,” Smith said.
He added Act 68 gives the impression of a disorganized system.
“The local folks get a chance to vote on their budget, their budget is passed, then it goes to the state and we don’t know what the outcome is going to be until every single budget in the state is passed,” Smith said. “Then the Legislature is supposed to set the tax rate. We’ve lost connections with the voter making an individual choice in what their tax rates are going to be.”
Leave Act 68 unchanged and it will “suck the financial life out of most of us,” Smith said.
But Rep. Willem Jewett, D-Ripton, cautioned that lawmakers must not tamper with key features of Act 68 that ensure property-rich and property-poor towns have the same tax-raising capabilities. Prior to Act 60 and Act 68, Jewett noted, towns like Stowe and Killington could raise far more per penny on their tax rates (thanks to their grand lists) for education spending than communities like Middlebury and Bristol.
The inequities of the previous system were hammered home in a lawsuit filed on behalf of Whiting student Amanda Brigham. The Vermont Supreme Court ruled the system unconstitutional, which led to the Legislature’s adoption in 1997 of Act 60, amended in 2003 as Act 68.
“Education has always been strongly supported here in Addison County, regardless of the district,” Jewett said. “Acts 60 and 68 gave those (property-poor) towns … an equal playing field with the ones that could raise (money) pretty easily.
“I’m not standing up here to defend our current law in total, but it is important to understand what it was founded upon,” he added. “It is founded upon fairness.”
Jewett said the state’s biggest problem, with respect to education funding, boils down to demographics. He believes the state needs to do more to attract and retain young families with children.
“We are losing kids,” he said. “There are less and less kids in our schools. We’re a graying state.”
In the meantime, local voters continue to have discretion over their school budgets on Town Meeting Day, according to Jewett.
Addison resident Paul Boivin voiced frustration that school taxes continue to rise in spite of new technology that has been advanced by some school officials as a way of improving learning and streamlining expenses. And he noted the recently announced 3-percent increase in tuition for the state colleges system.
“You take one, two, three percent and extrapolate that out over 10 or 15 years, and that far outstrips the growth in income people are seeing,” Boivin said.
Rep. Mike Fisher, D-Lincoln, said dollars are tight everywhere — including in the Vermont Statehouse.
“We can’t print money, and we have values about what we want to provide for our communities — and our communities care about their schools,” he said. “It costs a lot of money.”
Sen. Chris Bray, D-New Haven, noted Vermont is a state that has historically “made more compassion than we have money in the bank. We are always stretching the line of how much we can afford to do.”
Bray lamented the fact that middle-income Americans are making less money, “year after year after year.”
Other discussion at Monday’s legislative breakfast focused on:
•  The Phase II Addison-Rutland Natural Gas Project. Residents along the pipeline route (from Middlebury to the International Paper mill in Ticonderoga, N.Y.) continue to ask legislators to represent their frustrations about the project. The Vermont Public Service Board will determine whether to give the project the certificate of public good it needs to proceed. The PSB has already green-lighted Vermont Gas’s Phase I pipeline from Colchester to Middlebury.
At town meetings this week, residents in Cornwall, Shoreham and Monkton overwhelmingly endorsed referenda in opposition to the Addison-Rutland Natural Gas Project (see related story). Randy Martin is one of six Cornwall property owners that would be directly affected by the pipeline project. He voiced concerns at the legislative breakfast on Monday that opponents of Phase II are being given just one week to file paperwork to intervene in the project application process.
•  Reduced state spending commitments for programs aimed at preventing drug addiction and poverty.
•  Legislation that could free up physicians to prescribe long-term antibiotic treatment to patients suffering from Lyme disease.
Reporter John Flowers is at [email protected].

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