Act 46 school consolidation law brings new budget challenges

MIDDLEBURY — Area school directors will face some additional challenges this fall as they try to craft fiscal year 2017 budgets that meet new per-pupil spending guidelines prescribed by Act 46, the state’s new education reform law.
Act 46, passed during the 2015 legislative session, offers financial incentives to supervisory unions that agree to establish a single, consolidated K-12 school district that would be governed by a single board. But the law also calls for per-pupil spending caps during a two-year transition toward full implementation of Act 46.
“The design is a 2-percent statewide increase in education spending,” said Rep. Dave Sharpe, D-Bristol. Sharpe helped design Act 46 as chairman of the House Education Committee.
The Vermont Agency of Education has set fiscal year 2017 per-pupil spending limits that take into consideration what each district spent the previous year, per equalized pupil, according to Addison Central Supervisory Union Superintendent Peter Burrows. The per-pupil spending allowances for next year are more generous for frugal school districts and tighter for higher spending districts. And districts are charged a dollar penalty for each dollar they spend above their limit, noted Burrows, so school leaders have a major incentive to try and stick within their prescribed guidelines.
Fiscal year 2017 encompasses the 2016-2017 academic year, for which school directors have already begun to budget. Most of those spending plans will be decided by local voters on Town Meeting Day next March.
The ACSU Executive Committee and the school boards of all seven ACSU-member towns have agreed to proceed with an accelerated merger under Act 46. It’s a transition that will be put to a vote next March in all seven towns. The ACSU is currently made up of nine school boards — one that establishes ACSU policy, another that presides over Middlebury Union middle and high schools, and one for each of the seven elementary schools in the ACSU-member towns of Middlebury, Shoreham, Bridport, Salisbury, Weybridge, Ripton and Cornwall.
Information provided by the Agency of Education shows that several ACSU school districts will have no capacity — or very little — to increase their per-pupil spending for the 2016-2017 transition year to Act 46. That information shows:
•  Weybridge Elementary, currently spending at a rate of $20,200 per pupil, will not be entitled to any per-pupil spending increase next year. In other words, any per-pupil spending boost would place Weybridge in the penalty.
•  Ripton Elementary, now spending $17,433 per student, will be granted a per-pupil budget increase of 0.79 percent. That translates to an additional $132.62 per student.
•  Cornwall’s Bingham Memorial School, now spending $16,435 per student, is entitled to a 0.99-percent increase. That’s equivalent to $161.11 per student.
•  Shoreham Elementary, now spending $16,653 per student, is cleared for up to a 1.09-percent boost in per-pupil spending. That amounts to $174.61 per student.
•  Bridport Central, now spending $16,659 per student, is green-lighted for a 1.19-percent boost in per-pupil spending. That amounts to an additional $187.62 per student.
•  Salisbury Community School, currently spending $16,358 per student, is allowed a per-pupil spending boost of 1.44 percent. That’s equivalent to another $218.99 per student.
•  Middlebury’s Mary Hogan Elementary, now spending $14,779 per student, has been authorized to increase per-pupil spending by up to 2 percent next year. That amounts to an increase of $281.40 per student.
•  UD-3 (Middlebury Union middle and high schools) is now spending $17,714 per student. Under Act 46’s transitional budgeting guidelines, UD-3 is accorded a per-pupil spending increase of up to 0.71 percent next year. That amounts to another $120.66 per student.
Burrows acknowledged that some ACSU school districts will face substantial challenges to craft 2016-2017 spending plans within the per-pupil threshold.
“When you look at our smaller schools, there’s much more variability in per-pupil spending, because when you have fewer students, losing one or two or gaining one or two has a significant impact on the overall cost per equalized pupil,” Burrows said.
“I think school boards always have their work cut out for them; it’s a challenge in general to build a budget that provides what students need and that is fiscally responsible,” Burrows continued. “This (per-pupil threshold) does add another layer this year. It is something we have been talking about at the board level and we’ll be working on it a bit earlier in the budget cycle to make sure we understand all of the factors. ”
But he also stressed that per-pupil spending does not add up to a school’s total budget. In other words, a district can limit its per-pupil spending to a 2-percent increase and still see its overall budget change by more, or less, than 2 percent.
“You can have a flat budget, but have a significant increase in per-pupil spending, because it’s based on the number of students you have in your district,” Burrows said, adding the Agency of Education also takes into consideration revenue streams for each district.
Burrows cautioned that several factors could influence Act 46-related budgeting for schools during the coming months. He believes it is likely provisions of the new law might be challenged, and possibly changed, during the 2016 legislative session. And a few teacher retirements in one of the smaller school districts could dramatically change budgeting in that district.
“The challenge of cost-containment here is that it is different for different schools, and some feel that it’s not equitable,” Burrows said.
Sharpe anticipates some challenges next session to the cost-containment provisions of Act 46, but he does not see the need to make changes. He expects some proposals to increase the per-pupil allowance for next year, perhaps to the rate of inflation.
“I won’t advocate for that,” Sharpe said.
“I think what we have in place right now is pretty reasonable.”
But Sharpe is prepared to have a discussion about Act 46 and listen to school officials’ concerns about the per-pupil spending thresholds.
“I do recognize it makes for pretty tight budgeting in many school districts,” Sharpe said. “It is designed to force serious conversations in school districts about how the spend money.”
Sharpe pointed to what is a current ratio of one school staff person for every 4.67 students in Vermont, a state that he said has lost 20 percent of its school-age population during the past 15 years. He said increasing the staff-student ratio to one-to-five could save $70 million in public school expenses statewide.
“We are asking school boards to take a serious look at where there might be too many paid staff in their school buildings,” he said.
Reporter John Flowers is at [email protected].

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