MONTPELIER — After listening to hours of testimony on the good the bad and the ugly that school districts have endured trying to build budgets under a spending cap under Act 46, the House Committee on Education on Tuesday voted in favor of raising the spending threshold for every school district in the state by 0.9 percent for FY 2017.
The fix is meant to accommodate an unforeseen increase in health care costs and it has the support of Speaker of the House Shap Smith.
“I think that it is a reasonable move,” Smith said. He isn’t sure if there are enough House members in favor to get it through, but he also can’t be sure that the repeal of the allowable growth provision that the Senate is pushing will garner enough House votes, either. “There is a pretty significant split in the House on the repeal so it is not clear whether repeal would pass,” he said.
“I’ve had plenty of people stop me in the hallway today from the majority and the minority party,” said Kurt Wright, R-Chittenden, a member of the House Education panel. “Some were saying you are caving and shouldn’t be changing because it hasn’t had time to work. Others were saying they want to repeal it. I think repeal would be a horrible message to send. I think this is the best way forward for now, providing some relief, some help while staving off any attempt to repeal.”
Under the allowable growth percentage, or AGP, each school district was provided an amount they could increase spending from 0 to 5.5 percent based on the previous year’s per pupil spending. If a district votes to spend more than the allowed amount they are fined with a double tax on each additional dollar. An unexpected 7.9 increase in health care premiums meant more than 125 school districts would have to spend more than they were allowed, according to an analysis by the Joint Fiscal Office (JFO).
The House Education Panel zeroed in on that and raised the allowed growth across the state by 0.9 percent for one year. Even with the accommodation, the JFO estimates around 100 school districts will still fail to stay under their proscribed threshold. Many of those school districts have found that previously made contracts, special education costs, enrollment changes and spending choices made in the prior year will make it impossible not to overspend.
The testimony the committee heard revealed how unique each district is, according to Rep. Tim Jerman, D-Chittenden.
“I feel the need to protect cost controls put into effect last year … some (districts) are getting hit much harder than others,” he said. “It is hard to craft any bill that gets at all the circumstances. I think this is a reasonable compromise.”
The ACLU-Vermont has been urging lawmakers to repeal the AGP or face a lawsuit.
“The allowable growth rate caps need to be repealed to cure the constitutional infirmity of Act 46. A small tweak to adjust for increased health insurance premiums doesn’t do the trick,” said Allen Gilbert, executive director of the ACLU-Vermont.
The idea behind AGP was to lower tax rates for everyone in the state. Any district that stays within the allowed growth gets a tax decrease. And some who cross the threshold may still see savings even with the penalty, according to Rep. Sarah Buxton, D-Windsor-Orange.
“As I understand it in some situations you can be subject to the penalty but because of the cost savings from other communities that will be distributed through the education fund you may move forward with a lower tax rate for your citizens despite moving into the threshold,” she said.
Each school district’s allowable growth percentage next year will be based on this year’s spending. That means the AGP will be even tighter next year.
Windham Democrat Emily Long voted for the fix but didn’t seem completely convinced saying that she thinks caps and thresholds are bad public policy.
“There are many people really feeling the pain on this and I want to acknowledge that,” Long said. “No matter what the decision is we make today someone is going to feel the pain.”