MONTPELIER — Gov. Phil Scott made good on his promise to level fund the state’s budget and education spending in his first budget address to lawmakers on Tuesday.
The governor has not proposed any additional fees or taxes.
The Scott administration eliminates a $75 million General Fund budget gap in part by moving the $35 million annual teachers’ retirement obligation to the Education Fund.
The remaining $40 million General Fund shortfall is made up by cuts in human services expenditures and savings from the Medicaid program.
In a press briefing held an hour before Scott gave his much-anticipated budget address, his administration laid out a plan for extensive education financing reforms that will shift millions of dollars from the K-12 education system to pre-K and higher education programs.
The plan mandates level funding at the local level and requires all school districts to vote on budgets on the same day — Tuesday, May 23. Typically, school districts vote on budgets as part of Town Meeting Day, the first Tuesday in March.
Susanne Young, the secretary of the Agency of Administration, said the new date for school budget votes will give school boards time to find ways to keep budget growth at zero. Districts that are struggling to make cuts in fiscal year 2018 can put a 5 percent assessment on the local grand list to cover costs, she said, effectively putting the burden of increases on local taxpayers.
In 2019, district budgets will be tied to student population growth rates. Schools that are seeing a decline in enrollments would be required to reduce budgets accordingly.
The Scott administration did not analyze the impact of the level funding mandate on local schools, Young said, and would not be prescriptive about how school boards find savings.
When asked how small schools might be affected, Young said some “very well may close.”
The objective, Young said, is to lower property tax rates, which have continued to climb even though the student population has declined by nearly 28,000 students since 1997.
The state currently spends $1.6 billion on K-12 education. Lowering property tax rates was a promise Scott made to voters during his election campaign.
The Vermont-NEA, the state’s largest teachers’ union, said the governor’s proposals will harm public schools forcing them to lay off hundreds of educators, cut the pay of those who stay and close schools.
Martha Allen, president of the VT-NEA, said, “By freezing property tax rates, capping school budgets, firing hundreds of educators and seeking $15 million in pay cuts from educators, the governor will not achieve what we want: a top-notch education for our children.”
School boards will also be required to negotiate a 20 percent health care premium cost share with teachers. Young says this change will save the state $15 million annually.
Rep. Diane Lanpher, D-Vergennes, said she was pleased to hear Scott’s recommendations for support of housing and higher education and fighting the opiate abuse crisis. But the House Appropriations Committee member was not happy about the tack Scott took on education funding.
“I was more than surprised to hear a grand reform plan for education, given historic education reform (Act 46) was recently enacted and is currently working through communities,” Lanpher told the Independent. “It appears the governor is balancing his recommended spending by shifting costs to the Education Fund, which will be ultimately paid by property tax payers. He addresses this by capping spending and therefore eliminating  local school budget control. The timeframe to achieve these education recommendations is unrealistic for communities to achieve and therefore leaves approximately a $35 million hole in the presented budget.”
In his address, Scott said the new mandate will “establish parity” between teachers and their counterparts in state government and the private sector.
“I’m not asking school districts for anything more than what I’ve asked from state government,” Scott said. “We will be tightening our belts in Montpelier and rethinking every program and service at every level.”
Young said the changes will keep property taxes from going up in fiscal year 2018 and “put a pause on budgets.”
Almost every school board is bargaining changes in health care contracts because the Vermont Health Care Initiative is sunsetting old plans and offering new ones with lower premiums and higher copays at the end of this year. The changes could result in more than $26 million in savings for taxpayers, according to the Vermont School Boards Association. That estimate includes an 80/20 split on the premium and an assumption that school districts would add money to health savings plans to help teachers cover their increased out of pocket costs.
Geo Honigford, the president of the Vermont School Boards Association, strongly objected to changing the rules for budgeting so late in the game and said it was a slight against boards that have already put many hours into this year’s budgets.
“If the governor wanted boards to level-fund budgets, he should have made that a central piece of his election campaign,” Honigford said. Bringing this proposal forward after most boards have completed the difficult task of budgeting shows disregard for the elected officials overseeing Vermont’s public school system.”
Scott begged lawmakers in the House and Senate, the majority of whom are Democrats, to be courageous and resist the urge to block his reforms. “Vermonters asked us to put the state on a more sustainable path and this is one of them,” he said.
Scott said the state needs to align spending with the number of students in Vermont schools. “Remember: Vermonters need this,” he said. “Please don’t instinctively lock up with resistance to change. I promised to make the difficult choices to put Vermont on a more sustainable path. And this is one of them.”
“If we don’t, we will have to settle for higher taxes and fewer educational options,” Scott said. “And I refuse to settle for either.”
“Believe me when I say I know these are incredibly strong measures,” Scott said. “But over the last 20 years, student counts have continuously dropped. Costs have continued to rise faster than our ability to pay. And property taxes have become one of the biggest contributors to our crisis of affordability.”
Rep. Lanpher was skeptical.
“The question is — Why would the governor present a grand reform, which many Vermonters are looking to Montpelier for leadership and guidelines, then set a timeframe that all but guarantees failure,” Lanpher said. “I do not understand why he chose politics over good policy development.”
A large chunk of savings from K-12 education — $9.6 million — will be used to expand early childhood education programs for low-income families and improve childcare programs.
Let’s Grow Kids Campaign Director Robyn Freedner-Maguire said the investment in early education is a “game changer.” Middle class families where both parents work spend nearly 40 percent of their income on child care, according to the advocacy group. At the same time, child care workers are poorly paid.
“Significant investment is long over-due and frankly, our kids, families, providers and Vermont businesses that rely on a dependable workforce are counting on us to start solving the problem,” Freedner-Maguire said in a statement.
Higher education gets a boost of $6.5 million under the Scott proposal. The governor wants to increase base appropriations to the Vermont State Colleges by $4 million and the state contribution to the University of Vermont budget by $1 million. The money at UVM is to be used to support low- and middle-income students. The Vermont Student Assistance Corporation would also get $1 million for a need-based grant program for workforce training.
In addition, $500,000 would be set aside for military scholarships. Major General Steven Cray, the adjutant general of the Vermont National Guard, said the military scholarships will bring Vermont up to speed with neighboring states.
Vermont State College System Chancellor Jeb Spaulding lauded the governor’s attention to the “cradle to career” continuum of education from pre-kindergarten through postsecondary training and college. “The $4 million in additional funding will allow the Vermont State Colleges to turn the corner on years of stagnant state support,” he said. The colleges will use the money in 2018 to keep tuition rate increases down.
Independent reporter John Flowers contributed to this story.