Government officials and educators struggle with how to fund Vt. schools

NORTHFIELD — How can Vermont provide its students with a quality education at an affordable cost as the number of students across the state continues to decline? That is the question the state has been trying to answer for at least a decade.
It’s a question that is taking on new urgency in the face of a declining workforce, sluggish economic growth and nearly stagnant tax revenues.
On Monday, Gov. Phil Scott convened a group of approximately 300 educators from around the state — board members, superintendents, principals and teachers, including some from Addison County — for an education summit to examine that very question.
“We must increase the value students see from the dollars we spend, while providing relief from costs that continue to grow faster than Vermonters can afford to pay,” Scott said in his opening remarks.
The emphasis was on the rising cost of education in Vermont, even in the face of sinking enrollments statewide. The state’s Education Fund is projected to raise and spend $1.7 billion this year to educate Vermont’s K-12 students.
At the same time, Vermont is losing more than 1,000 students per year, and has lost 30,000 students in the last 25 years, Scott pointed out.
“The root of the problem is an education infrastructure that was built to educate 100,000 students,” said Scott. But it’s been 20 years since Vermont had that many students. Every $1 spent to preserve underused schools is money not being spent to educate children, Scott added.
To free up money to invest in improving education, Vermont’s education system must become more efficient, Scott stated.
“For nearly two decades we have heard the calls from Vermonters for property tax relief,” said Scott. “And we all watch as you struggle to preserve academic services as class sizes get smaller and overhead costs increase faster than our economy grows.”
“It also bears noting, to put things into context, that, on average, per pupil education costs — which is how we calculate property tax rates — have grown faster than even healthcare costs over the past 10 years,” he added. And health care, he noted, unlike education, is seeing increased utilization.
Each year the tax commissioner is required by law to set a yield for the education property tax formula. The yield is one of three key components that determine tax rates — the others are per pupil spending and common level of appraisal. This year, the yield increase is projected to cause property tax rates to rise an average of 9.4 cents.
That increase, Scott said, will only happen if “we do nothing.”
“I believe most of us recognize most Vermonters cannot afford this, which adds to the sense of urgency,” said Scott. “But I also know, and I hope you agree, that together we can find solutions.”
The tax commissioner’s projected increase is based on the assumption education spending will increase by 3.52 percent per pupil. That’s an increase of $47.5 million.
In contrast, general fund spending is expected to increase just 2.5 percent, said Susanne Young, the Secretary of Administration. If school boards were to hold per pupil spending to a 2.5 percent increase, then the increase would drop to $23.5 million.
   ADDISON CENTRAL SUPERINTENDENT Peter Burrows speaks about the state education funding system during Monday’s education summit at Norwich University.
Messenger photo/Michelle Monroe
Young pointed out that while the number of students in the state’s K-12 schools fell from 103,000 in 1997 to 76,220 in 2017. At the same time, the number of school employees rose from 14,451 to 18,015.
Vermont’s staff ratio has declined from 6.67 per pupil to 4.23 per pupil, with Vermont having more adults per pupil than any other state, noted Young.
Vermont has a hybrid education funding system in which budgets are voted on locally, but all education taxes go into the state Education Fund, and all of the schools receive the money they need to operate from the Education Fund (minus other revenues such as grants). Sixty percent of the funding in the Education Fund comes from the property tax and another 20 percent from a transfer from the General Fund to the Education Fund.
But the pressures on the General Fund are also increasing.
“Every $1 of General Fund that goes into the Education Fund is money that is not being spent on the workings of government,” said Young.
Absent additional taxes and fees, which Scott has pledged to avoid, that 2.5 percent increase in General Fund revenues will yield $39 million more in revenue in the next fiscal year. However, the state’s fixed liabilities, such as debt service, pension contributions and the human services caseload are projected to add $42 million to the expense side of the budget, explained Young.
In other words, the state is starting from a position of needing to cut $3 million in General Fund spending to balance the budget.
Addison Central Superintendent Peter Burrows noted the interdependency of Vermont’s education funding systems.
“None of us are really local,” he said. “We are all paying into a budget that supports everyone.”
Underlying the discussion of Vermont’s budget woes was one of the causes of those woes — a declining workforce leading to declining income and corporate tax revenue.
Paralleling a decline in students is a larger decline in the workforce. The state loses 1,788 people between the ages of 20 and 64 from the workforce each year, according to Young.
Compared to 2000, Vermont now has 25,000 fewer people under the age of 20 and 60,000 more over the age of 65.
Providing Vermont’s students with the education they need to join the workforce is even more critical, suggested Secretary of Education Rebecca Holcombe, because “we cannot afford to leave any potential on the table.”
Businesses are reporting a lack of skilled applicants, said Holcombe, meaning schools need to get better at getting students the skills they need to enter the workforce.
“Someone that leaves high school unable to contribute to a 21st-century economy is someone we’ll be providing for their whole life,” said Holcombe.
At the same time, income equality has increased, with those who have a post-secondary education seeing income gains. “The return on investment in education is getting greater with each successive generation,” said Holcombe.
“We can’t prepare kids exactly for the jobs of tomorrow because we don’t know what they are,” said Holcombe. But what is known is that the jobs that can be done with less education are disappearing, replaced by automation, she added.
“We know we have to make change,” Holcombe told the assembled educators. “We have to let go of where we’ve been.”
Editor’s note: This is the first of two stories on the education summit. The second, focused on Act 46, will appear next week.

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