Education News

New school-funding math could hurt local budgets

VERMONT — When you’re struggling to get by, it can be disheartening to learn that, on top of everything else, you may be getting a better than average deal out of an inequitable system that will soon change.

This is essentially the situation Addison County’s three school districts face as the Task Force on the Implementation of the Pupil Weighting Factors Report develops an action plan and proposed legislation that would “ensure all public school students have equitable access to educational opportunities.”

What does this have to do with our local schools?

The “Pupil Weighting Factors Report” — which was submitted to the Vermont Legislature in 2019 and subsequently dissected by educators and policymakers, as well as the Task Force’s ongoing investigations — concludes, among other things, that Vermont’s decades-old method of calculating equalized pupils doesn’t reflect the state’s current educational conditions, and this is undermining attempts to provide every student with equitable opportunities.

The report recommends several options for fixing this. All of them — and almost certainly any variation of them that might eventually get passed into law — would reduce the number of equalized pupils in the Addison Central, Addison Northwest and Mount Abraham Unified school districts. Fewer equalized pupils would translate into higher educational tax rates, reduced educational spending or some combination of both.

And this stings.

“We were already struggling to manage declining enrollment and rising costs, especially health care,” ANWSD Board Chair John Stroup told the Independent.

State Sen. Ruth Hardy, D-Middlebury, who co-chairs the Task Force, acknowledged that the Vergennes-area school district, because of its relatively small size, may feel more negatively effected by any proposed school funding legislation.

But the impact will probably be relatively modest, said Hardy and fellow Task Force member Rep. Peter Conlon, D-Cornwall.

This was cold comfort for Stroup.

Any further negative impact…,” he said, then trailed off, clearly frustrated.

ACT 60

To understand how changes in pupil weighting might affect local school districts, and why, a little history might be helpful.

In the late 1990s the Brigham family in Whiting filed a lawsuit against the state of Vermont because the state’s education funding system left communities like theirs, with lower property values, unable to raise equally sufficient education funds, compared with communities that had high property values.

The Vermont Supreme Court agreed — the funding system was indeed inequitable … and unconstitutional. And in response to this landmark case the Vermont General Assembly passed a landmark piece of legislation, Act 60, in 1997.

“For anyone who follows education policy and politics in Vermont, Act 60 is revered,” Hardy told the Independent. “It’s like Act 250 for environmentalists.”

Act 60 equalized the “taxing capacity” — or the ability for communities to raise funds to support schools — so that every student, regardless of what community they lived in, had the same backing from the same tax base: a statewide Education Fund that pooled together, among other things, revenues from local education property and income taxes.

That was nearly 25 years ago, and despite a few subsequent pieces of legislation that tweaked Act 60, the funding formula hasn’t kept up with dramatic changes in the way Vermont education is structured.

Chief among those changes was Act 46 (2015), which led to the consolidation of 206 Vermont school districts into 50, according to a State Board of Education report. School governance changed, and so did the way districts raised and spent money.

EQUALIZED PUPILS

One of the key tools Vermont uses to ensure equitable education spending across the state is the equalized pupil count, which provides a more accurate reflection of required educational resources than simply counting students one by one and evenly dividing resources among them.

The equalized pupil count is calculated with a formula that “weighs” certain categories of students more heavily than others.

For example, high school students, which generally require more resources than elementary school students, are given more “weight” in the formula.

The current formula uses four different weights:

• Secondary students (grades 7-12): 1.13.

• Economically disadvantaged students: 1.25.

• English language learners: 1.20.

• Pre-kindergarten students: 0.46.

At the state level, and more often than not at the district level, these weights contribute to a final equalized pupil count that is higher than the actual student count.

This equalized pupil count directly affects school district tax rates.

As the “Pupil Weighting Factors Report” explains, assuming the same level of education spending in a school district:

•  Increasing the number of equalized pupils reduces the cost per pupil, which in turn reduces the homestead tax rate.

•  Decreasing the number of equalized pupils increases the cost per pupil, which in turn increases the homestead tax rate.

Like many school districts around the state, the Addison Central, Addison Northwest and Mount Abraham Unified school districts are experiencing a steady decline in equalized pupils because they’re experiencing a steady decline in enrollment.

So even if these districts kept the same level of spending year over year — which would be a herculean task in itself, given sharply rising costs for things like health care premiums — they would still need to continue raising taxes to maintain their programming.

Now, in addition to declining enrollment, each of these districts will likely see a reduction in equalized pupils because of proposed changes in the formula weights.

‘OVERWEIGHTED’

The “Pupil Weighting Factors Report” concluded the weights listed above are flawed.

Basically the weights are “historical artifacts,” study co-author Tammy Kolbe told a joint meeting of the House Education and Ways and Means committees in January 2020, according to reporting by VTDigger. Furthermore, Kolbe said, “We could find no evidence that they were empirically derived.”

The report explores a few possible combinations of weighting updates that might better reflect educational and socioeconomic realities in Vermont. In the end, it recommends the following:

•  Increasing the 0.25 weight for economically challenged students to 2.97.

•  Increasing the 0.20 weight for English language learners (ELL) to 1.58.

•  Increasing a high school equalized pupil from 1.13 to 1.20.

•  Adding a category for middle school students, which would count as 1.23 equalized pupils.

•  Adding several smaller weights to account for remoteness and low population density.

The implication being that the weight for economically challenged students, or the “poverty weight” as it’s called, is less than 1/10 of what it should be, and the ELL weight is nearly as inaccurate.

Which suggests that districts educating a higher ratio of students in these categories, relative to other districts, are “underweighted.” That is, their ability to raise sufficient education funds is less than what it should be.

Theoretically, then, “corrected” weighting would result in more equalized pupils for underweighted districts, giving them the option to increase their spending without raising their tax rates, or reduce their tax rates and keep the same spending levels, or some combination of both.

On the other side of the coin, it would also reduce equalized pupils in overweighted districts, resulting in either reduced spending, increased tax rates, or some combination of both.

Addison County school districts are “overweighted.” Meaning, they have had more educational funding choices than an average of state school districts.

But only slightly, Hardy said. On a spectrum with the most overweighted districts on one side and the most underweighted districts on the other, the ACSD, ANWSD and MAUSD fall pretty close to the middle.

Yet when local school districts have built models based on the above recommendation, or variations of those numbers, they’ve gotten results that look much more alarming.

Last month, for instance, ANWSD Superintendent Sheila Soule warned of a worst-case scenario that could increase tax rates by as much as 20%.

But is the current publicly available data accurate enough for school districts to model potential impacts from updated pupil weights?

“No,” Hardy said. “Not at this time.”

OLD DATA

For starters, almost all of the data sets from the 2019 “Pupil Weighting Factors Report” are from 2010-2017.

“The data’s already old in the report, so if school districts are using what’s in the report, it’s no longer accurate,” Hardy explained. “This is how things go. These things take a lot of time, and the data is going to get old quickly.”

The data is especially limited because it doesn’t reflect the dramatic changes wrought by Act 46.

“All of the Act 46 mergers happened after (the data cited in) this report,” said Hardy, who previously served on several school boards and the ACSU Act 46 Study Committee. “Act 46 radically changes how school districts budget funds, how they allocate funds, and what the data is, especially when you look at small schools and population density.”

Another complicating factor in the Task Force’s work is the pandemic and how it has impacted school finances.

“We had a long discussion about which year we would use (data from), because if we use 2021 it’s a little skewed, because we have an unprecedented amount of federal funding coming into the state, going directly to school districts, so that actually skews their budgets and it skews their spending decisions,” Hardy said. “It helps them all, and I’m glad that they have that money, but it does skew what the normal is.”

On top of this, there are so many other factors involved.

COMPLEXITY

The “Pupil Weighting Factors Report” asks and answers a very narrow question: Are the weights correct?

“But school finance everywhere — and especially in Vermont — is not narrow,” Hardy said. “It’s very complex and very impactful and it’s one of those things where if you start to tweak something over here it has an impact over there.”

According to the legislation that created it, the Task Force must consider — in addition to how best to update pupil weights — the potential impacts on other parts of the school funding formula: “the spending threshold or the pupil count hold harmless; categorical aids; whether what we’re recommending is consistent with Act 60, Act 68 and Act 46,” Hardy said. “We’re not to recommend anything that could undermine those three very significant education acts. And we’re also supposed to consider the impact on tax rates and the quality of education in the state.”

So far it has been a monumental task.

“We were allotted 12 meetings,” Hardy said. “The first six meetings we spent getting on the same page, making sure everyone understood what the report said, making sure everyone understood the history and how our current system works.”

After taking testimony from expert witnesses and school districts that are expected to be impacted the most, the Task Force will develop some preliminary recommendations.

Analysts from the Joint Fiscal Office will then run models based on those recommendations to see what they would actually do to school budgets and tax rates, Hardy said. Then refine the recommendations. Then run them again.

Eventually the Task Force will share its findings with the public and ask for feedback.

MITIGATION

Because the impact on some districts could be dramatic — and jarring — the Task Force will also look for ways to smooth the transition, Hardy said.

“We might look at whether or not to have a ceiling on expenses — the excess spending threshold, or something like it — and a floor on expenses, too, because we want to make sure kids are getting a basic education.”

The Task Force may also look at ways of phasing in the updated pupil weights over a longer period of time, to mitigate the shock, said Rep. Conlon.

And though they do not expect Addison County’s school districts to suffer particularly dramatic impacts, Hardy and Conlon, as legislators representing county districts, are keenly aware of local realities and concerns.

“How do we ensure that districts like ours, literally caught in the middle, don’t suffer adverse effects that prevent them from being able to do what they need to do for students?” Hardy said. “But then how do we ensure this for all districts? That’s the balancing act for me as the Addison County senator and as the (Task Force) co-chair who has to look at this from a statewide perspective. Because we really need to make this work for the entire state — and not create a solution that further divides people.”

‘POVERTY WEIGHT’

Because the “poverty weight” is likely to see the most change — the “Pupil Weighting Factor Report” recommends it be increased nearly 12-fold, from 0.25 to 2.97 — it is the driving factor in these discussions, Hardy said.

But such a dramatic increase may not survive the legislative process.

“I don’t want to get ahead of what the Task Force decision is going to be, because we haven’t officially decided anything, but I’m fairly certain we will not be using the very large weight that is presented in the study,” Hardy said. “I think we’re leaning toward a more moderate increase.”

But again, she cautioned, the Task Force needs to run models and see the numbers for itself.

“I’m sure this is super frustrating for people who want to know now — it’s super frustrating for me — but that’s just sort of the way it is. We need to actually do the math and run it for every single school district and every single town. We need to understand the impact on schools and on taxpayers.”

Another question the Task Force has spent a lot of time on is “How do we measure poverty?”

In Vermont’s current school funding formula poverty is determined by eligibility and enrollment in the federal Supplemental Nutrition Assistance Program (SNAP), Hardy said. But this leads to an undercount in the number of Vermont’s economically challenged students “because it requires a family to apply for food stamps and go through the whole process and get approved. And a lot of families just don’t apply, for a variety of reasons.”

So the Task Force is considering replacing SNAP enrollment with Free and Reduced Lunch enrollment.

“This is also an application, but it’s an easier application and it’s done in school and it’s done specifically for the kid,” Hardy said.

Making the switch could increase the number of students counted as living in poverty by as much as 50%.

At the same time, however, the Legislature is trying to move toward universal school lunches, which if implemented would eliminate the data from the Free and Reduced Lunches program.

“So we’re also trying to figure out a different way to capture that data,” Hardy said.

CATEGORICAL AID

In addition to weights, the Task Force is considering other finance tools, like categorical aid, or state funding reserved for particular categories that often comes with strings attached.

Vermont’s school funding system has very few categorical aids and allows local school districts to make almost all of their own decisions, compared with other states, Hardy said.

At the moment the state uses categorical aids for three purposes: special education, which is by far the largest expenditure; school transportation; and small schools or merger support grants.

This aid comes “off the top” of the Education Fund — that is, it’s distributed before calculating the district education spending that determines tax rates.

Categorical aid has to be used for its intended purpose, Hardy explained. So for instance, school districts can’t use special education funding for transportation or to pay a music teacher or for the soccer team.

“It has to be for special ed and there are very strict rules on the use of special education funding,” she said.

There are many ways to design categorical aid, and the Task Force is considering whether or not it would make sense to use it in place of some — though probably not all — of the existing or proposed weights.

“I think there’s a strong argument, particularly for English language learners, to create a categorical aid for ensuring that districts across the state that have English language learners have the resources they need, and that the state knows that school districts are spending funding on students who need to learn English,” Hardy said.

DISAGREEMENT

Some policy advocates, like the Montpelier-based Public Assets Institute, have called on the Task Force to consider more categorical aid.

“No one imagined that when the Legislature asked for an analysis of Vermont’s current weights that the consultants would recommend increasing the poverty weight 12-fold,” Public Assets Deputy Director Stephanie Yu told the Task Force last month.

Such increases, which would make Vermont an extreme outlier in its use of weighting, would create “greater distortions and increase disparities across districts, and have to be absorbed by only a quarter of the tax base,” Yu said. Categorical aid “may make more sense as a vehicle to deliver more support to districts with kids in these categories, or there may be some combination of weighting adjustments and categorical aid that makes sense.”

The Coalition for Vermont Student Equity (CVTSE), on the other hand, “strongly opposes the use of categorical aid in place of correcting the flawed funding formula,” according to a press release issued by the coalition last month, and favors adopting the recommendations in the “Pupil Weighting Factors Report.”

Some critics of categorical aid have suggested that implementing spending restrictions that would only affect less affluent school districts amounts to a kind of “poverty shaming.”

“I am pleased to hear the questions about accountability but I do hope we all agree that questioning the ability of our poor communities to make the same decisions related to budgets and tax rates that wealthy communities have been making for 20 years is unacceptable,” said Rep. Laura Sibilia, I-Windham-Bennington, in her Aug. 27 Task Force testimony.

ELL PROPOSAL

Last week the Joint Fiscal Office released a preliminary proposal detailing how school districts would be affected if the ELL weight were replaced with categorical aid.

According to the proposal, school districts with at least one English language learner would receive a baseline grant of $25,000, plus $5,000 for each ELL student.

The proposal would result in modest changes for Addison County’s three school districts:

•  ACSD, with 22 ELL students and FY20 ELL expenditures of $91,775, would receive $135,000 in categorical aid.

•  ANWSD, with 9 ELL students and FY20 ELL expenditures of $65,615, would receive $70,000 in categorical aid.

•  MAUSD, with 9 ELL students and FY20 ELL expenditures of $32,258, would receive $70,000 in categorical aid.

The CVSTE objected, criticizing the Task Force and the ELL proposal for taking “an approach that has no empirical basis,” according to a press release issued by the coalition on Monday.

This proposal “would remove English language learners from the formula altogether, and fund them with grants, essentially funding them as a separate system of learners,” the CVSTE press release said. “Members of our coalition who educate English language learners have said time and time again that they will not be helped by these grants.”

HEARING & REPORT

The Task Force will hold a public hearing on Friday, Oct. 29, from 11 a.m. to 1 p.m., both in person and via Zoom.

Members of the public who would like to testify, either in person or remotely, must register by 2 p.m. the day before by visiting tinyurl.com/1029hearing.

After that hearing, the Task Force has roughly seven weeks to complete its work.

A final pupil weighting report with recommendations is due to the Legislature by Dec. 15.

“We are working hard to make sure it’s a unanimous, bipartisan report,” Hardy said.

The eight-member Task Force is comprised of four senators and four representatives, six Democrats and two Republicans.

In addition to the report, the Task Force will also draft a bill based on its recommendations that House and Senate members will co-sponsor in their respective chambers.

WAITING GAME

Until then, local school officials will be bracing for the results.

“We’re sympathetic to providing the supports kids need and recognize that some kids need more supports than others,” ANWSD board chair John Stroup said. “And we’re sympathetic to the investigation that’s happening in this study committee, but it’s undeniable it will negatively impact our ability to raise the funds we need to provide equitable opportunities.”

And if that happens, how is the Task Force “going to help us provide equitable programs that match districts that are able to provide lots of educational opportunities?” he continued. “How are you going to help us manage double-digit annual increases in health care costs?”

The weighting study has also been weighing heavily on the MAUSD.

In fact, the findings of the “Pupil Weighting Factors Report” were a major component in the considerations that went into a long-range facilities proposal unveiled by Superintendent Patrick Reen on Dec. 7, according to MAUSD Business Manager Floyd Davison.

“We know we have declining students, but through attrition and tightening our belts, it hasn’t been as impactful on the front line,” Davison told the Independent. “I know teachers might disagree, given less support structure and fewer staff in the classrooms, but that slow bleeding we’ve been having? The weighting study will accelerate that.”

The result, he said, is that “students are going to feel the impact.”

Davison hopes the Legislature will indeed find ways of mitigating the impacts that updated pupil weighting will have on school districts like his, perhaps by phasing in any dramatic changes.

“Otherwise, we’re looking at a big, ugly tax increase.”

Reach Christopher Ross at christopherr@addisonindependent.com.

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