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Vermont’s school spending in the past year is coming in far below expectations, meaning property owners will see a significant drop in expected taxes.
The tax department had predicted a 3.5 percent increase in school spending, which coupled with a $50 million deficit in the education fund left over from last year necessitated a tax increase of 9.4 cents on each $100 of assessed property value.
But the math has been changing as school districts submit their actual budgets.
Earlier this month, Brad James, finance manager for the Agency of Education, said budget reports from just over half the school districts showed spending was down to an increase of 2.14 percent. On Tuesday, he said that figure had dropped to 1.37 percent with nearly 80 percent of 176 school board submitting approved budgets.
That means an expected school property tax hike of 9.4 cents per $100 of assessed value will drop to less than 6 cents.
In the fall, Gov. Phil Scott and Education Secretary Rebecca Holcombe asked school boards to keep spending growth below 2.5 percent per pupil. The 136 school districts who have submitted board-approved budgets have an average per pupil spending of $15,416, just a 0.71 percent increase.
Tax Commissioner Kaj Samsom said the school property tax was now projected to rise by 5.8 cents on $100 of assessed value.
Scott’s office recognized that school boards “rose to the fiscal challenge” but said any increase in taxes is still too much. “Vermonters cannot afford this. The administration will continue to advocate for system reforms this session that provide cost-containment to prevent this outcome,” said Rebecca Kelley, spokeswoman for Scott.
Speaker of the House Mitzi Johnson, D-Grand Isle, said lawmakers are “thrilled” with a per pupil growth rate of less than three-quarters of a percent. She said it proves local school boards are already able to control costs.
“The near-flat per pupil spending, as well as the education spending rate are both well under the growth rates of the governor’s own budget. When you look at growth over a couple of years, ed spending is within normal inflation,” she said.
Nicole Mace, head of the Vermont School Boards Association, said her staff members had criss-crossed the state making sure school boards understood the dire state of the education fund, a message also driven home by the Scott administration.
“School boards responded to the call from the state and then some,” she said.
Mace also credited Act 46, the school district consolidation law passed in 2015, which was meant to increase operational efficiency and flexibility by creating larger school districts.
“I also think Act 46 is working, in terms of larger districts realizing economies of scale and being better able to manage staffing,” she said.
The act also sought to phase out the use of ghost students: numbers added to school rolls to mitigate the loss of students and inevitable tax hikes in hard hit localities. This school year, there are still 480 phantom students in the schools, but in fiscal 2019 there will only be 97, according to James.
James said the business manager of one supervisory union told him they cut staff and $760,000 when they realized they weren’t going to be subsidized for lost students. Other school districts are spending down their reserve funds because they are about to merge into larger districts and those that already unified are saving money, according to James.
“Changing to a unified union structure accounted for approximately half the decreases,” James told lawmakers on the House Ways and Means committee on Tuesday. The larger governing bodies have been able to take advantage of staff retirements and share staff, he said.
“Many of the budgets in newly unified districts are showing the lowest marginal increases in total and per pupil spending, which demonstrates the significant opportunity to contain costs and improve quality by changing the way we govern and deliver education,” Kelley said.
As the impact of Act 46 is just starting to be seen, the administration and Legislature are once again discussing a major overhaul to education funding.
House members have proposed fundamental changes to the tax formula, which Scott says he will only accept in tandem with cost-control measures such as a reduction in staff-to-student ratios or school closures.
Mace is concerned that lawmakers want to change the formula in time to impact the budgets school boards just approved.
“We just did all this work through Act 46, and through tough negotiations, that brought in education spending lower than its been in years,” she said. “Now, boards have to present a budget to their communities and can’t tell them what it means.”
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