LONDONDERRY—The three lawmakers (one a gubernatorial hopeful) stood in the Flood Brook Union School on Monday night before a full house of taxpayers, educators, and parents. The evening’s topic and everyone’s favorite frustration: education tax and reform.
The three state representatives braced for an angry crowd.
What Shap Smith, Dave Sharpe, and Oliver Olsen got were a lot of questions.
The main question was a perennial: How much local control do communities really have over their school budgets?
The lawmakers’ answer? More than they think. Just get involved early and often.
Education funding has received renewed attention in recent years. The cost of educating students in Vermont continues to rise, while student enrollments continue to drop.
Smith, a Democrat from Morristown, said education finance has remained a constant conversation and challenge for the 14 years he has served in the house. He’s served eight years as speaker.
Last year, Smith organized an education reform group to draft a plan to curb education spending. Earlier this year, lawmakers passed Act 46, designed to consolidate school governance by 2020.
It’s a tough conversation because it hits local schools, a big piece of Vermont’s identity, Smith said.
“Yes, our funding system needs to be fixed,” said Olsen, of Londonderry. But changing the money side at this stage “will not fix the underlying structural challenges” Vermont schools face, the independent state rep. said.
According to Olsen, Vermont spends a larger percentage — 5.2 percent — than most other states of its gross state product on education. The national average is 3.4 percent of GDP, he said.
Per-pupil spending drives the tax, he said, and the local education tax rate increases in proportion to how much schools spend on each student.
As an example, Olsen explained that per-pupil spending is why a school’s overall budget might increase by 0.6 percent but the education tax still jumps higher.
The overall budget is not the same as per-pupil spending, he said. If schools spend 11 percent more on each student one year, then the tax rate increases by 11 percent.
One factor driving per-pupil spending is student enrollment.
Olsen described the state’s declining school population as a “generational shift.”
Nationwide, young people are moving to urban areas, so fewer children are enrolled in rural schools. Vermont is also experiencing an overall depletion of its tax base as the state’s population ages, Olsen said.
According to Olsen, 80 percent of spending goes toward teacher salaries and benefits.
In broad strokes, the higher the student-to-teacher ratio, the less that a school spends per pupil. As student numbers decline, about 20 percent statewide, per-pupil spending increases, he said.
“We have a system that’s out of balance,” Olsen said.
House Education Committee Chairman Sharpe, a Democrat from Bristol, noted that it’s not the amount Vermont teachers earn that’s the issue. It’s the number of staff that’s the problem.
On average, Vermont teachers earn the second-lowest wages in New England. Only Maine’s teachers earn less.
Vermont’s teachers also earn less than the national average, Sharpe said.
If the state rounded up the student to teacher ratio from its average of 4.67-to-1 to 5-to-1, Olsen said, taxpayers could save $74 million a year. That’s approximately 7 cents per $100 of assessed value on the tax rate.
He estimates the ratio could improve if schools managed teacher retirements better.
“All the voters and all the school budgets across the state are reflected in our tax rates,” Sharpe said.
Changing school governance
Vermont instituted its education funding structure in 1997 (Act 60), with a revision in 2003 (Act 68).
The legislation attempted to equalize the amount spent on schools regardless of a town’s wealth. That initial aim was met. Inequality in education opportunities between schools, however, still exists.
“Despite equalized education financing, we have some real disparity in opportunities offered students,” Olsen said.
Enter Act 46, which asks communities to provide equity of educational programs and promotes the sharing of resources through a variety of consolidation options like combining school districts or consolidating schools.
Sharpe said Act 46’s goals are to ensure equality of educational opportunities between schools, the quality of programming, and financial sustainability for taxpayers.
According to the presenters, Act 46 keeps much of the decision making at the local level, as Vermont has done for almost 100 years.
It is supposed to give school systems the flexibility to design their own respective consolidation plans, whether that’s changing the structure of their supervisory union, their school district, or their school contracts. Act 46 even allows for towns to combine school boards.
“We’re trying to look at education in a more holistic nature,” Sharpe said.
Under the state’s current legislation, it’s difficult for schools to share resources like one music teacher for multiple schools, or to combine student population between schools that are in adjoining towns in different school districts, said Sharpe and Smith.
Smith added, “Based on the feedback, not everybody agrees with this direction.”
Some of the measures under Acts 60 and 68, like small-school grants that protect the smallest towns from financial penalty, have “created a false economy,” Olsen said, charging that they have disconnected the taxpayers from the actual costs of funding their schools.
According to Olsen, Act 46 will provide incentives for schools that merge in some form. It will also change how the state counts per-pupil spending by phasing out ”phantom students” — measures in the previous funding laws that soften the blows of declining enrollments by pretending that student population is higher for the sake of calculating state aid — by fiscal year 2021, except for merged schools.
It also changes the structure behind grants traditionally awarded to small schools.
Finally, Act 46 alters the penalties schools pay for excessive spending, Olsen said. In the past, schools were dinged for going above 123 percent of the state’s average per pupil spending. In fiscal years 2017 and 2018, the excessive spending penalty will be temporarily replaced by a mechanism that will penalize districts that increase their per pupil spending over a growth threshold.
Instead, according to Olsen, schools will be allowed a fixed amount of growth in their budgets from one year to the next. Higher-spending schools will have less wiggle room to increase their spending, while lower-spending schools will have more flexibility.
“Think about what you can do,” Olsen said. “Think about this [Act 46] as a blank canvas.”
Initial cost savings from Act 46 will be tiny compared to the $1.5 billion Vermont spends annually on education, Olsen warned. It’s the savings realized in 10 or 20 years that will make the difference.
Sweeping, difficult change
“This law is huge, it’s sweeping, it’s not perfect,” Olsen continued. “We as legislators recognize that.”
Still, Olsen urged everyone in the audience to get involved with how they wanted their schools to move forward.
“We as local communities control our own destinies,” he said.
Smith added some levity to the meeting, saying, “I’m a product of the public school system in Vermont, for good or for ill, depending on your perspective.”
Communities need to support their children not only to give them skills for future employment, he said; they also need their kids to grow up to be engaged citizens.
“This bill is about change,” he said. “Change is difficult.”
The last time Vermont changed its school governance was in the 1890s, Smith continued. “I think it’s worth having the conversation every 120 years.”
School board members in the audience asked voters to contact them. These big decisions might affect where kids will attend school, they said, and school boards can’t make these decisions alone.
Another audience member commented that not all the school spending decisions are local. School boards also wrangle with statewide decisions.
Comments from the audience were civil. Many thanked the lawmakers for the informative presentation.
Still, people stood in the back of the room and whispered to one another. So taxes will still go up, then? they said. So, where will we be sending our kids to school after all these changes? they asked one another.
One audience member, Duane Hart, a former school board member for Mountain Towns Regional Education District (RED), warned the speakers not to give the audience a “false hope” that if they trim the budget their tax rate will drop.
There’s still a disconnect between local spending and statewide decisions, he said.