As promised, Gov. Phil Scott has proposed significant changes to the state’s education funding system. Most of the proposals, in a memo submitted to lawmakers, focuses on caps for per-pupil spending rates and cuts to the state’s rebate program.
There are more than a dozen proposals on the table. Two ideas that generated the most consternation from lawmakers include a proposed cap for per pupil spending and an asset test for property tax rebates. The cap would be relatively high — $17,000 per equalized pupil — well above the $15,800 average spending rate. The governor also is proposing an asset test for people under the age of 65 who receive more than $10,000 a year in income from investments and who currently qualify for property tax rebates.
The estimated savings for the Scott administration’s proposed cost containment and education fund changes would be $75 million to $94 million.
Scott also has proposed the creation of a school consolidation commission that would evaluate whether schools with low student enrollments are viable. “Non-viable” schools would be consolidated by the commission.
The governor is fulfilling a campaign promise to lower state spending on K-12 funding, which has increased to $1.62 billion in 2017 from $1.34 billion in 2010. Meanwhile, student population has continued to drop. Over the past 20 years, student enrollments have declined by 30,000 pupils.
The cost of funding the state’s schools is anticipated to increase by 7 percent in the coming year. Most of that hike is the result of a $50 million deficit in the K-12 education fund. Because Vermont has a statewide funding system, local districts have to make up the difference. School districts are expected to increase spending by about 3 percent on average, which would increase the gap between spending and current tax rates by another $30 million.
Scott has said he will not accept any increases in property taxes this year, a pledge he reiterated in Friday’s weekly news conference.
The governor also emphasized that all options should remain on the table and said he is willing to work with lawmakers to develop a plan that eliminates the statewide education fund deficit. Scott also has issued a memo to school boards urging districts to keep spending at current levels.
In a letter to the House Ways and Means Committee and the Senate Finance Committee, Susanne Young, the secretary of the state Agency of Administration, urged lawmakers to consider the proposals with an open mind and “with a sense of urgency.”
The Scott administration attributes the problem of growing school spending against a backdrop of declining enrollments to a disconnect between increases in local budgets and tax bills. Seventy percent of Vermonters are eligible for income sensitivity rebates when property taxes exceed 2 percent of household income. That means many local residents are voting for budgets without having to pay significantly more in property taxes.
Young sees that as a problem. “The current formula does not adequately connect local budgets to local taxpayers in a way that would constrain statewide property tax growth,” she wrote.
Democratic lawmakers, who are the majority in the Legislature, have long lauded the income sensitivity program as a key mechanism for ensuring tax equity.