Governor: Education must take hit
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Gov. James Douglas delivers his inaugural address on Thursday at the Statehouse in Montpelier as Lt. Gov. Brian Dubie, right, listens. Jeb Wallace-Brodeur/Times Argus |
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By Louis Porter Vermont Press Bureau - Published: January 9, 2009
MONTPELIER — School spending has remained largely outside the control of Vermont's governors, the purview instead of local community school boards members. That will change if Gov. James Douglas succeeds in passage of sweeping changes he proposed Thursday, though a dense thicket of opposition lies ahead.
In his fourth inaugural address – which at times sounded more like a budget speech – the Republican governor said education funding must be cut like everything else in tough budget times.
"Now is not the time to spare sacred cows," the governor declared, proposing a series of changes that would limit per-pupil spending next fiscal year in schools across the state to the current year levels, and shift more education costs onto the state's Education Fund.
The limits on spending would not just apply to the portion of education funding that passes through state government's hands, but — unless local voters decided otherwise — would limit the local portion of school spending as well.
The proposal essentially does away with the current school funding system, and it immedi-ately drew objections from some in the Legislature.
For school districts with declining enrollment — which is occurring in many areas of the state — that would mean a drop in actual spending in schools that collectively have seen increases in spending, despite dropping numbers of students.
The governor proposes to use any savings for a property tax reduction of more than $40 million and to prevent some of the cuts in General Fund spending that will be required to fill a massive budget gap expected next year.
"In fact, the state will collect no more from residential taxpayers next year than it has this year, a welcome change for struggling Vermonters," the governor said.
The changes would last for one year, Douglas said, then he will offer an as-yet undrafted replacement for the complex statewide school financing system of Act 60, and its replacement Act 68.
That immediately drew the ire of legislative leaders, who said the governor should not propose tearing down the statewide school funding formula without proposing a long-term alternative.
"To simply criticize the status quo with flowery language without coming up with a plan is not constructively helping the debate," Senate President Pro Tem Peter Shumlin said. "Let's not destroy the system we have in the hope we can find a better one."
"Nobody ever likes a school funding formula," he added. "Nobody likes any of them because nobody likes to pay property taxes."
"We will not walk away from a system we have worked so hard to achieve that ensures that a student in Hardwick has the same access to education resources as a student of Stratton," Shumlin said.
In addition, some lawmakers said Douglas is not paying enough attention to the potential impact of a federal stimulus package expected to provide a significant amount of money to states, including Vermont.
Newly elected Speaker of the House Shap Smith of Morristown said Vermonters already have control over school spending, when they vote on school budgets.
"We have control on spending. It is going to Town Meeting every year," he said.
The proposal was also attacked by the state teachers' union.
"The governor's proposals will do great harm to the state's excellent public schools while at the same time burdening the state's property taxpayers with higher costs," Vermont-NEA President Angelo Dorta said in a statement. "For all of his talk of respect for educators and concern for Vermont's property taxpayers, his proposals for the coming budget year show a stunning lack of both."
At stake is a lot of money in a tough budget year. Vermont's spending of more than $4.3 billion in state and federal money can be divided very roughly into thirds. The General Fund has — and will continue to — see substantial declines during the current and next fiscal year due to the recession. Douglas argued that it's time for the Medicaid budget and schools, which comprise the other two thirds, to feel the pain as well.
But the governor's main focus was on school costs, an area of government spending he has tried to curtail in the past with limited success.
"The Education Fund has not shared any of the sacrifice seen by other areas of state government," Douglas said. "We need to reduce benefits and cut programs, primarily in human services, by at least $150 million out of a general fund of less than $1.2 billion. Meanwhile, funding K-12 education is expected to increase $63 million in the $1.4 billion Education Fund."
The proposed changes to education funding would likely result in layoffs of teachers or other school staff, administration officials acknowledged.
"Those are the times we are in," Secretary of Administration Neale Lunderville said.
But while the number of students has declined by 4,300 over the last decade the cost of kindergarten through 12th grade education has grown by 23 percent, Lunderville said.
"This is not sustainable," he said.
The state, like many across the country, is facing significant economic and fiscal problems. State revenues are declining rapidly, while needs for services are increasing.
There have been several rounds of cost cutting this year, but there remain about $46 million to be cut or raised to balance the fiscal year 2009 budget. When the fiscal year 2010 budget begins in July the state will face a $150 million or more shortfall.
The usual ways of getting out of a fiscal bind will not be enough this year, Douglas told House and Senate members gathered to hear his inaugural address.
"Given the magnitude of the growing budget gap, it would be shortsighted to only cut our way out of this problem," Douglas said. "If we nickel and dime services to keep the budget in balance, we will quickly reach a point where our programs are no longer able to serve their purposes."
That means turning to schools and reducing their spending — and the amount taken out of the General Fund for education and teachers' retirements, he said. About $40 million in retirement spending will be put onto the Education Fund, while the formula through which the transfer into the Education Fund is calculated would be changed — resulting in about $23 million less being taken out of the General Fund under Douglas' proposal.
Under that plan school districts would be able to vote to spend more in their next year's budgets than in the current year.
Putting the obligation to fund teachers' retirements onto the Education Fund and providing for additional spending to come out of local property taxes — while using some savings to aid the General Fund — essentially puts more pressure on local property taxes, Democratic lawmakers said.
Douglas, in turn, said that would "strengthen local control by holding school districts directly responsible for tax increases."
However, under the governor's plan, the entire "excess" spending at the local level would be on the backs of residential homeowners, not businesses or second homeowners. Secondly, that spending would not count under the state's current "income sensitivity" provision that results in many Vermonters paying their property tax bills based on their income instead of the value of their property.
Douglas also proposed to lawmakers that they reduce the income sensitivity threshold, which currently applies to those earning up to $90,000. The governor proposed reducing that to $75,000, which would bring in an additional $9 million.
The Act 60 education law was passed in reaction to a Vermont Supreme Court ruling that required more equitable school spending between districts with different tax bases. It is not entirely clear how Douglas' proposal will deal with that constitutional issue, although administration officials said if districts elected to spend more than the cap they would be limited to doing so to conform with the Brigham decision.
Rep. Janet Ancel, D-Calais, who has followed school funding issues in the Legislature, said she questions whether the governor's proposal will meet the requirements of fair school funding.
"If the idea is that towns could vote to spend whatever they want, it does raise some issues," Ancel said.