Fiscal problems facing education are dire: Failures could lead to 2.5 cent increase in property taxes

by Angela Chagnon

Montpelier – Mark Perrault, a fiscal analyst with the Joint Fiscal Office, presented the House Appropriations Committee with the education outlook for FY2011-FY2013 on Tuesday morning. The total education budget for the state in FY2011 is almost 2 billion dollars, a slight increase from last year, and spending increases are projected for FY12 and FY13.  But the numbers also show that the grand list, the property tax that funds Education, is coming down in value due to declining home values.  ”If tax rates and [education] spending rates stay the same, we’d still have $38 million less,” said Perrault.

The state keeps a certain amount of money in reserve to prevent the state’s credit or bond rating from going down.  Perrault said that as it is now, there’s no money going into 2013, and “we’re slightly below the 5% reserve.”  Even if there’s no increase in education spending, there would be no money in reserve for FY2012.  ”We’re short almost 31 million dollars,” he said.

The Challenges for Change mandate to reduce school budgets by $23.2 million was reversed on December 22 of last year by Governor Shumlin.  Of the 60 supervisory unions in Vermont, only 15 met the budget cuts, while 22 partially met the mandated cuts.  20 tried but didn’t make it, and 3 didn’t even bother to respond.  There were no consequences for the schools that didn’t make an effort.

“If they don’t want to fall off a cliff in 2013, they need to make cuts,” stated Perrault.  ”Towns will get what they spend, but will get a higher tax rate.”

Acknowledging that the current system of education is not working, Rep. Kitty Toll (D-Danville) remarked, “Cuts aren’t what we’re looking for.  [The schools] need to find a different way to provide education.”

“This is a very serious financial problem we’re facing,” said Brad James, Education Finance Manager of the Department of Education.  He admitted that any changes made will not have immediate effects.  ”Anybody who thinks they’re going to see results next year is fooling themselves.”  He estimated the cost per pupil was currently between $12,400 and $12,700.

Rep. Phil Winters (R-Williamstown) stated the need to address per pupil spending and the student-teacher ratio.  ”I don’t think we’ll see any changes until the people in Montpelier have the gumption to put out some mandates.”

Rep. Ann Manwaring (D-Wilmington) pointed out that only 7% of the education budget is spent on administration.  Perrault agreed.  ”85% of spending is salaries and benefits,” he said.  ”Unless you affect salaries and benefits, there aren’t going to be a lot of changes.”

One of the legislators asked what the obstacles were to address the problem of statewide teacher’s contracts.  ”Teacher’s unions,” Perrault replied.  Rep. Martha Heath said that a bill addressing teacher’s contracts had been introduced years ago, but had failed.  She also pointed out that contract negotiations with teachers’ unions were a major expense.

When asked what Education Commissioner Armando Vilaseca’s reaction to the education budget was, Brad James responded, “We’re in a dire situation still, and 2013 doesn’t look any better.”

Rep. Joseph Acinapura (R-Brandon) asked how much money would be transferred from the General Fund to the Education budget.  Perrault replied that although a $300 million transfer is required by law, only $270 million would be transferred due to the schools not meeting the Challenges for Change school budget cuts.  Unfortunately, it means that property owners will be expected to make up for that shortfall to the tune of a 2.5 cent tax increase.  Deputy Education Commissioner Bill Talbot outlined the education fund outlook in a memo released December 23, 2010.

This outcome would be in direct contradiction to Governor Shumlin’s inaugural promise:  ”But let me be clear: as we tackle the difficult challenge of balancing our budget, we must not and cannot succumb to the idea that Vermonters have the capacity to pay higher taxes right now. In order to grow jobs and be more competitive with neighboring states, we must resist the temptation to raise broad-based taxes.”