"Based on the actions the state is taking as a result of a declining grand list across the state, as well as the loss of some other revenues into the education fund, the state of Vermont is raising both state based spending per equalized pupils as well as the state-based homestead tax rate," said Pembroke at a recent Bennington School District board meeting.
In Vermont, education tax is calculated based off property values, the number of "equalized pupils" in a district, and, of course, spending by the school itself. Equalized pupils are calculated based on a two-year weighted average of enrollment, where more weight is given to students that tend to cost more to educate, students from impoverished backgrounds, students for whom English is not their first language, and secondary school students.
According to a January 18, 2012 report by Lawrence O. Picus and Associates entitled, An Evaluation of Vermont's Education Finance System, "To determine homestead tax rates, the first step occurs when the Legislature establishes the base homestead tax rate," which for fiscal year 2015 will be $1.01, "and the base education spending amount per pupil," which for FY15 will be $9,382. "A district's education budget," reads the report, "which can be larger than the base spending, is then divided by its equalized pupil count. This yields an education spending per equalized pupil figure for each district in the state. That amount is compared to the base education spending admit per pupil to determine the percentage variance from that amount. If a district's equalized per pupil spending amount is less than or equal to the base education spending level, its tax rate is the base homestead rate. If the district's per pupil spending exceeds the basic education per pupil amount, the base education homestead tax rate is increased by the percentage by which its per pupil spending amount exceed the base amount."
Furthermore, if the district spends more than 25 percent above the state average spending per equalized pupil level (which is currently around $13,700), called the High Spending Threshold, their tax rate increases at double the rate it increased below the threshold.
The tax rates are also affected by each district's common level of appraisal, or CLA. CLA is a system designed to normalize property appraisals across the state. It does this by comparing appraised home values to actual prices homes are selling for on the market in each district. For example, Bennington's CLA is 108.79 percent, which means that houses are selling for 8.79 percent less than their appraised values, on average. A CLA above 100 percent will benefit a district, while a CLA below 100 percent will cause the tax rate to be adjusted upwards.
The state base tax rate for FY15 was set to $1.01, a seven-cent increase from FY14. This means that districts are starting their budget discussions at roughly a seven-cent deficit compared to the previous year.
In the SVSU, which includes the towns of Bennington, Shaftsbury, Pownal, Woodford, and the currently non-operating North Bennington, administrative costs are shared amongst the member districts, including Mount Anthony Union, and are included in their respective budgets. This means that potential tax rate increases for a specific town can be calculated by taking the rate increase from that town's elementary school budget, multiplying it by the percentage of students who attend the elementary school(s), then adding the result to the rate increase from MAU multiplied by the number of students who attend the middle and high schools.
For example, 54.83 percent of students from Shaftsbury attend Shaftsbury Elementary, while the other 45.17 percent attend the middle and high schools. Based on early drafts of each school's budgets, Shaftsbury Elementary expects its impact on the tax rate to be less than a cent, while Mount Anthony Union is facing an approximately 8-cent increase. Together, this means, if the budgets remain the same as they are proposed right now, the residents of Shaftsbury would see an approximately 3.6 cent increase to their education tax rate.
Shaftsbury Elementary was able to keep its projected tax rate basically level primarily due to an increase in equalized pupils, which increased from 226.89 this year to 240.67 for next year. So, while spending increased from $2,693,960 to $2,805,626, spending per equalized pupil actually dropped from $11,869 to $11,648, meaning their spending adjustment for being over the state baseline of $9,382 decreased by five percent. The CLA in Shaftsbury also increased from 106.07 percent to 108.79 percent, which also drove their tax rate down.
While these numbers benefitted Shaftsbury, Pembroke warned their board not to get used to it, "I caution you, don't get addicted to the equalized pupil drug, or the CLA drug, because it is a drug that you can get addicted to. The growth is exponential, even if you leveled off at a high number, as your budget grows, that's going to grow you tax rate."
For the town of Bennington, the numbers were less in their favor. The town's CLA decreased from 91.70 percent to 89.08 percent, which drove the tax rate up. "That's not good," said Pembroke, "Well, its good if you're trying to sell your house, because you're going to get a couple more bucks for it. But if you're trying to stay in your house and pay your taxes, its not." The district, which includes Monument Elementary, Bennington Elementary, and the Molly Stark School, also saw its total education spending increase by $267,292, under the currently proposed budget, which when combined with the other effects, causes the adjusted homestead tax rate to increase by 12.8 cents. Because 42.45 percent of Bennington's student population attends the elementary schools, when combined with MAU, Bennington residents could see their education tax rise by approximately 10 cents overall under the currently proposed budgets.
According to Pembroke, who calculated that even if BSD had level-funded its budget, it would have seen its tax rate go up by about nine cents, meaning that only approximately 3.8 cents of the 12.8-cent increase were caused by changes to the BSD budget. "Whatever you do, you're going to have a tough tax rate year," he said. Pembroke related a story told to him by a colleague who had decreased her district's budget by three percent, but was still seeing a 10 cent increase in her tax rate, because of both the base rate increases as well as a decrease in CLA in her district.
In Pownal, Pembroke estimated that, should their budget be level-funded, they will see the district's adjusted homestead tax rate increase by eight cents, which stays at eight cents when you factor in MAU, as Pownal's students are split almost 50/50 between the elementary school and the middle and high schools, and both budgets are projecting an eight cent increase.
In Woodford, had they elected to level-fund their budget, they would have seen an increase of a staggering 20 cents, due to a decrease in equalized pupils. For the small district, a loss of three equalized pupils, as occurred this year, has a huge effect, leading to the state mandating spending adjustment jumping from 110 percent in FY14 to 125 percent in FY15. Woodford's current proposed budget, however, would actually decrease spending by about $31,350, which sets their projected increase at a more manageable seven cents. When combined with the projected increase in the MAU budget, this would mean a 7.7-cent increase in the adjusted homestead tax rate for Woodford residents.
SVSU member districts have not yet finalized their budgets, although Pembroke is encouraging the districts to finalize their budgets by Jan. 31. While Pembroke notes that these numbers can go up and down based on decisions made in both the local budgets and at the state level, he expects the end result to taxpayers will be roughly the same as the numbers he's presented.
Derek Carson can be reached for comment at email@example.com. Follow him on Twitter @DerekCarsonBB