The Senate Committee on Education voted 4 to 2 to repeal the allowable growth spending thresholds in the new education law, Act 46. The action comes on the heels of a vote by House counterparts to keep spending thresholds in place with a 0.9 percentage point increase to account for an unexpected increase in health care premiums.
"I would remind folks that this was not in our version of Act 46," said Sen. David Zuckerman, who introduced S.233, a bill that would repeal the spending cap.
Zuckerman said he didn't think the allowable growth mechanism was a big deal when they passed it but "with seven months of information and experience in real world Vermont we are seeing that it was a rather brash action relative to the goals we set out in Act 46."
The House pushed for the two year cost containment provision in the final hours of negotiations. The allowable growth percentage, or AGP, assigns each school district an amount they can increase spending from 0 to 5.5 percent based on the previous year's per pupil spending. If a district votes to spend more than the allowed amount they are fined with a double tax on each additional dollar.
Debra Taylor, the superintendent of Rutland Central Supervisory Union's testimony to the Senate panel further drove home the need for repeal, according to Zuckerman. Taylor called AGP, "arbitrary" and said it doesn't take into account annual budget variations and complexities. She cited three examples of school districts that had been hard hit by the cost containment scheme even though they were low spending districts.
Proctor School District is allowed to grow 1.9 percent, however, average spending for the past three years has seen increases of only 1.5 percent. "Proctor has maintained these modest increases through careful planning and precision in their budgetary process. The impact of the AGP target is nearly $200,000 in reductions which will result in a decrease in education spending of $78,000, or a 1 percent reduction in overall education spending below FY16 levels."
"I don't think any of us anticipated hitting the low spending schools," said Sen. Ann Cummings, chair of the Senate ed panel.
Lawmakers are hearing that a number of districts are spending reserve funds to stay under the allowable growth. At the same time, the state is planning to use $20 million in unused special education funds to keep taxes lower for FY17 but there are no reserves in FY18.
"There are communities staying under the threshold by creatively playing games with their budgets and some of that creativity is just pushing the bubble into the next year, which isn't actually changing the system which I think was our goal in Act 46," Zuckerman said.
"Are we actually doing something here that is functionally helping school boards do better or is it penalizing those who have been cost conscious?" asked Zuckerman.
Zuckerman said he wants to repeal AGP because of uncontrollable costs schools face such as special education, changes in student enrollments and increases in health care premiums.
Sen. Dustin Degree, R-Franklin, voted against the elimination of the tax relief provision.
"We had five months to come up with something," Degree said. "There are a lot of ways we could do it but this is the one that people were willing to look at. I think what the House [education committee] has done is a lot better option. I think repealing these caps without discussing this further and without even looking at what the House has done is a bad idea," he said.
Cummings said the vote wouldn't end the discussion. "We will have to reach a compromise at some point," she said. "I think we can also try and find a way to do some cost containment immediately that is not impacting the towns that are doing what we asked them to do."
Sen. Philip Baruth, D-Chittenden, also voted against repealing AGP and said he wished there were more time to put something better together, but he can't support repeal when he "actively sold the whole package to the Senate and Vermonters as something with short term cost containment and long term savings. The problem with voting to repeal in the first couple weeks is that we are sending a big signal that if you indicate you aren't happy with the governance changes in three years we are going to repeal that, too."
The Senate Finance Committee will be the next to consider S.233. Lawmakers are racing to get a decision in place in time for school boards to go to the printers with proposed budgets.