Summary
Report
Legislature Adjourns After Special Session:
2005 Action on Education Issues in Review
The 2005 legislature adjourned on June 16th after
taking final action on the FY 2006 Appropriations Act. As readers of this Report no doubt know, a
special session was required to resolve differences between the governor and
the legislature (or at least a majority thereof) over resolution of the Vermont
State Colleges labor dispute. The scope
of the anticipated special session had been somewhat in doubt prior to June 16th,
with some in the legislature threatening to open the session up to issues
unrelated to the labor dispute, or even to issues not addressed in the
Appropriations Bill. As it turned out,
the one day session remained narrow in focus.
With the exception of the
The following
sections of the Appropriations Act (H.516) will affect school districts.
Teachers’ Retirement Pension Fund. State Treasurer Jeb Spaulding urged the legislature early in the session to address “the persistent under-funding of the Vermont State Teachers’ Retirement System.” Spaulding pointed out that the gap between actuarial recommendations and actual appropriations to support the System has grown in the past five years. Five years ago, according to Spaulding, the state appropriated 93% of the recommended actuarial contribution for the pension fund, while the FY’05 the appropriation was only 43% of the actuarial recommendation.
The actuarial recommendation for FY’06 was $50M, the governor recommended $24M and the appropriation will be $24.5M. The effect of under-funding the pension system is a growing net pension obligation. In FY’02, the net obligation was $86.5M. By 2004, it had grown to $110.9M. Spaulding rightly points out that what this means to future taxpayers and school employees is serious business. In 2004, $14M of the recommended appropriation of $41M was attributable to the past shortfalls.
To significantly compound this problem, new accounting procedures will require the state, beginning in 2008, to fund its future liability for retirees’ health care benefits. Estimates are that this will require combined annual contributions four times greater than are currently being made.
At Spaulding’s urging, the Appropriations Act includes
authorization of a study of this problem.
The Act establishes a thirteen member Commission on Funding the State Teachers’ Retirement System of
Certain to be at issue is the extent to which local school districts—and by extension the education property tax—should shoulder a portion of the responsibility for fixing the shortfall problem. Spaulding has made it clear that he believes that school districts, as employers of the affected future and current retirees, must at the very least be “at the table” when a determination is made as to whose ox will be gored as part of the solution to past indiscretions. We have indicated a willingness to be “at the table,” but a reluctance to contribute a main dish. The state teachers’ retirement system has been, from its inception, a state program. Property tax payers have not heretofore been expected to contribute financially to the retirement system for school employees.
It is certainly possible that a combination of harsh measures will be required to bring the pension fund into responsible balance. The possible measures include reducing retirement benefits for teachers, increasing general fund contributions to the pension fund and requiring an employer contribution to employee retirement accounts. With the VNEA certain to resist any change in benefits, the competing needs for general fund resources and pressures on school budgets from many directions, it is very difficult to see a consensus developing in favor of any plan that does not include significant compromise on the part of all concerned.
Department of Corrections Special Education. As we reported in Legislative Reports during
the session, the payment of special education costs incurred by the Department
of Corrections was discussed in money and education committees of both the
House and Senate during this session. At
the center of the discussions was the potential
use of the Education Fund to supplement the General Fund appropriation for the
Special education funding at the
The Appropriations Act increases the General Fund transfer to Corrections education from $2.8M in FY’05 to $3.1M in ’06 and allocates $531,000 in FY2005 general fund “waterfall” resources to the Department of Education for transfer to the Corrections Department “as needed for special education program expenses.” The act also directs the Departments of Education and Corrections to develop a plan for special education within the corrections system’s Community High School of Vermont. The plan would address spending targets and budgets, describe how inmate needs are to be met, and state specific measures for program evaluation. The plan is to be submitted to the Education and Appropriations Committees of the General Assembly this December.
Adult Education and Literacy (AEL); High School
Completion. As expected, the
Appropriations Act addresses the unresolved question of how to fund the state’s adult education and literacy program,
particularly as it relates to serving individuals who can be characterized as
recent high school drop outs. At the
heart of this, of course, is the potential use of Education Funds to support
programs for students who may no longer be enrolled in high school.
The Appropriations Act calls for the creation of a High School Advisory Committee with responsibility for “develop(ing) a recommended mechanism and procedure by which funding for high school completion programs carried out by the adult education and literacy systems…shall be paid to school districts or supervisory unions.” The Advisory Committee will be made up of two legislators, the Commissioner of Education and representatives of the Vermont School Boards Association and the AEL program, now named Vermont Learning, Inc.
In FY’06, while the Advisory Committee is preparing its recommendations, adult education and literacy programs will again be partially funded through an Education Fund appropriation of $250,000 plus a FY’05 General Fund “waterfall” appropriation of another $250,000. The Appropriations bill makes clear that the intent of the legislature was to provide AEL funding from the Education Fund in FY’05 as well as FY’06.
Early Childhood Education Services. The Appropriations Act includes a provision recognizing in statute the ability to include early education students in a school district’s average daily membership count. The purpose is to eliminate doubt that the current DOE regulations are, in fact, consistent with legislative intent as to the use of ADM funds for early education programs. The Appropriations Act provision reads in its entirety:
School districts may
offer early childhood education services through direct provision of services,
collaborative programs, or direct contracting with other public or private
providers, or an combination of these, and a school district may obtain funding
for these services by counting resident early education pupils in its full-time
equivalent enrollment pursuant to Vermont State Board of Education Rule 9200.4,
as in effect on June 1, 2005. School
districts are encouraged to collaborate or contract with existing public and
qualified private early education service providers.
Language in the Senate-approved version of the
Appropriations Bill establishing that early education students can be included
in average daily membership calculations, that early ed students would be
separately listed as a category in establishing ADM counts and that a weighting
of 0.46 should be assigned to early education students who receive a minimum of
ten hours of educational services per week was removed by the conference
committee. Since the above provision
incorporates the State Board Rule by reference, it became unnecessary to keep
the Senate language.
Pressed by opponents of publicly funded early education programs, the governor’s office stated its opposition to this section of the Appropriations Act. The provision will remain in the Act, and it is likely that a more comprehensive early education bill, along the lines of S.132, and its 2004 predecessor S.166, will again be the subject of intense debate in 2006.
Funding for June Graduates. Issue 6 of the Education Legislative
Report (April 5, 2005) included information about proposed appropriations to
the Agency of Human Services to support services for developmentally disabled
high school graduates, commonly referred to as “June graduates.” The Administration’s funding proposal in
April would have left a $2 million
shortfall in funds needed to meet disability service caseload needs, June
graduates included.
To contend with the shortfall, the Agency of Human Services proposed to prioritize its services by imposing a minimum age of 21 on services to June graduates, an across the board cut to current services and the utilization of waiting lists. As approved by the House, the Appropriations Bill would have funded services for only 50 June graduates, far short of the anticipated need for services to 96 individuals in 2006. One obvious implication of the under funding is the potential pressure to retain qualified students in school, where services are assured under federal law through age 21.
The Senate responded to the House proposal by adding to the appropriation for developmental disabilities, albeit in an amount still insufficient to meet the projected need. In the Appropriations Act as passed, $728,585 in general funds ($1,772,713 when matched with Medicaid) will be available to support services to June graduates. This amount is estimated to be sufficient to serve 65 graduates - not enough to address all needs but more than has been available in prior years. As a result, the Agency will change its System of Care Plan to lower the age restriction on services to age 19.
As passed, the Appropriations Act states explicitly that a minimum of 65 new June graduates will be served. The bill also requires the Department of Aging and Disabilities to report quarterly applications and enrollments for developmental services including “the number of individuals who have requested and meet the basic requirements to qualify for services …(but) have been denied services due to funding constraints (June graduates and others).” Of course, this provision may not identify students who remain in school when they might have graduated if services had been available after graduation. If the under-funding of services to June graduates has implications for your school district and students to whom you provide services, please let your Association know, so that we can also track the effects of the State’s action.
Council on Education Governance. The Appropriations Act also includes a
$75,000 appropriation from the Education Fund to continue the work of the
Council on Education Governance. The
Council was established under Act 68 of 2003 to develop and implement a process
for engaging a broad spectrum of Vermonters in a discussion of effective
governance structures for the delivery of public education, with a focus on
cost-effectiveness and quality. The
VSBA, VSA and VPA each have representation on the Council.
Initially, the Council was funded with private foundation grants and, in 2004, the Council awarded $71,000 in small grants to communities to work on governance related issues. Private foundation funding is not available for FY2006 - although the Council continues to work effectively and wants to continue supporting local efforts to improve education governance. The legislature concurs, and has acted to support the on-going work of the Council by appropriating funds to support its work. Under the approved language, the funds would be appropriated to the Commissioner of Education to support the activities of the Council--specifically by providing grants for governance work at the local level, and to “…document the processes, successes and lessons to be learned from the work of these communities.”
Act 25--Agency Fees
As expected, H.299, the agency fee bill, passed the House and Senate with almost no dissent and was signed by the governor on May 20th. It has been enrolled as Act 25, and can be read at http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2006/acts/ACT025.HTM.
Until the passage of Act 25, teachers were the only unionized
employees in the state without the right to bargain for an agency fee. School employees who are not licensed
educators bargain collectively under the Municipal Employees Act. School employees licensed as educators
bargain under the Labor Relations for Teachers Act. The Municipal Act, like the State and
Judiciary Employee Acts, includes provisions that make an agency fee a subject
of collective bargaining, along with salaries and conditions of
employment.
An agency fee is a fee charged by a union to individuals who do not belong to the union but are members of the union bargaining unit. The purpose of an agency fee is to compensate the union for services it is required to provide to all members of the bargaining unit, whether they pay union dues or not. Services covered by agency fees include negotiations and grievance representation. The amount of the fee is calculated by the union, and must not include the cost of union activities that are not services to members, such as political or lobbying activities. If a non-member objects to the amount of the agency fee, he or she may appeal the union’s fee determination—usually to an arbitrator or to the Labor Relations Board.
If an agency fee is made part of a negotiated contract with employees, the employer may agree to deduct the fee from the pay of employees in the same manner that employers deduct union dues from employee pay checks.
With the enactment of Act 125, school district negotiators can expect to be asked to negotiate with teacher bargaining units for inclusion of agency fee provisions in master contracts. As a mandatory subject of bargaining, the answer to this request can not be “no.” However, it will be important to remember that agreement to bargain over an agency fee does not require acceptance of an agency fee proposal. Bargaining in good faith does not require that proposals be accepted, only that they be discussed with an open mind and a sincere desire to reach an agreement. A school board can certainly say “no” to an agency fee proposal, and it certainly can expect something in return for agreement to an agency fee provision in a teachers’ contract.
Act 32--School Board Vacancies
H.201, the bill on filling school board vacancies, has been
signed by the governor and enrolled as Act 32.
The effective date of Act 32 will be
Under Act 32, vacancies on union school boards will be filled within 30 days of notice of the vacancy (sent by the clerk of the union school board) by the board of the member district that elected the union board member who is no longer in office. In the case of a vacancy from a town that does not have a school board, notice goes to the selectboard of the town, and the selectboard fills the vacancy. If the vacancy is in an at large position on a union district board, the union school board will appoint a new member to fill the vacancy.
Act 32 provides for situations where there may not be a
quorum left on a board due to multiple vacancies on a board. In those cases, the Act authorizes the
remaining board members to draw orders for the payment of school district
obligations until the appointment of new members creates a quorum. And finally, if vacancies affect an entire
board, Act 32 requires the Secretary of State to authorize the school district
clerk or other qualified person to draw orders until a majority of the
vacancies are filled.
Act 43--Capital Construction
School construction funding faired well in the 2005 Capital appropriations process. More than $15 million—enough to fund nearly all of the existing general school construction obligations of the state—was appropriated for this purpose in either the Capital or the Appropriations bill.
Here is the breakdown:
The following school construction projects are expected to receive funding in
FY2006:
v
v
v
v
v
The sum of $200,000 to the Department of
Buildings and General Services for the
The Capital Construction Act also directs the State Board of
Education to “evaluate the method by which it assigns points to school projects
and places them on a prioritized list, and to “consider ways in which it might
integrate technical education centers, including the three proposed projects
for which the state is obligated to pay 100 percent state aid, into the
prioritization system or ways in which it might otherwise ensure a reasonably
predictable payment schedule for such centers.”
The Board is to make recommendations to the General Assembly by
Act 29--School Buses
The
Senate passed this bill, S.81, with the intent of amending “school bus”
definitions in the motor vehicle statutes to provide for the limited use of
motor coaches for school activities and to address a new type of vehicle, the
“multifunction school activity bus.” The
House Education Committee discovered a number of technical problems with the
bill as passed by the Senate, and proposed extensive amendments, all of which
were ultimately accepted by the Senate and enacted as Act 29.
Care
was taken by the drafters of Act 29 to make the law conform to current
practices with regard to various types of school buses. The school bus section of the motor vehicle
statutes is surprisingly complex. In
addition, federal requirements for school bus construction must be considered
when determining how to regulate the operation of vehicles used to transport
students.
Act 29 does the following:
1. It provides that, although not classified as Type II school buses for equipment purposes, taxi cabs and noncommercial vehicles with
seating capacities of fewer than 11 must be driven by licensed school bus
drivers and must display identification signs and alternating warning lights if
used to transport students.
2. It provides that “motor
coaches provided with a driver on a single-trip
or multi-trip contract basis to provide transportation to or from…athletic
or other special events” are not required to have the same equipment and
signage as school buses, but that drivers
of these vehicles be subjected to criminal record checks if they “may be in
unsupervised contact with schoolchildren.”
3. It provides that “multifunction
school activity buses…provided with a driver to a school on a single-trip
or multi-trip contract basis to provide transportation to or from, or to and
from, athletic or other special events” are not technically school buses, but
drivers of these vehicles must be subjected to criminal record checks if they
“may be in unsupervised contact with schoolchildren.”
4. It provides that drivers of multifunction school
activity buses used “to transport students on trips other than on a fixed route
between home and school (unless used to
transport students to athletic or school activities) must hold school bus
driver’s endorsements.
5. It allows multifunction activity buses to be painted
colors other than school bus yellow.
6. Finally, it allows the use of motor vehicles designed to
carry more than 10 and fewer than 16
passengers including the operator (e.g. Ford Econoline or similar vans)
until
To read the full text of Act 29, go to:
http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2006/acts/ACT029.HTM
Act 38—Appraisals and Education Finance
H. 504, now Act 38, was largely the product of the
The General Assembly included a provision in H. 504 repealing the special education “targets” enacted in 1999 as part of Act 117. The targets, initiated by the Dean administration and approved by the General Assembly, were intended to limit the state’s special education reimbursement obligations. Despite the Act 60 commitment to reimburse 60% of eligible special education costs, the determination was made that special education costs were increasing too rapidly, and the target provisions of Act 117 were established to cap the state’s liability by adjusting the reimbursement contribution annually by an index based on growth in the state’s gross domestic product. This action was taken despite an acknowledgement on the part of state officials and lawmakers that special education services are a federal entitlement, that some special education costs result from shifting burdens from the state to local school districts and that the federal government has never met its special education funding commitment since enactment of the federal law in 1976.
This year, the
The special education caps played a prominent role in the
House floor debate on H.504 when Representative Joyce Errecart of Shelburne
offered an amendment to strike the repeal provision from the bill. Errecart’s amendment was supported by the Administration,
which reportedly lobbied vigorously in favor of retention of the caps. During floor debate, democrats and
republicans alike joined Obuchowski, Rusten and Ways and Means Committee
members in upholding the repeal. The
Errecart amendment was defeated on a vote of 114 to 9. Of particular importance to the House floor
debate was bi-partisan support of repeal
of the caps, notably by the Education Committee Chair and vice-chair George
Cross and Kathy Lavoie, and Rep. Renn Niquette, of
The Senate Finance and Education Committees supported the repeal, and the provision was retained in the Senate version of the bill. Removal of the caps ultimately became law when the governor signed H.504 on June 2nd.
Our associations appreciate the actions of the General Assembly in repealing the special education caps. The result in FY2006 will be an estimated 57% special education reimbursement rate to school districts rather than the estimated 54% rate that would have resulted from retention of the caps. More than $4 million in additional special education reimbursements will now go to local school districts and taxpayers.
For their part, school officials must continue their efforts to prudently manage all education expenditures - including those associated with the provision of special education service.
Act 38 also increases the income sensitivity eligibility thresholds to $85,000 in 2006 and $90,000 beginning in 2007. Data compiled by the Legislature’s Joint Fiscal Office indicate that, if adjusted by the Consumer Price Index annually since 1997 (the year Act 60 was passed), the original eligibility threshold of $75,000 would have risen to $90,794 by 2005. The income sensitivity adjustments show the Legislature’s interest in seeing income sensitivity provisions reflect inflationary increases.
The General Assembly increased the qualifying house site value for income sensitivity eligibility from $160,000 to $200,000. The Joint Fiscal Office indicates that, if adjusted for the average annual increase in residential property values reflected by the Vermont Home Price Index, the $160,000 house site value would have increased to $282,913 since 1997.
Of specific interest to local education officials is a provision in Section 10 of H.504 that amends 16 V.S.A. § 4028 (c) to allow “any district which has adopted a school budget that includes excess spending . . . to use a portion of its excess spending penalty in obtaining an education operations consultant.” A district that employs a consultant under this provision would receive recommendations on how to reduce its future education spending. The Department of Education would pay the consulting fee from the property tax revenue generated by the district’s excess spending adjustment as estimated by the Commissioner, up to a maximum of $5,000.
This option is subject to a “timely notice” requirement. The district must notify the Commissioner of its desire to engage a consultant within 60 days of the adoption of its budget. The consultant engaged to address school spending can not be an employee of the district or the Department of Education, and a copy of the consultant’s final recommendations must be submitted to the Commissioner of Education with an executive summary of the recommendations included in the town report along with a description of where to access the complete report. A district would be authorized to obtain consulting funds under this provision only once every five years.
Act 38 also amends 24 V.S.A.§ 2804 to provide that funds may be deposited in an approved capital reserve fund to pay for future school capital construction costs. Such funds are to be considered “approved school capital construction spending” and therefore will not be counted in the calculation of excess spending under 32 V.S.A. § 5401(12). Districts utilizing this provision will be required to submit annual reports of deposits into and expenditures from the capital reserve fund to the Department of Education. If the Department determines that any amount in the reserve fund has not been used for approved school capital construction within five years after deposit into the fund, 150 percent of that amount will be added to the district’s education spending in the then-current year for purposes of calculating the excess spending penalty.
To summarize this provision, a district can deposit funds into a reserve account for school capital construction without counting the expense as local education spending, but the funds must be used for approved school capital construction spending within five years or the district faces a penalty that would require an addition of 150 percent of the amount deposited in the reserve fund to its education spending for the purpose of calculating an excess spending penalty. We recommend that districts interested in this provision contact the Finance Division of the Department of Education for more information.
Other sections of Act 38:
To read Act 38, go to
http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2006/acts/ACT038.HTM.
Act 54--Technical Corrections Bill
Each year, the Department of Education works with the House and Senate Education Committees to develop legislation in areas of statutory law requiring clarification or adjustment. Typically, this legislation is referred to as the “technical corrections bill,” and does not address policy issues. There are exceptions, however, and this year, the technical corrections bill, officially titled “An Act Relating to Updating and Clarifying Education Law” includes two significant policy provisions.
First, Act 54 is the
vehicle used to adjust the implementation dates for Act 130 of 2004. Act 130 changes the funding methods and tax
rate calculations for union school districts.
It is intended to align union school district funding with the Act 68
funding system. When enacted, all of Act 130’s provisions regarding
modifications to the union school district funding system had an implementation
date of
To review, one purpose of Act 130 is to assure that union school costs are allocated to participating school districts on the basis of equalized pupils. This is referred to by the Department of Education as the equity factor. Currently, the methods for allocating costs in union school districts are determined by articles of agreement entered into when each district was formed.
Act 130 also requires that per pupil spending determinations for union districts and their member districts be calculated separately. This is referred to by the Department of Education as the transparency factor. This requirement is significant, and in recognition thereof, the General Assembly directed the Department of Education to work with union school districts and their member districts to conduct a “dry run” in 2005 to illustrate the effects of the implementation of Act 130 for those districts.
The results of the dry run influenced the General Assembly to defer the implementation of parts of Act 130 for an additional year. In conducting the dry run, the Department determined that, by comparison, elementary school districts had significantly higher costs per equalized pupil than secondary districts. When disaggregated under the Act 130 system, these elementary districts showed levels of spending above or near the excess spending thresholds associated with the Act 68 funding system. This phenomenon reflects the fact that under existing per pupil weighting methods, secondary students receive an additional weight of 25%. A Department of Education analysis of costs demonstrates that, in fact, secondary union per pupil costs are only about 10% greater than elementary costs.
These findings clearly require more analysis, contributing
to the Legislature’s decision to defer the transparency
provisions of Act 130 until
1) Union school districts will be added to the definition of school districts in 16 VSA § 4001 - the school funding chapter of Title 16.
2) Union school districts will file special education expenditure reports with the Department of Education and receive special education aid directly.
3) Union school districts will receive transportation aid directly.
4) Technical education center tuition will be charged to union high school districts of residence, not town elementary school districts of residence as is the current practice.
5) Union school districts will have an equalized pupil count.
6) For FY2007 (beginning July 1, 2006) only, union districts will be funded by allocating costs to member districts based on the percentage of equalized pupils in the union district from each member district. (In FY2008 and beyond, union districts will be paid from the education fund and will no longer assess costs back to member districts.)
7) For FY2007 only there will be only one tax rate for the combined member town and union district spending. Beginning in FY2008 separate tax rates will be determined for union districts and member town districts.
(Thanks to the Department of Education for developing the above list)
The Department is developing information for school officials working with union districts and their members and will be communicating specifically on this matter in the near future.
The committee, comprising a wide array of educational and
business interests, will be chaired by the superintendent of the Chittenden
South Supervisory Union and is also charged making recommendations for
implementing the vision it creates. Recommendations are due to the General
Assembly, the Commissioners of Education and Buildings and General Services and
the regions’ Workforce Investments Boards on or before
The work of the Steering Committee will be monitored by the Commissioner of Education.
Other provisions of Act 54 that may hold some interest for school officials:
§ Amends 16 V.S.A. § 165(a)(2)(K) to provide that if comparative school report data is not available at the school level, than it may be provided at the school district level and strikes from the section requirements for data submissions such as cost per square foot of building, class sizes, course offerings and other performance data.
§ Amends 16 V.S.A. § 426(a) to make clear that if a treasurer does not receive notification to transfer funds to the school account within 20 days of the date taxes are due and payable than the treasurer shall effect the transfer within 20 days of whenever he/she receives notification by the commissioner.
§ Adjusts the reference date in 16 V.S.A. §559(e)(7) (concerning school district bidding processes and contract renewals) for the Cumulative Price Index from December 1 to November 15.
§
Amends 16 V.S.A. §562(8) to state that the amount
of money approved by the electorate is an
amount of money from all revenue sources to be expended by the board.
§
Modifies 16 V.S.A. §563(17) by striking the
reference to average daily membership and substituting the term student census information.
§
Adds language to 16 V.S.A. §706m to state that
the electorate of a union school district may vote to eliminate the office of
auditor and employ a public accountant annually to audit the financial
statements and the student census of the union school district.
§ Amends the elementary tuition statute, 16 V.S.A. §823, to add a reference to the tuition over-or-under-charge statute, and to cap the tuition payable to an approved independent elementary school at either the amount charged by the school or the average announced tuition charged by Vermont elementary schools, whichever is less.
§
Directs the Commissioner of Education to study
the relationship between amounts of announced tuition charged and calculated
net costs per pupil. The Commissioner is to report to the Senate and
House Committees on Education on or before
§ Amends 16 V.S.A. § 2957(e) to read: (e) Except as provided in 20 U.S.C. § 1412(a)(10)(C) or unless a court or hearing officer determines otherwise, where a unilateral placement has been made without the school district of residence being offered a reasonable opportunity to evaluate the child and to develop an individualized education plan, reimbursement may not be sought for any costs incurred before the school district is offered such an opportunity.
Please do not hesitate to contact us if you have any
questions about this report. Thank you.