March 19 - Issue #6

House Committee Passes District Merger Bill

On Tuesday, March 16^th, the House Education Committee unanimously passed H.782, a bill that would provide incentives for school districts that choose to voluntarily merge if the merger meets several conditions laid out in the bill. The bill would also require supervisory unions to provide certain services that current law allows either districts or supervisory unions to oversee. These provisions were originally advanced by the committee on the Financing and Effectiveness of Public Education that met several times last fall. H.782 also would make several miscellaneous changes to education law.

The unanimous support for the bill among committee members developed in the final hours of committee discussion. On Tuesday afternoon, language was inserted that specified how the merging districts would address school choice. This language appeared to satisfy the reservations of several committee members, and the 11-0-0 vote approving the bill followed shortly.

H.782 would provide fiscal incentives to taxpayers in districts that vote to merge into a unified union school district (UUSD). The bill would define a UUSD as a multiple-town supervisory district (i.e., one school budget, school board, and superintendent). The UUSD must be comprised of two or more contiguous districts with at least 1250 school children or five merging districts and must provide elementary and secondary education, among other requirements, to earn the incentives. The major incentives include up to four years of reduced residential property tax rates, a temporary preservation of small schools grants revenue, the option to engage in multi-year budgeting, and other short-term fiscal benefits.

The bill emphasizes local determination of each UUSD’s characteristics. If boards agree to pursue merger, a merger planning committee would be required to present a plan that addresses a number of important decisions, including the composition of the UUSD board of directors, and whether to include school choice or particular independent schools as student enrollment options. Assuming the merger planning committee adopts a proposal, it would then be put to a vote in each of the participating school districts. Each of the districts that the planning committee designates as necessary participants must vote to accept the merger.

While this bill contemplates the formation of some new UUSDs, it would also modify the duties of existing supervisory unions. It would include requirements that there be an S.U.-wide curriculum, professional development, and collective bargaining (contract provisions particular to bargaining units districts would be allowed). S.U.s would be required to provide special education services and financial management, and would have the option of providing centralized purchasing and other duties. Superintendents would have the sole authority to hire non-licensed employees, and would nominate a single candidate for a licensed position within the district; if the school board rejects the nominee, the superintendent would nominate a new candidate. Superintendents would be required to work with school district boards to implement policies regarding minimum and optimal class sizes.

The 35-page bill also contains several miscellaneous modifications to education law and important details regarding merger and supervisory unions too numerous to include in the above summary. Among other changes, these provisions address the maintenance of employee contractual rights when districts merge, and alternatives to district merger requirements.

On Thursday, the bill was referred to the House Ways & Means Committee. What follows is a detailed description of the bill’s provisions.

District Merger Structure & Conditions

A UUSD would be required to meet the following conditions to be eligible for the incentives:

• The UUSD must be operational by fiscal year 2017;
• The UUSD must be two or more contiguous participating school districts comprising either an average daily membership of 1250, or five districts, or both;
• The UUSD must maintain one or more public schools offering elementary and secondary education;
• The UUSD may designate an approved independent school or a public school located outside of the UUSD as the high school for the district;
• The merger plan may include the option of allowing public and approved independent school choice for UUSD-resident children, regardless of the requirement that the UUSD maintain schools (this provision will be the subject of more scrutiny by the General Assembly);
• The UUSD board would have policy and budgetary development authority and other duties of supervisory union and school district boards, including the hiring of a superintendent;
• The UUSD may not close any school prior to 2018 or the fifth year of merger, whichever is first, unless the electorate of the municipality in which the school is located consents to closure;
• “The UUSD shall provide access to secondary technical education… and shall permit any qualified student in grades 9-12 residing within its boundaries to enroll, as capacity permits, in appropriate classes and programs offered by the center or centers;”
• The UUSD must be the LEA for special education and other federally funded services;
• The UUSD must have a single curriculum no later than the sixth year of merger implementation;
• The UUSD must offer opportunities for students to enroll in postsecondary courses for secondary credit through dual enrollment programs;
• The UUSD must offer opportunities for students to enroll in distance learning programs, if sufficient Internet bandwidth capacity is available;
• The UUSD must offer opportunities for students to participate in internships and other work experiences;
• The UUSD must provide the option for students to graduate early if they have completed the necessary requirements;
• UUSD secondary schools and technical centers must develop “daily schedules that support opportunities for students to participate in available education opportunities;”
• The UUSD must assume the employer obligations in existing contracts between merging districts and their bargaining unit employees, including provisions that address the merger transition;
• The UUSD must pay tuition for its students to attend the schools that they are enrolled in prior to the merger, even if the UUSD determines that the school(s) will not be an option for its students after merger;
• The State Board of Education would be prohibited from adjusting the boundaries of a UUSD, unless the UUSD consents to the action.

District Merger Incentives

If a UUSD merger abides by the structures and conditions listed above, its taxpayers would be eligible for a residential tax rate incentive for the first four years of UUSD operation, or prior to fiscal year 2018, whichever is first. The tax rate incentive mechanism would work as follows. For the purpose of determining homestead tax rates, the UUSD’s education spending per pupil would be reduced by a certain amount. The amount to be reduced would be progressively larger if the district approves more fiscally conservative budgets. That is, smaller school budget increases would result in a more generous tax rate incentive.

Specifically, the total change in education spending approved by the electorate as compared with the prior year will determine how much of an incentive is applied to the UUSD’s education spending per pupil.[1] The maximum incentive, $875 per pupil, is earned by approving a reduction in the UUSD’s education spending from the prior year. The incentive would be $750 per pupil if the UUSD voted to level fund education spending. The incentive would be $600 for an approved education spending increase of one percent or less, $400 for greater than one percent but no more than two percent, and $200 for more than two percent but no more than four percent.

The bill also states one additional rule about property tax rates that supersedes the incentive described above, if the two conflict. During the first four years of merger or prior to fiscal year 2018, whichever is first, the equalized (i.e., pre-CLA) homestead tax rate for each participating former district within the UUSD is limited to an increase or decrease of no more than five percent in a single year. The effect of this cap is that if districts with significantly divergent tax rates participate in a UUSD merger, the rates will converge in the middle over a period of several years rather than immediately.

In addition the tax rate incentive described above, the UUSD would also be eligible for the following incentives:

• The UUSD would have the option to propose two-year budgets for the first four years of merger prior to fiscal year 2018 and, upon approval of the electorate, may propose two- or three-year budgets thereafter.
• If applicable, the UUSD would receive a grant from the Education Fund for each of the first five years of operation equal to the sum of the small schools grants the participating former districts received two years prior to merger.
• Prior to fiscal year 2018, any UUSD budget surplus may be applied to lower residential tax rates in 2018 or later, or may be used for another purpose approved by the electorate.
• If in fiscal year 2018 a participating former district in UUSD is still owed state aid for school construction from a project approved prior to fiscal year 2012 and has not yet received that aid, the Education Fund will pay the interest owed on that portion of the outstanding debt.
• If a UUSD or a participating former district closes a school building prior to the UUSD’s fifth year of operation or fiscal year 2018, whichever is first, and subsequently sells the building or an “energy saving feature,” it will not be required to refund the percentage of the sale price to the state that the district received in state aid when the building was constructed.

District Merger Process

Every school district board in Vermont would be required to discuss whether it wishes to explore a UUSD merger within its supervisory union or with contiguous districts outside the S.U. by November 1, 2010. By December 1, 2010, each school board would be required to take a vote whether to formally explore merger options, and the result of this vote must be announced to the Commissioner of Education and the voters of the district.

If the boards of two or more contiguous districts vote in favor of merger exploration, then the districts would form a subcommittee to explore and analyze merger. Each district on the subcommittee would have a vote weighted equally. The subcommittee could request technical assistance from the Department of Education in evaluating the advisability of merger by use of a merger analysis template. The merger analysis template’s creation is required by the bill, although the template would not be produced until after the discussion and votes described above.

If the subcommittee concludes that a viable merger is advisable, than it would develop a merger proposal pursuant to union school district formation law (16 V.S.A. 706 - 706b). The UUSD merger proposal that would be required to be developed and proposed to the voters would need to include the items in 16 V.S.A. 706b(b) and the following:

• Student enrollment options (i.e., independent and public school designation, school choice within and/or outside of the UUSD, technical center access). A provision added just prior to the committee vote to approve the bill would also allow the electorate to require new UUSD’s to provide choice vouchers to parents and operate public schools;
• “…structures and processes that provide opportunities for local participation in the creation of UUSD policy and budget development;”
• The UUSD’s budget for the first or the first and second years of operation;
• At the subcommittee’s option, the proposal may include a provision that allows the district to engage in two- or three-year budgeting beginning with fiscal year 2018;
• A plan that addresses transitional matters for the employees of participating districts that provides for the UUSD’s lawful assumption of the participating district’s contractual obligations, recognizes representatives of the bargaining units, retains tenured status, and addresses seniority and other labor issues.

Finally, the UUSD proposal will have to obtain the approval of the State Board of Education and voter approval in each of the districts designated as necessary to formation.

Supervisory Union & Superintendent Law Changes in District Merger Bill

As mentioned in the introduction, the district merger bill also includes changes and clarifications to the roles of supervisory unions and superintendents. The requirements in this section would be effective as of July 1, 2012. Supervisory union boards must:

• Establish an S.U.-wide curriculum;
• Provide professional development for teachers, administrators, and staff;
• Provide special education.

At the option of the supervisory union, the board may:

• Manage purchasing;
• Manage construction projects;
• Provide financial and student data management services;
• Negotiate with teachers, administrators, and other school personnel (contracts may vary by district);
• Provide or arrange the provision of transportation, if applicable;
• Provide human resources management support.

As indicated earlier in this report, superintendents would have sole authority to hire employees for the districts and the supervisory union when those positions do not require a license. When hiring licensed personnel, the superintendent would nominate a single candidate for board approval. If the board rejects the nominee, the superintendent would nominate a new candidate. Superintendents would have full authority to dismiss employees, subject to legal and contractual employee protections.

Superintendents would also be specifically required to make annual financial reports to the state, and to make detailed annual financial reports to voters regarding the finances of the supervisory union. The requirement that school districts report this information to the commissioner would be repealed.

Minimum and Optimal Class Size Policies

The district merger bill would require that prior to January 1, 2011, supervisory union boards and school district boards must adopt average class size policies. The policies must define minimum and optimal average class sizes, and there can be specific provisions for technical education, certain courses, grades, and districts.

The Commissioner of Education would be required to develop two or more model policies regarding class size and post them online by August 31, 2010.

Miscellaneous Changes to Education Law in the District Merger Bill

• If a UUSD merger results in one or more districts remaining in a supervisory union while others participate in merging into a UUSD, the remaining districts would stay in their existing governance structures. As is current law, these districts could petition the State Board of Education to assign them to a supervisory union.
• Two or more school districts interested in merger could request that the State Board of Education consider granting them a waiver from the requirement that a UUSD must be formed with an average daily membership of at least 1250 or five districts, if the districts can demonstrate that the requirement “would not be cost-effective, would decrease educational opportunities, or would diminish student achievement…”
• The Department of Education would be directed to develop a merger template to assist subcommittees in determining the advisability of merger and in planning the merger. The Department would be required to publish the template online by December 15, 2010.

· H.782 would clarify that a school district may contract with a provider of distance learning educational services to offer distance learning to students, regardless of whether the provider is located in Vermont. The provider must be accredited by an accrediting agency recognized by the U.S. Department of Education, or the provider must be approved by the State Board of Education pursuant to 16 V.S.A. 166(b)(6).[2]

• The current-law exceptions to the requirement that all collective bargaining occurs at the supervisory union level would be eliminated (i.e., there would be no exceptions). The contracts would still be allowed to have district-specific provisions.
• The Department of Education and the University of Vermont would be directed to study whether and how efficiencies, student learning opportunities, and student outcomes were affected by UUSD merger formation. The Department would also be required to report on how many districts contemplated and voted on UUSD formation.
• The Department of Education would be directed to develop a detailed proposal that would identify a “geographic necessity” component to the Smalls Schools Grants. The proposal would also calculate the level of additional financial support necessary for geographically-eligible small schools to provide an education in compliance with quality standards and other state and federal laws. The proposal would also state a plan to “withdraw small school support gradually” from districts that do not meet the geographic necessity component.

Senate Committee Passes Miscellaneous Education Bill

Last Friday, the Senate Education Committee unanimously passed its miscellaneous education bill, S.297. The bill was presented to the Committee by the Department of Education. The Committee chose to remove a couple provisions that would have shifted costs onto local property taxpayers before approving the bill. S.297 will now be considered by the full Senate, and if it is approved, it will move to the House. The following is a description of each of the bill’s provisions as approved by the Committee.

· Sections 1 and 2 would clarify that a school district may contract with a provider of distance learning educational services to offer distance learning to students, regardless of whether the provider is located in Vermont. The provider must be accredited by an accrediting agency recognized by the U.S. Department of Education, or the provider must be approved by the State Board of Education pursuant to 16 V.S.A. 166(b)(6).

· Section 3 is applicable to postsecondary degree programs that operate in Vermont, but are not primarily located in or chartered in Vermont. These programs would be exempted from the requirement that they be approved by the State Board of Education pursuant to 16 V.S.A. 176a if they are accredited by an accrediting agency recognized by the U.S. Department of Education.

· Section 4 would codify existing law that allows three school districts to designate a public school in New York as the public school for the district.

· Section 4 would also make two changes to the high school designation law. It removes one of the three caps on tuition paid by districts to non-designated schools, if the designating board agrees to the parent’s request to send his or her child to a non-designated school. Section 4 also clarifies that if the tuition is capped, the parent would be responsible for paying the balance of the tuition. Here are the three current-law caps, formatted to reflect how section 4 would eliminate cap number 1 and modify cap number 2:

1. The statewide average announced tuition of Vermont union high schools.

2. The per-pupil tuition the district pays to the designated school… provided the parent shall pay the balance of the tuition charged by the nondesignated school.

3. The tuition charged by the approved nondesignated school…

· Sections 5-8 would modify school food program law (16 V.S.A. 1262a) to allow food grants that flow through the Vermont Department of Education to be dispersed to supervisory unions rather than school districts. These sections would not change the amounts of the grants.

· Section 9 would modify the rules regarding revisions to average daily membership (ADM), if the revision occurs after January 15^th prior to the start of the fiscal year. It clarifies that such a revision would not result in any change to the district’s education payment or tax rate. The revised ADM will be used when determining the district’s long-term membership in the following year. The Department testified that the ADM revisions are typically very minor (often fewer than 10 students statewide per year).

· Section 10 specifies that the Department of Education would complete implementation of the statewide student information system by January 1, 2013 (four years earlier than required by current law).

Challenges for Change Education Design Team Update

The Challenges for Change Education design team has now met four times in advance of its March 25^th deadline to produce a cost-reducing implementation plan consistent with Act 68 of 2010, which we described in our Legislative Report of March 5^th. During the first week of meetings, there was much discussion among team members, the media, and others as to whether the meetings could be and would be open for public observation. After holding the first two meetings in private, Education Commissioner Armando Vilaseca announced that the remaining four meetings would be open, and staff members from our Associations have now observed the two meetings that were held this week.

The design team has considered a range of approaches that would reduce expenditures in public schools. The Department of Education presented “back of the envelope” reports suggesting that two methods of achieving significant savings might include closing small schools and increasing student-staff ratios. The Department also suggested that Vermont’s supervisory districts, which include many of the largest school districts in the state, have greater administrative cost efficiencies than supervisory unions, thereby leading to the conclusion that significant savings would be found by consolidating all supervisory unions into single-board districts. Members of the design team also offered their own suggestions which included using a block grant for special education state aid, and limiting the amount of public funds that flow to independent schools.

Near the conclusion of the meeting on March 18^th, the design team considered a list of six concepts for the team to focus its remaining work. The areas were:

1. Accept the cost savings that were found in the normal fiscal year 2011 budgeting process;

2. Recommend redistricting an undetermined number of supervisory unions into single districts;

3. Recommend reducing the number of small schools;

4. Recommend increasing student-staff ratios;

5. Recommend methods to achieve administrative savings through district consolidation (i.e., fewer audits, etc.);

6. Recommend changes to special education funding and processes.

The team will consider these concepts further when they meet again on Monday, Tuesday and Thursday next week. Look for more information on this process and the team’s recommendations in the next Education Legislative Report.

House Committee Passes Pk-16 Council Legislation

Last week, the House Education Committee passed H.709, a bill that would create a prekindergarten-16 council. The council would be tasked with developing and updating a statewide plan to increase postsecondary aspirations among students, including developing a plan to “guarantee college admission and financial aid” for low income students who meet certain requirements that are as yet undefined. The council would also develop strategies to engage secondary students, and expand access to dual enrollment programs. The strategies developed would include the goal of ensuring at least 60 percent of the adult population will have earned at least an associate’s degree by 2020. Although it is not stated in the bill, presumably the council would make recommendations to the General Assembly designed to achieve the goals of the plan.

The council would meet no more than six times per year, and it would elect a chair annually from among the members. The council would be comprised of the commissioners of education and labor or their designees; the president of the University of Vermont, the chancellor of the Vermont State Colleges, and the president of the Vermont Student Assistance Corporation or their designees; a principal, a school board member, a superintendent, a technical center director, a teacher, and a college professor selected by their respective associations; a member of the Building Bright Futures Council or designee; a business representative selected by the Vermont Business Roundtable; a low-income children’s advocate selected by the Voices for Vermont’s Children; a state senator, and a representative.

The bill is now under consideration in the House Appropriations Committee, because state representatives typically are paid a per diem allowance for their service on a state council or commission.

END

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[1] Note that the amount of the incentive is based on changes in total education spending, not changes in education spending per pupil, but the incentive is applied to education spending per pupil. This structure assists districts with decreasing enrollment without harming districts with enrollments that are steady or increasing.

[2] This provision is also in the Miscellaneous Education Bill passed by the Senate Education Committee.