December 22 - Issue #1
The Vermont General
Assembly will convene the 2011-12 legislative biennium
on January 5th. For at least the
first week of the session, the legislative schedule is filled with organizational
business including electing leadership for each house, announcing committee
assignments, and attending inaugurations for various state leadership posts. It will not be until sometime during the
second week of the session that substantive policy work will commence in
committees.
Shap Smith of
Morrisville is expected to be re-elected Speaker of the House, and John
Campbell of Quechee is expected to be elected to the top Senate leadership
post, President Pro Tem. The prior Pro
Tem, Peter Shumlin, has been elected the state’s 81st Governor, and
the executive branch will be returning to Democratic control after an
eight-year stint under the Republican administration of Jim Douglas. Shumlin was one of four senators from the
prior biennium to be elected or appointed to a new state office this year; the
others are Phil Scott (Lt. Governor), Doug Racine (Secretary of the Agency of
Human Services), and Susan Bartlett (special assistant to the Governor). At least 21 first-term representatives and
six first-term senators will take their seats in the new biennium. Democrats retained strong majorities in both
legislative chambers, similar to those they have enjoyed in recent biennia.
Again this year, the
professional associations representing educational leaders will pool resources
to provide regular reports on legislative activities of particular importance
to public schools. Through the
publication of our Education Legislative
Reports, we will provide timely information to Vermont’s school board
members, superintendents, principals and other school administrators. Our intent will be to inform, and our purpose
will be to equip school leaders with the information you need to communicate
effectively with your local legislative representatives.
We know from experience
that there is no substitute for constituent communication with legislators when
it comes to effective Statehouse advocacy.
Legislators want to know how their proposals are received at home, and
they understand that the best sources of information about the effects of their
proposals are the people they represent.
The Education Legislative Report will be distributed primarily through
email, with an Adobe Acrobat PDF file also available on each association’s web
site. Our publication schedule may vary. When possible, we will publish in time to
enable you to talk with your legislative representatives on weekends or
Mondays, when the Legislature generally does not meet. You will soon be receiving a directory that
shows which representatives and senators represent each supervisory union, and
the directory will include contact information for the legislators.
It is imperative that
school officials understand and participate in these public policy
deliberations. As bona fide experts on
the delivery of public education through our local schools, you have both the
obligation and the right to have your expertise considered in these
discussions. The quality of the
discourse on public education issues in Montpelier will improve if you
communicate your thoughts to your legislators.
Our job is to keep you informed on what is happening in the Statehouse
so that you know when and how to weigh-in.
Please do not hesitate
to contact us with your comments about the Education
Legislative Report. We look forward
to hearing from you. You will certainly
be hearing from us!
At a press conference
Wednesday morning, Governor-elect Peter Shumlin, Speaker Shap Smith, incoming
Secretary of Administration Jeb Spaulding, Commissioner of Education Armando
Vilaseca, the directors of our Associations, and Vermont-NEA leadership
convened together to announce that the Governor-elect and legislative leadership
will be recommending that Act 146 Challenges
for Change school district budget targets not be made mandatory.
Governor-elect Shumlin spoke first, indicating that it is his hope that
school officials and state policymakers can work together to address ongoing
fiscal challenges while preserving high quality public education in
Vermont. Shumlin also spoke of the value
of public education, and praised local school officials for their ability to
address difficult challenges. Smith
emphasized both the importance of education to the state’s future and the need
for ongoing fiscal responsibility.
Several speakers echoed parts of Shumlin and Smith’s messages and
welcomed the new administration’s willingness to work inclusively with local
and state educational leaders in developing state education policy.
Spaulding detailed three
recommendations the Governor-elect will make to the Legislature:
1.
The
budget targets should remain voluntary.
2.
All
school districts will receive a share of $19 million in federal education jobs
money as revenue to offset education spending.
Spaulding described this revenue as a “bridge” to allow districts more
time to realize efficiencies.
3.
The
General Fund transfer to the Education Fund should be reduced from its
statutory amount by $23.2 million permanently.
In other words, the transfer will still inflate in future years, but it
will inflate from a base amount that is $23.2 million less than it would have
been otherwise.
Shumlin and Spaulding stated that these
actions would allow districts to determine a level of education spending they
believe is responsible, while preserving the Act 68 system, that is, education
property tax rates are proportional to per-pupil school district spending
levels.
Commissioner Vilaseca
announced that the Department of Education would be posting the amount of
federal education jobs money that each district can expect to receive on its
website today. We expect the
announcement will include guidelines for how and when districts can utilize the
money.
A major fiscal issue
that must be addressed by the 2011 Legislature and executive branch is how to
finance the Education Fund adequately for FY12.
A significant portion of the state’s $150 million deficit projected for
FY12 is related to commitments the state has made to the Education Fund.[1] In other words, the state’s deficit and the
health of the Education Fund are closely linked this year, and resolving the
issue is arguably the top priority for policymakers tasked with balancing the
budget.
Property taxes
contribute approximately 70% of Education Fund revenue and the other major
source of funding is the annual transfer of funds from the state’s General
Fund. The amount of the transfer is
supposed to increase each year according to an inflationary index. However, in both FY10 and FY11, the state
reduced the amount of the transfer by more than $50 million each year. Federal ARRA (stimulus) funds replaced about
$38 million of the reduction both years, and property taxpayers picked up the
rest.
Policymakers are now in
the process of determining what level of support the General Fund can transfer
to the Education Fund in FY12. According
to statute, the transfer should be $304 million; in FY11, the actual transfer
was $235 million. We expect that the
answer will fall somewhere in between.
Secretary of Administration Jeb Spaulding announced at the press
conference described above that the Governor-elect will recommend that the
transfer be reduced from its statutory amount by $23.2 million. It remains possible, even likely, that there
will be further tweaks to the Governor-elect’s recommendation before the
process concludes.
The bottom line is that
the Education Fund must have adequate revenue to maintain a sufficient reserve
and pay all public education costs.
Ultimately, property taxes will “float” to meet the difference between
what the General Fund transfer can provide in revenue and school expenditures. A greater commitment of resources to the
transfer will translate directly to reduced property tax burdens. We hope that when the Legislature and
Administration consider and debate what transfer amount it can provide the
Education Fund, it will consider the property tax implications as well as two
salient facts:
Each December, the Tax Commissioner
is required to recommend a statewide base education tax rate for residential and
nonresidential property. The Commissioner
must evaluate the projected revenues and expenditures for the Education Fund
and recommend a rate that will provide for school funding and ensure the fund’s
reserve remains sufficient. Acting
Commissioner Ellen Tofferi cited the Act 146 Challenges for Change school budget
reduction targets and stated in her recommendation that the FY12 tax rates
should be reduced nine-tenths of one cent if all districts meet their reduction
targets, and that the rates should remain unchanged from FY11 if all districts
do not meet their targets. In FY11, the
statewide base rates were 86 cents for residential property and $1.35 for
nonresidential property.
In response to the
Commissioner’s letter, Governor-elect Shumlin sent a letter to all school board
members thanking them for their work and stating his expectation that statewide
rates will be the same in FY12 as they were in FY11.
We remind school
officials that the statewide education tax rates must be approved by the
Legislature. As more information becomes
available in the upcoming weeks and months regarding Education Fund revenues
and school expenditures, expect more clarity with regard to FY12 education tax
rates.
As part of Act 146 of
2010, each supervisory union and technical center school district in Vermont
was required to report to the Department of Education on December 15th
whether it expected to meet its budget reduction target. On December 16th, the Department
reported that 53 supervisory units had provided complete data at that time and
that 10 supervisory units had not provided all the required data. Of the 53 that did report, the Department
tabulated a net reduction of $4 million in education spending expected in FY12
as compared to FY11.
This is the first time
in the modern school funding era in Vermont that education spending is projected
to decrease statewide. In FY11,
education spending was level funded on average across the state, so statewide
education spending in FY12 is expected to be marginally less than it was in
FY10.
The 53 supervisory units
that reported had an aggregate Act 146 reduction target of $19.9 million, so
approximately 20 percent of the reduction target was met according to the
self-reporting required on December 15th. School districts are not bound by their
reports to the Department; actual school spending approved by voters may be
more or less than the reported amount.
At this
time of the year, legislators are having bills drafted that reflect their
policy priorities. Typically, more than
a few of these bills will contain ramifications for public education. In our Education
Legislative Reports, we report extensively on education bills under
consideration in committees, and at the end of the Report, we list all bills that were newly introduced and appear to
have provisions related to education.
However, at this time, the Legislature’s computer system has not released
any bills drafted for the 2011-12 biennium.
Stay tuned; we expect to report on a flood of new bills in our next Report.
END
[1] The state’s projected budget deficit was recently revised upward from $112M to approximately $150M according to an incoming Secretary of Administration Jeb Spaulding.