Education Finance - March 28, 2024

Chairwoman Kornheiser kicked off a joint hearing of the House Education and Ways & Means Committees on Thursday. She explained the format is to have a “free flowing” discussion of ideas without the need for formal legislation proposal; she asserted these ideas are from many around the (virtual) table. “The diversity and scale and complexity of some of the issues that we are facing in education and education finance this year necessitate more open dialogue,” she stated.

Kornheiser invited Nicole Lee (Director of Finance, Agency of Education) and Julia Richter (Senior Fiscal Analyst, Joint Fiscal Office) to refresh them on the Education Fund Outlook and budget projections they had seen late last week.

Following these, Kornheiser explained that she wants a round robin to hear folks priorities and/or top of mind concerns and proposals of any type. She asked for all ideas, proposals, concerns to be put on the table so they can “look each other in the eye and begin building the new mousetrap.”

Representative Anthony expressed frustration at the disconnect between spending per pupil and the local tax loads; also the spending disparity in per pupil spending (PPS) across the state (some towns spending high others low).

Representative Austin noted that the “incredible states” have a far lower PPS and are getting better results we should discern how they do it and how we can.

Representative Mattos agreed that we should stress spending the money we have better and NOT adding more money to the Education Fund.

Representative Taylor sees a “real struggle” in the balance between local control and the statewide funding system. He is also concerned about the negotiating of statewide education healthcare benefits and wants to hear a progress report. His third major concern is that “education has changed, we are now getting a lot more pressure on schools to deliver services.” He specifically mentioned mental health and behavioral health funding is “done wrong” in Vermont.

Representative Branagan noted that 30 budgets that were defeated, and wondered what they were trying to solve here. She believes communication about what is happening with education spending and its drivers is the most important thing. She also found it “very bothersome” that despite PPS rising our child achievement “goes down and down.”

Conlon pointed to the Act 46 goals of delivering a “high quality education that Vermonters can afford.” He thinks they have “lost that ability” and is not sure Vermonters can afford the system we now have. Mental health and other side services are “unprecedented,” combined with loss of federal funds, and in many cases people’s desire for “educational qualities” that are somewhat costly have contributed to this in his view.

NOTE: Salaries and benefits continue to be the cost drivers in education spending. Nearly half of the increased spending this year was due to salary and benefit increases.

Representative Beck sees the problem as education payments have increased by $197M (school budgets). Non property tax options to deal with this would be to increase non-property tax revenue, reduce the education payments, eliminate categorical aid, or shift categorical aid to the General Fund.

NOTE: All of these are essentially non-starters, he knows this. The point here is that we need incentives (or force, as some have suggested) a reduction in spending.

Representative Demrow sees a disconnect between the local tax rate and PPS locally. He called this a “central to the mistrust” of what is happening, and corrosive. He also agreed with the equity issue where towns who gained taxing capacity under Act 127 are using it to buy down tax rates instead of increasing spending.

NOTE: This does not seem to be the prevailing pattern. Most districts who gained taxing capacity used it unless there was an offsetting CLA increase that forced their hand otherwise. It’s unclear from his comments, but Demrow seems to be getting at the need to increase the link between PPS and local taxes, which is true. Money is too cheap in the current education funding system.

Taylor shared that constituents tell him we need to be more efficient with spending, draw back on mandates, figure out categorical aid funding streams outside the Education Fund. “We need to figure out where we can kill some stuff off,” he stated. School districts need predictability to prepare budgets and spending decisions.

Minier sum this up by saying they needed to do something “large and something simpler so people can buy in.”

Representative Brown piled on, saying “we need a funding formula that is affordable, predictable and understandable” to deliver that quality education. She called the formula “so opaque that it immediately leads to finger pointing, and we need to make it so that people can understand what they are paying into.”

NOTE: This is the same point that CFV made in a recent letter to the House Education Committee.

Representative Buss added that the complication “has led to a lot of distrust” and people assume that it is purposely set up that way so “things can be hidden from them.” She also believes that mental health challenges have led to brain drain and retirements. We now have many “provisionally licensed teachers” which she blames many of the failed outcomes on.

NOTE: Declines in outcomes started well before Covid and the mass-retirement. There is more to the story here.

Kornheiser called on Ryan Heraty (Superintendent, Lamoille South Supervisory Union). His take is that short term (this year) cost containment and transparency are most important. Long-term redesigning the education funding formula, rethinking capital construction needs and supporting the Agency of Education are important.

Jeff Francis (Executive Director, Vermont Superintendents Association) noted that he is struggling with the “magnitude of the exercise”. In over two decades of “observation the combination of pressures on the delivery system,” he pointed to a lack of willingness to really want to change. He also cited a lack “thorough diagnosis of what it is that brought us to the place that we are at.” He added unfunded mandates and CLA adjustments that impact voters “perceptions of their property tax bills” as additional challenges the legislature hasn’t been willing/able to address.

He thinks the worst is not behind us as some collective bargaining agreements still ramp up next year. However, he continued to point fingers at everyone except school leaders.

Marc Bernard Schauber (Executive Director, Coalition for Vermont Student Equity) proposed a “master plan” for the entire state that includes class sizes, locations, buildings, curriculum etc. A re-envisioning of the entire system.

Buss liked this idea, saying that she is visual so “I love that and is easier to visualize. Create a bigger plan.” Brown agreed, saying that her “brain exploded after the list of problems highlighted the gravity of the situation.” Representatives Stone and Minier also voiced support.

Taylor stressed the need to pull back unfunded mandates and also tap outside resources here, including districts and school boards.

Beck noted that what they don’t have is a tool to make changes to the education payments (funding school budgets). “That is a tool we would have to develop but we don’t have it right now,” he stated.

Kornheiser added that another tool they don’t have is “clarity on whose decisions any of these decisions are… there is a huge amount of finger-pointing.” She lamented that they don’t have the tools to control costs and yet, “if anyone does, we do, right?”

There was a lengthy back and forth following this about which approaches were correct, how to evaluate the best outcomes (both financial and performance), and whether to force more consolidations. There was little agreement about what needed to be done or how to do it, but everyone did agree that the system needed to change.

Sue Ceglowski (Executive Director, Vermont School Boards Association) asked for access to the same statewide healthcare system for administrators that employees have.

NOTE: This is a small-potatoes ask for wish list item, not a useful policy idea to address the current conversation. This one was blatant, but legislators will need to be wary of this going forward if they are to avoid the same pitfalls that the Act 46 ran into.

Meagan Roy (Superintendent, Washington Central SU) pointed them back to class size research and optimizing scale based on “grade configuration. If you align the policy of the state moving forward with the latest research, she said, that is a “guidestar.” 

Allen Gilbert (Former Chair, Worcester School Board) touted relevance of the Brigham Decision and also the Baker case which shared similar basis. He asserted these were an extension of the Vermont tradition of equality of opportunity. He commented on the “lateness in the session,” for this conversation, suggesting that “perhaps should be the first week in January. You have got yourselves into a very difficult situation,” he concluded.

He also cautioned them not to “start tearing things apart just to do something.  Because whatever is done now has got to be done with a lot of thinking, with a lot grit to take on tough issues, and a lot of time figuring out difficult questions.”

A conversation followed ask Kornheiser asked legislators around the room what they had taken way from the conversation. Themes included:

  • Move slow to move quickly.
  • Difficult decisions need to be made, but it’s unclear what they are.
  • Previous legislation not implemented as well as hoped.
  • They should rely on good research as much as possible.
  • Equity in access to funding, capital, and other metrics is not universal.
  • More “right-sizing” via consolidation and class sizes.
  • Some want to go all in on community schools.
  • Restructuring the Agency of Education.
  • Unfunded mandates.
  • Understanding the changing role of schools and the services they provide.

The cost of building maintenance and replacement.

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