Education Spending (H.850) - Feb 16, 2024

On Friday afternoon, Chairwoman Cummings started out the Senate Finance Committee’s review of H.850 by stating that further action would be necessary because “the cost per pupil that is going up in a lot of cases, not your actual spending.” Legislators are looking at school budget spending caps but there are different ways of containing costs.

NOTE: This is factually incorrect. School districts are proposing $216M in new spending for FY2025.

The Joint Fiscal Office (JF) explained to the Committee that capping spending at 10% isn't the same thing as capping education spending per pupil. It's different because in Vermont's education finance formula, education spending is calculated by subtracting out all offsetting revenues and building expenses. Education spending is usually what is included on the ballot.

District homestead rates vary across the state based on the district's education spending per weighted pupil. These weights vary from district to district because each have different student bodies made up of students with different needs. The weights artificially increase the number of students you divide by (for tax purposes) and thus is greater than the actual head count.

Comparing just education spending from one district to the next district is not an apples-to-apples comparison because it does not factor in all of the nuances of that district’s student body. Capping education spending alone is not factoring in the second part of the equation.

Cummings noted that we have never had a 20% increase across the board in property taxes before, and normally they “roll some things in over three years, but this is a territory for us.” She wanted to get the bill out as soon as possible. It repeals the 5% cap on property taxes, and then implements a new transition mechanism that will reduce property taxes for districts that see a decrease in tax capacity. She wanted to send a strong signal to school boards about what to expect for the town meeting day votes on their budget.

During the meeting, a note was sent down from the Speaker’s office that would tighten the language around what votes could be deferred in the bill. There was concern that the current language was open season for districts to delay all kinds of votes and not just their budget or bond votes.

Senator Chittenden was concerned about timing and didn’t think they should “do an amendment this time because this needs to move forward.” However, he thought it would be better to have the step-down percent decrease using the pupil count in each subsequent year instead of basing each year of the phase-out period on FY2024 pupil counts.

Senator MacDonald commented that “we have a system now that self-levels pain” when we run into a hard time and was hesitant to disrupt that system to allow “one group of towns to get more state aid than the other.”

Chittenden moved that they adopt H.850 as sent to them by the House. They could offer floor amendments on Tuesday after considering over the weekend.

Cummings added that they had heard from the town clerks that there was some question being brought to them, but she never saw it. She noted that the Committee will make an amendment if they think it's necessary, but agreed they wanted to “send a clear message to the school districts that this is the path moving forward.”

The Committee vote was 6-0-1 in favor.

In closing, she commented that “there is a lot of talk about the property tax increases, but nobody has talked about reducing spending.” The was general agreement that this needed to be addressed by both districts and the Legislature.

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