Vermont Business Magazine Governor Phil Scott and his Administration todaypresented a five-year planthat intends to revitalizeVermont'seducation system by generating nearly $300 million in savings that can be used to provide tax relief, expand educational opportunities like early care and learning andtechnical education, whileimproving overall quality – without raising tax rates. Further, it would reversedeficit growth and stabilizeeducation tax rates for five years. Of the savings, most will come from reducing student-staff ratios, Special Education and health insurance. As of this moment, the governor is anticipating a $58 million increase in the property tax.
This packageuses ideas from the Administration, Legislature and education stakeholders, many of which are already moving forward at the State House.
Among those include modest revenues in the coming fiscal year 2019, but accelerating in future years by using school staff attrition to reduce student-staff ratios (over $30 million in savings a year and grow to over $70 million per year by 2024);adjusting special education costs (save $34 million by 2024); continuing work on a statewide health plan for teachers and staff; and change the current income sensitivity components passed by the House in H911 by lowering the threshold from $500,000 in homevalues to $400,000.
The governor did drop an idea floated last week that school districts with very low student-staff ratios be penalized.
“We all share a goal to provide our kids with the best education possible and have committed tremendous resources to K-12 education. The challenge lies in consistently declining enrollment and an old and inefficient infrastructure, which is diverting investments away from kids and causing taxes to increase at unsustainable rates,” said Scott. “Vermont has great schools and teachers and delivers quality education to our students. But we can do better, and this plan will help us achieve our goals.”
Since his inaugural address, Scott has highlighted Vermont’s shifting demographics, including student enrollments that have declined by nearly 30,000 in the last 20 years, and has put forward a number of proposals to improve efficiency and quality of the system to address this challenge.
For details on the governor’s plan to improve education quality and affordability while achieving tax rate stabilization, see below and view additional detailshere.
5-Year Education Revitalization, Tax Stabilization & Investment Plan
Introduction:
For years, Vermonters and Vermont’s economy have struggled undernearly non-stop increases in state education property taxes, and if we do nothing, we face a 6-cent education tax increase that the Governor will not accept, because Vermonters cannot afford it.
Vermonters also want to see the quality of education improve.Governor Scott has consistently proposed structural reforms that will generate savings to bereinvested in improving education quality and lower tax rates.
The Governor has offered anotherplan to revitalize our education system. This plan is intended to be the basis of a bipartisan consensus and is built on ideas the Legislature, the Administration and education groups have already offered.
What the Plan Achieves:
This is designed to be a consensus plan that’sbuilt on ideas from the Scott Administration, Legislature, and education stakeholders. It achieves the following:
- Generates almost $300 million in total savings over 5 years, which can be reinvested in more and better opportunities for early care & learning, K-12, technical and higher education as well as lower tax rates;
- Stabilizes statewide property tax rates for 5 years;
- Allows education spending to grow sustainably each year based on theaverage projected increase in grand list value of 3.25% each year;
- Fully funds the school budgets local voters have approved for next year;
- Sets Vermont on a stable and predictable 5-year trajectory allowing local school districts to take full advantage of the governance changes made under Act 46; and
- Closes the FY19 Education Fund gap and prevents future deficits.
Why We Must Act Now:
We all share a goal to provide our kids with the best education possible and have committed tremendous resources to K-12 education. The challenge lies inan old and inefficient infrastructure, which isdiverting tax dollars away from kids. Here are some key facts:
- Our K-12 infrastructure was built for more than 100,000 kids. Enrollment has declined to 76,000 in the last twenty years – a decline of about 27,000 students. We spend $1.8 billion to educate these 76,000 students.
- The U.S. Department of Education predictsVermont student count will drop below 70,000 by 2026.
- Vermont’s school employee staff-to-student ratio has shrunk to 4.25 to 1 – the lowest in the nation.Slightly increasing this ratio would produce tens of millions in savings while keeping our ratio among the lowest in the nation. And this can be achieved through attrition (retirement and voluntary departures).
- From2006-2015 (years with most comparable and available education and healthcare spending data), spending per equalized pupil grew at a faster rate than growth in healthcare costs.
- According to the National Education Association, in the 2015-2016 school year,Vermont’s per pupil expenditure was $23,557– over $2,000 more per pupil than New York who spent the second most. This compares to anational average of $11,787 per pupil.
- Looking at the “National Assessment of Educational Progress,”Vermont students performed about 2 percentage points better than the national average.Yet Vermont’s per-pupil spending is double the national average.
Frequently Asked Questions:
If we have a deficit, how can we hold property tax rates level this year?
The proposal is a comprehensive approach that, if adopted, will use funds available now (see details here) to do the following:
- Eliminate the deficit in the Education Fund while allowing property tax rates to remain level for the second consecutive year;
- Institute reforms that – over a 5-year period – will make the education system much more efficient.
- Generate nearly $300 million in savings in Year 5 – money that can be invested in improving education opportunities (early care and learning, tech ed, higher ed) and/or used to lower tax rates.
As savings from reforms accrue in fiscal years 2021 through 2024, the Education Fund will transfer the money back to the General Fund and special funds to repay the FY19 investment. A similar approach was taken by Treasurer Beth Pearce in FY15 to sure up the teachers’ retirement fund – this plan proposes to repay that FY15 obligation as well.
How will the savings be generated?
This plan provides a roadmap for both savings AND sustainable increases in education spending, that don’t require non-stop tax hikes.That package entails (see graphic):
Reducing ratios, and changing special ed funding and income sensitivity make me nervous – what’s the impact?
We understand the concern. The Governor directed his Administration to build a plan with bipartisan ideas that focus on improving efficiency to expand educational opportunities and improve outcomes. This isn’t about cutting, it’s about improving the efficiency and capacity of the education system so our kids see more value out of every dollar we invest.
But how can you do that when you’re increasing ratios?
Importantly, this plan relies onlowering ratios throughnaturally-occurring attrition and voluntary departures. Attrition is a natural opportunity to adjust the system to the steady decline in students we’ve experienced – and will continue to experience – for decades. A recent VT-NEA Economic Analysis projected attrition of approximately 1,000 Teachers and Educational Support Professionals (ESP) per year. The Administration plan estimates vacancy savings from less than half that number. Finally,Vermont’s ratio would still be among the lowest in the nation.
But what about special ed and our most vulnerable students?
A UVM study concluded that switching to the proposed funding model wouldprovide better outcomes, efficiency and value. Thesavings do not result from reduced spendingon special education but rather from more effectively managing resources at their current levels.
Will the changes to income sensitivity hurt people who are currently benefiting?
The Administration’s proposal – which builds off work in the Legislature’s H.911 – is designed tofocus the benefit on lower income Vermonters. In addition, itwill haveno effect on current recipients(who are grandfathered in).
Is it too late to achieve all this for Fiscal Year 2019?
We can do this now because it’s a plan based on ideas offered and developed this session. All these ideas have been discussed throughout this year (and many for longer than that), and many are already contained in bills supported by the House and Senate.