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Sen. Ann Cummings, D-Washington, chair of the Senate Education Committee, hands an agreement to Rep. David Sharpe, D-Bristol, chair of the House Education Committee. Photo by Amy Ash Nixon/VTDigger
House and Senate conferees settled on a method to contain the persistent rise in public school spending and agreed on sweeping education reform Thursday.
The 68-page bill encourages schools to merge into larger districts and phases out subsidies for those that don’t.
One of the centerpieces of the 2015 legislative session, H.361 now heads for a vote on the House and Senate floor Friday as lawmakers race toward adjournment.
“It turns out every 100 years or so we need to adjust the structure of our schools in order to advance the education for our students,” said Rep. David Sharpe, D-Bristol, chair of the House Education Committee. “Our goal is to provide better education for our students at a price our taxpayers can afford. I think we’ve accomplished those goals in this bill.”
Cost containment
Conferees resolved the major sticking point of negotiations by agreeing to a variable spending control plan aimed at keeping increases in statewide education spending at an average of 2 percent.
The plan was brought forward by the administration, based on a proposal by Rep. Oliver Olsen, I-Londonderry.
“Every school district in the state will be given a growth ceiling — that ceiling will be set based on their prior year’s spending,” Olsen said. “Low-spending districts will be allowed to grow their spending without penalty by a greater percentage than high-spending districts.
“Each district will be given a limit on how much they can grow their spending by; districts may still choose to spend above that growth ceiling, but will pay a penalty for doing so,” he said.
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The plan modeled Thursday proposes growth of 2 percent, but would permit per-pupil spending to increase up to 5.5 percent, depending on a district’s spending in the prior year. High spending districts would have very little room to increase spending before they hit the threshold.
“The way this works is when you add everything up, assuming everybody keeps their spending within these growth ceilings, then you’re constraining statewide growth to 2 percent,” Olsen said.
Districts with more than 10 percent phantom pupils are exempt from the growth limit.
See the town-by-town chart here that shows the variable growth limit.
Other compromises produced during the conference committee include:
• Striking language in the Senate version that would have tripled the amount of dividends and assets counted toward income for property tax relief purposes;
• House members agreed to go with the Senate property tax rates;
• The Senate agreed to the House’s insistence on a short-term mechanism to restrict increases in education spending until the larger, more efficient school systems called for in the bill are established, and a formula to do that was adopted late Thursday;
• An education adequacy study the House wanted was restored — one that will cost up to $300,000 and would be paid from unexpended money in the 2015 Education Fund;
• The House got its way by lowering tax incentives in a five-year, accelerated tax break for school districts that merge quickly;
• The House won agreement to having incentives in the first year of the merger program, up to $620,000, come from the unreserved balance;
• The Senate also agreed to language that would phase out small schools grants, except in certain circumstances, and that sees those grants continue in perpetuity for small schools that join larger school districts;
• The Senate’s proposal of 900 students in new districts was kept over the House version, which called for districts of 1,100 students;
• The Senate’s more voluntary approach in the process instead of required merger studies of districts was adopted — but the plan does have an end stage in which the secretary of education will propose to the State Board of Education possible restructuring of districts to meet the state’s education quality goals by 2019.
‘A great day for the students of Vermont’
“I think this was the ultimate in cooperative work,” Sen. Ann Cummings, D-Washington, chair of the Senate Education Committee, said Thursday evening. “We’ve worked together both House and Senate and I think we’ve come out with a group product that we all feel will help the children and taxpayers of the state.”
Lawmakers were joyful as the agreement was signed — hands were extended across the table, everyone was smiling, cameras were clicking and there was applause to thank legislative staff who guided the committees through countless drafts of the legislation and financing models.
“I think it’s a great day for the students of Vermont,” said Rep. Bernie Juskiewicz, R-Cambridge, vice chairman of the House Education Committee. “This is going to create opportunities they didn’t have before and provide a better education.”
Rep. Johannah Donovan, D-Burlington, a member of the House Ways & Means Committee who served on the conference committee, said, “This is a big step forward in the delivery of education; it’s a two-century leap from a delivery system designed in the 19th century.”
The House and Senate Education Committees were focused all session to produce a bill that would address the rising costs in the state’s school spending amid continuing declines in student population.
H.361 seeks to have the state’s 277 school districts come together into larger education districts, and includes tax incentives and grants to help spur the merger activity.
The most generous tax breaks will be offered to districts who move the fastest into merged systems, but other incentives, including tax breaks and merger grants, will be available for districts that take longer to join larger school systems.
Districts that merge into larger systems will be able to keep their small schools grants but they will be converted to merger incentive grants — that will be the case for both districts that move quickly, and those that merge within the four-year timeframe laid out for the voluntary process.
Small schools grants will remain for geographically isolated schools and for schools that meet state standards for quality, staff-to-student ratios and other criteria.
The bill stresses that it is “…not the State’s intent to close schools, and nothing in this act should be construed to require, encourage, or contemplate the closure of schools in Vermont.”
The hold harmless formula, which has cushioned the actual per-pupil spending costs for schools losing students, creating so-called “phantom students,” will phase out in the bill for districts that do not move into larger systems.
Districts that do join larger school systems will have an adjusted hold harmless formula — less generous than current law — grandfathered under the legislation.
Education property tax rates set
The plan could add $12 million more to the Education Fund, members of the conference committee were told.
The formula would apply only to fiscal year 2017 and 2018.
The nonresidential property tax rate is $1.53.5 per $100 of assessed property value; 99 cents for homestead ratepayers. The rate for income-based payers is 1.8 percent and the base education amount for FY 2016 is $9,459.
Committee members expressed satisfaction with the final result.
House Education Committee member Rep. Tim Jerman, D-Essex Junction, said the bill is “important” and it will cause some pain as it calls on school districts to undertake major changes — and to tighten their belts.
“I do think it will lead to better student outcomes,” said Jerman, who said building in a cost-containment piece was critical for the House to respond to taxpayer concerns lawmakers heard loud and clear while campaigning.
Rep. Sarah Buxton, D-Tunbridge, a member of the House Education Committee, said the changes the bill will cause sets the state’s public education system on a course that can be sustainable for the next 30 years.
“That was my driving force for supporting it,” said Buxton. “You can’t just keep kicking the can down the road. We stopped it.”
Rep. Kevin “Coach” Christie, D-Hartford, ranking member of the House committee, said the bill’s signing is the result of five years of work on changing the education landscape, for students and for taxpayers.
Christie credited Speaker of the House Shap Smith for “redesigning the structure of his House Education Committee this year,” to try and move ahead legislation to respond to taxpayers’ needs and the declining student population.
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