A number of fiscal issues are threatening Vermonters’ wallets, and Hartwell says one of the most serious issues, with the most potential for long-term impact, is education funding. He plans to introduce a bill next week that would mandate school consolidation. Although a similar proposal by former Vermont Commissioner of Education Richard Cate was roundly criticized two years ago, Hartwell says it has become evident to him that consolidation is the only way to keep public education affordable for Vermont taxpayers.
Hartwell says population projections indicate Vermont will continue to see a steady drop in the number of children in the state. “We suspect there’s a net migration of school-age children, and we think the people leaving the state are younger than those coming in. There’s going to be fewer children going into the school system, and we’re piling up a huge education infrastructure that we’re not using. It’s going to be an incredible expense.”
Previous projections indicated that Vermont’s school population would bottom out at about 85,000 students in 2013, when the number of students would begin to rise. But Hartwell says the latest indicators suggest that the decline will continue further into the future, eventually bottoming out at around 70,000 to 75,000 students by 2019. “If we don’t consolidate supervisory unions and school districts, and unload some of the infrastructure, education will become hideously expensive,” he says.
Under the proposed bill, the commissioner of education would consolidate the existing 46 supervisory unions into “no more than 16” supervisory unions. Hartwell foresees the new supervisory union boundaries falling along those of the state’s regional technical schools. Some variations would occur, at the discretion of the commissioner, to ensure that schools within 10 highway miles of each other are included in the same supervisory union. Hartwell says the consolidation of supervisory unions would reduce administrative costs, reduce duplication of effort, and streamline efficiencies of scale.
A number of functions would become the responsibility of the new supervisory unions, including the purchase and distribution of supplies, budgeting and financial management, special education, construction management, transportation, and contract negotiations.
The bill would also mandate a change in governance. The current town school districts would be dissolved, creating larger, regional districts governed by the supervisory union board. Within each regional district, schools that are physically located within 10 “vehicular” miles from each other, and house the same or similar grades, would be required to consolidate. The goal of school consolidation would be to use existing space more fully and reduce the number of school buildings in operation.
A provision of the bill would also require the state to figure the common level of appraisal on a regional district basis.
Hartwell acknowledges that, like Cate’s proposal two years ago, his bill will come under fire from staunch defenders of local control, but he says it’s the only way to solve the financial crisis that looms ahead for property tax payers. Referring to a recent presentation by tax commissioner Richard Westman, Hartwell noted that consolidation would have less impact on property tax payers in his district than proposals to raise property tax revenue by eliminating or reducing provisions such as income sensitivity and current use.
“We’re getting close to the tipping point,” Hartwell says. “This year we’ll see that tax rate go up 2 or 3 cents, but that’s before the impact of the demographics. The environment has changed; people who don’t want to see change aren’t going to prevail any longer.”
Consolidation under the proposed bill would take place over the next couple of years.
The other big fiscal issue on the Legislature’s agenda this year will be the state budget, which is already projected to have a shortfall of $85 million. Hartwell says the Legislature will likely look at using the state’s $70 million “rainy day” fund to cover much of the gap. “We have already faced the tough decisions of employee reductions and reductions in salaries,” Hartwell says. “We held the rainy day fund in abeyance, but every time we come back it gets tougher.”
The good news, Hartwell says, is that some analysts suggest that the state’s revenues have “bottomed out” and will begin to rebound. The bad news: The state may face a $150 million shortfall in 2012, when federal recovery funds are expected to dry up. Hartwell says his goal will be to minimize the impact on those who depend on some assistance from the state to survive. “We have to be careful we don’t undermine the people who need our help. They’ve taken some hits already.”
But one issue that was expected to dominate the legislative agenda this year, the relicensing of Vermont Yankee for another 20 years, may not even be a “blip” on the radar. Hartwell says a recent power sale offer by Entergy was “a complete nonstarter,” and that the Legislature won’t consider Yankee’s relicensure until power purchase agreements are in place between Entergy and Vermont utilities. “And there’s no evidence that’s going to happen,” he says. “The cost of power is relatively low and demand is down.”
Hartwell said it’s also unclear whether Entergy’s spinoff company, Enexus, which would be responsible for Yankee’s eventual decommissioning, is financially viable. Hartwell says Yankee will be on the back burner. “I think Entergy has painted themselves into a corner, and they could end up having nothing happen.” If Yankee’s license is allowed to expire in 2012, the plant would be put in a “safe store” mode until it can be decommissioned – which could be a number of years in the future.