In his remarks to board members, administrators, and legislators, he acknowledged the state’s demographic and fiscal challenges – a shrinking student population, and perpetually rising per-pupil costs, taxes, and state education budgets. He said the root of Vermont’s education funding problem is an education infrastructure originally intended to educate 100,000 students that educates 76,000 students today. “For nearly two decades we have heard the calls from Vermonters for property tax relief,” Scott said. “Yet instead, every year taxes have been raised, which raised more revenue and is now over $1.6 billion to educate 30,000 fewer students than we had 25 years ago.”
Noting that Act 46 “is encouraging the rightsizing of our system,” he called on education leaders to address the challenges of providing education that meets the needs of a changing workforce, while controlling costs. “We must increase the value students see from the dollars we spend, while providing relief from costs that continue to grow faster than Vermonters can afford to pay,” he said. “Think of it this way: Every dollar we spend on underutilized space in a public or independent school is a dollar that’s not being spent on a child.”
Vermont Secretary of Education Rebecca Holcombe outlined the broad range of demographic challenges the state is facing, challenges that not only affect the funding of education, but also affect the economic future of the state and its residents. Holcombe said Vermont’s labor market is restructuring, with an increase in demand for higher-paying jobs in which a professional degree or bachelor’s degree is required, as well as an increase in demand for low paying jobs for unskilled workers with a high school degree or less education. For those in between – people with some college, non-degree training, or associate degrees, little increase in demand is projected for their skills in the workplace or, in the case of those with some college but no degree, a decrease in demand is expected. “We have a hollowing out in the middle class that is driven largely by technological innovation, which is really giving a greater return to people with very high levels of skill but automating anything that can be automated and taking those jobs away from people.”
Holcombe said the changes in the labor market are the reason people in Vermont are struggling with issues of affordability and prosperity. She also noted that income inequality has increased over the last 40 years, also driven by automation and the demand for skilled workers. “What matters as Vermont moves into the 21st century, is how well as a system are we preparing our young people, not to learn, but to figure out how to learn and use what they learn in ways to create opportunity and prosperity for the rest of Vermont,” she said. “What we need to do for our children has changed, and our cradle-to-career commitment is to take care of our children and make sure they start off on the right foot.”
Vermont Secretary of Administration Susanne Young offered an overview of the education budget and a fiscal forecast that included a recently released projection for a 9.4-cent increase in the statewide education tax rate for both residential and nonresidential property.
Young said that the projected increase was based, in part, on a statutory formula that anticipates a 3.52%, or $47.5 million, increase in per-pupil spending in Vermont. About 6 cents of the 9.4-cent increase is due to the calculation. If school districts were to constrain their increases in per-pupil spending to 2.5%, according to Young, it would result in a $24 million reduction in the projected $47.5 million increase.
But Young also noted that Vermont was facing uncertainty regarding the impact of changes at the federal level. “We’re not sure what the effect of the federal tax law may be,” she said. “And 35% of the state’s total budget comes from federal funds.”
Young also addressed demographic challenges, explaining that from 2000 to the present, the state has lost 25,000 people in the 25-64 age bracket – the state’s labor force – and as a result, has less tax revenue. “Each year we lose about 1,800 people in that category. We’re nearly the oldest state in the union, second only to Maine.”
The summit also included a panel discussion on “affordability,” but local attendees including Rep. Laura Sibilia and Windham Southwest Supervisory Union Superintendent Chris Pratt noted that the discussion was focused on how schools might produce savings under Act 46, rather than new strategies to ease the burden on struggling districts.
During the discussion, Brigid Nease, Superintendent of the Harwood Unified Union School District, echoed the challenges educators in the Deerfield Valley have faced.
Despite a merger that created an 1,800-student district spanning several towns and seven campuses, and a single board overseeing a $40-million budget, Harwood still faces a steep tax increase. “We’ve done it all right and we find ourselves in early numbers this budget season with a 2.2% increase – under the governor’s (2.5%) target for increases,” she said. “But due to declining enrollment, changes in revenues and other factors, our rate, even after the 8-cent tax incentive, is slated to go up 12 cents. This is intolerable for taxpayers, and the only way out is through restructuring.”
Nease said her district was facing “sweeping changes” that includes the consolidation of grades into fewer buildings.
Sibilia says the affordability issues cannot be fixed under the current system, which she says punishes rural schools for spending an amount needed for a basic education, and encourages larger schools that benefit from economy of scale to spend more each year.
During the last legislative session, Sibilia and Rep. John Gannon sponsored legislation that would require a study regarding the addition of a rural factor in figuring the number of equalized pupils.
If adopted, a rural weight would acknowledge that it costs more to educate a student in rural areas, and increase a rural school’s equalized pupil numbers to compensate.
After the legislation passed, Holcombe announced that the agency of education would not carry out the mandated study. At a meeting this week, however, Sibilia and Gannon announced that Young has indicated that the state will request $300,000 in a budget adjustment bill at the beginning of the next session to complete the study, which was originally due December 15.
“I think this is a step in the right direction,” Gannon said. “The alternative, as we indicated in our letter to the AOE, was litigation.”