Manchester school board urges action on Act 46 spending caps
MANCHESTER — The Manchester School Board has weighed in on the growing concerns over spending caps incorporated in Act 46, legislation passed last spring which aims to moderate pressure on property taxes and streamline public school governance within the state.
On Monday, Nov. 28, the school board approved the draft of a letter it intends to send to the town's legislative delegation, calling on the lawmakers to revisit the spending cap provision. The caps are stating not needed, board members said, since local voters will have the final say on a budget. The caps also threatened to distract the conversation about finding workable merger solutions between area school districts, a primary thrust of Act 46.
"While we understand the intent of the spending caps, we believe that such fiscal restraints do not need to be legislated, as it will be applied by our own constituents, who, like Vermonters across the state, have become increasingly conscious of sharp increases in their tax rates," the proposed letter states in part. "Furthermore, we believe these caps only enhance the uncertainty in our district and shift the dialogue away from finding effective longer term merger solutions towards complying with these limitations in the short term."
The letter is still in a draft form, and is being circulated to other school boards within the Bennington-Rutland Supervisory Union, with an eye towards offering other boards an opportunity to sign on to it.
Under Act 46, a spending cap provision — formally known as the Allowable Growth Percentage — was inserted near the end of the deliberations about the statute, in response to a perception that voters, having rejected a large number of school budgets across the state during March Town Meeting in 2014, were fed up with increasing education costs. While the Act 46 statute focused largely on designing ways for Vermont's 270 school districts to merge and consolidate in hopes of achieving cost savings in the future, those savings were deemed unlikely to materialize much before 2017 at the earliest, and possibly much later. A spending cap provision, which limited the growth of school budgets on a sliding scale based on the previous year's spending per equalized pupil, was seen as a way to bring property tax relief more quickly.
The spending cap aims to keep total statewide education spending growth at 2 percent by limiting school districts to enlarging the bottom lines of their local budgets between zero and 5 percent. The more a district spent the previous year, the less room they would have to increase their budget in the upcoming fiscal year. For those districts that were unable to stay within their maximum allowed increase, the tax rate on the portion above the threshold will double, as the law stands at present.
Special education costs, are, however, exempt from the calculation of budgetary increase and the tax penalty they could trigger.
Manchester has an allowable growth percentage of 2.5 percent, said school board chairman Brian Vogel during the meeting, but that comes nowhere close to enabling them to easily finance a projected increase in health insurance costs of around 8 percent for the coming fiscal year. Another factor in play is teacher salaries. A new contract has not yet been negotiated, but under their old contract, their salaries rose 3 percent, Vogel stated in a follow up email.
With 80 percent of their budget associated with salaries, benefits and personnel, that means there isn't much room elsewhere in the budget to find the savings that would be needed to fit under a 2.5 percent maximum allowed increase without triggering a punitive tax penalty-driven increase, precisely the outcome Act 46 was attempting to circumvent, he said.
"You're either making draconian cuts to building and equipment or other places that are very small parts of the budget or you are going to be penalized for blowing through the caps," he said. "The other thing that's frustrating is that we have tried to be very fiscally responsible the last few years and we've kept our budget increases pretty tight."
That meant in effect they were being penalized for their past frugality and fiscal rectitude, and would have had more flexibility now if they had not been as mindful of controlling their cost increases in previous years, he added.
However, the spending cap provision has led to a wide-ranging blow back by school boards across the state, and the likelihood that the legislature will seek to adjust that portion of Act 46 early in the coming session seems high. Several prominent educational officials and leaders have called for a delay in implementing the spending cap provision, arguing that trying to impose this on school board as they are navigating their way to consolidations with neighboring districts complicates that process, according to a recent report in VTDigger.org.
Last week, Gov. Shumlin also called on lawmakers to do precisely that, adding that his office had some ideas on how to do that, but declined to give details.
"I want the legislature to act on this before school boards are submitting their budgets to voters in time for the printer," Gov. Shumlin told reporters at a press conference in Montpelier.
Rep. Cynthia Browning (D-Manchester, Arlington, Sunderland, Sandgate) said she would be pushing to immediately suspend the variable spending cap provision of Act 46 for one year, adding that this should be a measure the legislature could enact quickly enough to give school boards time to finalize their budgets before they have to be filed for Town Meeting.
"We can then take the rest of the session to either fix the variable spending cap provision or find a different way to approach the problem, along with possibly fixing other problems with Act 46," she stated in an email to The Journal.
In other business, the Manchester school board is also moving towards filling an "ad hoc" committee designed to explore other alternatives to a consolidation with other districts. The school board signed on the a formal Act 46 merger study committee with other BRSU districts, and those discussions will be getting underway within a month or so. But the Manchester board is also interested in looking at different scenarios, the most prominent one being restructuring the Manchester Elementary Middle School from a public to an independent school, or restructuring the school district to allow for it to become a "non-operating" school district.
The ad hoc committee will include two of the present school directors — Steve Murphy and Mark Kaplan — plus five other community members. The board developing a list of possible names to fill the committee slots but has not finalized who that will be yet, Kaplan said after last week's meeting.
An organizational meeting will be held when they are ready to announce the launch of the committee's work, he said, which hopefully will occur by Jan. 1, 2016.
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