Redeeming Act 46


Act 46 has laudable goals of improving the quality and equity of education, and fostering a financially sustainable educational system. However, trying to achieve these goals through mandated consolidation is misguided, adding complexity and decreasing democracy. The fundamental drivers of increasing costs are not addressed, and the immediate effect may be to increase property tax rates. Act 46 must be transformed.

Voluntary, flexible mergers

District mergers should be voluntary. The number of students in preferred or alternative mergers should be reduced. The time to qualify for incentives should be extended.

Certainly any communities that see educational and financial benefits from consolidation should undertake it. But Act 46 requires combinations that make little geographic, historical, or educational sense in some regions, especially because of different district patterns of school operation and choice. This may disrupt successful school systems and diminish local control. No community should be forced to merge, to eliminate their school board, or to alter school choice to obey state requirements. Temporary reductions in property taxes may well not compensate for permanent losses in community representation. Schools with problems of poor quality or inequity should receive state guidance and assistance rather than forcing unnecessary and uncertain changes in governance on all.

Moderating education spending increases

In January the Legislature should immediately suspend the variable spending threshold of Act 46 so that districts can proceed with school budgets without incurring tax penalties for costs beyond their control. Then during the session this mechanism could be redesigned.

However, school districts still need to control costs over which they DO have jurisdiction. Since our student population has shrunk while staffing has not there is a low student to staff ratio and therefore a high cost per pupil. (Some of the staffing is related to Special Education, which is an unfunded Federal mandate.) About 80% of education cost is from staffing. So to control costs the growth rate of compensation and the number of staff must be reduced. Properly compensating teachers for the important work that they do is essential. Each year increases in compensation add millions of dollars in costs. Some of this is keeping up with inflation. But since the incomes of many Vermonters have NOT kept up with inflation, it is difficult for property taxpayers to continue to bear such cost increases.

About 500 teachers have already retired this year. Some will not be replaced, and those that are will be replaced by newer teachers at lower compensation. This could reduce the total number of staff and reduce the growth of costs before any mergers.

State responsibility for high property taxes

The state must fund all Act 46 merger incentives and any other state mandates from the General Fund rather than the Education Fund, where the costs drive property tax rates up.

Mergers mandated by Act 46 may eventually moderate increases in costs and property taxes. But in the short run Act 46 will likely increase property taxes for many because of the costs imposed on the Education Fund (EF). The incentives for merging districts – the property tax reductions and the grants — are paid for within the EF. So ALL property taxpayers will pay slightly higher taxes to fund those rewards. And unless amended the variable spending caps will likely impose property tax penalties for increases in spending that are beyond the control of districts.

The state has taken earlier actions that drove property taxes up. Several years ago the state contribution to the EF was recalculated, lowering it by $27 million that year and every year since – this has meant property tax rates three cents higher. Unfunded state mandates for schools also cost millions of dollars – for instance Pre-Kindergarten at $20 million, or two cents on the property tax rate. After Act 60 the cost of programs that allow certain groups to pay lower property taxes was shifted out of the state General Fund (GF) and into the EF, and these programs cost tens of millions of dollars and drive up property tax rates. State policies mean that some EF costs are not under the control of school districts.

Such state policies have valid goals, but nothing in Act 46 requires the state to take financial responsibility for them. This could be done by removing those costs from the EF or by increasing the GF transfer to the EF, or some of both. Neither is likely given the state's budget problems, but recognizing this situation might prevent the state from penalizing communities for increases in property taxes connected to state actions.

Act 46 should be transformed

We should increase the flexibility that districts have to share resources and to alter governance structures. It is the communities that should be empowered. The state needs to take responsibility for increasing property tax rates through costs imposed on the Education Fund. Together we can redeem Act 46 and do better for Vermont's children.

Cynthia Browning represents Manchester, Arlington, Sandgate, and Sunderland in the Vermont House.


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