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Vermont Legislature
Follow VPR's statehouse coverage, featuring Pete Hirschfeld and Bob Kinzel in our Statehouse Bureau in Montpelier.

Lawmakers Consider Uses For $20 Million Education Fund Surplus

Angela Evancie
The state's education fund has a nearly $20 million surplus, and now lawmakers are trying to put that money to good use. House Speaker Shap Smith says the Legislature owes it to constituents to use the money to bring down property tax rates.

Lawmakers got a welcome bit of financial news this year when they learned of a nearly $20 million surplus in the education fund. Now they have to decide how to spend it, and some education officials question the wisdom of the current plan to send it all back to taxpayers this year.

In the scheme of the $1.5 billion education fund, the surplus isn’t enormous. But it’s enough to have a perceptible impact on statewide property tax rates. And House Speaker Shap Smith says he thinks lawmakers owe it to their constituents to use the entirety of the surplus this year to buy down rates for property taxpayers. 

“And I’m not sure whether property taxpayers would feel that great about us leaving money on the bottom line that could impact their property taxes this year,” Smith says.

Not everyone is so sure that’s the best way to use the money. Nicole Mace, executive director of the Vermont School Boards Association, says this past budgeting year was one of the most difficult in recent memory for school boards. And she says many of them used up all their one-time reserves this year to keep their budgets below a threshold established by lawmakers. Districts would otherwise suffer financial penalties for exceeding that threshold.

Mace says that since many districts won’t have reserves available next year, lawmakers should think about using the education fund surplus more sparingly.

“I think we’re urging policymakers to consider not using the entire $19.7 million this year, but to spread it out over … two years or more in order to sort of cushion the landing in terms of where we’re headed,” Mace says.
Jeff Francis, head of the Vermont Superintendents Association, says there is merits to both arguments. But he says the reserve built up over a number of years, and that it makes sense to spread out its tax-reducing benefits over a number of years as well.

"We're urging policymakers to consider not using the entire $19.7 million this year, but to spread it out over ... two years or more in order to sort of cushion the landing in terms of where we’re headed." — Nicole Mace, executive director of the Vermont School Boards Association

“When I learned to drive, my father said you go down the hill in the same gear you use to go up it,” Francis says. ““I think it would be reasonable to say that money could be utilized over a couple of years.”

Smith says the education fund already has a 5 percent reserve. And historically, he says any surplus beyond that 5 percent has been put toward property tax relief. 

“I think it’s really important for people to understand this does not really deviate from standard practice in the past,” Smith says.

House Minority Leader Don Turner, however, says lawmakers aren’t accustomed to surpluses of this size. And he says it would be irresponsible to use the whole of the surplus in a single year. 

Turner says the reason House Democrats are so eager to spend the money now is to provide the illusion of tax relief in an election year. 

Turner says the more fiscally responsible approach is to hold back a portion of the money, so that lawmakers can use the remainder to buy down tax rates next year, when it will be needed most. 

Smith says he thinks Republicans would be criticizing whatever decision House Democrats came up with.

“What I would say is if we kept $20 million on the bottom line, they would be complaining that we were keeping the money and we were not dispersing it to property taxpayers in the state of Vermont, so, damned if you do, damned if you don’t,” Smith says.

Lawmakers in the House Committee on Education will consider the fate of the surplus when they return from the Town Meeting Day recess.

The Vermont Statehouse is often called the people’s house. I am your eyes and ears there. I keep a close eye on how legislation could affect your life; I also regularly speak to the people who write that legislation.
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