The COVID-19 crisis has hit every part of the global and local economy. Vermont's K-12 schools are no exception. There’s bad news, and then there’s really bad news.
The bad news is that for the 2020 fiscal year, the $1.6 billion education fund is projected to end the year with a $39 million deficit. It looks even worse the next year.
Voters have approved $70 million in new spending for fiscal year 2021 that starts in July, but schools and the state may no longer be able to pay for it. At stake potentially are new construction projects, teachers’ jobs and class sizes. This comes as educators say students' academic needs will be even greater in the fall after missing months of classroom time.
“It’s almost as though the words can’t do justice to the challenge,” said Jeff Francis, executive director of the Vermont Superintendents Association. “Because at the very time when we will need to find ways presumably to reduce expenditures, there will be an awareness that the needs that schools respond to societally, in terms of supporting children and families, are going to grow.”
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Janet Ancel represents Calais in the Legislature and chairs the House Ways and Means Committee. She and other lawmakers are also trying to get a handle on the scope of the problem.
“We’ve got a troubled fiscal ‘20 to get through, and then we’ve got a really, really difficult fiscal ’21,” she said at a recent hearing. “So we’re going to have a few bumps in the road just getting through ’20.”
The bumps in the road include mounting special education costs, child care expenses for teachers, and bus contracts for delivery of meals that may not be covered in existing budgets.
"We've got a troubled fiscal '20 to get through, and then we’ve got a really, really difficult fiscal '21." — Janet Ancel, chair House Ways and Means Committee
Then there’s the revenue side, which looks grim both this year and next year.
Schools are funded by a mix of statewide consumption taxes and local property taxes. Brad James, finance manager at the state Agency of Education, points out that about 70 towns collect their tax payments quarterly, so they don’t yet have all the money in for their schools.
“So there’s some concern that the towns will not have the money to pay them,” he said. “[The] statute says if a town does not collect all the education funds by the end of the fiscal year, they have to borrow money to make the school district whole. That’s still in statute; that’s not changed.”
Jeanne Collins, superintendent of the Rutland Northeast Supervisory Union and president of the Vermont Superintendents Association, said 80% of school budgets go to personnel who are covered by existing labor contracts.
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“Contractual deadlines have passed, and that makes it a little more difficult for next year,” she said. “But we’re also very aware that as we move into the budget process for FY '22, any savings that we can find next year is going to help that, and that we’re probably going to be making very significant cuts.”
No one knows how the education fund or school budgets will look in the next fiscal year, because it depends on what else happens to the economy. The Education Fund’s major statewide revenue sources — such as the sales tax and rooms and meals tax — are expected to decline.
A recent study by the Brookings Institution said states that fund education with these taxes may be forced to make serious cuts to school budgets due to the COVID-19 crisis.
"This is the one that keeps me up at night. I mean, we can set all the tax rates we want, but if people can't pay it, they can't pay it." — Janet Ancel
And with businesses closed all over Vermont, and unemployment reaching nearly 30%, whether people can actually afford to pay their local taxes is perhaps the biggest question looming for schools.
“I have to admit, this is the one that keeps me up at night,” said Ancel, the chair of the House Ways and Means Committee. “I mean, we can set all the tax rates we want, but if people can’t pay it, they can’t pay it.”
The federal government has stepped in with some money. School districts in Vermont will get $30 million to cover their COVID-19 costs.
Legislative analyst Mark Perrault said schools have wide latitude in how they can use the money.
“The allowable use for that money is very, very broad," he said. "I think they can use it for pretty much almost anything."
That should help close the gap in fiscal year 2020, but not for the next year. But some school leaders aren't just worried about budget problems. They're worried about finding a way to get residents to vote.
"No one is sure what the pulse of the electorate is. Everyone's really concerned about putting food on the table and keeping themselves and their families safe in these times." — Tim Smith, Slate Valley Union Unified District
Tim Smith chairs the Slate Valley Union Unified District. The district saw a bond vote and its budget defeated at March Town Meeting. Smith told a legislative hearing recently that the budget looks even less certain now.
“So if you had asked me two or three weeks ago if I felt confident that a re-vote would be successful, I would certainly say yes, we weren’t that far off to begin with,” he said. “But now given the development and the situation at hand, no one can be sure what the pulse of the electorate is. Everyone’s really concerned about just putting food on the table and keeping themselves and their families safe in these times.”
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Smith said a re-vote may not be possible anyway given social distancing requirements, and a vote by mail-in ballot would be a better option. That could happen under a new law passed by the Legislature that gives the governor and the Secretary of State emergency authority to modify elections procedures.
Another bill on the fast track would waive the required penalties and fees if taxpayers are late paying their town taxes and statewide education taxes. A second bill would set default 2021 budgets for districts based on this year’s levels, if voters have not approved one before June 30 of this year.
