Updated 10:30 a.m. 5/15/2020
A bombshell proposal from the Scott administration Thursday would require school districts to hold revotes this summer on budgets approved by local voters in March.
In a Zoom meeting with members of the House Committee on Ways and Means, Commissioner of Finance Adam Greshin said a projected shortfall in next year’s education fund will require significant reductions to school budgets that were approved before the arrival of the coronavirus pandemic.
“And I don’t think I’m going too far out on a limb to suggest that the budget votes would have been different, or the budgets themselves would have been different if voters knew then what we know now,” Greshin said.
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Fiscal analysts are now projecting a $167 million deficit in next year’s education fund due to revenue losses associated with COVID-19. If districts don’t reduce budgets accordingly, Greshin said, then the state will have to raise property taxes by as much as 14% next year in order to fill the gap.
“The tax consequences of the approved budgets are radically different from what they were when voters went to town meeting,” Greshin said Thursday. “I’m confident that Vermonters will understand the challenges we face, and I think they’ll appreciate the initiative to let them participate in the solution.”
"And I don't think I'm going too far out on a limb to suggest that the budget votes would have been different, or the budgets themselves would have been different if voters knew then what we know now." — Adam Greshin, Finance Commissioner
Lawmakers did not appear to share Greshin’ optimism.
Shelburne Rep. Kate Webb, chair of the House Education Committee, said the closure of schools and the advent of remote learning have already thrown a measure of “chaos” into the education system.
“The concept of sending voters back to revote budgets sounds like instead of stabilizing contributes to even more chaos,” Webb said.
On Thursday, lawmakers rejected the idea that property tax rates will have to rise next year in order to accommodate the latest revenue forecasts. Calais Rep. Janet Ancel, who chairs the Committee on Ways and Means, said her panel has already endorsed a framework that would keep next year’s property tax rates at what they would have been prior to when COVID-19 arrived.
“The solution to [fiscal year 2021] isn’t going to be increased property taxes,” Ancel said. “We’re not sure what it’s going to be, but it isn’t going to be increased property taxes.”
Lawmakers are contemplating one scenario in which Vermont uses a sort of fiscal gymnastics that would allow the state to use some of its $1.25 billion in federal coronavirus relief funds to bail out the education fund.
Existing guidance prohibits states from using those funds to offset revenue shortfalls due to COVID-19, but legislative analysts say there may be a workaround. Lawmakers are also holding out hope that Congress will revise guidance for relief funds in forthcoming legislation, as many states, including Vermont, have requested.
"The concept of sending voters back to revote budgets sounds like instead of stabilizing contributes to even more chaos." — Shelburne Rep. Kate Webb
Regardless of what happens at the federal level, Ancel said Thursday that disruptions in students’ lives over the past two months will only intensify the role of schools and educators for the 2020-2021 academic year.
“And for me anyway, to talk about something which may leave schools with insufficient resources to do the job that we’ve asked them to, is just unacceptable,” Ancel said.
Secretary of Education Dan French, however, said the viability of Vermont’s education system hinges on a prompt reckoning with the new financial realities that all sectors of the economy now face.
“I can’t help but think that we’re at a moment in history where the system is going to have to evolve,” French said. “And to think that there wouldn’t be a spending reconciliation somehow in this sector of our economy … where every other sector of our economy is learning how to navigate this, I think is unrealistic.”
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Lawmakers said they’re not convinced schools could revise next year’s budgets even if elected officials unanimously supported the concept.
Most districts have already signed collective bargaining agreements with their local teachers' unions. With 80% of total education costs going to salaries and benefits for personnel, any substantive reductions to next year’s spending plans would require those unions to voluntarily renegotiate for lower pay.
Asked why teachers would agree to such a renegotiation, French said, “to help sustain the viability of their system.”
“If the choice becomes closing a school to navigate the budget, versus salary increases … giving the voters the information to make those difficult choices — that’s the nature of our system," French said.
He added that political pressure on unions from local voters may also compel them to come back to the negotiating table.
“I don’t understand how we can maintain the trajectory … where some teachers and employees of school districts will be receiving raises at precisely the time when we’re going to have some of the highest unemployment rates since the Great Depression,” French said.
"I don't understand how we can maintain the trajectory ... where some teachers and employees of school districts will be receiving raises at precisely the time when we're going to have some of the highest unemployment rates since the Great Depression." — Dan French, Secretary of Education
Don Tinney, president of the Vermont-NEA, said “austerity” measures are not a solution to the financial challenges schools face.
“We cannot cut budgets as a way to recover from this crisis,” Tinney said Thursday.
Tinney also said the union is not amenable to returning to the bargaining table to renegotiate next year’s salary and staffing levels.
“I don’t foresee that happening at all,” he said.
Jeff Francis, executive director of the Vermont Superintendents Association, said the Scott administration is correct that the education system faces an unprecedented fiscal dilemma.
“But to basically come in and say, ‘Negate your contracts, kick it back to the locals, revote your budgets’ — with all due respect to the proposers of the idea, I do not think it’s going to work,” Francis said.
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Francis said the legislative and executive branches, in consultation with local education leaders, are best situated to address the financial crises wrought by COVID-19.
“I don’t think ideas that basically would absolutely turn our conventional systems on their head, in an effort to try to contend with a crisis situation, is the most effective approach,” Francis said. “The notion that you would basically say to local school district officials: ‘Here’s the problem, this is what we need, now you guys take responsibility,’ is, I think, in fact a recipe for chaos.”
Lawmakers also questioned the logistics of the administration’s proposal. Danville Rep. Kitty Toll said with public gatherings limited to 10 or fewer people, districts would be hard-pressed to disseminate information about the revised budget proposal — and what it means for education services — to local voters.
“And how would we ensure that their voices are actually heard if we can’t hold the town meeting in a school gymnasium with 300 or 400 people?” Toll asked.
Other lawmakers said scheduling budget votes during a summer of social distancing also seemed implausible.
"I don't think ideas that basically would absolutely turn our conventional systems on their head, in an effort to try to contend with a crisis situation, is the most effective approach." — Jeff Francis, Vermont Superintendents Association
The fiscal year for schools begins July 1. The administration has proposed that districts receive current-year funding levels for the first three months of the next fiscal year. That would ensure continuity of funding, Greshin said, while districts prepare new budgets for revotes this summer or fall. Those budgets would establish funding levels for the remaining nine months of fiscal year 2021.
Greshin said the administration appreciates the complexity of its proposal. But he said it’s also important that lawmakers appreciate the severity of the financial challenges now facing Vermont’s education system.
“I’m not suggesting that anything I’ve said is easy or ideal. These are extraordinary times and they call for extraordinary measures,” Greshin said. “But at a minimum I am suggesting that we can’t go on viewing this from a revenue perspective alone.”
As for budget revotes themselves, Greshin said Vermont already has a primary election coming up in August.
“So that could be a time,” Greshin said. “That actually might get turnout for a primary.”
This story was updated to include information about the timing of the proposed budget revotes.
