Governor Scott's Proposed Budget

February 13, 2017

The Governor's proposed budget has been described as innovative, clever or slight of hand, depending on individual perspective. The Ways and Means Committee has reviewed it from many angles, and here is what we found.

Education
   First, Governor Scott proposed significant new education spending. Specifically, he would increase the Vermont State Colleges base appropriation by $4 million, increase UVM's base appropriation by $1 million, expand early education spending by $9.6 million and provide $1.6 million for education innovation. This spending is sorely needed. As a VSC Trustee I can attest that current state support for the state colleges is appallingly low. In fact, our state support for higher education is nearly the lowest in the nation. Where the money would come from is another matter. 


   Next, the Governor proposes that all school budgets be capped at their present spending level for the coming fiscal year, that all teachers and support staff be mandated to pay 20% of their health insurance, retired teachers health care be covered by the Education Fund, new teachers retirement contributions also be covered by the Education Fund and that the legislature mandate that all school budget votes be postponed until late May. The health care related expenses will drain the Ed Fund by an additional $35 million. Further, Governor Scott proposes that in future years, school budgets be permitted to grow at no more than 5% and that any spending above that be covered by the town's municipal taxes, not school taxes.


    To cover these costs, the Governor would transfer an additional $86 million from the General Fund to the Ed Fund, book $5 million that he claims will be unspent from last year's Education Fund, $4 million from the Education Stabilization Reserve and $26 million of unspecified unallocated or unreserved funds. Thus, the Ed Fund will be balanced - if you believe that savings will materialize from teachers health care, level funded budgets, unproven savings elsewhere and that the $86 million hit to the General Fund won't be significant.

Problems abound 
    First, at the time Governor Scott proposed his budget, school districts had nearly completed their school financing plans for the coming year and teacher contracts were in negotiations or nearly closed. By now, schools have complete their Warned Articles for Town Meeting. Even if the legislature agreed that mandating capped budgets and postponing school district votes until May were good ideas, there is no way, even in the most expedited circumstances, that the legislature could complete its due diligence and pass such a law in time. 


    Beyond that, and recognizing that some of the more vexing school costs are beyond local school board control, we didn't see that it would be at all fair to mandate that budgets be capped. School budgets are the responsibility of local school boards and voting them up or down is the responsibility of local voters. Next, teacher health care has never been the responsibility of local school districts and over which school boards have no direct control. As we know, health care costs have skyrocketed, and it is the Green Mountain Care Board that is trying to reign them in. Further, retired teacher health care funds are invested in the stock market, and a downturn in the market would leave local taxpayers footing the bill.


    Next, the Governor proposed that future school budget growth be capped at 5%/year. This idea is likely unconstitutional because high spending schools would be able to increase their budgets by a much greater dollar amount than low spending schools, further increasing the divide between rich and poor communities.


Which way to turn?
    In his budget address, Governor Scott promised to veto any bill that increases taxes or fees. While we do not know what sort of cuts we will see from the Trump Administration, it is difficult to believe that they're won't be any. Some cuts may be quite severe. At present, approximately 33% of state spending is from federal funds. This money goes to pay for clean water, clean air, Medicaid, other health care initiatives and on and on. Cuts from Washington will make the job of closing the year in balance all the more difficult. We asked the Governor's budget director if they would present a Plan B if the education spending ideas do not fly or if the legislation disagrees with other parts of the budget proposal. The answer was essentially take it or leave it. 

 

     In as much as the legislature is not likely to follow the Governor's directive on school spending, we all (the legislature and local school boards) have our work cut out for us to balance our respective budgets. I will post an update on how the House proposes to close the budget and specifically what will become of the General Fund once things become more clear. But that won't be right away.

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