Spending Caps Put Strain On Schools Facing Rising Health Care Costs

Nov 16, 2015

The House Education committee will meet this week to review possible changes to Act 46, the state's new school district consolidation law.

But it's very unlikely that any final package will be voted on by the Legislature until after Town Meeting Day in March, and that timing could leave many school boards in budget limbo.

There's been a sharp debate over a provision of Act 46 that imposes a spending threshold on local school budgets.

How It Works

Towns with the highest per pupil spending rates can increase their budgets by roughly 1 percent. Towns in the middle can increase their per pupil spending by 2 or 3 percent and the lowest spending towns can raise their budgets by 4 or 5 percent.

If the towns go over these limits, they are subject to tough penalties.

Rising Health Care Costs

Most school boards are seeing their health care costs go up almost 8 percent next year and they say this increase means they'll have to cut other programs in their budgets to come in under the cap.

House Education chairman David Sharpe says one plan under consideration would exempt health care costs from local school budgets for the purpose of meeting the spending thresholds.

"Health care costs are eating us alive in this state,” says Sharpe. “Whether we're talking about Medicaid in the General Fund or whether we're talking about property taxes and funding schools. So that is one proposal, we'll look at numerous proposals. Repealing it, I don't think, is in the realm of possibility." 

Some lawmakers think the whole concept of the spending caps is unconstitutional and the Vermont chapter of the American Civil Liberties Union is poised to help represent any town that challenges this part of Act 46. 

That's why Stowe Rep. Heidi Scheuermann thinks the caps have to be taken out of the bill.

"I think we're going to have some constitutional challenges come March,” Scheuermann says. “If we don't do something in the Legislature we're probably going to have a constitutional challenge and I believe it will win." 

If lawmakers do decide to alter Act 46, Rep. Sharpe says it will take several months for a final bill to emerge from the Legislature.

"If we don't do something in the Legislature we're probably going to have a constitutional challenge and I believe it will win." - Stowe Rep. Heidi Scheuermann

This timetable could put a lot of school boards in a tough situation because the budgets they present to voters on Town Meeting Day won't be based on any changes that are made to the new law.

“Getting something out before those budgets go to print is highly unlikely. Having the governor sign a bill by the 15th of January I think is pretty impossible,” Sharpe explains. “We are absolutely putting school board members and school boards in a difficult spot; there's no question about that."

Sharpe says some school boards could choose to present voters with various spending options. Or they could pass a preliminary budget in March and consider an amended version once the Legislature has taken final action on the bill.