State Budget Compromise Leaves School Districts Scrambling

Jun 22, 2017

Democratic lawmakers and Republican Gov. Phil Scott finally got a budget compromise on Wednesday, but in doing so, they’ve created a whole new set of financial dilemmas for school districts across Vermont.

Tracy Wrend is the superintendent of the Lamoille South Supervisory Union, a seven-school organization that includes Stowe High School and People’s Academy, in Morrisville.

Wrend says she and other superintendents have tried to play a hands-on role when it comes to cost containment in the education system, which made being on the sidelines of the budget negotiations in Montpelier this week so difficult.

“What has been unsettling was just the last couple of days of conversations behind closed doors that resulted in a proposal that we have not have time to evaluate, vet, analyze, give thoughtful and thorough feedback to,” Wrend says.

Lawmakers and the governor decided in the end to simply take $13 million from school districts, with most of it coming from budgets that voters have already approved.

“It’s an exceptionally challenging situation, and it’s going to take us the entire fiscal year and then some to understand fully the implications, and make sure we have addressed those implications responsibly,” Wrend says.

"The Legislature and the governor are asking us for an outcome that we're not entirely in control of." — Burlington School Board member Mark Barlow

Lawmakers say if districts negotiate more restrained health benefits packages with teachers and other employees, then schools should be able to free up the money needed to comply with the new mandate. Bristol Rep. David Sharpe, the Democratic chairman of the House Education Committee says on the whole, insurance premiums for school employees are expected to drop by $75 million next year.

“And that gives school districts quite a bit of headroom to negotiate plans for their employees and save sufficient money,” Sharpe says.

But nearly a third of the state’s supervisory unions and districts, including Lamoille South, have already settled those health contracts. And based on Wrend’s preliminary calculations, Lamoille South is somehow going to have to come up with $200,000 in additional savings to balance its ledger.

How will they do it?

“A flip response is, we’re going to turn down the heat,” Wrend says.

More realistically, according to Wrend, it’s going to mean a lot of tough choices over the next 12 months.

“So we’re going to get through this. My bigger fear is that there are places that won’t get through this, and they’ll end up essentially deficit spending,” Wrend says.

It isn’t only districts that have already settled health care contracts that are worried about Montpelier’s budget compromise.

"We're going to get through this. My bigger fear is that there are places that won't get through this, and they'll end up essentially deficit spending." — Superintendent Tracy Wrend

“The Legislature and the governor are asking us for an outcome that we’re not entirely in control of,” says Burlington School Board member Mark Barlow.

Lawmakers didn’t pull the $13 million figure out of thin air. They say if districts negotiate to a “benchmark plan,” then they’ll save the money needed to avoid any impact. The benchmark would have teachers pay 20 percent of premiums and a certain amount of out of pocket costs.

But Barlow says the boards can’t snap their fingers and make it happen, hence the term “negotiation.” Barlow says preliminary calculations indicate the Legislature’s decision has opened up a $300,000 hole in Burlington’s school budget, and he says it’s far from guaranteed they’re going to save that much from lower-cost health plans.

“It’s going to put us under pressure to cut money, and hundreds of thousands of dollars out of our budget, and be faced with the prospect of cuts to programs and services,” Barlow says.

Perhaps ironically, the Vermont School Boards Association and Vermont Superintendents Association initiated the legislative debate by teaming up on a proposal to save even more money on teacher health plans.

That proposal, however, also included changes to the collective bargaining system, which lawmakers were not willing to go along with. Jeff Francis, the executive director of the Vermont Superintendents Association, says the savings in that plan were predicated on the accompanying overhaul to collective bargaining.

He says if lawmakers leave that piece behind, “then we regrettably will be destined to an education system and finding system which is going to be driven by health care costs which are going to be really, really hard to get ahold of one district at a time.”