School budget fate may eclipse renovation bond progress
February 10, 2024 | By Lisa ScagliottiAs they follow the shifting landscape of public school funding guidelines coming from Montpelier, Harwood school leaders say the financial turbulence involved in settling next school year’s budget could derail hopes for putting a construction bond to voters in November.
Timing for moving ahead with renovations to Harwood Union Middle/High School will likely be affected by the process to put a budget in place for the 2024-25 school year. File photo by Gordon Miller
“We’re considering pushing it out,” said school board member Ashley Woods of Warren, who heads the committee studying renovations needed at Harwood Union Middle/High School. “We are going to put together our project, and we are going to wait for the information to unroll. We’re going to take the time to not necessarily put it for a vote on election day [in November]. We may wait a little bit.”
Woods was speaking with the district’s Bond Study Committee on Feb. 1 as it began sifting through community feedback on the Harwood renovation proposal. At the same time, the committee was hearing that lawmakers in Montpelier were changing the state’s new and problematic education funding formula in Act 127 that Harwood’s school board used to adopt a $50.8 million budget for the March 5 ballot.
For the past several months, the Harwood Unified Union School District has been focused on two key topics that have unfolded along separate but parallel paths: community engagement around renovations needed at the high school and the district’s budget for the 2024-25 school year. Voters in 2021 rejected a nearly $60 million bond largely to improve Harwood. Through a series of community meetings over the past several months outlining the building needs, district leaders have been hoping to get voters on board with tackling construction beginning with approving a substantial bond in the fall election.
Meanwhile, school district administrators and school board members have wrestled with new state guidelines for calculating budgets. The school board on Jan. 31 approved a $50.8 million budget to put on the Town Meeting Day ballot. It relies on the original Act 127 formula that caps the district’s tax increase at 5%. That isn’t as reassuring as it may sound, because when calculations are made to account for property values that haven’t kept pace with the real estate market, taxpayers across the district’s communities would be looking at increases in their school taxes between 16.6% in Duxbury and 25.8% in Warren; Waterbury’s increase would be just over 20%.
But that was a week ago.
This week, lawmakers in Montpelier faced with a chorus of complaints from school districts around the state about the new formula in Act 127 hurriedly began crafting revisions to the law.
On Friday, the House Ways and Means Committee moved ahead with a proposal to adjust the Act 127 formula. The key change: eliminating the 5% tax cap for districts that keep their per-pupil spending increases below 10% because it is not resulting in the desired impact to make funding more equitable across the state, based on feedback from school districts.
The change could prompt school boards across Vermont to reevaluate their budgets before voters weigh in on March 5. That may mean delaying voting on school budgets, something legislators also are planning for as they work through their changes.
Next school board meeting: Valentine’s Day
The Harwood school board meets next on Wednesday, Feb. 14, and it has a budget discussion on its agenda. Board Chair Kristen Rodgers of Moretown on Friday said there’s no recommendation just yet as district leaders are waiting to see how the state’s latest proposal shakes out. “Things are shifting so quickly, therefore we will wait until the board meeting to have a group discussion,” Rodgers said.
Harwood Superintendent Mike Leichliter and Finance Manager Lisa Estler took a break this week from following the developments in Montpelier to talk about what the changes will mean for the Harwood budget. Leichliter and Rodgers recently testified in a legislative hearing about their frustration with the Act 127 formula.
“The intent was good, but their mechanisms were horrible,” Leichliter said in an interview. “The [pupil] weights were good. We all agree with that. But they gave no thought into how to operationalize this within a school district budget or the state budget.”
Estler walked through the revisions being proposed for the Act 127 formula using figures from the budget the school board approved the week before.
For Harwood, the latest approach would not bring the bottom line down for taxpayers. Instead, the tax rate previously capped at a 5% increase would grow to a 17% increase – and that’s before the common level of appraisal adjustments are applied to the calculation.
An early look at the change shows that the school tax increase for 2024-25 would jump from $72 per $100,000 of property value in the plan that the school board approved on Jan. 31 to $250 per $100,000 of assessed property values across the district. Those figures are not final, however – the common level of appraisal values, which vary by town, still need to be factored in. For the budget adopted on Jan. 31, they range from an additional $244 per $100,000 in property value in Duxbury to $437 in Warren; Waterbury’s figure is $317.
Estler said she needs to review the figures carefully to present updated town-by-town breakdowns for the school board’s Feb. 14 meeting.
Tightwalk to a ‘level-service’ budget
The $50.8 million budget the Harwood school board unanimously approved on Jan. 31 represents a spending increase of 11.9% over this year’s $45.4 million. Big drivers in that increase are fixed costs such as employee health insurance up more than 14% for next year and scheduled wage increases. Leichliter said that district officials in drafting the budget have reduced staffing by 13 positions due to attrition and the budget does not aim to add any new programming for 2024-25.
Passed in 2022 and implemented now for the 2024-25 budget year, Act 127 aims to put more funding into districts with students requiring more services. Guidelines were revised for how school enrollments are evaluated with new rules giving more weight to students in circumstances that increase the cost of their education such as those who are English language learners, those in small rural schools, those in poverty, and several other categories.
Harwood’s student population consists of proportionately fewer students in the heavily weighted categories than larger districts in Vermont, school officials explained. As a result, the district’s calculated enrollment for 2024-25 dropped by a count of 99 students, without actually losing students, school officials said.
The formula revision moving forward in Montpelier would give districts that lose money due to the new pupil weights a discount on their tax rate each year for the next five years. In Harwood’s case for next year’s budget, it would mean shaving off 9 cents from a tax rate of $1.78 per $100 assessed property value to $1.69.
The budget for the current 2023-24 school year used $1.44, hence the potential 17% increase on the March ballot. That would be the case if the school board chooses to stick with its $50.8 million budget. While lawmakers are fast-tracking the Act 127 changes, it’s not likely that the bill erasing the 5% tax cap will be through both chambers by the time the school board meets on Feb.14.
In building the 2024-25 budget, Harwood school board members pledged to offer the community a “level service” budget. Besides eliminating the positions through attrition, the board refrained from making any additional cuts. School administrators explained that to make a substantial difference, cuts would need to be dramatic.
For a comparison, Estler told the school board that if it wanted to keep the school tax rate level with the 2023-24 rate, it would need to trim $7.3 million from the $50.8 million proposal it was weighing. What would that take? “That would be equivalent to 66 positions,” she said. Put another way, the sum is comparable to the entire budget of Brookside Primary School, the district’s largest elementary school.
The only line item the Harwood board debated was $1 million in new revenue to the district’s Maintenance Reserve Fund. That would be in addition to putting $535,000 in unspent funds from the 2022-23 fiscal year into the facility account. The school board approved a second ballot question asking voters to authorize putting the surplus into the maintenance fund as it typically does.
The board ultimately decided in favor of including the $1 million because, under the original Act 127 funding formula, Harwood’s tax rate capped at 5% would be the same regardless of whether the budget totaled $50.8 million or $49.8 million. And the balance in the Maintenance Reserve Fund is far behind the cost of the project list for the district’s school facilities. Currently, it has under $3 million while repairs and upkeep projects for all of the school district’s buildings over the next three years add up to over $19 million.
Harwood School Board member Ashley Woods of Warren, talks about Harwood renovations at a bond presentation meeting at Moretown Elementary School in January. Screenshot
Meanwhile at the bond study effort
Harwood leaders have been hoping to address the needed renovations at Harwood Union Middle/High School with a major construction project funded through a bond put to voters in November. The items considered essential to repair and replace in the nearly 60-year-old building including HVAC systems, a roof, electrical, plumbing, lighting, windows, and site work to manage stormwater, etc. total just under $70 million with other improvements adding another potential $22 million.
The committee overseeing the bond planning met on Feb. 1 to review community feedback that shows strong support for the elements on the must-do list. The group is aiming to make a recommendation to the full board in the coming weeks on what to include for the bond and how to proceed.
News of the budget formula woes in the capital, however, gave the group pause.
“The timing is terrible. Terrible, terrible timing,” committee chair Woods said during a two hour session last week that included the project architects. “I don’t think that the timing is right now to go and try and sell the big bond. …The idea of the tax rate meeting up with our bond and being this massive number that people choke on and vote no because they can’t afford it. … There’s this anger and frustration among everyone – rich, poor, and in the middle – it doesn’t matter who you are, nobody wants to get screwed on their taxes.”
Another factor that leaders at schools around Vermont with building construction needs are considering is if and when the state gets involved in funding school construction again. The state ended construction aid in 2007 and many projects have languished as districts have struggled to pull together the funding needed on their own. As a result, the list of school building repairs and replacements around Vermont is long and expensive.
A state panel charged with assessing the school facility needs just reported that it would take $300 million per year for the next 21 years – for a conservative estimate of $6.3 billion – to tackle all of the work needed in Vermont’s schools.
Legislators receiving the report say they would like to create a process to restart state construction aid for facilities. The task force working on how to prioritize projects could present a proposal in 2025 with the goal of starting a program in the legislature’s next biennium.
TruexCullins Architect David Epstein, who has been working with the Harwood district to plan facility renovations for nearly a decade, is a member of the state task force looking at the issue. He told the Harwood bond committee that the state panel doesn’t want the possibility of potential state funding to slow down projects in the pipeline. He said it would like to recommend “a grandfathering clause where any project completed before the program is enacted is potentially eligible for construction funding.” He referred to it as “retroactive eligibility.”
When it met on Feb. 1, Harwood’s Bond Study Committee agreed it should continue with its work to prioritize construction for Harwood based on the community feedback. It discussed possibly proposing phases as a way to tackle the highest-priority element.
Leichliter said that exercise is necessary to move forward. The question now is timing. “I think the [bond] committee, their idea to have a plan ready is good,” he said. “But we might wait and see what’s going to occur here because there’s so many moving parts. We don’t want to disadvantage ourselves.”
And although renovations to the high school have been on the drawing board for years, some items on the list for Harwood are likely to need attention sooner than a large multi-year, multi-million-dollar project gets a green light from voters, Leichliter said.
“It depends also on what happens with our budget this year because our maintenance reserve is dwindling, and there's critical infrastructure issues that have to happen on the near horizon. My crystal ball is pretty fuzzy on this,” he said.
In the recent bond committee discussion, Woods asked Epstein – a veteran of scores of school construction projects around Vermont – his opinion on how to decide timing large projects.
“It’s never the ideal time, let me tell you,” Epstein replied. “In all my years doing bond votes, there is no good time. It’s always three years ago when it was the best time.”