School leaders appeal to lawmakers to change Act 127

Harwood leaders participate in hearing

Jan 26, 2024  |  By Sophia Buckley-Clement  |  Times Argus Staff Writer

Representatives from 14 Vermont school districts and supervisory unions presented statements on the unintended consequences of Act 127 to legislators on Tuesday, highlighting the catastrophic financial scenarios towns are expecting across the state.

The hearing was hosted as a joint meeting with the House Committee on Ways and Means, House Committee on Education, Senate Committee on Education and Senate Committee on Finance.

“The (Agency of Education) is also concerned about the current implementation of Act 127,” stated AOE Interim Secretary Heather Bouchey at the meeting. “It is disconcerting to receive communication from districts (like) Winooski, who expressed frustration that the very law that’s meant to correct longstanding inequity for historically marginalized populations of students is, in fact, potentially penalizing them through regional budgeting decisions.”

Signed into law in May 2022, Act 127 redefined pupil weightings with the intent of more equitably accounting for the cost of educating a student, as well as begin to level per-pupil spending across the state.

Act 127, which is in its first year of implementation, involves a protective provision that caps district tax rates at a 5% increase before the common level of appraisal is applied, as long as per-pupil spending does not increase more than 10%. However, if a district fails to meet this requirement at any point between FY 2025 and FY 2029, they are disqualified from using the cap for the full five years.

Ways and Means Chair Rep. Emilie Kornheiser, D-Windham, invited Department of Taxes Senior Fiscal Analyst Jake Feldman to speak about the impacts of CLAs and potential misunderstanding surrounding the root cause of widespread tax increases.

“CLAs are always determined based on sales data and are entirely independent of the cost pressures in the education fund,” he said. “CLAs are not the reason taxes are forecasted to go up in FY 25. Taxes are forecasted to go up because of unprecedented increases in anticipated education spending and the one-time funds used in FY 23 and FY 24 to artificially lower tax rates.”

The estimated yield fell from $15,443 to $9,452 when announced in December, and was lowered again earlier this month to $9,171, which has raised homestead tax rates across the state.

Feldman said that when the CLA goes down, the yield goes up. That is happening this year, he said, but is being drowned out by those other factors.

Districts stressed in their statements that whatever the cause is, the impacts of these tax increases will have legitimate and detrimental impacts on Vermont communities.

A statewide crisis

Elaine Collins, superintendent of North County Supervisory Union, stated that prior to the release of CLAs, she and her school board were hopeful — having seen a decrease in projected tax rates and a level service budget.

Then the CLA came out.

“For towns used to 2- or 3-cent increases on their taxes and really having to debate that at Town Meeting Day, we now have school board members who are going to have to defend 27- to 60-cent increases in some of our rural and poorer towns. It (will be) a miracle if we pass school budgets this year,” she said.

For Harwood Unified Union School District, school board Chair Kristen Rodgers said that based on a recent letter from legislators to school districts warning of additional state review, their budget is likely to trigger an automatic review under Act 127, despite proposing a level service budget that involved phasing out 14 positions through attrition.

Rodgers said the district, which is losing funds because of Act 127, has some $10 million in deferred maintenance issues and necessary capital improvements, which she noted have not been supported at the state level since 2007.

“We are seeing double-digit increases in statewide health insurance, contractual wage increases necessary to attract and maintain teachers and support staff, increasing costs of federally mandated special education service, a new child care tax, increases in transportation costs as well as increased costs associated with ongoing mental and physical health of our students. This is where our budget has increased in spite of a level service approach,” she said.

Jay Badams, superintendent of Norwich/Hanover Interstate School District, said the Norwich School Board has done everything in its power to contain spending in the elementary school’s budget, but that it’s at a point it can’t come back from.

Norwich School Board Chair Garrett Palm outlined that the district is expecting a 15% tax rate increase after the application of the CLA, which would have been closer to 40% if not for the Act 127 5% cap.

He added that knowing the magnitude of this year’s budget, he and the board spent time analyzing scenarios that would potentially lessen the increase.

“The work was eye-opening. To come in just under the 5% cap threshold, we determined we would need to cut over $2.5 million from our elementary school budget, which in itself is only $7.8 million. If we wanted to come down with a 0% rate increase, we would need to cut nearly $4 million. To put this into perspective, this is the entire amount of the regular education portion of our budget — so all teacher salaries, all benefits and classroom supplies,” he said.

Time for a decision

In addition to sharing the stories of their budget seasons, district representatives also asked legislators to make tangible changes to Act 127 and the education funding formula.

South Burlington School District Superintendent Violet Nichols suggested lawmakers limit CLA fluctuations or modify how the CLA factors into the education funding formula, allowing for more predictable budgeting and tax rates that communities support.

She also requested that legislators consider eliminating the section of Act 127 that disqualifies districts from obtaining the 5% tax rate cap if they fail to meet the provision.

Tom Flanagan, superintendent of Burlington School District, said that while some may suggest a legislative review of the new weights introduced by Act 127, he urges continued support for that aspect of the law.

“The state should address the serious impacts caused by the CLA without conflating it with the weights in Act 127. These are distinct issues and should be treated separately. Act 127 addressed historical inequities and we should not retreat from that while we address other challenges,” he said.

Others, like Caledonia Central Supervisory Union Superintendent Mark Tucker, told lawmakers that it is simply too late to make any changes to this year’s budget cycle and advocated that any changes be implemented in FY 2026.

The only comment Kornheiser gave following testimony was in response to questions regarding the finality of the current yield number, which she stated is “not even close to fixed.” She said earlier in the meeting that another hearing of a similar nature will likely take place again before the legislative session is out.

“There is clearly, at least for me, no easy path forward through this,” Kornheiser said.

This story was originally published in The Times Argus. See the recording from the joint hearing of the Education and Ways and Means Committees here.