School board on budget: ‘Let the voters decide’
February 18, 2024 | By Lisa ScagliottiTaxpayers in the Harwood Unified Union School District could expect to see the school portion of their property tax bills go up by 30% to 40% later this year if they approve the $50.8 million school budget on the Town Meeting Day ballot.
That’s the scenario the school board chose this week by opting to stick with the plan it unanimously approved at the end of January.
The Harwood Unified Union School District School Board meets on Feb. 14 with a full agenda. Multiple unionized support staff employees, some with children along, attend to comment and demonstrate during the public comment period to call for a resolution to contract talks to settle their labor agreement that expired last June. Talks are in a fact-finding process with both sides saying they are moving toward a resolution. Photo by Lisa Scagliotti
The budget discussion at the Feb. 14 meeting concluded with a consensus among most members to keep with the board’s original March 5 vote schedule.
“Let the voters decide if [the] budget is too large or the tax implications are too high,” said board Vice Chair Kelley Hackett, of Waterbury.
“I am optimistic that we will pass this budget because there isn’t any fluff in it,” Warren member Ashley Woods said. “We should take it to Town Meeting and let the people decide.”
The sentiment wasn’t unanimous, however.
“I don’t see this budget passing on Town Meeting Day as it is right now. That’s why I think we need to wait,” Fayston member Mike Bishop said. “People are just going to look at how much their taxes are going to go up and that’s how they’re going to vote.”
Duxbury board member Life LeGeros agreed. “There is going to be serious sticker shock,” he said, noting the tax increases needed to support the budget without revisions. “That’s a serious hardship for a lot of people.”
The board had the option to revisit the budget proposal for voters to consider because state lawmakers are in the process of revising the new state education funding formula that the board followed when it adopted its budget on Jan. 31.
Because of changes happening in the legislature though, the $50.8 million budget the board chose has gone from having its school tax rate capped at 5% to now carrying an increase of 17%. That’s before the real estate adjustment calculations are made to account for local property values lagging behind the real estate market values over the past several years.
As a result, the January estimates of school property tax increases ranging from a low of 16.6% in Duxbury to a high of 25.8% in Warren (Waterbury’s jump was 20.3%) now range from 30.1% in Duxbury to 40.4% in Warren (Waterbury’s rate lands at 34.3%).
The estimated translation in dollars for every $100,000 of assessed property value ranges from $570 for Duxbury to $790 in Warren. Waterbury’s estimate is $653 per $100,000 of property value, so a home valued at $300,000 would see a school tax increase of $1,959.
Final tax rates vary by town based on real estate appraisal values that are part of the complex state formula for funding public schools that’s been even more complicated than usual this year.
Harwood school tax scenario based on proposed Act 127 revisions
This chart presumes Act 127 changes proposed in H.850 go into effect. It uses the proposed $50.8 million budget the Harwood school board approved Jan. 31. Note: CLA is Common Level of Appraisal; FY24 school tax rate went down 5.1% from FY23; the discounted school tax rate for FY25 is $1.69 before CLA calculations are made. Estimated increases by property value are at right. Source: HUUSD
Consequences of removing the tax cap
The Harwood board approved its budget to put on the ballot by following the guidelines in Act 127, the state’s new education funding law that is being rolled out this year. It aims to make school finances more equitable across the state by making sure districts with students that fall into a variety of special categories receive adequate funding needed to support their education. But, while the law acknowledges the extra costs involved in serving English language learners, students in poverty, and those in small, rural schools, etc., the implementation of the formula touched off a firestorm of complaints from school districts around Vermont. One feature of the formula involved an incentive to districts to phase in the funding shifts by capping the school tax rates if districts held spending increases calculated per pupil to under 10%.
In Harwood’s case, its budget originally at $49.5 million came in under that threshold with a per pupil increase of 5.81%, so it qualified for the tax cap. It was low enough that adding $1 million to the district’s building Maintenance Reserve Fund was possible without exceeding the spending threshold (new increase calculated to be 8.31% per pupil) and still qualifying for the tax cap. The board then decided to put a $50.8 million budget on the ballot.
But it’s the tax cap that’s proved problematic as many districts sought to propose budgets within the formula’s parameters while relying on state funding to cover the expenses beyond what the capped tax rates would generate.
State lawmakers responded and began work on a fast-tracked bill to modify the formula. The bill, H.850, cleared the House of Representatives on Wednesday.
The bill replaces the cap with a new calculation based on each district’s weighted enrollment as a portion of the statewide total. Those districts whose weighted enrollment dropped under the new system – including Harwood – would see their school tax rate “discounted” one cent for each percent of what the state policy writers refer to as a drop in “taxing capacity.”
The bottom line for Harwood?
The $50.8 million budget has gone from generating a capped tax rate of $1.51 to $1.78. When a 9-cent discount is applied, that brings the rate down to $1.69 which represents an increase of 17.2% over the $1.44 used to calculate taxes for the current 2023-24 school year’s budget of $45.4 million.
All of these figures are before the common level of appraisal portion of the formula is considered and it’s that final step that launches tax increases to unprecedented levels.
Given the Act 127 formula changes underway via H.850, lawmakers are telling school districts they can reopen their budget discussions and revise their proposed budgets to put their voters.
The catch, however, is that altering the budgets that were approved in January would mean postponing voting until revised versions could be warned for 30 days. That would move school budget votes past the Town Meeting Day local elections and presidential primary to a date in late March or early April. The state legislation also includes funding to cover the costs of postponed school budget votes for districts that opt to amend their requests to voters.
Keeping new funding for maintenance
In a detailed slide presentation to the school board on Wednesday night, Harwood’s Finance Manager Lisa Estler and Superintendent Mike Leichliter went over detailed data on several budget scenarios.
Leichliter called the exercise an “unprecedented circumstance” but suggested that the board’s input would result in a path that reflected the community’s priorities.
“Our goal is for the board to make the best decision it can with the information we have at the moment,” he told the group at the outset.
Estler calculated the tax impacts of several options that the board could take to cut back on the $50.8 million budget it has put forward.
The first would have been to remove the $1 million addition to the Maintenance Reserve Fund.
Several Harwood board members on Wednesday supported that step at first. “I think we have to give up the $1 million,” Fayston member Danielle Dukette said.
LeGeros agreed. “We passed a budget last meeting based on some assumptions about tax rates,” he said.
Estler’s next suggestion was to skip putting the 2023 surplus of $535,000 into the Maintenance Reserve Fund and use it as general revenue instead. The district typically asks voters for approval to pay for facility repairs using unspent dollars from previous budget years. A second question on the March 5 ballot would direct the surplus to the maintenance fund.
LeGeros called the $50.8 million plan “too risky” and advocated for postponing the March 5 vote in order to incorporate both of the first two suggested cuts.
The steps, he said, would show voters the board recognizes the tax impacts from the new state formula and would offer the community “the leanest budget we can without actually reducing staff more than 13” positions the approved version trims. “I’m even willing to even give up the rollover money because I want to see a budget that passes,” he said.
But the suggestion did not get wide support in the group given the long list of capital improvement projects totaling $19.3 million over the next four years and the reserve fund to pay for them currently having less than $3 million.
Overall, projects at Harwood Union Middle/High School account for $5.6 million of that total and include items that are being discussed as part of a large construction bond. Those items would need to be done using maintenance funds if the renovation project funded by the bond does not move forward soon.
Harwood renovation bond now on hold
Also in Wednesday’s meeting, members of the Harwood renovation bond study committee told the board that the financial volatility surrounding the budget for next year has convinced them that a November bond vote will not be prudent.
Built in 1965 and opened in 1966, Harwood Union Middle/High School is in need of renovations that school district leaders hope to finance with a long-term bond. Recent community meetings outlined $64 million to $92 million in possible upgrades. File photo by Lisa Scagliotti
Woods, who chairs the committee, said the group will continue to work on preparing a proposal for the full board based on community and student input and the top-priority building needs. “But we feel like we need to hold,” she said. “We maybe decide to vote on that at a later date, not Election Day in November.”
Committee member Cindy Senning of Duxbury said important steps needed before a construction bond is presented to voters include settling the 2024-25 budget with taxpayers understanding the impacts and also learning more about whether the state will resume contributing to school construction costs – the topic of ongoing discussions in Montpelier.
“We absolutely still continue to need a bond,” Senning said. “There’s no doubt about that.”
Woods noted that many comments on the community survey about the Harwood bond mention concern about rising taxes, so the committee will look to put a proposal together, but not this year.
“I appreciate that. Taking a sight breather,” said board Chair Kristen Rodgers of Moretown. “Because we want a bond that’s really successful.”
Deeper cuts ahead
The next two budget recommendations from the administration presume the first two steps are taken to not add to the maintenance fund. They then suggest cutting deeper by eliminating the equivalent of either 10.5 or 26.7 full-time positions across the district.
Estler said she uses a figure of just under $111,000 to calculate the costs of wages and benefits for one full-time equivalent employee.
For each option, Estler’s presentation included the tax impacts, demonstrating smaller tax increases with each reduction in the bottom line. The final scenario brings the bottom line back to a level with a tax rate matching the original capped proposal the state offered in Act 127 before revisions.
Responding to questions from board members, Leichliter noted that both union and non-union employees would be considered for cuts, although non-union employees don’t have contractual deadlines for notifying them about their status. “Everything is on the table,” he said.
Potential future budget cuts would likely target both unionized staff and teachers as well as non-union administrative employees, school officials say. Support staff on Feb. 14 lobby the Harwood school board to resolve their stalled labor contract. The current contract covering teachers is set to expire this June. Photo by Lisa Scagliotti
Leichliter noted that the proposed budget already reduces the district’s staffing level by 13 positions due to attrition. Those reductions will be made to account for federal pandemic-response funding that ends this year and was used to hire new staff such as school counselors. While some of the new staff positions will remain, others will be trimmed to offset the loss of funding.
There was no support in the discussion for revising the budget to make additional staffing cuts before a public vote is held.
For context, the presentation included comparisons to other school districts, showing that Harwood’s current proposed budget with a spending increase just under 12% is on the lower end behind districts such as Washington Central (15.6%), Mt. Mansfield Union (19.5%), and Stowe (19.7%).
Board leaders stressed that the $50.8 million budget represents a “level-service” approach with no new programs planned for 2024-25. The spending increases are due to more expensive fixed-cost categories including health insurance benefits, contractual wage increases, and a new state childcare payroll tax.
Sharing a slide with information on education costs by state from the U.S. Department of Education, Leichliter suggested that Vermont is not an outlier in its education costs.
“I don’t think we are over-spending. I do think that what we are providing is at a high cost,” he said. “We do spend a high amount, but a lot of those areas are essential to what we do.”
The board discussed timing if it opted to revise its budget proposal and members debated pros and cons of voting on a popular presidential primary day with large turnout versus a special election later in the spring.
Bishop suggested that a vote later in the spring might be better than March 5.
“I think you might have a better chance of getting this passed on an off month than you might at Town Meeting. That’s just a hunch,” Bishop said.
A key consideration for avoiding changes though was that a delay would mean not having a budget approved before mid-March deadlines to communicate with teachers and staff covered by union contracts regarding their employment offers for next school year.
The discussion also acknowledged that if voters reject the budget on March 5, the board would need to entertain Estler’s scenarios that call for layoffs – referred to a “reductions in force” or “RIF” for short.
Now in his second year as Harwood’s superintendent after moving from Pennsylvania in 2022, Leichliter said he sees layoffs as a last resort. “In 15 years as a superintendent, I’ve never had to RIF someone. I’ve been able to do it through attrition and timelines,” he said. “But I’ve never been in a situation that’s quite so dire as the one we’re in.”
In the end, the majority of the board agreed to leave the budget they chose on Jan. 31 in place for Town Meeting Day
Despite the administration’s recommendation to the board not to make cuts yet, Leichliter said his understanding from legislative hearings is that lawmakers hope many districts will pause and revise their budgets and cut school spending across the state by as much as $100 million. He said his message to state representatives from the Harwood communities is that the state’s process needs better revisions.
“They need to have a more predictable system for funding and budgets that makes sense, that allows boards and administrations to have good tools as we’re crafting budgets and trying to control spending because it’s almost impossible to do now,” he said.
The board did not take a formal vote on their budget decision, but Rodgers went around the table asking all to weigh in. Bishop and LeGeros said they preferred to postpone the vote to allow for revisions and/or a final decision on H.850, the legislation in progress in Montpelier. All of the others preferred keeping with the March 5 vote schedule. Waterbury member Victoria Taravella had been on Zoom for the meeting but had left the call before the straw poll. Waterbury member Marlena Tucker-Fishman was absent for the entire meeting.
Warren board member Jonathan Young voiced some ambivalence when he was called upon. “It’s all so messed up, so we might as well go for it and see what happens,” he said.
Letter from board leaders
Outgoing HUUSD School Board Chair Kristen Rodgers of Moretown and Vice Chair Kelley Hackett of Waterbury. Courtesy photo
On Friday, board leaders Rodgers and Hackett wrote a letter to the Harwood community following the meeting asking for support for the budget question and the second question to put the 2023 surplus in the maintenance fund. That’s posted on Waterbury Roundabout in the Opinion section and on the Education page.
They explain the reasons for cost increases in the proposed budget and the challenges surrounding the new state funding formula. “The school board needs the input of our community in the form of your vote on the budget proposition question on the ballot,” they write.
Should voters on March 5 approve the budget as proposed, school leaders will work over the next several years to gradually trim staffing levels. If the budget fails at the ballot box, cuts will be needed for the 2024-25 school year, Rodgers and Hackett’s letter states.
They conclude by posing their conundrum to the community: “The school board fully understands that the projected tax rates from the legislature are of great concern. As your elected school board representatives, we also understand that the loss of 10.5 positions or 26.7 positions beyond the 13 already budgeted for elimination will have a huge impact on the safe operations of all of our community schools.”
The budget scenario slide presentation to the board is linked on the school board’s Feb. 14 agenda here and video recordings of the meeting discussion can be found on the district’s YouTube channel and on Mad River TV. The school board meets again this Wednesday, Feb. 21, at 6 p.m.
Voting on the school budget and maintenance reserve questions will happen in person on Town Meeting Day, March 5, 7 a.m. to 7 p.m., in each of the Harwood school district communities. Early voting is now available at each town clerk’s office; ballots also may be requested by mail.
The school district will hold its annual meeting and information session at 6 p.m. on Monday, March 4, in person in the library at Harwood Union Middle/High School and also online via zoom and livestreamed on the district’s YouTube channel.
Details about voting and the March 4 meeting including links for Zoom and YouTube are on the school district’s Annual Meeting Warning. The school budget and annual report is posted on the HUUSD.org homepage.