Act 46 'tax incentives not really incentives'


BRATTLEBORO — In complying with the new education law mandating that districts consolidate statewide, officials are warning against looking at associated tax breaks in a certain light.

"Even the tax incentives themselves are not really incentives. They really are a way to bridge over to a new situation where everyone is coming together," said Donna Russo-Savage, who advises on school governance at the Agency of Education. "So the thing that should be first and foremost on everyone's mind is what's best for the kids. Are we creating a structure that is better for the kids? Are we creating a structure that is more transparent to the populace?"

At a Monday morning meeting, school board members from the Windham Southeast Supervisory Union met at the Marlboro College Graduate School to discuss questions coming up lately as an Act 46 study committee looks at options. The accelerated merger, which would combine districts already in the supervisory union, is one option under the law.

Going down that road would give homestead taxpayers in existing districts a 10-cent reduction per $100 of assessed value. Then it would drop to 8 cents, 6 cents, 4 cents and 2 cents in the following years.

AOE Education Finance Manager Brad James said the base rate of the state's education fund will need to go up to account for the tax breaks being handed out. But on the other side of the coin, he said, efficiencies will be gained in "quite a few of these districts."

"Part of the idea is to drive down the demand on the education fund," he added.

"It should not be perceived as a major tax savings for anyone," said Nicole Mace, executive director at Vermont School Boards Association. "If you don't start to realize efficiencies then you're facing a cliff four or five years out."

Rep. Mike Hebert, R-Vernon, also chairman of the Vernon Elementary School Board, said there is "great concern" in the House of Representatives about the second year of tax savings for districts that go through a merger.

"It is a concept that's being missed," he said. "The pressure on the yield may be upwards of $7 million next year."

The VSBA along with similar groups have met with supervisory unions around the state after Act 46 was enacted last June.

So far, 10 mergers have been approved by voters in Vermont and two more are in a reconsideration period. That means 12 out of 46 supervisory unions are bringing their districts into a single district.

"We've seen a lot of activity and progress in places where they've had votes," said Mace, adding that actions in other areas are taking longer because the complexities are different. But she noted an accelerated merger wouldn't be possible for every supervisory union.

Seeing all those mergers happen so quickly came as a surprise to Russo-Savage and the AOE. Other district configurations, such as a modified-unified or regional-education districts, can bring the same level of tax breaks to the towns within district with the exception of the first-year 10-cent reduction. Conventional mergers also would maintain the tax breaks.

These variations would see districts still eligible for small-schools grants, which would become known as merger-support grants. Districts would keep their "phantom-students" figure within their calculations for average daily membership or ADM. This would help with ensuring they meet the goal of the law: an ADM of 900 students.

"All these (variations) can go outside of supervisory union boundaries," noted Russo-Savage.

Accelerated mergers need to be voted on by June and a plan needs to be submitted to the state Board of Education by May. The new district would need to be operational within a year.

Votes on the other variations would need to occur by the end July 2017 and the new districts would not need to be operational until July 2019.

If the Brattleboro Union School District were to dissolve, Russo-Savage said, the question would be different. Multiple structures could be looked at.

"That raises unlimited possibilities," she said.

Nikki South, director of the VSBA's Act 46 Implementation Project, told school board members they should consider the details going into articles for voting on forming new district. This can become confusing when a no-vote will create an alternative governance structure.

"The secretary of state is very uncomfortable with these tiered systems of voting," Hebert said. "It is confusing to voters."

At least one public forum and informational meeting would be required for each community where the vote is set to take place, Russo-Savage pointed out. If an alternative structure is possible as a result of a vote then it should be explained so the electorate understands the complexity of the warning, she said.

If the five towns in the WSESU did not approve of an accelerated merger, a separate vote could happen later on to form a different structure.

But Hebert anticipates changes will be made to the law in the next legislative session.

"Many of us are cautioning that let's take that extra time to see what these changes are," he said. "I'm not hearing a lot of people saying we're not interested in some sort of restructuring or merger. But they want the additional time."

Contact Chris Mays at or 802-254-2311, ext. 273.


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