MONTPELIER — The House Ways & Means Committee has added a two-year pause to the excess spending penalty in the education funding formula as part of changes it made to S. 13, a bill establishing a task force to implement new per-pupil weighting factors.
The amendment, offered by committee vice-chair Rep. Emilie Kornheiser, D-Windham 2-1, was unanimously approved by the panel, as well as its amended version of the bill.
S. 13 had already been through the Education Committee and will next stop briefly at Appropriations before being considered on the House floor.
Also added to the bill by Ways & Means were provisions asking the task force to “recommend ways to mitigate the impacts on residential property tax rates and consider tax rate equity between districts,” and consider whether to change or repeal the excess spending threshold altogether.
The provision could have a budgetary impact on four Windham County school districts that are currently above the excess spending threshold, according to Mark Perrault of the Legislative Joint Fiscal Office: Twin Valley, West River, Bellows Falls Union, and Marlboro. Other affected districts include Addison Northwest, Hazen, Thetford, Peacham, and Hartland.
Asked about the financial impact of removing the penalty, Perrault said it would cost the state about $1 million.
Marc Schauber, executive director of the Coalition for Vermont Student Equity, is also on the River Valleys Unified School District board. Speaking for the Coalition, he said it appreciates the work done by Ways & Means, and by the excess spending moratorium Kornheiser proposed.
“S. 13 is a vehicle to correcting 20-plus years of inequity in the current weighting formula,” Schauber said. “The coalition will be working closely with the task force to make sure they produce an actual plan to implement the correct weights.”
Schauber said the moratorium is”a big help to a number of districts across the state, not just in Windham County, and we anticipate once the corrected weights are implemented the districts currently coming up against the excess spending threshold ... will no longer be in that circumstance.”
At first, Kornheiser’s proposed amendment did not include an end date for pausing the excess spending penalty. But committee members showed an interest in setting a time limit.
While some members said the excess spending penalty has served as a useful tool in controlling costs. “For districts that are underweighted and have experienced threshold as part of that, this is an acknowledgement that this is a problem we’re working on,” she said.
Rep. James Masland, D-Windsor-Orange 2, agreed with Kornheiser.
“It increases the unfairness of the bollocksed-up weights,” he said. “Maybe going forward we suspend it and do something quite different ... but I don’t know what different is right now, and we won’t know until the commission does its work.”
Rep. Laura Sibilia, I-Windham-Bennington, who has advocated for a moratorium on the excess spending penalty, said the amendment might have an even broader effect on the school funding picture. “I think it will be the reason the state is not successfully sued for the FY 22 and FY 23 school years,” she said.
Kornheiser also explained the proposed changes in the House Democratic Caucus on Tuesday.
“I think that we have some broad acknowledgement that post-Act 60, 20-something years out from the Brigham decision, we still don’t have equity of educational opportunity for all our kids, and we don’t have equity for spending,” she told fellow House Democrats.
In another key change, Ways & Means removed the Secretary of Education and chairperson of the state Board of Education from the task force, making it a panel of eight legislators representing financial and education committees — four each from each chamber.
DOLLAR FOR DOLLAR
The excess spending penalty is like a professional sports “luxury tax” in that it penalizes spending over a prescribed limit on a dollar for dollar basis. In the case of Vermont, that’s the equalized per-pupil spending limit set by a complex formula.
For some districts that have been underweighted by the current per-pupil weighting factors, the resulting limited taxing capacity has led to equalized per-pupil spending approaching the excess spending threshold, and the dollar-for-dollar penalty results in larger property education tax increases.
The weighting factors are Vermont’s post-Brigham court decision method of equalizing education spending, based on the idea that counting children who are more expensive to educate as more than one student would provide equity.
But a 2019 University of Vermont study showed the factors adopted by the state had no empirical basis, and suggested new weighting factors, including a steep increase in the poverty weight from 0.25 to 2.97.
S. 13 proposes a task force that “shall recommend ... an action plan and proposed legislation to ensure that all public school students have equitable access to educational opportunities, taking into account the [UVM] report.” That change, made by the Education Committee, departs from language the Senate approved, which allowed the task force to consider whether to modify weights or replace them with categorical aid.
Rep. Kathleen James, D-Bennington 4, a member of the House Education Committee, said she was happy with the level of compromise and focus shown by her committee, and by Ways & Means.
“It’s an issue that has equity at its core and at the same time it had the potential to be very divisive,” James said, referring to the ways changes in tax rates might influence political decisions. “Instead, people came together on this — it was conversation, cooperation and consensus-building at its very best.”
James is also pleased that the excess spending penalty is suspended, “so we can take a deeper look at how that works and whether it should be part of the funding formula going forward.”
Ways & Means member Rep. David Durfee, D-Bennington 3, said while not a perfect solution, the excess spending moratorium will relieve some districts and allow for more spending flexibility.
Durfee felt a key moment in the discussion was when the UVM study’s author, professor Tammy Kolbe, testified before the committee and answered questions about how the new weights were derived.
“I think we had a fairly compelling conversation ... that helped address some concerns about the validity of the results. For some people that was a stumbling block,” Durfee said.
Beyond that, he felt the changes made by Ways & means were subtle but effective ways “to include looking at other ways we can get to more equity. It in fact smooth things out for districts that will be harder hit by the correct weights.”