Op-Ed — Holcombe: Governor’s budget veto is a rebuke of voters’ wishes

Rebecca Holcombe

As secretary of education for two governors, I took affordability seriously. That’s why I wrote school boards last October to encourage them to manage ratios, and why I supported districts like Bethel and Royalton, where people had hard community conversations and explored all options before voting to merge not just governance, but high schools, to reduce costs while expanding opportunities for their children.

Gov. Phil Scott’s recent insistence on overriding local budget votes, increasing tax bills regardless of local decisions and relying on borrowed money is a rebuke of local voters, who are currently tasked in statute with deciding how we meet our state’s most fundamental obligation: ensuring we have an educated citizenry.
Here are two points to keep in mind:

• The governor proposes to increase taxes and spend more of the education fund from “Montpelier.”
When he ran for governor, Scott’s campaign website stated: “We should find ways to let communities keep what they save from mergers, and other efficiencies, returning the savings to local taxpayers or local schools – whichever their voters choose – instead of sending it back to Montpelier.”

His funding proposal, however, will increase taxes and scoop any savings for use by “Montpelier,” thus preventing local tax relief and reducing the incentive for districts to save.

First, Gov. Scott assumes average growth in the property grand list of 3 percent a year, and promises he won’t raise rates. However, his plan doesn’t lower rates either, even if districts spend less. As the grand list grows, so will Vermonters’ tax bills, even if districts vote for budget cuts. The bill – not the rate — is what you pay.

Second, if school boards reduce costs, as many have begun to do, the governor proposes to keep the average tax rate too high, presumably to create a slush fund for yet to be specified state initiatives — ones for which districts pay, but over which they have no say. Again, this removes any incentive for districts to be efficient, because good fiscal stewardship would no longer lead to property tax relief.

Despite this, let’s assume districts do cut staff. When Scott ran for governor, he said: “We need to stop using one-time money to plug reoccurring budget holes.”

Nevertheless, last year, the governor insisted on a veto budget that used about $35 million in one-time money and reserves to buy down tax rates. This year, the governor proposes to borrow up to $44 million to $58 million (the number keeps changing) to keep tax rates flat.

However, the governor can’t pay back money borrowed to cover “reoccurring” costs without raising taxes, even if districts cut their budgets. That is because his planned “savings” are actually avoided costs. If public schools hire fewer teachers, they “avoid costs” by budgeting for fewer teachers. In this case, the state would have to set a rate higher than what is needed to fund budgets, in order to pay back borrowed money.

• Gov. Scott’s education veto is a rejection of local voters, not the Legislature.

School budgets belong to districts, not the governor. Local voters approve — or reject — school budgets, and the Legislature is tasked with setting the average education property tax rate necessary to fund approved budgets.

Communities often customize education to local priorities. For example, one district with an average tax rate takes advantage of excess capacity in its school building to offer two years of full-time prekindergarten. Overall this year, districts approved budgets that were $29 million lower than anticipated.

The administration’s proposed savings depend on voluntary increases in staff ratios. Ratio changes are a part of the solution in some places; the bulk of this year’s savings appear to have come from management of ratios in districts that operate public schools.

However, simplistic solutions create perverse incentives. My district is high spending and has high tax rates, but its ratios already meet the governor’s goals. Some districts with lower ratios spend far less and have lower tax rates, including some on the front line in combating the devastation of opiate addiction. Some of the highest spenders have no ratios to manage because they provide tuition vouchers instead. These latter districts are also exempted from the excess spending penalty.

As for quality, Finance Commissioner Adam Greshin told VTDigger, “To fill voids in academic expertise, teachers would be asked to switch specialties. A social studies teacher would be asked to become a science teacher, for example.” When savings come before expertise, quality is the casualty. That’s when our schools stop being one of our greatest assets.

As our population ages, we face higher health care and pension costs. The state still lacks a coherent and sustainable economic development strategy. We have water to clean up and carbon goals to meet. Our Vermont brand takes farms for granted, but many farmers struggle. All indicators suggest inequality is growing, but too often, our policies make inequality worse. Public schools are the payer of last resort when children suffer.

Our problems are manageable, but they can only be solved through hard work and compromise. A tripartisan legislature put together a grown-up budget. Let’s all support it and get to work on real solutions to our real shared challenges.

Rebecca Holcombe is the former secretary of the Vermont Agency of Education.

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