HARTFORD — On Feb. 12, the Mount Ascutney School Board became the first district in the Upper Valley to formally remove a 2023-24 budget proposal from an approved Town Meeting warning.

Strafford school officials followed three days later. After them came Hartford.

Other districts, including Hartland and Weathersfield, will hold meetings next week and are expected to follow suit.

The school officials are responding to the passage of H.850, a law that allows Vermont school districts to delay their annual budget votes this winter. Lawmakers in Montpelier are encouraging the delays because H.850 also repeals a 5% property tax increase cap created by a different law, Act 127, and replaces it with a new education funding formula. State officials passed it because the tax cap was causing schools to increase spending in unprecedented and unsustainable ways.

For many Upper Valley school districts, opting to push their votes beyond Town Meeting Day will extend a budget season plagued by skyrocketing education costs and unprecedented levels of uncertainty about the tax impacts of school spending.

“We have never seen anything like this,” Hartford School Board Chairman Kevin Christie said. It’s been a “perfect economic storm.”

Gov. Phil Scott signed H.850 into law on Thursday. In a scathing rebuke to lawmakers, Scott’s signing letter scolded the Legislature for not working with him last year to prevent the unintended cost spikes created by the 5% cap.

Even H.850, Scott indicated, is only a temporary fix: “To be clear, this bill does not solve our property tax problem.”

The reforms introduced “will only reduce rates if school boards adjust their spending accordingly and local voters approve those changes,” he wrote.

H.850 includes $500,000 to compensate districts for expenses related to moving budget votes, such as reprinting and mailing warnings and ballots.

The Mountain Views Supervisory Union, which includes Woodstock Union Middle and High School, has not delayed voting, but its board met in an emergency meeting on Feb. 2 and removed $700,000 from its budget in anticipation of the repeal of the tax cap. The money was initially budgeted to take advantage of the cap by paying down debt.

The Mount Ascutney and Strafford boards hoped that even a slight delay would provide more accurate information to inform their budgeting decisions.

“The more we wait, the better news we’re getting from Montpelier,” Mount Ascutney board member Rebecca Roisman, of Windsor, said.

‘A big ask’

By the time H.850 was first introduced in the House Ways and Means Committee on Feb. 9, most school boards had already drafted and approved budgets with the understanding that as long as they kept per-pupil spending increases under 10%, Act 127’s cap would hold tax rates to a reasonable level.

Then in early February, just a month before Town Meeting Day, lawmakers began to signal that the 5% cap had resulted in spending levels so high they threatened to bankrupt the education fund and the cap might be repealed.

With that protective rug likely to be pulled from under them, some districts were looking at property tax increases ranging between 20% and 30%.

In the case of Norwich, possibly even 40%. Norwich has no plans to delay its budget vote, board member Neil Odell said in a Thursday interview.

“Essentially the playing field changed at the end of the game,” White River Valley Superintendent Jamie Kinnarney said in a recent interview. His business office is “working on its sixth or seventh budget draft,” he said.

Facing a nearly 38% property tax increase, Hartford’s School Board held an emergency meeting last Monday at which it voted to rescind its proposed budget and delay voting. The board instructed Superintendent Tom DeBalsi to find ways to reduce spending so the projected property tax impact would not exceed 18.5%.

“It’s approximately $3.5 to $5 million in cuts from a $52 million budget,” which is “drastic,” DeBalsi said.

Even with reductions, the 18.5% tax increase is “a big ask of communities for our schools,” he said.

As schools have seen increases in mental health issues and other student support needs, pandemic-related funding for badly needed staff positions is ending, forcing painful spending decisions for school boards.

“We’ve made huge strides in this district in the last few years in our programs and our supports for kids, and we’re all devastated to even think about what this means,” DeBalsi said at a Feb. 14 board meeting.

‘We’ve got a problem’

As school districts respond to last-minute changes, residents grapple with alarming tax predictions and rapidly changing news both from the state and their local school boards

“Between this and the town budget, it’s terrifying,” said White River Junction resident Michelle Boleski at a recent Hartford School Board Meeting.

The Norwich School Board has held informational meetings and used the community Listserv to help voters understand the situation.

“We talk about it at every single board meeting,” Odell said.

The challenge, he said, “is that the formula is so complex that there is no linear correlation between how much you spend and what your tax rate is, and that’s hard for people to understand,” Odell said.

Hartford’s DeBalsi acknowledged that complexity at a Feb. 14 board meeting. Vermont’s tax structure for education is “unbelievably complicated because it is very, very ambitious,” he said. “And most of the time that’s in a good way. It’s an admirable thing.”

He contrasted Vermont’s system — which pools money at the state level and redistributes it to towns — with New Hampshire’s, which funds education largely through local property tax, “which is a lot easier but causes a lot of inequities from town to town,” he said.

Amid the backdrop of an extraordinarily challenging budget year, the Mountain Views School District will ask voters on March 5 to consider approving a $99 million bond to construct a new middle and high school building. Mountain Views serves the Vermont towns of Woodstock, Bridgewater, Barnard, Killington, Pomfret, Reading and Plymouth. The bond vote will be determined by a simple majority of voters from the seven towns.

“I can’t imagine that you could have more headwinds or confusion,” Ben Ford, vice chairman of the Mountain Views School Board said. But whether the issue is school consolidation, pandemic recovery or statewide funding upheaval, “there’s always going to be something.” Moving the construction project forward is a priority, he said, “particularly when the building and grounds crew is in there with duct tape and barbed wire every day trying to keep things together.”

Despite the challenging context for the vote, Ford is optimistic that even people who vehemently oppose the project recognize that something needs to be done. “I think we all recognize that we’ve got a problem,” he said.

Lack of foresight

Much of this last-minute school budget upheaval is the result of what some lawmakers have called an “unforeseen” side effect of Act 127 but one that others, including Scott, say was eminently predictable.

The purpose of Act 127, which was passed in 2022 and takes effect July 1, is to direct education spending equitably throughout the state.

The chief mechanism for creating that equity is the pupil weighting system, which Vermont has used since the passage of the Equal Educational Opportunity Act, or “Act 60,” in 1997.

Act 127 updates the old pupil weighting formula to more accurately reflect student needs and the cost to school districts of meeting those needs.

Students who cost more to educate, such as high school students, English-language learners and students living in poverty, “weigh” more than other students. Districts that “lose” pupil weights will see their tax capacities decline and will have to pay more in taxes to achieve the same level of operating funds.

In order to smooth the transition to this new tax burden for those districts that would lose tax capacity, the Legislature put the 5% tax increase “cap” in place for the first five years of Act 127’s effect.

But evidently nobody at the state level told the state’s school districts that the 5% cap was only aimed only at those districts that were most heavily losing tax capacity under Act 127.

Because Vermont suspended school construction aid in 2007, aging buildings across the state have been creaking and groaning under the weight of more than two decades of deferred maintenance. With no other help in sight and the state offering an increase in spending with a minimal tax increase for five years, many districts jumped at the chance to carry out their due diligence and address looming infrastructure crises.

Other districts counted on the tax cap to retain crucial mental health support staff positions that had previously been funded with pandemic relief money.

“We were never issued a memo,” or any guidance as to what the intent of the tax cap was, Kinnarney said in a recent interview.

But when increased spending threatened to overwhelm the education fund, that memo arrived loud and clear in a scathing Jan. 19 letter from state Rep. Emilie Kornheiser, D-Brattleboro, chairperson of the House Ways and Means Committee, and Sen. Ann Cummings, D-Montpelier, chairperson of the Senate Finance Committee, who scolded school boards for inflating their budgets on the back of Act 127’s 5% tax buffer.

The 5% cap, they wrote, “was designed to help the few districts who would experience the most extreme reduction in weighted pupils.”

“It was not intended as free money” the letter said.

Ford called the letter a “nasty-gram” and said that before factoring it into their budget projections, his supervisory union had spoken with the Agency of Education’s financial manager to make sure that the cap applied to every district.

The scold felt unfair.

“My frustration with all of this is that I do believe that there could have been a little more foresight that we were going to run into this problem with the education fund,” White River Valley’s Kinnarney said.

Leadership gap

A contributing element of this “perfect economic storm” is that Vermont has been without a permanent education secretary for nearly a year, said state Rep. Elizabeth Burrows, D-West Windsor, who also serves on the Mount Ascutney School Board. The person in that office would normally provide leadership in times of uncertainty and “would have combed through the bill and sent out advisories to school boards” about the intent of the legislation, Burrows said.

Legislators and school boards alike acknowledge that H.850’s reforms are only a stopgap measure, and not a long-term solution to Vermont’s education funding challenges.

“We need to answer the question of how we fund education so that it is sustainable going forward,” Kinnarney said.

Burrows said last week that the discussions around H.850 may open the door to discussions about potential new revenue sources for the education fund, such as online sports betting.

Cannabis sales are “coming in ahead of revenue projections,” Ford said, and he sees potential there for reviving school construction aid. “Colorado and Washington have been building school buildings on cannabis revenue for a long time. It seems like a smart way to spend that money.”

Kinnarney was less sanguine about the future availability of school construction aid.

“I am not hopeful,” he said. “As a state, we need to figure out how to diversify our revenue stream and then to allow for capital improvement needs. I’m not optimistic about that right now ”

Christina Dolan can be reached at cdolan@vnews.com or 603-727-3208.