Debate Grows Over Education Funds; $19 Million at Stake (VT)

September 27, 2010

With a federal approval in hand, the administration of Gov. James Douglas will move forward with a plan to send $19 million in new federal money through to school districts.

But at the same time, the state plans to hold back a roughly proportionate amount of state money – at least temporarily, and that plan that is drawing fire from the state’s education commissioner, Armando Vilaseca, who is appointed independently of the governor.

Ultimately, how much state money will go to education is going to be decided next January when lawmakers return to the Statehouse, because it will be up to legislators to determine how much money will go out from the state’s General Fund.

The federal program providing the $19 million was set up to prevent teacher layoffs. Its require ments stipulate that states may retain only 2 percent of the money for administrative costs, passing the rest on to “local educational agencies” like school districts.

The law also stipulates that the money may not go to rainy day funds or other debts, except pension obligations incurred before August of this year. States must also meet required “maintenance of effort” standards to ensure they are not simply cutting their spending on education and using the money elsewhere.

But Douglas, in his letter to the U.S. Department. of Education, said that Vermont was unlike other states in that it has declining enrollment, and has put some programs in place to reduce costs including in staff. The state’s school districts have also already established their budgets for this year, Douglas added.

“Given this complication, among others, Vermont will distribute through the state’s funding formula, inclusive of Education Jobs Funds, currently anticipated by district votes,” Douglas wrote. “Vermont will temporarily withhold the distribution of state funds equal to the amount of Education Jobs Funds distributed to school districts that is above the required maintenance-of-effort.”

That is apparently fine with the U.S. Dept. of Education, which approved the award of money to Vermont in a Sept. 14 letter consisting mostly of boilerplate language.

“The governor’s letter is very clear” about how the money will be used, said Deputy Secretary of Administration Tom Pelham.

Douglas would like to see the money go to teachers’ retirement obligations or some similar expense. What the money held back – and replaced in school budgets with the new federal funds – could be used for will be fairly open-ended, however. That is because those funds are pri marily from the General Fund, and therefore state not federal dollars whose use is dictated by the Legislature.

“The governor and the legislature have to agree,” Pelham said.

Douglas, who is not seeking another term, will not be in office for the next legislative session. But Vermont Commissioner of Education Vilaseca, who is hired by the Vermont State Board of Education, likely will be.,

“I hope to be here in January and the January after that and the January after that,” Vilaseca said.

He thinks the state should not hold back any funds as Douglas has proposed or use the money for teacher pensions. With school savings targets included in the Challenges for Change government efficiency process, the federal funds should help give some time to districts to save money through consolidation, Vilaseca said.

“In my estimation the money should be used to offset the $23.2 million Challenges for Change targets schools have been given to meet,” he said. “I am as passionate as the governor is about reducing the duplications of services and finding more efficiencies.”

A simple calculation of staff-to-student ratio may paint a simpler picture than the reality of trying to save money in a landscape of local control and small sometimes-isolated schools, Vilaseca said.

“When you have schools that are locally controlled, that may be isolated from other places, that have seen declining enrollment, it is not that easy to do in this one size fits all,” he said. “I believe this is a really difficult thing for schools to accomplish based on the current structure.”