by Paul Bean
After a year that saw school spending jump 20%, school leaders, lawmakers and taxpayers should brace for another potential school spending and tax tsunami, unless corrective measures are taken, the Vermont School Board Association said.
In August, The Vermont School Board Association sent a letter outlining the main cost drivers for education for next year – not this year, but the budget the Legislature will be preparing in January.
Nothing the widespread rejection of school budgets at this year’s Town Meeting, the VSBA said that “Vermont cannot endure an FY2026 budget cycle like FY2025. Without successful efforts to significantly reduce the rate of increase in school district spending proposals for FY2026 as compared to FY2025, more budgets could fail.”
Here are some of the cost centers:
Personnel. Vermont has a 4.4/1 pupil-to-staff ratio, the lowest in the nation. The FY2023 cost of school system wages, salaries, and benefits totaled $991 million. The entire budget for the State of Vermont was $8.5 billion. Assuming an annual 6% salary hike since FY2023, “that is a significant contributor to increased education spending across the state.”
(It’s worthwhile to note here that the Vermont NEA, the teachers’ union, did not co-sign the letter.)
Healthcare is a key driver of rising personnel costs. “Given that no structural changes are expected to happen with the VEHI plans in the coming year, we anticipate that FY26 will bring another year of double-digit rate increases similar to last year.”
Healthcare coverage is one of the biggest incentives for folks to join and stay in the education workforce. It isn’t cheap. States the report: “Spending on health insurance premiums (only) was $211 million in FY2023. Assuming this increased by 12.5% in FY2024 and 16.4% in FY25, then a 17% increase in FY2026 would cost an additional $42 million to the State Education Fund.”
Special Education costs are “predicted to increase by approximately $40 million between FY2024 and FY2025.”
This increase in special education costs is the result of a continued transition in education spending put forth by Act 173 of 2018, a law “enhancing the effectiveness, availability and equity of services provided to students who require additional support,” the state website says.
Facilities. If all of this was not enough, one of the most concerning figures is the cost of upgrading and replacing school buildings and facilities. “In a report to the Vermont House Education Committee in January 2024, the Agency of Education stated that immediate facilities needs for the state totaled $228,613,264 and placed total costs at $6,352,324,952,” said the VSBA report, which warns: “These figures, according to the Agency, are likely an underestimate.”
Inflation. The overall inflation rate, running at 4% annually, also affects school budgeting, the letter said.
Tuition increases. The three signers, all affiliated with public schools, also took a shot at paying tuitions to private schools: “Overall tuition costs increased 5% from FY2022 to FY2023. For every student educated outside the public education system, it drives up the cost per pupil within the system. This directly increases property tax rates.”
Excess Education Spending – The excess education spending threshold (118% of statewide average) has been reinstated beginning in FY2026. The legislature repealed the exemption of voter-approved bond payments from the excess spending threshold. BUT – for all bonds approved by voters prior to July 1, 2024, voter-approved bond payments toward principal and interest will not be included in education spending for purposes of calculating the excess spending threshold.
This ‘exempt’ bond spending was a big driver in last year’s out-of-control education spending. And the payments for those bonds enacted pre-July 1, 2024 will still be exempt.
What can be done?
The letter recommends local school boards review several areas of potential cost-containment:
- “Responsible budgeting” by local school leaders.
- Pay more attention to class size. “Vermont law currently does not set minimum class sizes; however, pursuant to Act 153 of 2010 all school districts must have minimum and optimal average class sizes,” the letter notes.
- Consider school re-configuration and school size. “We anticipate that challenging conversations will surface about the number of schools operated in Vermont as a whole and in local school districts.”
The letter is skittish about cutting administrative costs. “When administrative positions are cut from budgets, some of their responsibilities are often ederal and statewide requirements. Cutting administrative personnel can mean that more responsibilities are placed on principals and teachers.”
- Collaborate with other school districts on professional learning, such as ‘in-service days.’