Education: 8. Fiscal Year 2017 Update

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Education remains the single largest expense for Vermont’s taxpayers, absorbing 60.5% of total state tax revenues in fiscal year 2017.  This article provides an update on 1) Vermont’s student enrollment trends, and 2) the total expenditures and revenues of the Agency of Education in fiscal year 2017.

Student Enrollment

K-12 enrollment continues to decline in Vermont.  Enrollment in grades K-12 fell by 858 pupils in fiscal year 2017, to 76,220.  Since the end of fiscal year 2014, K-12 enrollment has declined by 3,293 students.   The total number of publically funded students fell by 980 in fiscal year 2017, which is equivalent to a single,large school district.

 Vermont Enrollment Trends

Category

Fiscal Year 2016

Fiscal Year 2017

K-12

77,078

76,220

Pre-K

6,242

6,999

Essential Early Education (special education for pre-K children)

1,059

1,104

Total Public School

84,379

84,323

Other Publically Funded Students

4,475

3,551

Total Publically Funded Students

88,854

87,874

 

 

 

Challenged Enrollment

 

 

Special Education

13,885

13,900

Title I

52,963

51,624

Homeless

1,124

1,096

Source: Agency of Education Budget Book 2018

15.8% of Vermont’s publically funded students are receiving Special Education and 58.7% are in low-income communities receiving federal Title I Education Grants.  Sadly, both of these enrollment categories exceed the national averages. This clearly presents greater challenges for Vermont’s schools on an ongoing basis.

 Total Education Expenditures

According to Vermont’s Comprehensive Annual Financial Report, audited General Education expenditures in fiscal year 2017 were $1.996 billion, up $55 million over fiscal year 2016.  This figure includes approximately $87.7 million of higher education expenditures in each year, so the increase in overall expenditures relates entirely to Vermont’s public schools.

A more detailed examination of education expenditures is available in the Agency of Education 2017 Budget Book, as follows:

 Summary of Vermont’s Education Budget ($ millions)

Budget Category

Fiscal Year 2016

Fiscal Year 2017

Change

Agency of Education

1,699.2

1,742.2

+43.0

Higher Education

87.7

87.7

State Teachers Retirement System

98.0

110.6

+12.6

Total

1,884.9

1,940.5

+55.6

Sources: Vermont Agency of Education Budget Book 2017.  FY 2017 and FY 2018 State of Vermont Executive Budget Recommendation

Note that the audited expenditures exceeded the final budgets by $56 million in 2016 and $55 million in 2017.   Some of this is no doubt the result of different methodology used in the budget process compared to the audit process.  In particular, budgets are done a cash basis and the audits are based on accrual accounting.  For example, the audited accounts will include expenses incurred but not yet paid for that will not be in the budgets.  However, as consecutive budgets continue to increase, it would appear that actual expenses have been greater than budgeted amounts during this period.

 Source of Education Funding

Federal grants provide only a very small portion of the state’s education expenditures.   In fiscal year 2017, federal grants were $135.4 million, up $8.5 million over fiscal year 2016.  Service revenues were only $4.3 million and $2.3 million, respectively, in fiscal years 2017 and 2016.

Net of federal grants and service revenues, Education expenditures were $1.856 billion in fiscal year 2017, up $44 million over 2016.  As noted above, this is funded by 60.5% of total state tax revenues.

Education property tax receipts, after taking account of income sensitivity adjustments, were $1.049 billion, down $1.6 million from fiscal year 2016.  A mix of other state taxes provided the balance of $807 million. 

Rising education expenditure levels and modestly declining net property tax revenues looks like a challenge for the state government.  

Reliance on other taxes was $40 million higher in fiscal year 2017 compared to 2016.   According to the Comprehensive Annual Financial Report for Fiscal-Year 2017, total state tax receipts excluding property tax actually declined by $4.5 million in 2017.  With total tax revenues down, the $40 million swing to education must be posing challenges for all the other government departments

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