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Human Services: 4. Vermont’s Comparative Health and Welfare Costs

In this section, Vermont’s key health care and welfare program costs will be compared to the rest of the country.

 

 

Medicaid

According to the J Henry Kaiser Family Foundation, Vermont had 168,961 Medicaid enrollees as of March 2017, representing about 27% of the entire population. For the USA as a whole, Medicaid enrollees represent 23% of the population.

In 2016, per capita Medicaid spending in Vermont was $2,695.95 as compared to $1,713.47 for the country as a whole. Vermont’s per capita Medicaid spend exceeds the national average by 57%. Medicaid spending per enrollee in Vermont is 37% higher than the national average.

Temporary Assistance for Needy Families (TANF)

According to the US Department of Health and Human Services, Vermont’s TANF caseload as of October 2016 was 7,992, comprised of 2,402 adults and 5,590 children.

For a single-parent family of three, the average monthly TANF benefit payment was $644 in Vermont as compared to $427 nationally, 51% higher than the national average.

Supplemental Nutrition Assistance Program (SNAP or Food Stamps)

According to the US Department of Agriculture State Activity Report for fiscal year 2014, Vermont has 77,585 EBT card beneficiaries and a further 15,415 individuals receiving cash assistance under SNAP. With 93,000 total beneficiaries, this represents 14.9% of the state’s population compared to 14.4% for the country as a whole.

The average monthly benefit per person in Vermont was $116.78, about 6.6% lower than the national average of $125.01. The average monthly benefit per household in Vermont was $223.58, about 12.8% lower than the national average of $256.46. Federal money under SNAP is reduced on a formula basis when a state’s TANF benefits are high, which is the case for Vermont.

 

How Generous is Vermont’s Health and Welfare?

In 2013, the CATO Institute did a detailed analysis of welfare programs in all 50 states. Vermont’s rank compared to all other states is provided below.

Health and Welfare Benefits 2013 (Number 1=Most Generous)

Welfare Program Vermont’s Rank
TANF 4
Medicaid 12
Housing Assistance 7
Utility Assistance 3
SNAP (Food Stamps) 49

Source: CATO Institute, “The Work Versus Welfare Trade-Off: 2013

 

The Cato Institute is a libertarian think tank so their reports should be read with a healthy degree of skepticism.  The report cited above appears to have applied a consistent methodology across all fifty states and its ranking of Vermont is consistent with the information provided by the US Department of Agriculture, the US US Department of Health and Human Services and the J. Henry Kaiser Foundation.

 

Key Observations

Comprehensive Programs: Vermont has adopted extensive health care and welfare programs to serve low-income individuals and families. Vermont clearly ranks in the top ten states in the country with respect to the amount of benefits paid annually and enrollment as a percentage of the total population.

Unemployment Is Not The Problem: At 3.2%, Vermont has one of the lowest unemployment rates in the country. There appear to be plenty of jobs available.

Low Wages Are A Problem: 10% of employed Vermonters earn less than $21,740 per year and 25% earn less than $27,150, equivalent to 108% and 134% of the Federal Poverty Level for a single-parent family of three. At the bottom 25% of Vermont wages, a single person or dual-earning couple with no children would qualify for health insurance subsidies. With children, SNAP, child-care, children’s health insurance and other benefits become available.

Federal Grants Are Important: A majority of the funding for Vermont’s health and welfare programs is provided by federal government grants. Vermont already has some of the highest state taxes in the country. Any reduction in federal grants available to the Agency of Human Services would put great pressure on the state’s fiscal position.

Top Welfare Beneficiaries: Across the USA, tens of billions in welfare assistance is being paid to the employees of companies like Walmart and McDonalds, whose business models rely on low wages. Whether the availability of welfare has the effect of reducing prevailing wages or provides a needed safety net to a low wage economy that would exist in any event is a question that is actively debated.

 

 

 

 

 

 

Human Services: 3. Vermont’s Welfare

Children and Family Services manage and administer most of Vermont’s welfare services and financial assistance. The department’s budget in fiscal year 2016 was $388.8 million. The final fiscal year 2016 budget for each major functional department is outlined below.

 

Department of Children and Family Services; Fiscal 2016 Budget

 Expenditures

Department Amount ($ millions)
Administration 57.5
Family Services 99.7
Child Development 81.1
Child Support 13.7
Disability Determination 6.2
Economic Opportunity 18.0
Economic Services 107.8
Woodside Rehabilitation Center 4.8
Total 388.8

Source: Governor’s 2017 Executive Budget Recommendation

Federal funds provide just over $200 million, or about 52%, of the department’s total funding. While Medicaid provides a meaningful portion of federal funding, the majority of federal money comes from a variety of national welfare programs.

Before describing the activities of each of the above operations, a quick overview of key federal welfare programs will be helpful.

Supplemental Nutrition Assistance Program (SNAP). This is the food stamp program, which provides food to low-income individuals and families. Participants receive a debit card that is accepted by grocery stores for the purchase of food. The US Department of Agriculture, which runs SNAP, also has a Child Nutrition program targeting low-income households with free or reduced price meals, including school lunch, breakfast and after school programs. SNAP is 100% federal funded.

Earned Income Tax Credit. Administered by the IRS, this program provides tax refunds or rebates to working low-income citizens, thereby boosting their incomes. It is one of the country’s better welfare programs as it promotes work and is designed in such a fashion that one dollar of incremental wage is always worth more than one dollar of incremental tax credit.  Vermont has adopted the Earned Income Tax Credit with respect to state income tax.

Temporary Assistance for Needy Families (TANF). This is a combined federal and state program that pays cash to low-income households with the twin objectives of taking care of children and moving adults from welfare to work.

Child Care and Development Fund. This is a federal block grant program that provides funding for childcare facilities for low-income families.

Supplemental Security Income (SSI). This program pays cash to low-income individuals over 65 years of age or under 65 years of age if they are disabled or blind. This program is 100% funded by the federal government and run by the Social Security Administration.

Head Start. This is a pre-school program for low-income children.

Job Training Programs. There are a variety of job training programs administered by the US Department of Labor for low-income individuals.

Low-Income Home Energy Assistance Program (LIHEAP). This program helps low-income families meet home heating and/or cooling costs.

With that as background, lets take a look at the operations of the Department of Children and Family Services in a bit more detail.

Family Services, with a budget of $99.7 million, is the rough end of the business when it comes to welfare services. This department conducts child abuse and neglect investigations, provides child protective services, manages the juvenile detention and probation programs and regulates adoption and foster care. The state’s Social Workers are housed here.

Child Development, with a budget of $81.1 million, is aligned with the federal government’s Child Care and Development Fund and provides funding for childcare, after school programs and training of childcare practitioners.

Child Support, with a budget of $13.7 million, serves custodial families and seeks to enforce child support payment obligations. Basically, this department works to get fathers (or mothers) to make their child support payments to keep their children and the responsible parent off the welfare system.

Disability Determination: This department is responsible for determining eligibility for the Supplemental Security Income program on behalf of the Social Security Administration.

Office of Economic Opportunity: The focus here is on emergency food and shelter and homelessness. This department also manages home weatherization programs.

Economic Services. Food stamps (called 3SquaresVt in Vermont), TANF (called Reach Up in Vermont), home heating fuel assistance and certain job training programs all flow through this department. With a 2016 budget of $107.8 million, it represents the largest expenditure in the Children and Family Services Department.

There are some other large welfare programs managed outside of the Agency of Human Services, including housing assistance and the Earned Income Tax Credit.  The Informed Vermonter will publish a more comprehensive series of articles regarding the state’s welfare programs and costs at a later date.

 

Human Services: 2. Vermont’s Health Care

The state’s health care spending is largely conducted through four Human Services Departments: Vermont Health Access, which administers the core Medicaid coverage programs, the Department of Health, Mental Health and the Department of Disabilities, Aging and Independent Living.   The operations of each will be reviewed below.

 

Vermont Health Access

To understand Vermont’s health care system, a clear understanding of the federal government’s Medicaid program is required. Medicaid provides health care cost subsidies to low income adults, people with disabilities, low-income senior citizens who can’t afford the Medicare co-payments, children and pregnant women.

Medicaid is funded on a formula basis by the federal government and the state government (which will be discussed below). Medicare, which is available to people aged 65 or higher, is 100% funded by the federal government.

Medicaid benefits are based on income thresholds or “Modified Adjusted Gross Income”, which includes wages, investment income and social security benefits. There are basically three types of subsidies, as follows:

  1. Free Medicaid coverage is available to adults with incomes up to 138% of the Federal Poverty Level (“FPL”), pregnant women up to 208% of the FPL and children up to 312% of FPL. As of September 30, 2016, Vermont had 177,795 Medicaid enrollees, representing 28% of the population.
  2. Premium Tax Credits, which effectively cap the cost of health insurance premiums, are available from 138% to 400% of FPL, with insurance premium costs capped at 3-4% of income in the 138-150% FPL range to 9.69% of income at the 400% threshold. Premium Tax Credits may be paid in advance or upon filing tax returns. In 2016, 19,575 Vermonters received Premium Tax Credits.
  3. Cost Reduction Subsidies cap out-of-pocket expenses, such as deductibles and co-payments, and are paid directly to insurance providers. Eligibility begins at 138% of the FPL and goes to 300% of the FPL. Similar to the Premium Tax Credit, the subsidies decline as incomes rise.   Vermont has a more generous Cost Reduction plan than the underlying federal Medicaid program. First, they offer higher subsidies in the 200-250% FPL band. Second, they offer subsidies up to 300% FPL while the federal program caps these at 250%. In 2016, 14,893 people in Vermont benefited from Cost Reduction Subsidies. This program was recently eliminated by the current administration in Washington by way of a Presidential Executive Order.

To get a more intuitive feel for how Medicaid works, some key income thresholds are outlined below.

2017 Medicaid Income Thresholds ($)

 

Household Size 100% FPL 138% FPL 150% FPL 200% FPL 250% FPL 300% FPL 400% FPL
1 11,880 16,284 17,820 23,760 29,700 35,640 47,520
2 16,020 22,356 24,038 32,040 40,050 48,060 64,080
3 20,160 27,820 30,240 40,320 50,400 60,480 80,640
4 24,300 33,534 36,450 48,600 60,750 72,900 97,200
5 28,400 39,247 42,660 56,880 71,100 85,300 113,760

Source: Vermont Health Connect, Eligibility Thresholds-2017

Vermont’s Medicaid program is governed by the Global Commitment to Health, a type of contract with the federal government that expires on 12/31/2021.

This document sets out the scope of services available for coverage under Medicaid, which can differ from one state to the next. Vermont has elected a very expansive set of services.

The document also sets out the match-payment arrangements as between state and federal funding. For fiscal year 2016, total Medicaid funding in Vermont was $1.69 billion. The federal government’s share was $1.015 billion, or 60%, and the state government’s share was $670 million, or 40%.

The state funds its $670 million share of Medicaid from a variety of sources. General Funds (state income taxes, sales taxes etc.) provide 45%, or about $300 million.

Taxes assessed on health care providers, which were established as part of the Affordable Care Act, provide 23%, or about $154 million. Cigarette and tobacco taxes together with funds from the tobacco settlement provide a further 16%, or about $107 million. A variety of other sources make up the remaining 16%.

On balance, Vermont has one of the better Medicaid programs in the country. Vermont accepted the Medicaid expansion from 100% to 138% of the FPL available under the Affordable Care Act and enhanced some of the subsidies available on the insurance exchange (many states did neither).

As a result, some 95%-96% of Vermonters now have health coverage, one of the highest rates in the country. Vermont also provides coverage for a very extensive list of health care procedures and services resulting in high health care outcomes.

However, insurance premiums in Vermont rank among the highest in the country. Vermont is one of only two states (New York is the other one) that require pure community insurance rates.

Medicaid allows a 3:1 differential in insurance premiums as between old and young persons. In Vermont, insurance premiums are the same for all ages. So, young persons in Vermont pay higher premiums than they would otherwise have to and older people pay lower premiums. Vermont also has the second oldest population in the country, which drives up medical costs fundamentally and therefore insurance costs.

Vermont is adopting a managed-care model to replace the fee-for-service model that underpins both Medicaid and Medicare.

The fee-for-service model incentivizes health care providers to maximize services to maximize fees. This has resulted in excessive treatments, excessive testing, excessive medication and excessive Medicaid costs.

With a managed care approach, health care providers must assume responsibility for both the quality of care and its cost of delivery. Vermont hopes to bring down aggregate health care costs and thereby reduce insurance premiums over time.

Vermont Health Access, which manages the core Medicaid program, had a budget of $1.136 billion in fiscal year 2016.

Department of Health

An additional $146.9 million was budgeted by the Department of Health. This department provides a variety of administrative and support services, manages the state’s drug and alcohol abuse programs and the public health operations. Public health services include disease prevention, infectious disease control, environmental health control (asbestos, lead, radon etc.) and emergency medical planning and procedures.

Mental Health Services

This department, with budgeted costs $217.2 million in fiscal year 2016, manages adult mental health services, children’s mental health service, emergency mental health services, mental health legal services and system development and planning.

Mental Health is principally funded under the Global Commitment (Medicaid). Most of the mental health clinical services are provided under contract by independent, non-profit agencies.

Over 9,000 adults and 10,000 children receive mental health services in Vermont. A further 6,000 receive emergency services annually.

Disabilities, Aging and Independent Living

This department, with a fiscal year 2016 budget of $256.6 million, funds a variety of programs for vocational rehabilitation, the blind and visually impaired, and both short-term and long-term support for very old or severely disabled individuals.

The department also certifies, inspects and monitors nursing homes, residential care homes and other facilities to assure the best level of care for these vulnerable individuals. This department is largely funded under the Global Commitment (Medicaid).

 

 

Human Services: 1.Vermont’s Total 2016 Human Services Expenditures

The Agency of Human Services, with audited expenditures of $2.4 billion in fiscal year 2016, is the single largest source of state government expenditures representing 43% of the total.

It is also the largest recipient of federal grants, which totaled almost $1.5 billion. Taking into account federal grants and service revenues, the net cost to Vermont taxpayers was $889.9 million, or 30% of total state tax revenues.

The Agency for Human Services administers all of Vermont’s health care, chiefly Medicaid, all mental health services and most welfare programs through the Children and Family Services Department. It also manages the Vermont corrections system and the Vermont Veterans’ Home.

As noted above, total audited expenditures were $2.41 billion in fiscal year 2016. The budgeted expenditures for fiscal year 2016 totaled $2.36 billion, as follows:

 

Agency of Human Services Budget: Fiscal-Year 2016

 

Department Amount ($ millions)
Central Office 31.1
Vermont Health Access 1,136.5
Health 146.9
Mental Health 217.2
Green Mountain Care Board 9.1
Children & Family Services 388.8
Disability, Aging & Independent Living 256.6
Corrections 155.3
Vermont Veterans’ Home 21.0
Governor’s Commission on Women 0.4
Retired Senior Volunteer Program 0.2
Total 2,363.1

Source: Governor’s 2017 Executive Budget Recommendation

 

The actual audited expenditures in fiscal year 2016 were 2.2% higher than the budgeted amounts.

In the following sections, The Informed Vermonter will review the operations of the Agency of Human Services in detail, with a principal focus on health care and welfare.

 

 

 

 

Education: 7. Can Vermont Reduce Education Expenditures?

The Vermont Legislative Joint Fiscal Office recently hired Pincus, Odden & Associaties, a public education consulting firm, to assess adequate spending levels for Vermont schools.

Importantly, adequate spending levels were defined to be those necessary to meet Vermont’s student performance standards, including normal students, low-income students and special needs students. The Pincus Report was made available on Jan. 28, 2016 and was titled “Using the Evidence-Based Method to Identify Adequate Spending Levels for Vermont Schools”. The report was based on the 2014/2015 school-year data for Vermont.

 

The key findings of the Pincus Report were as follows:

 

  1. Based on 2014/2015 Education expenditures, Vermont could reduce its total expenditures by $163.9 million, or about 10%, with no effect on education outcomes.
  2. Vermont’s high Pupil Teacher ratio was a major source of high costs.
  3. Vermont’s Special Education expenditures were also a major source of high costs. First, Vermont identifies 16% of pupils as needing special education as opposed to 12% nationally. Second, Vermont has 90 pupils per special education staff member compared to 141 recommended by the Pincus Report. Vermont’s level of “paraprofessional” staff was particularly high.
  4. Vermont needs a more efficient organization of Supervisory Unions to achieve economies of scale. The Supervisory Unions need to be larger and thus fewer in number.
  5. Vermont has too many administrators in the system at every level.

 

The Pincus Report conclusions are entirely consistent with those a normal citizen like The Informed Vermonter might reach from the US Census Bureau Survey of State School System Finances.

 

Education: 6. How Does Vermont’s Cost of Education Compare to Other States?

The US Census Bureau conducts an annual survey of state public school system expenditures and finances for grades pre-K-12.

The most recent survey was published in 2016 for the 2013/2014 school year. Below, per pupil spending of Vermont will be compared to New Hampshire and the USA as a whole for all key categories of expenditure.

Per Pupil Education Spending: 2013/2014 School-Year ($)

 

Spending Category Vermont New Hampshire USA Vt. vs. USA
Total Per Pupil Expenditures 16,988 14,335 11,009 +54%
Salaries and Wages 9,760 7,848 6,482 +51%
Instruction 10,165 9,016 6,654 +53%
-Salaries 6,564 5,673 4,378 +50%
-Benefits 2,756 2,563 1,691 +63%
Total Support Services 6,285 4,942 3,888 +62%
-Pupil Support 1,423 1,102 619 +130%
-Instructor Staff Support 772 447 509 +52%
-General Administration 386 495 210 +84%
-School Administration 1,191 821 607 +96%

Source: US Census Bureau Survey of State School System Finances

Key Observations

Vermont has High Cost Education: The cost per pupil in 2014 was 54% higher than the USA average and 18.5% higher than New Hampshire, a state with equivalent or higher education outcomes. If Vermont could reduce its Education expenditures to the level of New Hampshire, the savings would total $235.7 million, equivalent to 19.5% of gross Homestead property tax receipts.

Vermont has Very High Administrative Costs: Vermont’s Education expenditures exceed the USA average and New Hampshire in every single category. Support Service expenditures, particularly Pupil Support, General Administration and School Administration expenditures exceed the national average by 130%, 84% and 96%, respectively.

Vermont’s Fiscal-Year 2016 Education Expenditures are Even Higher: The total Education cost per pupil in Vermont has gone from $16,988 in the 2013/2014 school year as reported by the US Census Bureau to approximately $21,000 in 2015/2016 school year.

 

 

Education: 5. Vermont’s 2016 Total Education Expenditures

As reported in the Fiscal-Year 2016 Comprehensive Annual Financial Report, total Education expenditures were $1.94 billion.

Unfortunately, this report does not provide a detailed breakdown of Education expenditures. For this information, The Informed Vermonter used the final approved budget of the state.

 

Summary of Budgeted Education Expenditures: Fiscal-Year 2016

 

Expenditure Category Amount ($)
Agency of Education (pre-K-12) 1,699,237,702
Higher Education 87,737,024
State Teachers Retirement System 97,984,195
Total 1,884,958,921

Source: Governor’s Fiscal-Year 2017 Executive Budget Recommendation

 

The Agency of Education budget (almost $1.7 billion), which funds grades pre-K through 12 in Vermont, will be detailed below.

The vast bulk of Higher Education expenditures are going to UVM, other Vermont State Colleges and the Vermont Student Assistance Corp.

The Informed Vermonter will review the State Teachers Retirement System later under Vermont Employee Retirement Benefits. Note that $9.3 million of the State Teachers Retirement System expenditures were funded by the related pension fund, which is held in trust for the benefit of retirees and therefore not included in the primary government financial report.

Taking into account the funding provided by the pension fund, there is a $65 million gap between the actual audited Education expenditures and the budgeted expenditures in 2016.

There are probably two key reasons for this gap. First, the accounting methods used in the budget process differ from the audit. Budgets are done on a cash basis and the audit on an accrual basis, so the audit will include expenses incurred but not yet paid for, for example. It is also possible that the actual expenses incurred by Vermont’s 273 school districts were somewhat higher than estimated in the budget process.

Agency of Education Budget: Fiscal-Year 2016

 

Department Amount ($)
Finance & Administration 26,673,703
Education Services 132,137,303
Special Education 179,823,434
State Placed Students 16,400,000
Adult Education & Literacy 7,351,468
Education Payment 1,289,600,000
Transportation 17,734,913
Small School Grants 7,615,000
Capital Debt Service 122,000
Tobacco Education 766,541
Essential Early Education 6,356,188
Technical Education 13,331,162
Cost Containment 1,325,990
Total 1,699,237,702

Source: Vermont Agency of Education 2017 Budget Book

 

Much of the above is self explanatory, but a few clarifications will be helpful. The Education Payment of almost $1.3 billion basically represents the aggregate budget of Vermont’s school districts.

Education Services effectively administers a wide variety of federal grant programs focused on quality of education (Common Core, Personalized Learning, Flexible Pathways…), child nutrition, Title I (low income students) and IDEA grants for special education. Federal funds accounted for 93% of the Education Services 2016 budget.

Tobacco Education is funded by the tobacco litigation fund. Cost Containment is a result of recent Vermont legislation aimed at reducing the cost of Special Education.

 

Education: 4. Vermont’s Education Infrastructure

The chart below summarizes the total number of public schools, the total number of education administrative entities and the total number of teachers in the Vermont education system.

 Vermont’s K-12 Education Infrastructure

  2015/2016 School Year 2014/2015 School Year Publically Funded Students Per: 2015/2016 Publically Funded Students Per: 2014/2015
Publically Funded Students 88,854 88,816
Public Schools 301 303
Technical Centers 15 15
Approved Independent Schools & Programs 139 126
Total Schools 455 444 195.3 200.0
Total School Districts 268 273
Supervisory Unions 45 45
Technical Center School Districts 3 3
Joint Contract Schools 6 5
Gores & Unincorporated Towns 9 9
Total Public Education Governing/Admin. Entities 331 335 268.4 265.1
Superintendents 57
Principals 309
Vocational/Tech. Directors 25
Business Managers 64
Special Education Directors 84
Total Public School Administrators   539   164.7
Teachers   8,370   10.6
School Boards   285   311.6

Source: Vermont Agency of Education 2017 Budget Book

Key Observations

Vermont Has More Teachers Per Pupil Than Any State in the USA: As noted above, Vermont has only 10.6 pupils for every teacher, the lowest ratio in the USA. According to the National Education Association, the US average is 15.9, or 33% higher.

Vermont has a High Level of Administrative Infrastructure: According to the National Education Association, Vermont has the lowest student enrollment in the country but ranks number 20 with respect to the number of school districts.

Vermont has Small Schools: Vermont has an average of 195 pupils per school. According to the National Center for Education Statistics, the US average is 477.

All this Infrastructure Costs Money: At just about $21,000, Vermont’s education cost per pupil is the highest in the country. According to the National Education Association, the US average education cost per pupil was $11,709 in 2015.

 

Education: 3. Legal Architecture For Education In Vermont

Education was once principally a local matter.

The first wave of change came in 1997 with the passage of Vermont Act 60. The intended purpose of this law was to achieve a fairer balance of educational spending across Vermont as between “rich” and “poor” towns.
Act 60 was amended/adjusted in subsequent years pursuant to Acts 68 and 130. This body of legislation created the following key changes:

 

  1. The centralization of school funding at the state level by pooling local school budgets and local property taxes
  2. The creation of the Education Fund at the state level. This is funded largely by residential and non-residential property taxes (say 67%), state income taxes, sales, and purchase and use taxes and by the lottery and Medicaid transfers. These amounts are in addition to other sources of revenue for the schools, principally US federal grants.
  3. The creation of a state property tax on both residential and non-residential property called the Homestead Tax to partially fund schools. There is effectively a minimum level of property tax, calculated on a per “equalized pupil” basis (different types of students have different weightings). Towns can elect to spend more than the minimum, in which case the Homestead property tax rate increases by the percentage by which the spend per equalized pupil exceeds the minimum spend determined by the State. As the Homestead property tax covers only a portion of the total funding need, the increase in property taxes to cover such excess spending is therefore less than the actual spending increase. In a final twist, there is an Excess Spending cap to prevent “rich” towns from gaming the system. If the spend per equalized pupil exceeds a threshold above the minimum spend (25%), all excess amounts are added to the local property tax rate on a dollar-for-dollar basis.
  4. To help assure fairness in Homestead property taxes, the state adjusts local property valuations pursuant to a Common Level of Land Value Appraisal (the “CLA”) in an attempt to achieve apples-to-apples fair market values across the state. This mitigates both different appraisal methodologies and different appraisal timing used across towns in Vermont. It also helps to prevent gaming the system in any given town, not that any town in Vermont would do such a thing.
  5. Finally, there is an Income Sensitivity test that allows taxpayers to receive a rebate of a portion of their Homestead tax if their household income is less than specified levels. This is intended to be an affordability test. In fiscal year 2016, Vermont collected $1.2 billion in education property taxes and rebated $158.6 million, or about 13%, under this program.

 

In 2015, the passage of Vermont Act 46 did to the organization of schools what Act 60 did to their funding, all in response to cost pressures.

With an environment of declining enrollments and escalating costs, three-dozen towns in Vermont voted down school budgets in 2014. Act 46 provides meaningful financial incentives and disincentives for schools to combine districts with other towns in an effort to reduce costs.

Act 46 is now having a major impact on certain Vermont communities, many of which are reluctant to cede control of their schools to a regional authority or risk the loss of a local school facility.

There are 273 school districts in Vermont. The goal of Act 46 is to have a minimum 900 students per unified district, which would suggest only 87 surviving school districts given 78,000 K-12 pupils in all of Vermont.

The ultimate objective of Act 46 is to reduce costs through consolidation. In the next section, the Informed Vermonter will survey Vermont’s education infrastructure, which should all begin to shrink in the years ahead if Act 46 is successfully implemented.

 

 

 

 

 

 

 

 

 

Education: 2. Vermont’s Student Enrollment Trends

Declining Student Enrollment

According to the preamble of Act 46, the number of grade K-12 students enrolled in public schools in Vermont declined from 103,000 in 1997 to 78,300 in 2015, a staggering 24% decrease. Grade K-12 enrollment declined a further 1.5% in 2016, as follows:

 

Public School Enrollment: 2015/2016 School-Year

 

Grade Enrollment
K-12 77,078
Pre-K 6,242
Essential Early Education (special education for pre-school age children) 1,059
Total Public Schools 84,379
Other Publically Funded Students 4,475
Total Publically Funded Students 88,854

Source: Vermont Agency of Education 2017 Budget Book

Key Observations

High Per Pupil Education Costs: Total education costs have been consistently increasing as student enrollment has been consistently decreasing, which is not sustainable in the long run.

Challenged Student Enrollment

There are two important federal grant programs available to local schools for disadvantaged students. IDEA (Individuals with Disabilities Education Act) grants are available for special education and Title I grants are available for low-income school districts.

There is hard empirical evidence that education outcomes for affluent students exceed those achieved for low income students, and Title I was put in place to help close this gap. To qualify, a school district needs to meet certain low-income thresholds.

40% or more of the students must be from households with “low income”, as defined by the US Census Bureau. The US Census Bureau currently defines “low income” as household income of $45,000 or less. Sadly, 48% of USA households now meet this test. As illustrated below, the majority of Vermont school districts qualify for grants under Title I.

Student Support Programs Enrollment in Vermont: 2015/2016 School-Year(Categories are not exclusive)

 

Program Enrollment
Special Education (age 3-21) 13,885
Title I 52,963
Homeless 1,124

Source: Vermont Agency of Education 2017 Budget Book

Key Observations

High Proportion of Low-Income Students: The enrollment of “low-income” students in Vermont is approaching 60%.

High Proportion of Special Education Students: Special Education enrollment represent almost 16% of total publically funded students.