End of ARRA shouldn’t mean another cost shift to schools

A story by the Associated Press last month carries a warning for Vermont. It describes cuts to education that many states are preparing to make after federal stimulus money runs out.

We’re in a similar boat here. We used funding from the American Recovery and Reinvestment Act (ARRA) to avoid making harmful cuts during the recession. If we don’t develop a strategy to replace the federal money, we won’t have really avoided the harm—just postponed it. Local voters once again will face a choice between raising property taxes or undermining their kids’ education.

Much of the ARRA money was designated for specific purposes. However, there was also a pot of so-called “fiscal stabilization” funding that was given to the states with few strings attached. Tax revenues had taken a nosedive. All of the states were facing big budget deficits. These funds were meant to help fill the gaps.

Vermont used the bulk of its fiscal stabilization money for education—specifically, to make up for cuts in General Fund spending. Every year, money is appropriated from Vermont’s General Fund to the Education Fund. For the last two years, the administration and the Legislature reduced the transfer by about $60 million, but backfilled only about two-thirds of the cut with ARRA money. That left Vermonters paying higher property taxes.

The cuts were supposed to be temporary—and full funding of the transfer restored in fiscal 2012. But in the budget he presented in January, the governor put back only part of the money and proposed a permanent reduction to the transfer of $23 million—nearly 8 percent.

That cut won’t be felt quite as much in the coming year because there is some additional federal money—about $19 million—that is going directly to school districts. But in 2013, if the Legislature goes along with this permanent education cut, local districts will be left holding the bag again as they were early in the recession. Neither the administration nor the Legislature is willing to raise taxes directly for education, but they don’t seem to mind shifting costs onto school districts, which forces local education officials to cut programs or once again ask for higher property taxes.