Health insurance, inflation and federal funding cuts driving school budget increases

By Corey M cdonald VTDigger

Vermonters headed to the polls on Town Meeting Day will cast votes on critical decisions around school district budgets and the future of small elementary schools, as property taxes and education reform remain top of mind for lawmakers and voters.

Adam Bunting, the Cham-plain Valley School District superintendent, told lawmakers on the House and Senate education committees last month that health care costs at his district have grown by 40% over the last five years.

The district's budget is "just below" level service and comes with a 2.7% budget increase, but is still "assuming increased risk on the operations side" by limiting the increase, Bunting said in an email. About 15% of the district's $107 million budget is dedicated to health care benefits for faculty and staff.

Bunting noted that this year's budget follows two years of budget cycles where Champlain Valley School District officials have cut 82 staff positions and $9 million from their budget.

While current statewide projections have school spending increasing by 4.2% from the current year - less than the 5.8% projected rate of growth in the Tax Department's annual "Dec. 1 letter"- it's no rosy picture for school districts.

Burdened by skyrocketing health benefit costs, rampant inflation and critical building maintenance costs, school leaders say they are running out of financial runway to keep their district spending level without making cuts to staffing or programming.

Education property taxes have risen more than 40% in the last five years. In 2024, in a tax revolt, voters struck down close to a third of school district budgets - a historic proportion that's prompted ongoing legislative efforts to bring down the cost of public education.

This year's roughly 7% increase in statewide health insurance costs is weighing heavily on school district budgets. The increase follows the 12% and 16% increases borne by school districts during the two previous budget cycles, Chelsea Myers, the Vermont Superintendents Association's executive director, said Tuesday.

"The fact that we're celebrating a 7% increase is a sign of the times," Myers said.

Those hikes have eaten into school districts' budgets. In 2018, health benefits made up less than 10% of school budgets in Vermont, Ceglowski said. Now, they make up 15%, and could soon make up 20% of district spending.

Sue Ceglowski, the Vermont School Boards Association executive director, said districts are focused on maintaining their programs, but are "facing a difficult year where they're really scrutinizing their budgets and trying to ensure that they can keep them at a level that taxpayers can support."

Jay Nichols, the Vermont Principals' Association's executive director, said that "just to maintain the services you have, you're hit with some increases that you really don't have a lot of control over."

The school budget votes come as school officials are facing immense pressure from lawmakers to keep district spending in check as they work towards education reform set in motion by last year's Act 73.

Gov. Phil Scott last month devoted his entire State of the State address to urge for education reform. And legislation sponsored by Senate Pro Tempore Sen. Phil Baruth, D/P-Chittenden Central, and backed by Scott, would limit growth in school districts' per-student spending in fiscal years 2028 and 2029.

Scott during his address acknowledged that school leaders were "trying their very best" to maintain level services. But, "As one superintendent put it last year: 'We have no more to cut.'" While health insurance hikes have been a mainstay over the last few years, school districts have a unique problem this year in managing the uncertainty around federal funding.

Bob Thibault, the Windham Central Supervisory Union superintendent, said his member districts are "trying to budget responsibly by not anticipating" federal funds for teacher training programs and afterschool programs.

These and other economic factors, such as labor costs, contracted raises and general inflation are forcing school boards and superintendents to find ways to consolidate operations in their districts and, in many cases, shutter smaller schools.

This fall, board members with the Taconic and Green Regional School District voted to close their two elementary schools in Sunderland and Danby. And in February, the Washington Central Unified Union School District tried unsuccessfully for voter approval to close schools in Calais and Worcester.

Next week, residents in the Marlboro School District - part of the Windham Central Supervisory Union - will vote whether to close the Marlboro Elementary School. The school serves about 50 students, and Thibault said they project continued declines in enrollment.

"That's the problem that we're seeing," Thibault said. "And these problems are everywhere, but they're magnified in rural, small places."

Residents in the Addison Central School District, meanwhile, will vote on whether to shutter Ripton Elementary School. Students at the Ripton school have since moved to the Salisbury Community School, but next week's vote would make the closure permanent.

Wendy Baker, the district's superintendent, considers efforts to consolidate operations at her district less of a financial decision and geared more towards ensuring quality educational programming for students.

Addison Central School District's roughly $53 million budget comes with a just under 3% budget increase this year, even with efforts to consolidate operations at fewer schools.

While the district has seen some savings from transferring students out of the Ripton Elementary School and other reorganization efforts, Baker said it's doubtful that consolidation at her district will lead to any sustained savings.

If the district rolled the budget over into next fiscal year, she anticipated that the district would still need a 6% budget increase to match health insurance hikes and contracted raises for faculty and staff.