In October of last year, Sidenote reported a potential 26.5% increase in Thetford's education tax rate for the upcoming 2024-25 school year. The recently released Annual Report from the school district indicates a significant rise of 46.13% in the homestead property tax rate compared to the previous year. Representative Rebecca Holcombe clarified in an email that a portion of this increase will be phased in over a 5-year period for districts like Thetford.
The leap from approximately 26% to around 46% can be attributed to heightened education spending statewide. Districts that were initially expected to witness a decrease in education tax rates due to an increase in their tax capacity ended up increasing their overall spending. To explain a little, tax capacity is the amount of funds that a school district receives from the Education Fund for a certain tax rate. The tax capacity of a school district is adjusted using the “weighted pupil assessment” that allocates additional funds for pupils who are more expensive to educate. Projected school district spending in FY25 has reportedly surged by $243 million, marking a 14.8% increase, far surpassing the anticipated $65-70 million increase and consequently threatening to raise education tax bills across the state by an estimated 20%.
Initially, the legislature proposed a 5% cap on tax rate increases. However, this allowed districts anticipating a tax rate decrease to increase spending without significant consequences. The 5% cap offered a one-time opportunity to catch up on deferred building maintenance etc without increasing taxes by more than 5%. The cap was subsequently removed and replaced with a "cents off" model. Under this model, districts projected to face a tax rate increase, such as Thetford, will experience a phased 5-year “discount,” while other districts will not benefit from this.
Essentially, districts that substantially increased spending based on an expected tax rate increase cap will now face the consequences unless they reconsider and reduce their budgeted spending.
Rep. Holcombe explained, "To provide districts with an opportunity to revisit and trim their budgets, given the removal of the 5% cap, the legislature has committed to covering the costs for any district wanting to reopen and reevaluate their budget."
This implies that total statewide education spending could still decrease from the reported $243 million increase. The actual impact on tax bills remains uncertain until the legislature determines the yield at the end of the session, as Rep. Holcombe pointed out, “and whether or not the state takes some state programs out of the education fund or puts new revenues into the fund.”
Adding to the discussion, Rep. Jim Masland stated, "As long as the 5% cap remained in place, school boards could spend with abandon… H.850 is not a definitive answer. It's just an interim first step in what will be a longer process… Regarding developing a new education funding formula, we'll get to work on that soon. We recognize that the present formula doesn't work as intended in 1997."
“The solution can't just be about how we raise dollars. It will also have to be about how we send dollars out and for what. Nobody is going to like that, but there is a reason. Only one other state has a formula like ours, and there is a reason for that,” Rep. Holcombe added.
According to Thetford school district’s Annual Report, spending per equalized pupil, an outdated metric as the state transitions to the Long Term Weighted ADM, will decrease by approximately 20% next year. This spending cut for the elementary school is in spite of a roughly 16% increase in healthcare costs and a new teacher contract that includes improved wages. According to a school board member, the cut was achieved, in part, by:
- Cutting the Spanish language program from the school budget. However, the position had been open for a year and saw little to no interest from applicants.
- Reducing spending on art by 20%. However, spending on art at Thetford Elementary still remains above several other Vermont districts in the Upper Valley
- The retirement of a school psychologist. The job function is being replaced, in part, with a third-party social worker, who can do counseling with students. The social worker is funded exterior to the school budget.
- A reduction in office administration hours.
- The termination of a building maintenance contract with Thetford Academy. The elementary school is able to perform the same maintenance in-house for significantly less money.
Meanwhile, tuition at Thetford Academy, a private school deriving 97.5% of its tuition revenue from public school districts (primarily Thetford), has increased by 6.5%.
As of now, it is unclear what the education tax rate increase in Thetford — or the state — will be, but it will be sizable.
In other news, Thetford’s municipal tax rate is anticipated to rise by 5.58%. Reviewing the Annual Report may cause some surprise at the 37% increase in General Fund spending. Still, much of this can be attributed to the allocation of remaining ARPA funds to three capital reserve funds — the Town Hall Fund, the Timothy Frost Fund, and the Planning and Consulting Fund — considered a one-time expense. Otherwise, the biggest increases in spending, increased wages and associated costs aside, is a 220% increase for cemeteries, or roughly $23,000, a 35% increase for the Transfer Station, or roughly $20,000, and an almost 11% increase for Treasure Island, or roughly $12,000.
Highway Fund spending remains relatively flat, with an increase of about 2% (less than inflation). One of the largest line items, the contribution to the Town’s capital reserve Paving Fund, is level-funded from last year at $125,000, and actually down from a few years prior, indicating no change in strategic spending on town road repair.
The Library Federation request is up by 5.38%, requests for Social Service appropriations are up 3.63%, and the Volunteer Fire Department request has increased by 3%.