On February 21, 2024

Local taxpayers to see double-digit increases in ed tax rates, again

MVSU district budget, yield, rates, effect on taxes, questioned

By Polly Mikula

The difference between a projected statewide yield per student of $10,250 and $9,775, probably doesn’t cause alarm for most. But the effect on local taxes could be significant: to the tune of a 11% increase in the base equalized tax rate and a15%-30% increase after each town’s Common Level of Appraisal is factored in.

For a homestead in Killington on the Grand List for $500,000 that means $15,373 in education taxes if Mountain Views Supervisory Union’s (MVSU) projected yield of $10,250 proves correct —  and $703 more if the $9,775 yield is applied.

After the CLA is applied, that Killington homestead will pay 30% or about $3,720 more than was owed last year. And last year’s education taxes were up over 23% compared to the year prior.

The seven towns that make up the MVSU district — Barnard, Bridgewater, Killington, Plymouth, Pomfret, Reading and Woodstock — will all see steep increases (see chart on page 5) if the budget is approved on Town Meeting Day, March 5.

While skyrocketing property values account for most of the increases; the MVSU proposed budget of $29,756,674 is also a factor. It’s up $3.9 million over last year’s approved budget (a 15.2% increase).

When originally crafting the FY25 budget the MVSU district board and finance personnel were working under different calculation scenarios as Act 127 had kept the district to a 5% cap on the equalized tax rate, as long as they kept their per pupil spending under the 10% growth threshold.

But last minute changes to those calculations from the state abruptly changed the scenario. At an emergency meeting Friday, Feb. 2, the MVSU district board voted to amend the proposed district budget after the House Ways & Means committee and Agency of Education alerted them to the changes in funding calculations. MVSU Superintendent Sherry Sousa told the district board the state education fund estimated a serious shortfall — to the tune of $100 million — which necessitated the last minute changes. 

Two of the changes mostly affected the funding calculations.

First is the replacement of the 5% cap with a targeted 1 cent discount on homestead properties for every percentage decrease in their tax capacity. (Bill H.850, is fast making its way through the Legislature.)

“Under the proposed language of H.850 section 2 we are also a District that will qualify for a discount on our homestead tax rate,” MVSU Finance Director Jim Fenn wrote in an email.

The effect on local taxes 
could be significant ... 
a 15%-30% increase after 
a town’s CLA is factored in.

House representative Jim Harrison also confirmed that Killington and the MVSU district qualify for the 1 cent discount.

Secondly, the state changed the estimated statewide yield, which is calculated to be the per pupil spending amount the state can support with a $1 tax rate on homestead property, according to the Vermont Legislature’s Joint Fiscal Office.

Originally, under Act 127 the state had set the yield at $9,452 per student, but when the 5% cap was removed the state revised the number up to $9,775. That number was again confirmed Tuesday, Feb. 13, at House Ways & Means, according to Nicole Lee, director education finance at the Vermont Agency of Education.

The yield may be further revised upward after actual spending approved across the state on Town Meeting Day (or whenever school districts pass their budgets) as is the case every year.

In the meantime, however, the state has given districts $9,775 for budgeting purposes.

When Killington Select Board member Jim Haff, who spent 15 years on the district board, and Marc Weinstein of Woodstock asked MVSU Finance Director Jim Fenn why the district chose to use the higher yield, Fenn replied that the Joint Fiscal Office has demonstrated that a yield of $10,000 or more is achievable, depending upon Legislative choices. “The yield we are using for our calculations is one that was provided by legislators working to address the tax issue in Montpelier,” Fenn wrote. “This view is being supported by AOE and legislators.”

“Any number you or I put out there is only a best guess based on what we know at the moment. I believe that the numbers Ben [Ford] and I are using are based on the best information available at this time. Should that information change we will update our numbers,” Fenn added.

Ben Ford, MVSU board member and chair of the finance committee, added: “Before our emergency meeting on Feb. 2 the state told us to use $10,250 as the yield, that was their most up-to-date number at the time, so that’s what we used.Yes, sometime after that I understand they’ve revised it back down to $9,775. But this number is always an adjustable figure until all budgets are passed.”

“In the past, our district (like every other district I know) has always used the state-given yield when presenting the school district budget for voters to approve on Town Meeting Day,” said Haff. “The state’s number ($9,775) is the statewide yield, and that number ensures that rates will not increase from there,” he explained. “It’s unclear why this board chose to use a higher yield than the state’s number… The effect of using a higher yield is that it lowers the tax impacts of the school district budget from what is currently being shown to voters. It’s not fair to voters to be presented with a budget that they think will have a 6% increase on their equalized tax rate, then actually experience an 11% increase prior to the CLA.”

After factoring in the  CLA, Killington homeowners will see an increase of over 30%, if the current state yield holds. “But even if you go with the more generous district guestimate of 10,250, it’s still a 25.19% increase,” Haff explained. “Either way, that’s an unaffordable increase in spending over a single year and I think we need to look at these expenses much closer to find savings where we can.”

   
By Polly Mikula
Chart shows the estimated dollar amount a homestead on the Grand List for $500,000  will pay in each town based on yield.

Calculations

The equalized tax rate is calculated by subtracting local revenues from the budget ($29,756,674 minus $4.5 million), which is then divided by the district’s 1,520 long-term-weighted equalized pupils, and then divided by the statewide yield.

  • Using the district’s $10,250 yield, the FY25 equalized tax rate would be $1.6196 — a 6.4% increase.
  • Using the state’s $9,775 yield, the FY25 equalized tax rate would be $1.6932 — an 11.23% increase.

The 1 cent discount would then be applied to the tax rate in FY2025 for either a $1.6096 or a $1.6832 rate, depending if you use the MVSU or state yield input, respectively.

In order to derive education tax rates for each town, that FY25 equalized tax rate is divided by the Common Level of Appraisal (CLA) which adjusts taxation to fair market value. In Killington the CLA is 0.5235 so the FY25 estimated homestead property tax rate is either $3.0747 or $3.2153 (MVSU versus state’s yield inputs, respectively). 

For a home on the Killington Grand list for $500,000 they’ll pay $3,016.95 or $3,719.91 over last year bill (5,000 x $3.0747 or $3.2153 homestead tax rate, respectively). For a  $500,000 home on the Woodstock Grand list it’d be $2,545.15 or $3,123.31 more.

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