OVUU SB grapples with budget redo, real estate

Re-vote date set for April 30


BRANDON—The Otter Valley Unified Union (OVUU) School Board met on Tuesday the 19th to reorganize and discuss next steps after its proposed budget failed at the ballot on March 5.

Laurie Bertrand was re-elected Chair, with Natalie Steen as Vice-Chair, and Barbara Ebling as Clerk.  Brett Mullins was appointed Representative to the Negotiating Committee.  Ms. Bertrand, Ms. Ebling, and Paul Lathrop were appointed OVUU’s reps to the Rutland Northeast Supervisory Union Board.  Kevin Thornton was appointed OVUU’s rep to the Stafford Technical Center in Rutland.

The majority of the meeting was spent discussing how to proceed in light of the rejection of the proposed school budget of $27,247,823, which failed on a vote of 891 yes to 1,325 no, approximately 40% to 60%, a “hefty margin,” as RNESU Superintendent Kristin Hubert put it.

In an email to The Reporter on the morning after the vote, Ms. Hubert expressed concern that “reductions [in the budget] are likely to impact people and/or programs,” given that the Board had not “padded or inflated” the budget.  And that sentiment remained on the 19th.  The Board now finds itself having to satisfy potentially competing desires for affordability and educational quality.  

The Board had found itself already paring down its budget in the wake of Act 127, a recently passed law that capped a district’s property-tax increases at 5% if the district kept its budget increase under 10%.  OVUU had already slashed $500K from its earliest draft proposals in order to meet that criterion.  It now finds itself needing to find even deeper cuts to satisfy voters.

And the Vermont Legislature came to believe that Act 127 had actually encouraged some districts to pad their budgets, since they could go up to 10% while keeping tax increases below 5%.  In response, the Legislature passed H.850, which repealed the 5% cap, opening up the OVUU district to potentially greater tax increases despite all the cuts.

To compound frustrations, the Board has scheduled the re-vote on the budget for April 30 but must notify teachers of any Reduction in Force (RIF) by April 15.  An RIF is a notification by the district that a teacher will not be renewed for the coming school year.  So, the Board will not be able to make additional cuts to teaching staff if the budget fails on the 30th because the deadline for RIFs will have already passed.  The Board would then have to make cuts in other areas, such as athletics, clubs, afterschool activities, facilities, etc.

Brenda Fleming, RNESU’s Director of Business & Finance, led the Board through several scenarios, outlining the dollar values of the reductions needed to reduce school taxes by certain amounts.  

To realize an average yearly savings of $13.60 per $100K of assessed property value across the district, the budget would need to be cut by $207,535, which represents a reduction of 1¢ on the tax rate. By extension, to realize an average yearly savings of $136 per $100K of assessed property value across the district, the budget would need to be cut by $2,075,350, which represents a reduction of 10¢ on the tax rate.  

This means, for example, that a taxpayer whose home is assessed at $300K would save $40.80 per year if $207K were cut from the budget.  If roughly $1,000,000 were cut from the budget, that same taxpayer would save approximately $204 per year.

“Cutting $1,000,000 is cutting a lot of people,” said Ms. Bertrand.

Board member Kevin Thornton noted that morale among the teaching staff would suffer greatly if cuts to personnel were limited to the schools and not also made among administrators at the district’s Central Office, to “spread the pain.”  Ms. Hubert assured the Board that all options are being considered.

Ultimately, however, the Board must contend with forces beyond its control: real-estate values.  According to Ms. Fleming, much of the anticipated tax increases this year are the result of increased property values across the district.  Since Grand List values often lag behind fair-market values, the state has devised a measure called the Common Level of Appraisal (CLA) to bring the two values more in line.  

The state looks at the property sales in a town over the previous three years and compares the sales prices to the assessed values of those properties.  Over the past three years, driven in large part by COVID refugees from urban areas, sales prices across Vermont have risen sharply, creating a large gap between sales prices and Grand List values.  For example, Brandon currently has a CLA of 74.69%, which means that a home that sold for $100,000 would likely have a Grand List value of only $74,690.  

The state views this gap as inequitable, since education tax rates are set by property values.  Communities whose real estate is worth significantly more than the real estate’s assessed value are seen as underpaying on the value of their homes.  Because the state cannot adjust the fair-market value of real estate, it adjusts the assessed value for tax purposes, in order to ensure that homeowners are paying taxes on what their properties are currently worth.  The lower a town’s CLA, the more the state will adjust the town’s tax rate upwards to compensate for the difference.

The increase in property values across OVUU’s constituent communities has all but guaranteed a significant increase in education tax this year regardless of cuts to the budget.

“Draconian reductions will not bring us to 0% increase in tax,” said Ms. Fleming.

But the Board is still expected to present a new, reduced budget to the voters.  At its meeting on March 20, the RNESU Board cut $164,000 from its budget.  OVUU’s portion of that cut will go towards the first $207K in cuts in OVUU’s own budget (RNESU covers both Otter Valley and Barstow in Chittenden.) 

“It would be a slap in the face if we offered the same budget,” said Brett Mullins.

The district has chosen Tuesday, April 30 for the re-vote, which will coincide with the re-vote on the failed Brandon town budget.  The Board will meet again on Tuesday, April 2 to review the scenarios prepared by Ms. Fleming.  It will meet again on April 9, which is the latest date by which the Board can adopt a new proposal and still hold a vote on the 30th.  If a new proposal is adopted by the 9th, the Board will then hold a public meeting to discuss the new budget on Tuesday, April 23 in anticipation of the re-vote on the 30th.

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