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With Significant Savings on the Table, We Must Act Now

April 27, 2017

With Significant Savings on the Table, We Must Act Now

By Governor Phil Scott

We have an opportunity to save up to $26 million a year – up to $100 million over five years, adjusting for inflation – in our education system, without program cuts or asking teachers to pay more for benefits. But the Legislature must act now. 

The federal Affordable Care Act signed by President Obama put high valued health plans at risk of a Cadillac tax. The Vermont Education Health Initiative (VEHI) is transitioning to new plans, which are projected to cost substantially less than existing plans and will not be subjected to the federal penalty.

That’s why I’ve put forward a proposal – developed with the Vermont School Boards Association and the Vermont Superintendents Association – that creates a statewide health benefit where the state bargains with employee unions, maximizing the savings of these new plans. This approach would save up to $26 million each year.

Right now, taxpayers invest $1.6 billion a year in our K-12 education system – about $19,000 per student, among the highest per pupil spending in the country. We have the smallest classes in the nation – averaging less than 10 students per teacher and almost four students per staff member. Though we have 27,000 fewer kids in our public schools than we did 20 years ago, the costs of the system have been growing faster than our economy – and faster than many Vermonters’ ability to pay.  

While we have good schools and great teachers, the fact is – even while we’re among the highest per pupil spending in the country – we are not yetan education destination for young families.  

But we can be. 

If we have the courage to rethink how we structure and fund education and work together to ensure more of our spending goes to educating kids rather than empty spaces and unnecessary costs, our schools can become our best economic development tool. 

That's why I’ve proposed moving toward a cradle-to-career education system that realigns priorities and spending. By investing in early care and learning, technical and higher education, we can attract more families to Vermont, better prepare students for 21st century jobs, and address social challenges facing teachers and students.

Since presenting my budget in January, I’ve highlighted opportunities to reduce costs, specifically in health care, which is one of the biggest drivers of growth in school budgets. The teachers’ union itself cited “the inexorable growth in health care costs” as the “root” of excessive growth in school budgets.

Now, with the details of my plan in place, we know we can save up to $26 million per year while preserving high quality health care coverage for school employees, and without asking them to pay more.

Think about that. When was the last time Vermont had an opportunity to reduce education costs by $100 million over five years, without asking employees to pay more or cutting services?  Never in my lifetime. 

Imagine the value of these savings to our kids, and our economy. 

By creating this statewide benefit, we’ll be better positioned to achieve the education vision I’ve highlighted. We could return savings to taxpayers. We could invest in child care and early education. We could expand science, technology, engineering or mathematics programs. We could reduce the cost of college. We could do some, or all, of the above.

What we can’t do is leave this savings on the table.

Realizing up to $26 million in savings each year is a win for taxpayers. It’s a win for local volunteer school boards who can focus more on school programs and classroom innovation instead of negotiating complicated health care proposals. And we can achieve this while ensuring school employees do not pay more.

With all teachers’ contracts open this year, it is trulya “once-in-a-lifetime” opportunity. As we continue to lose an average of six workers from our workforce, and three students from our schools each day, we literally cannot afford to pass it up.  

For the future of our kids and teachers, and our economic well-being, we must act now.