State legislators have been trying for years to boost local education aid without weakening an aggressive savings program that’s been wiping out Connecticut’s debts faster than ever before.
Now it appears something must give, and nearly half of all 169 cities and towns could pay the price.
The new biennial budget Gov. Ned Lamont proposed recently maintains the legislature’s 2017 plan to grow the Education Cost Sharing grant, a $2.4 billion program that provides the bulk of state aid to local elementary and secondary school districts, by $85 million next fiscal year.
But to help pay for that overall increase and boost aid to some cities and towns, ECS grants would drop starting July 1 for 80 municipalities, including many rural communities with modest resources.
This would be counter to the approach legislators and governors employed often in prior decades. Regardless of what the grant formula called for, officials tried to ensure no district would receive less state funds than it had the prior year, a practice commonly referred to as “hold harmless.”
By 2017, though, lawmakers seemed resolved that “hold harmless” had to end to better finance districts most in need. They adopted a new formula without this safeguard and stuck to it through 2020.
But after COVID’s arrival left many communities struggling, lawmakers slipped back into old habits. And for the past four years they again have kept aid flat in districts that were supposed to get a cut according to the formula.
But with Medicaid costs skyrocketing, nearly $3 billion in federal pandemic aid exhausted, and many legislators demanding big new investments in child care, social services and health care — along with education — Lamont says Connecticut has to let “hold harmless” expire.
‘Unfairly punished’
Meanwhile, a growing number of legislators from both parties say some other solution must be found, because many districts that stand to lose funds are far from affluent.
“Communities are unfairly punished for being small, rural communities where [losing] 10 students makes a big difference,” said Sen. Cathy Osten, D-Sprague. Grants would be cut not just among Fairfield County suburbs — some of the state’s wealthiest communities — but in eastern Connecticut, Litchfield County and in the Naugatuck River Valley, she added.
Originally crafted in the late 1980s and modified several times throughout its history, the Education Cost Sharing program apportions aid to local and regional districts based in part on community wealth, enrollment and student needs.
But critics say the formula doesn’t fully appreciate the challenges of rural districts — communities that are small population-wise but mid-sized-to-large geographically. A 10-pupil drop in population could cost a school big grant dollars, but if those disappearing students are spread about five or six grades, it might not be possible to eliminate even a single teacher, said Osten, who co-chairs the Appropriations Committee.
Similarly, rural schools are spread out across greater distances and programs can’t always be consolidated without keeping children on buses too long.
Voluntown, a rural community along the Rhode Island border that’s dominated by the property-tax-exempt Pachaug State Forest, would lose $343,000 over the next two years combined.
Superintendent Adam Burrows described the potential cuts as a “profound challenge,” that will need to be made up on a local level.
“Right now, I have been cutting back with staff because of attrition and other types of things are happening,” he said, noting the district, which serves slightly more than 200 students, has received the same $2.1 million ECS grant from the state annually since 2017.
Enrollment has been declining and when five of the district’s 36 certified full-time staff retire at the school year’s end, those jobs likely won’t be filled, he said. But that won’t be enough.
Food, school readiness and remedial instruction programs also are at risk.
“I’ve been a superintendent now for almost 20 years, and I’ve never had to go back to the town for additional funds,” Burrows added. “But this may be my last year here, and I might need some.”
Property tax hikes could be a problem many towns could face over the next two fiscal years, said Betsy Gara, executive director of the Connecticut Council of Small Towns, which represents more than 100 communities with populations below 30,000.
Like state government, municipalities also have exhausted most of their emergency federal pandemic aid. And many still are reeling from “steep increases in the cost of delivering education due to inflation, and increases in costs for salaries and benefits, transportation, energy costs, and special education,” she added.
Rep. Tammy Nuccio, ranking House Republican on Appropriations, said 14% of the households in Willington — one of three towns she represents — are living in poverty and nearly half of the students qualify for free or reduced-price lunches in public schools.
Yet Willington and the other towns she represents — Tolland and Ashford — each would have their grants cut and would face a combined loss of $481,000 next fiscal year.
“If I had my way, we would revisit the whole [ECS] formula,” Nuccio added. “I think it’s flawed in its nature.”
Budget challenges
But the Education Cost Sharing grant program isn’t the only challenge facing Lamont and the General Assembly.
Public colleges and universities are losing hundreds of millions of dollars in federal pandemic aid the state officials have given them in recent years to maintain operations. And tuition already is up this fall 11% at community colleges compared with 2022, and 7.5% at regional state universities.
Also, lawmakers haven’t adjusted Medicaid rates in a comprehensive fashion since 2022 and health care advocates say many poor patients can’t find doctors willing to treat them. A 2019 analysis by KFF, the health care think tank formerly known as Kaiser Family Foundation, found that Connecticut’s Medicaid rates paid to specialists ranked 42nd among all states.
Lawmakers are also demanding more funds for child care, at-risk youth and federally qualified health centers.
And there’s a more than $100 million gap between the cost of local school districts’ special education programs and the aid the state provides.
In addition, all major state employee unions are due for raises this fiscal year.
“It’s impossible when you have so many issues that are up in the air,” said Rep. Toni E. Walker, the other co-chairwoman of the Appropriations Committee.
A Democrat from New Haven, one of the state’s poorest communities, Walker wouldn’t rule out finding the roughly $8.6 million it would cost to spare all towns an Education Cost Sharing cut next year.
But she noted ECS grants aren’t even the only K-12 funding issue demanding attention. Legislators are trying to find ways to bolster funding for special education right away and to preserve school lunch programs in the next two fiscal years.
The Connecticut Conference of Municipalities insists the entire ECS program has failed to keep pace with inflation for at least a decade, effectively negating about $650 million of the $2.4 billion, or more than 25%, of what communities would receive next fiscal year.
Even some communities on the higher end of the wealth spectrum are facing new challenges.
We’ve had to be really creative for years about how we navigate our budget.
Cheshire Superintendent Jeff Sloan
Cheshire ranked 17th out of 169 cities and towns in median household income in 2022 according to the Office of Policy and Management, state government’s chief fiscal and policy planning agency.
Yet Schools Superintendent Jeff Sloan said the district’s ECS funding largely has remained flat for decades. Cheshire is expected to lose about $250,000 next fiscal year and that figure would double to $509,000 by 2026-27.
“We’ve had to be really creative for years about how we navigate our budget,” Sloan said, adding his priority is to “focus very much on the classroom and protect that resource in funding” decisions, even if that comes at the expense of maintenance.
Limited resources
Meanwhile, Connecticut continues to follow a series of budget caps and controls that have generated unprecedented annual surpluses averaging $1.8 billion — or 9% of the General Fund — since 2017.
With $4.1 billion in reserve, Connecticut already boasts one of the largest rainy day funds per capita in the nation. And analysts from The Pew Charitable Trusts said last week that Connecticut is using the rest of those surpluses to pay down its pension debt faster than any other state in the nation.
Sen. Heather Somers of Groton, ranking GOP senator on Appropriations, said she hopes legislators can find the resources to spare all districts from ECS cuts, but added she doesn’t want to weaken ongoing efforts to pay down pension debt.
Meanwhile, critics note this pension debt still won’t be eliminated until well into the 2040s and argue this savings effort is draining too many dollars now from core programs like education aid.
Lamont has proposed some changes that would make at least $30 million per year available for child care programs, regardless of any restrictions posed by the state spending cap or other budget controls.
But many of the governor’s fellow Democrats say this won’t free up adequate resources to fix education or most items on their budget wish list.
The administration’s response is to remind the legislature they chose this ECS plan in 2017 — two years before Lamont took office. Now lawmakers need to make it work.
“The administration is willing to engage in conversations regarding the hold harmless provision of the ECS statute,” said Chris Collibee, Lamont’s budget spokesman. “But any changes must ensure the state budget complies with all constitutional and statutory budgetary requirements.”