September 20, 2017

State education funding to be a battleground in budget dispute

Huge questions over how state aid for schools and state colleges ultimately will fare will be a critical focus of Democratic and Republican leaders as they grapple with reconciling their vastly different state budgets.

While Democrats have a narrow majority in the state House, and the lieutenant governor's tie-breaking vote in the evenly-divided Senate, Republicans sent shockwaves across Connecticut last Friday when they were able to pick up enough Democratic votes to send a GOP budget to the governor's desk.

Gov. Dannel P. Malloy, a Democrat, has promised to veto that budget, but Democratic legislative leaders and the governor now acknowledge they must negotiate a bipartisan one.

"There are things that I think are must-have items for all sides that will have to be compromised to some extent to get a deal," Senate President Pro Tem Martin M. Looney, D-New Haven, said Monday.

Here are the critical differences in funding for schools and colleges that Democrats and Republicans must resolve.

How should state school aid be allotted?

Republicans and Democrats agree the state's 30 lowest-performing districts need more funding.

But their plans differ on how to achieve that goal.

The Democratic budget would cut the state's primary education grant by 6 percent this fiscal year. The $124 million in cuts would fall entirely on affluent and middle-income communities. Nearly $11 million would be redirected to many of the 30 lowest-achieving districts, and the remainder would go toward closing the state's budget deficit.

Currently, two-thirds of the state's primary education grants, known as Education Cost Sharing (ECS) grants, go to the bottom 30 districts. And while the Republican plan would increase education aid by $68 million this fiscal year, struggling districts would not have a higher priority than they do currently. The 30 lowest-achieving districts would get a $46 million increase, and the better off communities would receive $22 million more. No towns would lose aid.

Both plans include a formula for deciding how much aid each town would receive, but the Republican budget would spare towns any cuts even if their formula called for them.

Malloy this year has regularly said shielding towns from cuts may be the easy approach to avoid backlash, but he has insisted that the state stick to a formula that accounts for changes in enrollment and a town's wealth when shelling out state education aid – even if that means individual towns lose funding.

Senate Republican Leader Len Fasano of North Haven called for time to phase in cuts that sticking to a formula would entail. His budget would phase in cuts to school districts over 10 years, starting with the fiscal year that begins in July 2019.

"They are going to just have to live within the money that they are given," Fasano said Monday. "Some people felt that just to do it to the municipalities now might be too harsh."

The way the state distributes education aid has drawn a lot of attention since it was ruled irrational and unconstitutional last September by a Superior Court judge. The state Supreme Court will hear arguments in an appeal of that case next week.

After the Superior Court decision, Malloy in February proposed funneling an additional $300 million toward the lowest-achieving 30 districts by slashing aid to better-off towns. However, to help end a budget stalemate, he offered a compromise that would redistribute just the $11 million to the lowest-performing districts.

Speaking to reporters Monday, the governor had a harsh assessment of the Republican plan for education aid.

"It offers no progress on fixing the legal defects regarding the current status of the ECS grant. In fact, distribution in all municipal aid will raise additional questions about fairness before any court that hears that issue," Malloy said.

Aside from the changes proposed to the state's ECS formula, both the Republican and Democrat plans make cuts to several smaller grants that help pay for things like reading tutors and summer and after-school programs in struggling districts.

The Republican budget has more room for school aid than the Democrats' because the GOP plan would reduce payments to the state's chronically underfunded pension system, make huge cuts to the state's flagship university and call for large unspecified cuts.

While the labor concessions deal ratified earlier this summer locks the state employees' benefits package into place through 2027, Republicans said Connecticut can save more money now by limiting pension benefits offered after that date. Those new limits would reduce required pension payments by $280 million this fiscal year, they said. Malloy, many Democratic legislators and union leaders have questioned whether the state can make these changes unilaterally or whether that would violate collective bargaining rules.

Republicans also impose more aggressive, though unspecified, savings targets that would have to be achieved after the budget is in force. These undefined savings targets are $96 million greater than those proposed in the Democrats' budget.

Another task force to study education aid?

Both budgets acknowledge that their plans for divvying up education aid might need further adjusting – and they call for task forces to study the issue and make recommendations.

The Republican plan sets up an "education cost sharing grant formula review team" that would recommend by March 1 if changes are necessary.

The Democratic plan establishes a "Connecticut Achievement and Resource Equity in Schools Commission" with a more prescribed mission: Devise an education funding formula that bases funding levels on "an appropriate foundation level" that addresses students' educational needs, "addresses the issue of unequal local tax burdens," and reduces segregation.

The commission also would be asked to identify a stable funding source. It has until Jan. 1 to make recommendations.

Malloy said he is not interest in studying education funding again.

"Well that's what they've always historically done," he said Monday, pointing to his previous statements that the state has waited long enough for a working system to fund struggling schools.

But the coalition of parents, teachers, and municipal leaders who filed the lawsuit prompting the ruling that found the present system unconstitutional, have for years been pushing the state to study what it actually costs to provide children with the opportunity to succeed in school. The group – the Coalition for Justice in Education Funding – argues that the state is falling well short of providing high-need students with the resources they require.

The Malloy administration eventually compromised with the budget it negotiated with the Democratic leaders, and such a study was included.

Looney, the Senate Democratic leader, said a study is appropriate.

"I know that was one of the things that had been asked for by the plaintiffs in the case," he said. "Everybody knows that at some point we need to have a new comprehensive formula."

But he pointed out that getting legislators to stick to a formula – and not withhold their votes in exchange for protecting their towns from cuts – is tricky.

"Being able to apply a pure formula has always proven to be politically difficult," he said.

Teachers retirement costs: Who pays the bill?

Democrats and Republicans agree that the state's share of teacher pension costs is too large – but huge differences remain on who will be stuck with the bill.

Teacher pension costs are easily the fastest growing cost in state government – and they are expected to escalate even more in coming years.

Recognizing this, the governor convinced Democratic legislative leaders to include in their budget a requirement that municipalities begin picking up the public share of pension costs for current school staff. A massive and rapidly growing unfunded pension liability — compensating for decades' worth of contributions that past governors and legislators failed to make — would remain the state's responsibility.

That plan would require municipalities to pay $92 million toward the teachers' pension fund in this fiscal year. Municipal leaders have pushed back on this proposal, saying their ability to control the cost of teacher pensions is limited because state law dictates the benefits and binding arbitration laws somewhat limit their ability to rein in teacher pay.

Republicans rejected having municipalities picking up pension costs, and instead would have current teachers pay more toward their future pensions. Currently teachers pay 6 percent of their salaries. Under the GOP plan, teachers would begin paying 7 percent Jan. 1, which would raise $19 million through the end of the fiscal year. Next year, teachers would pay 8 percent, which would bring in $76 million.

While differences remain on who will be stuck with the bill, both parties agree that a task force must be set up to study the problem and search for solutions.

How deeply to cut UConn?

Both budgets reduce the state's share of funding for the state's flagship university over the next two years – but there are huge differences in the size of the cuts.

University of Connecticut officials say the cuts in the Republican budget total $308 million – a 20 percent reduction – through the biennium. Republican leaders say their cuts total $186.8 million.

The legislature's non-partisan fiscal office estimates the reductions are between $244.3 and $308 million, depending on how they are calculated.

Any of the estimates, however, are far above the $108 million the Democratic plan proposed cutting.

UConn President Susan Herbst used a Dickensian metaphor to describe what the Republican budget would do to the public university and its Health Center in Farmington.

"I am afraid that it will become a tale of two cities," she said, explaining that the university would have to cut financial aid and provide a lower-quality education for those who could afford it, while the affluent flocked to private universities. "I would hate to see that bi-furcation of higher education," she said. "… It's an ugly list of the things we would have to cut."

State funding for UConn has doubled over the last 20 years – rising from $183 million in 1996 to $385 million in 2016, in part to help accommodate increased student enrollment. The state has made cuts to the university while facing deficits, but decreases were quickly restored over the next couple of years.

Democrats were quick to blast the deep cuts Republicans made to UConn. Republicans are attempting to make the case that the cuts are reasonable – pointing to policy changes that should be implemented.

"The taxpayers of this state can no longer afford tuition waivers for employees at UConn," Rep. Mellissa Ziobron, ranking Republican of the legislature's budget-writing committee. That change would save the state $7 million over two years.

But with more than 95 percent of UConn's employees being part of a union, implementing such a change may prove difficult.

Michael Bailey, the leader of the UConn chapter of the American Association of University Professors, said the university would be in violation of its negotiated contract if it stopped waiving tuition for employees and their families.

"They couldn't stop it. It's in the agreement. As far as I am concerned, they couldn't take that away," he said during an interview. "It's a form of compensation so it is negotiable."

Fasano, the Senate Republican leader, disagrees and says it is within the authority of the system's Board of Trustees to make such a change.

Other changes the Republicans propose include no longer picking up the cost of health and retirement benefits for staff earning more than $100,000, and requiring faculty to teach one more course each semester. Retirement benefits are very costly because the state is now making up for a decades-long failure to properly fund its pension system.

During the House budget debate, Ziobron said Republicans believed taxpayers "deserve a little more from our well-educated professors at UConn. So we've added the requirement that they have to teach one more class – just one," Ziobron said. "We have a lot of very talented staff at UConn, but they have very high salaries. And I am sure they are very well-deserved. But if UConn is going to choose to pay $100,000 or more in salaries, we put a trigger in that we say they must also pay for their fringe benefits – that's how you get people to start making hard choices."

But Bailey said asking professors to teach more is a recipe for disaster if UConn wants to attract top talent who expect to have the time to do research as well as teach. Currently, professors teach an average of two courses a semester, Bailey said, with some teaching more and others less when their research load is heavy.

"I don't think they understand how that would impact their research," he said. "You will lose faculty. They will go somewhere else, and the university would have difficulty finding people."

President Herbst made the same point during a news conference on Tuesday.

"I would not want to hire an obstetrician-gynecologist for $100,000 or less because then I wouldn't have to pay the fringe," said Herbst. "We pay for people to come here based on what the labor market is… I can't make their salary lower than the labor market."

Scott Jordan, the university's budget chief, said during an interview that the size of the cuts go far beyond the policy changes the Republicans have proposed.

"This goes beyond what we can manage with larger class sizes, using our fund balance, or doing away with tuition waivers," he said. "Many of the things they are proposing require collective bargaining. A lot of these things are really hard to just do."

Connecticut Mirror Budget Reporter Keith Phaneuf contributed to this article.

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