AP/Toby Talbot

The Douglas administration says that's good news, but there's concern that property tax rates might still increase significantly in many towns.

VPR's Bob Kinzel reports.

(Kinzel) Over the past two years, there's been a sharp decline in the growth of local school budgets in Vermont. In 2008, the statewide average increase was roughly 5 percent and a number of towns proposed double digit increases.

Jeff Francis is the executive director of the Vermont Superintendents Association.  He's in the process of compiling a database of proposed school budget increases for Town Meeting Day.

Francis says the growth this year is one of the smallest in many years.

(Francis) "Based on our preliminary data collection, we think that budgets will be up statewide a very, very modest amount - probably less than 1 percent. We know that in many communities budgets are going down. We know that in others they're level-funded or just going up a very, very small percentage. I think it's an indication that school officials are responding to the economy."

(Kinzel) Francis says he's hopeful that local voters will realize the hard work that many school boards have done to restrain spending this year.

(Francis) "So the process is going to involve presentation of these budgets at town meeting across the state and the folks who are voting in communities will have their say on these budgets. But for their part, local school officials, we believe, have budgeted extremely conservatively this year."

(Kinzel) Deputy Administration Secretary Tom Pelham says the education spending trend is in the right direction. 

But Pelham says it's important to remember that a decline in student enrollment in many towns means that the local property tax rate will have to go up.  He says that's because the state sends money to schools based on the number of students they have.

(Pelham) "I think there are a lot of stories in the newspaper where school boards are very proud of having presented school budgets that are level funded and that's a good thing. But the consequence for taxpayers is still going to be a substantial increase in their local tax rates because the number of kids in the school has also dropped dramatically."

(Kinzel) Pelham says he's also concerned that while some of the state's smaller school districts are keeping their spending under control, some of the larger districts are not. And he says this situation could result in a substantial increase in overall state spending on education next year.

For VPR News, I'm Bob Kinzel in Montpelier