MONTPELIER – Education Commissioner Armando Vilaseca has braced school officials around Vermont for across-the-board spending reductions in next year's budgets.

After holding the line on spending last year, school districts will be asked to shave $23 million from the bottom line in fiscal year 2012.

"It's a much bigger request than last year," Vilaseca said Thursday. "We're asking them not just to hold the line, but to reduce budgets that in many places already have been cut fairly dramatically."

In a June 7 memo to superintendents, principals and school board chairmen and chairwomen, Vilaseca prepared officials for an Aug. 1 letter that will recommend reduction targets for virtually every district in Vermont.

"We need to provide local boards and superintendents and districts with as much time and information as possible so they can make good decisions," Vilaseca said.

The reduction directives are part of Challenges for Change, a government restructuring initiative signed into law last week. While legislators opted to make the spending reductions voluntary for schools, they told Vilaseca to establish recommended cuts for individual districts and supervisory unions.

Lawmakers hope the exercise will result in about $23 million in cuts – a 2 percent decrease in overall school spending.

"I think school boards and school districts understand the gravity of our circumstance," Vilaseca said.

The cuts aren't mandatory, and it's unclear what steps the Legislature will take should districts fail to adopt the recommendations. Vilaseca said he's confident districts will respond favorably. Last year, he said, districts level-funded education spending in response to a similar request for fiscal restraint.

"In last year's budgets, they surpassed my expectations," Vilaseca said. "I think they will be fiscally responsible again."

At stake is a dramatic increase in property taxes, according to Vilaseca. About $38 million in federal recovery funds in each of the last two fiscal years has helped temper the impact of school spending on property taxes. In the absence of continued federal aid, Vilaseca said, spending reductions will be needed to prevent significant tax-rate increases.

"Unfortunately I think this is the first of a couple more years of pretty tough budgets, because we're going to be going without the federal aid that has been used to subsidize this spending," he said.

Vilaseca and a team of numbers crunchers from the Department of Education will spend the next four weeks calculating "appropriate" spending reductions for individual districts and supervisory unions. Lawmakers directed Vilaseca to craft those targets using criteria such as per-pupil costs, staff-to-student ratios and the rate of past spending increases.

"It's a fairly complicated process and there will be folks who will be happy with the decision and others who will not be," he said.

Given the mounting costs of doing business in public schools, the spending reductions will cut deeper than the numbers suggest, according to Vilaseca.

"If you have a 2 to 3 percent increase in contracts, services, heat, fuel, electricity – you name it – and then on top of that you're asked to cut 2 percent, it's really a much more significant cut than just the 2 percent," Vilaseca said. "And there really aren't that many places to find that kind of money outside of staffing."

Vilaseca said he worries that the education-governance structure in Vermont, which has more than 280 school districts, will exacerbate the impacts of the cuts. Larger districts, he said, can better absorb the kind of spending reductions that will be needed to stave off tax increases.

He said he hopes the voluntary district merger bill that recently became law will compel administrators to consider consolidation.

"My concern is that because we have 283 groups trying to do this individually, it won't be strategic, won't be planned," he said. "If we can have larger governance bodies, we can eliminate duplication and inefficiencies that won't get us to where we need to be completely but will get us a lot closer than we are right now. Ultimately, I'd rather see things impact adults than see them impact kids."