Vermont Legislature SmartTranscripts:

[Peter Conlon, Chair, House Education Committee]: That'd be great. Thanks. Alright. Welcome everybody to House Education on 01/14/2026. We're gonna have a walk through of H five forty two and accolating to terminating testing of schools in Vermont for PCBs. Before we turn it over to Ledge Council just to provide some fairly basic context and background, I think it was 2021, while we were an online legislature, a very small provision was sort of, I wouldn't say snuck into the budget, but let's just say put into the budget. It didn't come through the House Education Committee, who was in the final days of the work, that said that all schools, regardless of whether they're independent, recognized or public, had to test for PCBs. And by PCBs, I'm talking about not in the in the construction materials, but in the air. So airborne PCB testing. And then as I recollect, some money was attached to it. And as part of that, the state was then tasked, the health department was tasked with setting what were acceptable levels of airborne PCBs. A lot of this was born out of the situation in Burlington, that when they went to sort of look at renovating their school, they discovered that there were high levels of airborne PCBs. I won't get into it, there was a lot of debate between what does the EPA say is acceptable and what did the health department in Vermont say was acceptable and what was the impact on what they ultimately decided to do, which was tear down the building and build new. So since then, I would say over the rather strong objection of the House, testing program has gone on now for several years and has sort of found a number of schools in the state, all public schools, that's where they sort of started. It was all based on age of school and year it was built. So a number of schools now have exceeded one of their three levels of airborne PCB levels that can require some sort of action. So in some schools, the action may have been to put out fans throughout the school, and if you've ever been to Bellis Falls High School, even U32 when we were up there, there were fans around running 20 fourseven, those have been happening, to other situations such as North Country, where the state has invested $8,000,000 in encapsulating and painting and tearing out of stuff still to no avail. The sort of controversial parts of all of this are: Are the state's levels realistic in terms of health impact. And that's going to be debated by scientists and courts right now. For me, and I think for the House, as we have tried to put a stop to this program by voting on bills to end it, the issue has been, this is, as I have often said on the floor, the mother of all unfunded mandates, because there isn't money to tear down North Country Union High School and build a new one. And for other places, there have been just the ongoing expense of running fans for electricity and replacing fans and all the filters and all that are significant costs. And once flagged, you have to have regular retesting, which is not cheap either. So there's always been my objection and the House's objection that if we're going to do this, we've to pay for And we're going to have folks from the Department of Environmental Conservation come in and talk about what's the status of the funding. Essentially, the original appropriation is gone that we had put aside. It was about $30,000,000 Basically, half of it went to Burlington to deal with the removal of all of the PCV contaminated soil and building materials, and the other half was to be used throughout the state for the rest of the program. That money is essentially gone. Last year, the Department of Environmental Conservation came in with a plan to use about $9,000,000 of funds from a special hazardous waste

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: Contingency fund.

[Peter Conlon, Chair, House Education Committee]: Environmental contingency fund in order to continue to fund not more testing, but ongoing testing at places that have been flagged and ongoing remediation. We need to sort of find out what's going on there. In the midst of all, the original language said all schools must test and be tested by a date certain. That date is coming up quick, so we extended it later. Well, now, we've got money available to me, it makes sense to just suspend that, make it an indefinite date, remove the deadline completely, probably, till such time as there's funding, not required to test it. So the requirement to test had remained on the books by a date certain and the money has been used. So that's sort of the basis for H542, as well as to say, if there's money available, it's got to be focused on those places that have already been flagged. Anyway, with that, welcome. Thanks for joining us and look forward to your walkthrough.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: This is Mike O'Grady, VP Office of Legislative Account. That was an excellent overview. Took away something that I needed to do. I would like to add a couple points. One was, although the legislature stated when it created this program subsequent amendments to the program that it was going to pay for all of the school's investigation and vacation and removal costs. But the reality was those costs were much more than the money that's available. And in addition, as the chair referred to it, when there's PCBs discovered in a building in excess of 50 parts per million, EPA requires those PCB materials to be removed entirely. So you can't even estimate the cost of what it would be because you don't know when you do your testing for the indoor air if triggers a level. The indoor air level is not entirely convertible to the 50 parts per million. The indoor air trigger tells you you have to go look for the source of the the PCBs in the air, and then you have to determine whether that has 50 parts per million or not. You can't estimate where the source is going be, what the source is going to be. So it's really hard to basically fund this program with any predictability.

[Peter Conlon, Chair, House Education Committee]: Just to reiterate, the point that's being made is that because of the way the original law was written, when we test as a state through this mandatory testing program and it is discovered that the levels are above our state determined levels, not the EPA levels, but definitely, and if it is above the EPA levels as well, it is considered a chemical release and it triggers a federal EPA to say, okay, you have a problem. And as Michael said, now you need to find out the source of it and fix it. So you're under a federal clock at a certain point.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: And that definition of release, when it was originally drafted, would have applied to all buildings. But in a in the next legislature, I won't say why, but it was changed to just being school buildings. So it's just the release in a school building triggers that determination that it's a hazardous material to release. And so it was going to be focused to be broader, but it's now just on schools. So with that, do you want me to put five forty two up on the screen?

[Peter Conlon, Chair, House Education Committee]: Everybody got it available on their screen? Yeah. That's fine.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: But generally, this this does, as the chair noted, it would repeal the requirement or continue testing. But it would address the fact that there are some schools that are in the midst of testing or have already tested positive or are already going through investigation remediation and removal. And it basically tries to address those concerns and address the funding as well. So this is not a statutory program. As the chair referenced, this was included in an appropriations bill, included as session law. So this is session law. So I'm not amending statute. The bill doesn't amend. There's no statute to amend except for the definition of release. So you will see in section one, there's going to be a termination of testing of schools in Vermont for CVs acceptance provided in Subdivision 2, which we'll get to in a minute, notwithstanding the requirements in session law and other bills for the agency to conduct indoor testing in public schools and approved independent schools that were constructed or renovated before 1980. A and R shall cease testing for PCBs in public schools and approved recognized independent schools and shall terminate any scheduled or ongoing testing for PCBs in public schools and approved recognized schools. Now remember, there was that exception, acceptance of division two, where ANR previously completed PCB testing of a public school or an approved recognized school, and the school tested positive for the presence of PCBs at a level that requires continued testing under state or federal law, testing at the school shall continue and shall be funded by the state. So if you've already tested and you have to continue testing, you will be funded by the state, but it will continue at your school because it's required to.

[Peter Conlon, Chair, House Education Committee]: I can't interrupt you there for a second. So despite having been here a while, I don't really understand the concept. So we passed a bill several years ago or language, put something in a bill that said, whatever remediation is needed, whatever is funded by the state. So when the state doesn't fund it, and you have a regulation that says you still gotta do it, the ongoing testing, What is that? How do we resolve that conflict?

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: It's a great question. It goes back to the concept that general assemblies can't buy future general assemblies. So when you said in 2023 that you were going to fund it all, that doesn't bind this current general assembly to fund it all. You can say, we can't fund it all. We don't have the money to fund it all. And so that is and appropriations, if you look at the appropriations bill, it will say, unless otherwise indicated, every section in here is limited to the fiscal year that it is being drafted to address. So this didn't necessarily say Nice thing to say. It's a nice thing to say. It was an expression of intent. And the legislature has made a pretty sincere effort to fund it. But as we've already indicated, the costs were well in excess of what was expected. And it's, I would say, almost impossible to estimate what they would be.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: So with the schools that have already tested positive, I mean, there any way to say what we're still on the hook for?

[Peter Conlon, Chair, House Education Committee]: No. And and later today or tomorrow, if remember when they're coming in, we'll we'll get sort of on the ground. Hey. Here's what it's really costing us in our school and here's what's getting paid for here, what isn't getting paid for.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: So moving down on page two, line 14, if A and R completed testing at a school prior to the effective date of the SAC and the school tested positive for the presence of PCBs in excess of the state action levels, the state of Vermont, consistent with your previous statements, shall pay for the cost of investigation, remediation, and removal of PCBs at the school. If as a result of testing, the school tested positive for the presence of PCBs in excess of the state action levels, the school shall not be required to continue or continue interim remedial measures for management of PCB exposure if the state is not fully funding. So if the school is not being fully funded, they don't have to continue with remedial measures under the state law. The most viable and effective form of remediation is the replacement of the school building that tested positive for PCBs. As the chair referenced, there are already schools that understand that the best way, most effective way to deal with this is to replace the school. So if that's the most effective way and the state is not fully funding, then you don't have to go forward with continued remedial measures. But if federal law requires immediate remediation, there's no way to get out of that. And the chair and the vice chair previously asked me to work with EPA to see if there was a way out of that, looking at the language in the federal rules. And EPA said no, and I have a letter to that fact.

[Peter Conlon, Chair, House Education Committee]: Though to be fair, they have said, we understand your situation and we're willing to work with you. And that's sort of informal conversation from what I

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: Right, they couldn't put on paper, don't comply with federal law. Yeah. But so but behind the scenes are being cooperative. On page three, line eight, any funds remaining from those monies appropriated, and any of the bills where it was appropriated or any other appropriation for endear air quality testing of PCBs in schools shall no longer be used for testing for PCBs and shall be used instead for the cost of investigation, remediation, and removal of PCBs at a school where ANR conducted testing and the school tested positive for the presence of PCBs in excess of the state's collection. So whatever money's left that was supposed to go to testing is now for investigation, remediation, and removal.

[Peter Conlon, Chair, House Education Committee]: So just a quick question about just the wording here. If there is money available for those schools that are flagged, they have to go through ongoing testing. So by saying it can't be used for testing, does that limit or would that fall under the broader investigation umbrella?

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: I think that's in the broader investigation. Once you've triggered the school action levels, you're into another phase. You're into the investigation phase, and I think that's suitable. And if ANR I haven't talked to ANR about the language. I talked to ANR about the concepts.

[Chris Taylor, Vice Chair, House Education Committee]: Just initial testing, we put it in, the word initial?

[Peter Conlon, Chair, House Education Committee]: Yeah. Or yeah, well, we can. If we need to be clear, maybe it would say, shall be used instead for the cost of the investigation, remediation, ongoing required testing, and removal PCPs. So as we'll learn tomorrow, schools that are, let's just say, treating this with having fans all throughout the building or filters, they still have to test at least every six months.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: Moving on, on page three on 16, if the state lacks sufficient funds for investigation, remediation, or removal of PCPs where the ANR testing is positive. The secretary of natural resources submits to the general assembly, a recommended amount of funds that should be appropriated to ANR or agency of Ed to sufficiently fund that investigation remediation and removal. And then page four, line five, sub c, notwithstanding that subsection we just walked through, and the intent of the general assembly to pay for investigation, remediation, and removal. The state is not going to pay when PCBs are discovered during the renovation or construction of a project that the school was already intending to undergo. So if it's not PCBs are not discovered as a result of the indoor air quality testing, but are discovered during construction renovation, etcetera, that's a cost borne by the school school district,

[Peter Conlon, Chair, House Education Committee]: not this program. There's a requirement that predated the indoor air testing program.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: I mean, it's just part of dealing with hazardous materials releases. If you find a hazardous materials release, it's your responsibility to respond, remediate, etcetera. And then you try to find who was the cause of that and then get them to pay. And the state is is litigating against PCB manufacturers to try to seek viability and damages for PCB release exposures, etcetera. But that will probably take some years. To put it mildly. And the manufacturers are this is one of the first cases, rationally, the CSAT types of liability for exposure in a building. So they're likely going to litigate strenuously.

[Peter Conlon, Chair, House Education Committee]: So since you brought this up, is there any way maybe just maybe you've checked on it or we could ask you to check on it, the status of both the state case and the private case against PCB manufacturers?

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: Sure. The private case might be a little bit harder for me to check on, but I can first check with the state, and then they might have more information about the private. That's okay. That'd great.

[Peter Conlon, Chair, House Education Committee]: Thank you.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: I'm looking to just click a note for that. Okay. So you are on page four, slide 16 on or before January 15, ANR, after consultation with the agency of Ed, representative of schools, other interested parties, submits to the general assembly a long term remediation plan for remediation of PCB contamination in schools. And then on page five, line three, subsection e, beginning January '27 and annually thereafter, ANR after consultation with the agency of Ed reports to you regarding ANR's indoor air quality testing for PCBs in schools. The report includes the status of testing, the number of schools tested, the number of schools that remain to be tested, the number of schools for testing indicated presence of PCBs in excess of the state action levels, the remedial measures taken, the remedial measures to be implemented, the amount of state funds expended for testing investigation remediation or renewals, and then the amount of the funds that remain at ANR or Agency of the Ed for testing or for grants for investigation, remediation, and removal, and an estimate of additional funds necessary to complete investigation, remediation, and removal at schools. That goes into effect on passage because it deals with appropriations. I won't say, will be sucked into the appropriations bill, but I wouldn't be surprised if it did.

[Peter Conlon, Chair, House Education Committee]: Mhmm. Interesting. Yeah. Folks have any questions? Yeah, go ahead.

[Leanne Harple, Member, House Education Committee]: So I can see the point of why this bill was written, but I guess my big question is, the reason that we don't want PCBs in school is because they may make people sick. They may make people have cancer, right? And that's not my question, but is my premise correct? Sure. Okay. Yes. So what is the actual level of risk that by passing this, someone is going to, who's worked in a school for thirty years, end up with cancer because we passed this and said, oh, we're finding the results, let's stop looking for them.

[Peter Conlon, Chair, House Education Committee]: Before you answer maybe, I'll just say the point of this is not to say PCBs are dangerous or not dangerous. It's not about the science. It's about the fun thing.

[Leanne Harple, Member, House Education Committee]: No, I understand that, but that doesn't mitigate the reality that they are dangerous.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: My response is a punt.

[Leanne Harple, Member, House Education Committee]: Knowing

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: the I'm not a scientist, and I think I would say if you're gonna hear from the Department of Health or ANR, I would talk to them about the carcinogenicity and the exposure levels and risk of illness from those exposure levels over time. I do think they have some information about that, but I'm not the one qualified.

[Leanne Harple, Member, House Education Committee]: Can I ask a follow-up question? So my follow-up question is, didn't Vermont also pass a law for firefighters and maybe policemen, but I know firefighters that like, if they were exposed long term to chemicals and they did get sick, then we have a fund for that. Is that like something that could be tacked on somehow that is like, we are gonna stop this, but if there are teachers that work for forty years in the school that was built prior to the 1980, ducats, we will have a fund for you.

[Peter Conlon, Chair, House Education Committee]: Well, so that's were you involved with the firefighter legislation?

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: I was involved in banning the products that created the attempt

[Chris Taylor, Vice Chair, House Education Committee]: to Yeah. Don't think there's a specific fund there is, but I think it allows it to be classified as presumptive that it was caused by. Then it would go towards workers' compensation.

[Leanne Harple, Member, House Education Committee]: Okay, that's what I'm talking about. Is that something that we could do if we pass this? I mean, obviously that's legislation in a vote, I understand the process, but like

[Peter Conlon, Chair, House Education Committee]: mean, theoretically we can do whatever we want, but I would say that the science isn't really out there to This is new ground. We are the only place in the world testing indoor air quality for PCBs in public buildings. We have lawsuits, probably much of that will have to be settled before we could say that because you worked in a school twenty years ago and now you have cancer, we're going to presume that it was caused by the PCBs of your school, what if your school is never tested? Maybe, I mean, we've tested a lot of schools that fall in that construction period, but don't have any problems.

[Leanne Harple, Member, House Education Committee]: I understand why we're doing this, I'm really torn on what is the human cause, and we're making a mistake. No, it's okay. Was gonna just echo what Chair Conlon was saying. Think having sat on the House Ed for the testimony about the health risks of PCBs, speaking for myself, I've never really had clarity around what those risks and potential impacts are. It seems very murky, I guess.

[Emily Long, Member, House Education Committee]: And I'll just say that applying, I guess I'll ask, wouldn't that be the same for radon as well? I mean, those are

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: Well, if

[Emily Long, Member, House Education Committee]: I mean, I'm only trying to apply it in the perspective that Representative Harple was bringing up twenty years later. They can cause issues too.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: Yeah. So obviously, they're both carcinogens, but that has multiple parts of it. But there are requirements for each of those if discovered and lead. Those requirements have been in place for a long time. In a school, they should have already been addressed decades ago.

[Emily Long, Member, House Education Committee]: Right, but I guess what I'm thinking about is do you just for someone who's been in a building where radon has been discovered. That's, I guess, what I'm I just trying think think it's been remediated.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: I mean, you went through aspect of this a couple of years ago, the medical monitoring bill for those people exposed that to PFAS and Bennington, and whether or not there can be a cause for That cause of action is available to people that were exposed to PCBs or lead, or if they can show that exposure and known harmful toxic substance and there's multiple criteria that need to be met, there's the opportunity for medical monitoring cause of action.

[Peter Conlon, Chair, House Education Committee]: That's helpful. Think about it in a broader sense. First of all, any building constructed during this time period could have airborne PCBs, including your house or apartment. So how do you say it was the school that caused it? But other than anything, you also have to think about the level of risk we live with every day, mold, lead, radon, whatever other sort of contaminant. But, bottom line for me is that we have tried to stop this program from the house side numerous times. The last time we really sort of just tried to put an end to it, the administration came in of the health department and the Department of Environmental Conservation, they were like, what the kibosh on us stopping this? And so, you'll hear politically ping ponging back and forth between the legislature and the administration as to who's responsible for this bill, law. And I think at the point where the administration came in and said, Oh, you can't stop this, and here's all the scary reasons why, this really became an administration priority. So we may get the same sort of level of opposition to this as well. But for me, again, bottom line is, if we're going to do this, then we've to put our money where our mouth is, and say we're going to pay for everything. Which means school buildings and everything. I don't have strong feelings about this level.

[Leanne Harple, Member, House Education Committee]: This is so hard, I'm hearing what you're saying, but if they came in with that level of concern as a teacher, I feel that. I guess we don't want our teachers to get sick, or our students, but the teachers are there a lot. Or people

[Peter Conlon, Chair, House Education Committee]: who are living in public housing, or people who work in courthouses, or people who are forced to live in a place that might have high PCB levels like prisoners. So where does it end? I think that's the bigger philosophical question here.

[Emily Long, Member, House Education Committee]: Remind me of the levels, federal levels and state levels.

[Peter Conlon, Chair, House Education Committee]: I'm gonna get this a little more nuanced than just comparing

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: Right, it there's different media, so they don't convert easily. And I was talking to Trish Cipolino, who's the person at DEC that's effectively in charge of this program yesterday about how can I make that conversion? How can I do it? She's like, you can't. So the action levels in the state are based on indoor air, like what presence nanograms per cubic meter are detected in the air. And it's based on exposure class. So if the exposure population is pre kindergarten children, there's a higher risk of health effects. So the level is lower. It's thirty nanograms per cubic meter. If it's kindergarten to grade six, it's sixty nanograms per cubic meter. And for grade seven to adult, it's 100 nanograms per cubic meter. But when you go to EPA standards, EPA standards are not indoor air quality. It's not air at all. It's about what's present in the physical source of the PCB. And that is measured at 50 parts per million, and the threshold that requires anyone who discovers it in a building to remove it is 50 parts per million.

[Emily Long, Member, House Education Committee]: That's helpful.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: If this is administration priority, are they willing to shake your budget around it?

[Peter Conlon, Chair, House Education Committee]: Yes. Would say to this have not. Okay. Just checking. I think it may be their priority to force this unfunded mandate on schools, but I'm not sure it's their priority to pay for it.

[Leanne Harple, Member, House Education Committee]: But you said, sorry, the best solution is to just build new schools?

[Peter Conlon, Chair, House Education Committee]: Oh no, depends on which building you're talking about.

[Leanne Harple, Member, House Education Committee]: Okay, I mean, part of the solution here be like five major district high schools? I mean, I'm

[Peter Conlon, Chair, House Education Committee]: not That was part of our, you know, I school construction advisory group, as they develop their criteria for who gets what level of funding when funding exists, hazardous material issues So are part of that

[Leanne Harple, Member, House Education Committee]: this could actually be connected to this other topic that

[Peter Conlon, Chair, House Education Committee]: we're Oh, absolutely, yeah. So you sort of run into an issue of like, but not all schools have been tested, you know?

[Leanne Harple, Member, House Education Committee]: I guess to me, it reminds me a little bit of COVID times, we're like, could test for COVID, but then I might find out it happens.

[Peter Conlon, Chair, House Education Committee]: Exactly. This is a debate many school districts are having.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Good. I really want to know.

[Chris Taylor, Vice Chair, House Education Committee]: Milton's a great example. So I have, since this topic came up, I've kind of been a pretty vocal no on stopping PCB testing. I've softened my stance on that, full transparency, fully softened it yet. But it's because when I started thinking about my district that I represent, building has not been tested yet. Well, the high school was tested, the elementary school was not tested. High school was tested only because they

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: were doing a project and it

[Chris Taylor, Vice Chair, House Education Committee]: was found to be in the construction material. So I'm kind of in the same camp as you are, where it's a double edged sword. My district hasn't been tested, so I feel there's some inequity there with my students being in a building that they don't know. But I also don't want their lives turned upside down with not being able to use their building, but not having the funds to fix it. So what I'm wrestling with Again, when I'm looking at I have softened my stance on the strictly no, we've got to keep going with it, but that's my internal struggle. So I just kind of unthrow it out there.

[Leanne Harple, Member, House Education Committee]: I hear that. I know how disruptive it was to be intense for a season. Don't know if I agree, but do we have a list? Have we been given a list of all the schools that have been tested?

[Peter Conlon, Chair, House Education Committee]: It's available and we'll have folks in from Trish Capolino and another person in.

[Leanne Harple, Member, House Education Committee]: Okay.

[Peter Conlon, Chair, House Education Committee]: And yeah, it exists, yeah. I think it's on website.

[Leanne Harple, Member, House Education Committee]: I'll actually know where to find that because I would love to see that list.

[Emily Long, Member, House Education Committee]: So there's a Representative Taylor made me think about this. Are some school districts who tested even though they didn't get funding from the state to test. And I know that because I live in the town where one was tested. And they couldn't There was a decision made. What I'm trying to get at is people can still test, right? There was a decision made to combine That's what I'm saying. There was a decision made to combine three elementary schools into one, and no one wanted to go forward with that proposal until that one school was tested. Why would you invest if the school was filled with PCBs in that one school? Couldn't get the funding from the state to test and couldn't get the bond passed if there was going to be one without it. So the school went ahead and tested. And fortunately, in that case, there wasn't any PCBs of actionable level found. And it made it so you can start talking about this again, that you put it back on the table. So I guess what I'm trying to say is that there's nothing stopping schools from testing. And I can't remember what the dollar amount was, but we'll never get reimbursed for that, we were told, because we did it without approval for the state and there wasn't funding for it. But districts can make decisions that certain we're not gonna get paid for it anyway. We have additional funds to do it.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: The testing program is for schools that were constructed or renovated prior to 1980 because in 1980, the the use of PCBs and building materials was supposed to be prohibited. Did some continue to be used? Probably. But 1980 was the threshold where they were supposed to no longer be used, and that was a threshold to set where testing would be required and investigation remediation removal will be funded. Yeah. Representative Morgan? The purpose of having PCBs to start with, why why were they utilized in construction? When you put them in certain materials like caulk or paint, They they provide that kind of viscosity, the flexibility necessary to use that. And then they're also they were very frequently used in electric transmission equipment. And so if you have electric transmission equipment that was older, you might have PCBs in that equipment. Transformers. Yeah, etcetera.

[Peter Conlon, Chair, House Education Committee]: And they were really big in fluorescent lighting ballast, which have largely been replaced.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: And I don't think

[Chris Taylor, Vice Chair, House Education Committee]: you haven't been here for a lot of these PCB discussions, but they also seep into other

[Peter Conlon, Chair, House Education Committee]: surroundings. Yes, they migrate them. The hard part is that you want to debate the science, and we're not scientists. So, my feeling is that the scientists say we should do it, then it's got to get paid for.

[Leanne Harple, Member, House Education Committee]: Not to throw another wrench in this, but another thing that I'm thinking about is, as we move towards Act 73, and there may eventually be some closure of some of these schools, towns are talking about, well, do we turn them into low income housing? So then that, for me, opens up a bigger question of, all right, then we're moving low income middle people into these houses with PCBs who then probably aren't gonna have the least amount of capacity to help themselves once they get sick or if they get sick. So I guess my question is, are there funds that we could also look at for housing for those schools that need housing?

[Peter Conlon, Chair, House Education Committee]: Yeah, bringing the bigger question up, how broad do you wanna make PCBs a concern? Because really, if you wanna do that, we really should be testing existing public housing, existing prisons, existing hospitals, existing office buildings.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: Remember when I told you when you first defined a release, it would apply to a venue building? The people that came in and said, Hey, you need to narrow the scope of that, were the people that were redeveloping buildings for public use to the affordable health. Because they said if that's considered a relief, it triggers a whole another level of insurance and indemnity and liability that they would have to be on the hook for. And they said it would make that redevelopment potentially viable. But that's why that definition was changed.

[Peter Conlon, Chair, House Education Committee]: When this all sort of started, there was a lot of talk that Vermont was on the cutting edge that others would follow, at least by my general local

[Emily Long, Member, House Education Committee]: He keeps looking.

[Peter Conlon, Chair, House Education Committee]: Nobody was following. Because the can of worms that it is opening.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: EPA does have guidance that says schools should be doing this, but they don't say you must do it, and then schools don't do it.

[Peter Conlon, Chair, House Education Committee]: Alright, so we've got more testimony on this coming up later today and I think tomorrow. So we'll hold there, and again this is about money not about science.

[Leanne Harple, Member, House Education Committee]: Can I add one more thing? I mean I'm not saying how I do or don't feel or plan to vote but it's also about ethics, Like it comes down to the insurance question too like oh you're really sick but can you afford to save yourself? Sorry.

[Peter Conlon, Chair, House Education Committee]: You know,

[Leanne Harple, Member, House Education Committee]: so I feel like it's a little bit more complicated than just being about science and about, I don't know, I feel like there's some ethical thing I can't quite wrap my head around here. But I'm trying really hard to.

[Peter Conlon, Chair, House Education Committee]: Yeah, but you know, obviously I think discussions are huge and it's like, well, do you stop? What about every risk that's out there? Do we mitigate? And who pays to mitigate them all? Thank you, Michael, much. Thank you. Are folks comfortable just continuing or do you need a five minute break? Keep going. All right, great. So just do a little mental gymnastics here. We're gonna switch topics and go into sort of a review of how the education fund works. And then in particular, sort of what happens today when a district passes a large construction bond. Sort of the thought here is we often talk about how we have no aid to school districts for education or for construction, but in a sense, because of the way the education fund works, a district that does do a bond is actually subsidized just by the way the Ed Fund works. So just the idea was to learn a little bit more about that with our joint fiscal office folks who are on. Do you have a slide deck for us?

[Chris Rupe, Senior Fiscal Analyst, Joint Fiscal Office]: Yes, I do.

[Peter Conlon, Chair, House Education Committee]: So maybe it'd be good to broadcast that on the screen.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Yes, I am in the Zoom waiting for the host to give me permission. Looks like I have it. So for those of you who don't know me, which might be a lot of you, this is my first testimony here this session. Join physical office. There we go. Zoom here.

[Peter Conlon, Chair, House Education Committee]: Go ahead and share my presentation with you all.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Alright. Sorry. Just getting rid of all of the little text boxes that pop up when you try and share in Zoom. So as Chittenden mentioned, today we will be talking about the education funding system and school construction costs under current law and how those two are connected.

[Michael (Mike) O'Grady, Legislative Counsel, Office of Legislative Counsel]: Before we

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: can get started, we have to go through my disclaimer slides. So Joint Fiscal Office, we are a nonpartisan legislative office. We don't advocate for policy decisions or anything. We're just here to work for you all and let you know whatever you wanna know. So the outline is gonna be a brief overview of Vermont's education fund, education expenditures, which include school construction, education funding, how that's all paid for, and then school construction costs and how those could have impacts on tax rates. And so first we're going to take a look at Vermont Education Fund overall. As you know, Vermont Education Fund is unique, and it's difficult to compare to other states. Unlike other states, Vermont's education funding system doesn't have state share or local share. When we say statewide fund, we are truly statewide fund. All of the, education expenditures are paid for out of the fund even though they are crafted at the local level with local school budgets. So that's something that's different from other places. So it's just good to keep that in mind. You look at, well, Rhode Island does this or Maine does that. You know, it's really apples and oranges and bananas here. So property tax rates are set to ensure that all education fund expenditures are fully funded after accounting for your nonproperty tax revenues. And so revenue raise is driven by the expenditures, not the other way around. You don't figure out how much pie you have to split. You more like you enlarge the pie to make sure that everyone gets the piece that they need. And so a basic equation here to think about it is your education fund expenditures minus your non property taxes. That's the amount you need to raise by property taxes there in that blue bubble. And so under current law, all else equal, an increase in education spending means that all statewide property tax rates must increase. Now I mentioned that there are nonproperty tax revenues, but the lever that you have the most control over immediately are those property tax revenues. Sure, you can increase a nonproperty tax or add a new one, but that takes time. That's not going to solve your immediate issue. So for example, in the past, legislature has added in a tax in short term rentals, but that takes time to be collected and to be implemented. So that's why your property tax rates, both homestead and non homestead, are the levers that really get pulled when it's time to set the yield every year with your yield bill to ensure that education is funded statewide. And so your non homestead property tax rate, that increases uniformly across the state, whereas your homestead property tax rate, it increases across the state, but that is not a uniform increase because there are more factors at the local level influencing that. And so in the context of construction, if a school district has increased construction costs, they're going to see the most significant of that homestead property tax rate increase. Of course, you could apply that to a lot of other costs, but since we're gonna try and talk about school construction today, school construction is the context for that. And so let's take a look at some of those education fund expenditures. And broadly, there are two levels. You have the local level and then the state level when we think about expenditures. And so at the local level, each school district builds its annual budget, and that budget is required to be approved by your local voters. And so even though, like I mentioned earlier, this is built at the local level, but it's still being funded by state and federal funds. And so from a high level perspective, that budget is really made out of two components, the district's education expenditures, and then any offsetting revenues that district has, and then that leads you to your education spending for districts. And that's what you'll hear a lot from districts, because it's that education spending that really goes into determining their tax rate, the homestead tax rate. So here's just a very, very simple graphic and inflation of that process. So education expenditures, which would be every expenditure at the school district, including your personnel costs, your tuition payments, if you're paying any sort of tuition, also construction costs, since we're talking about school construction. And then you get to subtract any offsetting revenues that you get as a district. So that would be state or federal categorical aid, like your special education aid, your transportation aid, any CTE aid, or anything like that. Also, tuition revenues. If you're receiving some students and they're bringing tuition dollars, that also goes to reducing your education expenditures, and then any prior year surplus that you may have as a district or reserves. And so the net of that is your education spending as a school district or all funds a district spends net of offsetting reference that it receives. And so, again, since we're talking about school construction, that spending will include a district's construction, both the immediate cash outlay, but also those debt service costs down the line. So that will get baked into education spending as they occur. So that's the local level. And now we have the state level. So we have two buckets broadly for that. So you have your education payment, which is, you'll remember on the previous slide, we're kind of leading to a district's education spending. So all of that education spending statewide is then summed up together for that education payment, and this would include those construction costs at the district level. They're all summed up with everything else that they're spending under their education spending. But that also includes an education fund's other expenditures such as categorical aid. If the state is providing a district with that transportation aid, with that special education aid, that's accounted for here on the education fund's expenditure side. Any other one time or operating costs that the education fund has are included in your all other expenditures. But the majority of those expenditures are coming from the education payment influenced by the local districts. So do I have everyone so far? Am I going too fast, too slow? Good. All right. So we've talked about the expenditures, and now we need to talk about the funding, cause we have to pay for all that spending somehow. So education funding. So we have some recurring education fund sources, and here on this graphic, you can see the twenty twenty six recurring education fund sources and the relative size of each component. And so Vermont pays for its education through the education fund and its two principal buckets of revenues. I think we've touched on this already. You have your property taxes, homestead, non homestead, and then your non property tax revenues. Now why do I use the word recurring? Well, because in recent years, the general assembly has used one time funding from the general fund to pay down property tax rates. In fiscal year twenty twenty six, it was about 77,000,000 from the general fund. And so I don't include that here because that is not usually a component of the education fund. That's decision every year. It's not baked in automatically. So I left it out for this for that reason. And so you can see that non homestead education property tax and net homestead education property tax make up the two biggest pieces for fiscal year twenty six, followed by your sales and use, meals and rooms, purchase and use taxes. I just wanna touch on the word net. When I said net homestead education, that's accounting for the property tax credit. So that's removed from that. If that was not removed, then it

[Peter Conlon, Chair, House Education Committee]: would be a larger portion here, but we've removed that out when we're talking about the percentage that it takes up. The homestead or what we call the income sensitivity. So it's kind of interesting because it's a rebate that's paid out of the Ed Fund, but the Ed Fund then has to generate enough revenue to pay out. So it's a little bit of a circle in that the people who receive the credit are also paying for that credit, obviously at a much smaller percentage. Exactly, that's a great way

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: to put it. So it's an interesting, like you said, a little bit of a hamster wheel there. You got to spend it, but the same people are paying for it, receiving it sometimes. Not everyone gets property tax credit, and so they're just paying for it. So of those two property taxes, which are, like I said, that's the Ed Fund's primary revenue lever. When you need to fill the education fund, that's the easiest one to pull. So non homestead property tax, this is a tax applied to all real property that does not qualify as a homestead or is not exempt. And I put a few examples up there, but really, it's just about anything you can think of that's not a homestead. So I have parking lots, commercial buildings, apartment buildings, but you can throw a rock at a building. If it's not a homestead, it's going to be looped in here. So that's just a few examples. And so like I mentioned, it's a property tax that's across the state, uniformly applied across towns. So that's not as influenced by the local education spending, but it is influenced by the statewide spending because as you spend more money, this rate will have to increase, but it's not as dependent on the individual local decisions for the rate change. That's where the homestead property tax comes in. So that's a tax on all real property that qualifies as a homestead. So that's everything that's not a non homestead property tax, so if it's a homestead.

[Peter Conlon, Chair, House Education Committee]: And if you recall in Act 73, it calls for breaking non homestead property tax into at least one additional category. Right now, non homestead is everything that isn't homestead. Now we're talking about creating a second home category in that.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Yeah, correct, yes. The non homestead residential and then the non homestead non residential are the two classes, I believe, Chair Conlon is referring to. I don't touch upon those here because that will be implemented in the future, but that's a great point to be aware of. And so the homestead property tax rate in each town is dependent on the locally approved education spending per pupil, but it is still affected by statewide decisions. It's just more so impacted by the local decisions. And so that's because of these three factors here. And so you can see that I've structured these to illustrate that there are many local inputs, but there are also many statewide inputs. So for example, a district's education spending. So that's a local budget, but it also has offsetting revenues, which are determined at the statewide and then federal level coming in. You have a district's weighted pupil, so that's your local enrollment, but that's also reflecting statewide weights that have been set for the entire state districts not choosing how to weight those students. So again, they have both of those factors coming together. And then your statewide property yield is influenced by local decisions, but all those decisions aggregate statewide is what is ultimately setting that yield where it is. So you can see that there are many local inputs, but also many statewide inputs that are affecting the property tax. And when you're talking about school construction, that's why you can have school construction subsidized by the whole system, because it's influenced by your education spending, but it's also influenced by everyone else's education spending. And so we've talked a little bit about how there's a variety of factors influencing homestead property tax rate. And I've mentioned that this tax rate is most sensitive to the local decisions, and this calculation illustrates why. So as we discussed, homestead property tax rate is calculated based on the district's education spending, weighted pupils, and statewide property yield, which can be impacted by local decisions and statewide decisions. And so that property tax rate is $1 times a district's education spending over the district's weighted pupils, and then that is going to be divided by the statewide property yield. So you can see that you have district education spending, district weighted pupils, but that's ultimately over the statewide property yield. So decisions from the state are impacting that yield even if the education spending and weighted pupils don't change as that statewide property yield moves up and down. You can see that the property tax rate would actually change. So let's try and bring this to the school construction And I've put together a couple of really broad examples to kinda show impact at statewide, all the districts, and then just the local district doing the construction. So as a reminder, all districts are funded from the statewide education fund. And so all else equal, construction costs are going to increase your total education expenditures and therefore the amount that you need to raise statewide. And so since your funding need is increasing, all of your statewide property tax rates must increase. Remember, that's your lever that you can really pull immediately to fill this need. And so we've discussed non homestead property tax rates increase uniformly. The homestead property tax rates increase uniformly not uniformly. They will increase, but the impact will be much greater at the location doing any significant construction project. So let's go into a couple examples. First, we're gonna talk about the impact of construction costs on local homestead property tax rates across the districts. So if you have an increase in construction costs or debt service payments in another district, this increase in construction costs will then increase the local statewide excuse me, the locals' education spending, which is then aggregated up to the statewide education spending. And so because those expenditures have gone up, the statewide property yield must come down because you now need to raise more funding for your education fund to pay for that construction. And because that yield has come down, remember, it's a statewide yield. That equation that we've looked at on the other slide, I have it here, and I've highlighted that statewide property yield, that's what's changing here for all of the districts. And so that is why even if it's one district doing some major construction, the property tax yield for the state will shift, and that would increase the homestead property tax rate in all districts. Now it should be noted that if it's a relatively small construction project, the impact on the statewide property yield may be relatively minor because it's a very large fund. But if you have a lot of districts undergoing construction or a very large construction project, you can see more of an impact statewide. But it's just important to highlight here that even if one district is not doing construction, if another district is taking on that construction costs, putting it in their education spending, that statewide property yield that highlighted there is going to have to change.

[Leanne Harple, Member, House Education Committee]: Can I just get a scale of what would be a small construction project price tag versus a large construction price tag, if that makes sense?

[Peter Conlon, Chair, House Education Committee]: About $5,000,000 to put a new roof on your middle school versus $150,000,000 to build a new high school.

[Leanne Harple, Member, House Education Committee]: Okay, thank you. That just helps me that very soon.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Yeah, just to tack onto that, I think education spending is about $1,900,000,000 $2,000,000,000 It's in that ballpark range. So when you think about that level of expenditure, that's the scale that you're talking about. Plus, also you have your categorical aid that is being paid for statewide, what would be all the other expenditures that aren't in that education spending. So yes, that's a great example, 5,000,000 to 150,000,000. The district might think that 5,000,000 is a large expenditure for sure, but when you look at the whole state to over $2,000,000,000 in the entire fund, yeah, it's not as much. But 150 might move the needle a little bit. More so than 5,000,000.

[Peter Conlon, Chair, House Education Committee]: Of course. Okay. And

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: so now let's look at the localized impact. So we have the same format as the prior example, but now we're looking at the homestead property tax rates in the district that's undergoing this project, whether it's the 5,000,000, 150,000,000, whatever the number is. So just like before, we have an increase in construction costs at the district, or they have some debt service payments that have come on that they didn't have before, and this is increasing their education spending. And so this increases their education spending per weighted pupil. So now we're not just touching the statewide part of the equation, we're also touching the district part of the equation, which is that district's education spending. So all else equal, as a district's education spending per pupil increases, that means that they will need to pay in more to the homestead property tax rate because of this equation here. Your education spending is being divided by the same number of pupils in this example. So as your ed spending is going up, that number's gonna get larger and larger. At the same time, you have a decrease in the statewide property yield because, remember, that is influenced by all of the education spending. So your education spending is helping to, which is, in this example, increased by the construction, is helping to drive that property yield lower because you need to raise more funds. So that is why the local increase is going to be greater because you have your increase in education spending at the same time that the property yield is being driven lower statewide. How much that's being driven lower depends on the size of the project, but both are being affected by action in this example. So that's the difference between statewide and the local, but illustrating that both of them are seeing something change. It's just that at the district level, they are having both parts of the equation touch, not just statewide.

[Emily Long, Member, House Education Committee]: So I don't want to take a stand, and you may be talking about this later. Just didn't look at your future slides. But in the past, school construction costs weren't included when you calculated the excess funding protocol. And now they are, which has an impact on decisions, of course, as well. So is that something you're going to touch on here?

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Yes, So I do have, at the end, a

[Peter Conlon, Chair, House Education Committee]: slide, so

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: I've got some other legislative action. Make

[Emily Long, Member, House Education Committee]: sure. Just want to, I don't, just one other thing. The difference between non homestead and homestead, I think there's a lot of confusion around it statewide for folks and how to understand it. I'm to say something to you about how I help people understand it. And you tell me whether you think this is accurate. Non homestead

[Peter Conlon, Chair, House Education Committee]: is

[Emily Long, Member, House Education Committee]: more forget the term you used, but I often refer to it as a more stable tax rate, a more predictable tax rate for folks. And I think you didn't mention businesses when you were talking about, of course, businesses are included in it. And when we're thinking about locally and statewide here at the legislature, we want to support our businesses and make sure their tax rate doesn't fluctuate with a big construction cost as much as our local homestead residential property tax rates. And that's and so then going to Representative Conlon's explanation that we're moving forward with separating the non homestead from residential and non residential, that's where we'll still continue to stabilize the rate for our small businesses, middle set,

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: our businesses in the state, where second homeowners will be separated from that. Is that correct? Right. So mechanically, because it has calculated, yes, your homestead property tax rate is the one that is being moved because of the mechanics in this equation, for sure. Also, we, as JFO, in conjunction with the tax department and AOE, when we bring forth the December 1 letter, we are statutorily charged with doing uniform increases. The legislature could also choose to do a non uniform increase later when they set the yield bill if they wanted to increase one or the other, but we calculate uniform because that's part of the December 1 letter. So when we're talking through this, we're keeping that uniform increase. Uniform is the word. I think it's really helpful to make

[Emily Long, Member, House Education Committee]: sure that we understand what that does.

[Peter Conlon, Chair, House Education Committee]: Thank you.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: All right, so we've gone through a few examples, and they're a little broad. And the reason is that they are so broad is because it is challenging to accurately illustrate hypotheticals when it comes to school construction, like trying to do hypothetical tax rates for districts. Like if district X did this, their tax rate would increase by X number of pennies. And it's difficult for a variety of reasons to do it with the level of comfort that we want to give everyone. We don't want there to be any confusion because no two school districts are the exact same. Your education spending, your pupils, that's going to differ at every single district. And property values also differ at districts as well. And so it would be a little unreflective if we tried to give you a hypothetical example of if District X did this action, what would happen locally and statewide with actual tax rates? Because if District X did something, that's only one scenario. You have 119 school districts, a lot of different scenarios. We really would need 119 different scenarios. Typically, would say that

[Peter Conlon, Chair, House Education Committee]: it is challenging. However, we are still going to ask you for examples.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Examples can be crafted with specific direction. Absolutely, we can do that. It's just out of caution, we don't want to come to a broad overview like this with a more concrete example, because we don't really want people to say, well, that's a great idea, or that's not how it would work for us. But if we have specific instructions, we definitely can do that for you. I just want

[Peter Conlon, Chair, House Education Committee]: to acknowledge that it is hard, because here's always my question to illustrate to the committee that construction projects are in a way already subsidized. So what I want to say to you is supposing our district district A did a $100,000,000 bond for all the renovations that they need, how much of that is paid for by all the rest of us?

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Yeah, and to kind of make that example work here, we would lot of it. We would need to know what District A's education spending per pupil already is. We would need to know what the rest of the state is spending, property values, tax rates at all of the districts before and after. So, yeah, there are a lot of pieces that we would need filled in to do that kind of example.

[Peter Conlon, Chair, House Education Committee]: I think when Burlington passed its bond to do its high school, that question did come up. And I think it probably wouldn't require much research, but it was illustrative for me because I think people were throwing around the number of, oh, it increased the statewide property tax 2¢, which means we were all paying a small, I think it's really important to emphasize a small portion of that.

[Leanne Harple, Member, House Education Committee]: Well, I was gonna ask something kind of related to what you're saying is could we look at an example that's already happened and what it did? Or there are districts that are preparing bonds right now. Oxford is preparing a bond vote for their six towns to vote on a new middle school, or sorry, new elementary school to go to high school. They already have those numbers. Could we just take that?

[Peter Conlon, Chair, House Education Committee]: Well, because it's in the future, we don't know what the rest of the state's education spending is going to be, what the deal is going be. But I guess we could look back at the Burlington situation.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Yeah, so if members have specific examples, I'd be happy to meet with you maybe outside of committees, we can really walk through the specifics, specific districts, and all of the different criteria that we would need to take into account. That might be better outside of the committee, where you have more time to really talk about a specific district and all the different

[Peter Conlon, Chair, House Education Committee]: I think what I'm trying to get to here is, okay, we have established that when a district does a $100,000,000 bond, that they're not in it alone, that it affects the statewide spending and therefore the yield, etcetera. So I need is an idea of, well, is that shared cost that spreads across the state 1% of the total bond or is it 30%? If it's 30%, then sort of begs the question, do we need school construction aid? We need to debate about education fund versus general fund, of course. But if it's 1% or 2%, then we really don't have substantive school construction aid.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Yeah, I'd be happy to

[Peter Conlon, Chair, House Education Committee]: There wasn't a question there, it's just sort of like, that's what I'm kind of looking for, is that sort of like, yeah, it's a shared cost, but it's pretty small in the grand scheme of things.

[Emily Long, Member, House Education Committee]: But we have a new education funding system in accepting period. So we need to look at it

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: from that perspective as well. I

[Leanne Harple, Member, House Education Committee]: was just going to sort of echo some of what the chair was saying. Just, yeah, it would be really interesting to sort of dig into examples from the recent past. A little tricky because you don't wanna necessarily put certain districts under the spotlight. But yeah, I think some understanding of an actual case study would be helpful.

[Peter Conlon, Chair, House Education Committee]: And really the only sort of big ones that have happened have been Levesque, which is a little bit of a hard one because they received a really significant amount of federal funding, but probably Burlington. Colchester's is more of a two year implementation, so it's actually not fully implemented yet. It predates you, but there may be sort of sitting out there, having a look at Burlington at the time the bond was floated, where you wouldn't need to redo anything. And again, I've done no need to put Burlington on the spotlight except that it might just illustrate how this all works. Understood.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: Well, with all that being said, just wanted to reiterate a couple of points here with taking all of this into account, reason that we don't do anything more granular. Also, we need voters to actually approve and pass these budgets. Some years, that's more challenging than others, it seems. Again, that makes hypotheticals a little difficult to say notwithstanding past actions, as pointed out by the chair, and that districts do not live in a vacuum. If District X brings forth some sort of capital construction project, District Y might say, Well, if District X is going do this, I might as well jump on that as well. And so that's just something that you The known unknowns, we don't know what districts will do, looking at what other districts are doing, but we know that there will be some sort of impact on the thought process. So just wanna close with some examples of prior legislation on school construction. I believe this was touched on earlier. So in recent legislative history, the excess spending adjustment was updated to exempt principal and interests from voter approved bonds, but just those made prior to the 07/01/2024, so more recent there. And so the excess spending adjustment, to try and put it simply, essentially double counts your spending per weighted pupil at a district once you've gone above the excess spending threshold. That threshold is recalculated every year. But with this exemption, the prior approved bonds are covered without incurring a penalty, so you would essentially just remove those identified expenses from your per pupil spending to keep you below that threshold or reduce the amount that you have gone over that threshold. Also in the past, the state funded school construction aid through the capital bill. And so grants were issued worth 30% of eligible project costs with different tiers for projects meeting certain criteria. And this was funded through the capital bill, which meant that you were taking that out of the education fund. So those payments were not on the education fund, and therefore, it didn't impact the property tax rates. Of course, you still have to pay for that with other dollars, but not education fund dollars. In 2007, there was a suspension of accepting new projects due to lack of funding capacity in the capital bill. There are sometimes emergency projects that are approved, but small amounts, around $50,000 And the program will be revamped under Act 73, but that is future. That's not now, and there still has not been funding source identified yet. So without a funding source, not sure what the impact would be of this on school construction with districts. And so just wanna hit a couple of considerations that school construction costs, they do have an impact on the education fund, and the extent of the impact varies on the district doing the construction, what the rest of the districts are doing, all the different factors that we've gone over in this presentation. The costs are included in the local budget, so locality is making that decision. However, there's funding statewide, so the locality is not gonna bear all of that cost on their own. Everyone in the state's gonna take a little piece of that through statewide Ed Fund. But the locality is going to see the greatest impact because of that equation we went through earlier, where the district's education spending is increasing in addition to the statewide property yield being forced down. I just want to reiterate again that Vermont is a very unique system. And so it's difficult, would caution you if you're looking at what has New Hampshire done, what has Rhode Island done. You know it's different because their systems are different from ours. I just want to reiterate that. And so that's all I've prepared today if there are any further questions other than what we've discussed already. And

[Leanne Harple, Member, House Education Committee]: it's kind of a big question, but I'm just curious why we can't sort of come up with one model across the country that really works? Is it because we have different amounts of sort of wealth categories or small towns versus cities? Like what makes it so that Vermont does have to have a unique and different system versus Maine versus Colorado?

[Peter Conlon, Chair, House Education Committee]: First of all, it's all state. Every state is responsible for funding their education system, they all come up with different things. Probably two things unique to Vermont are one, it's in our constitution, and two, the pream decision.

[Leanne Harple, Member, House Education Committee]: Right, no, I understand that, but it seems like at some point one state would emerge and be like, we have found the right way to do this, this is the most efficient, best way.

[Emily Long, Member, House Education Committee]: Well, that's going to be people. Just saying, years ago, I was at a conference talking about a very similar thing about education funding across the state. It was a national conference. And the panelists were asked, Does any state do it? I

[Peter Conlon, Chair, House Education Committee]: forget how they worded it.

[Emily Long, Member, House Education Committee]: Is any state got it right, and they stood up and said Vermont. I happened to be sitting under a sign that said Vermont, and everybody came crowding to our table to talk about

[Peter Conlon, Chair, House Education Committee]: it as soon as we

[Emily Long, Member, House Education Committee]: tried to explain it. They're like, we're not great. And started to block. It's a it's a really big part

[Peter Conlon, Chair, House Education Committee]: of this.

[Emily Long, Member, House Education Committee]: I mean, a huge part of it, it's in our Constitution, it says, two parts of our Constitution that say how we fund our system. And it's hard for me to shift from what we've done since Act 60 and the Brigham decision to something new, similar to what other states have done, because we are, frankly, as you use the word, unique. And anything that is equitable becomes more and more complicated. That's what I thought about. Yeah, usually complication and equity go together. Yeah, they should.

[Peter Conlon, Chair, House Education Committee]: Thank you very much. I might take advantage of the fact that Chris you're in the room with us and maybe if you take the seat, the question would be to have you sort of repeat for us your feelings about the question of funding sources came up. And I might need a refresher, your feelings about whether one looks for a dedicated funding source or one says this is, and it should be in the budget of the state each year or in a school construction context? Sure.

[Ezra [last name unknown], Fiscal Analyst, Joint Fiscal Office]: For the record, Chris Roop joined fiscal.

[Chris Rupe, Senior Fiscal Analyst, Joint Fiscal Office]: I appreciate you completely pulling me out of obscurity and with no preparation whatsoever. I was primarily here to serve as backup for Ezra in case any questions came up that are of a more historical nature. But since you opened the door, I'm going to walk through it. I think the school construction debate has been going on for a few years, as this committee knows. And there was a force put together, or I should say a working group, in the '24. And the task force looked at this question pretty deeply in terms of what should a new revamped school construction aid program look like? And the $6,000,000,000 question that was left unanswered is where does the money come to pay for it? And the model that the working group had recommended that ended up in Act 73 was to shift away from the legacy model of the state paying for a share of construction aid through the capital budget and instead moving into something called a debt service subsidy model where the state would be giving a payment to school districts equal to a certain percentage of their debt service payments, but the school districts would then be on the hook for borrowing the bonds. No matter how you slice and dice this, the question comes down to where's the money going to come from. And given the fact that Vermont is unique, it's hard to think in terms of local versus state dollars because they're all state dollars. I think the way that's more helpful to think about it is property taxes versus non property tax dollars. And is there a way that you can shift some of the cost of school construction off of property taxes? So that's the way I sort of frame that. The question always comes up is where's that money going to come from? That's not property tax revenue because as you mentioned, Mr. Chair, under status quo, school construction is funded by property taxes. The in the absence of a subsidy from somewhere else. I think you all as legislators, getting back to trying to answer your question more directly. I think you all as legislators have a question in terms of how do you think about paying for things like this? And there's often sort of a debate for we should have a dedicated revenue source to fund something, or we should maybe carve some money out of the budget to fund something. I am a nonpartisan employee of the legislative branch. As a result of that, it's sort of my job to remind you all of what your powers are sometimes. And I think your powers of the purse and your powers to set priorities really, really The rubber meets the road in the appropriations process. And I think that is when you all have the ability to actually set priorities, evaluate needs, and figure out how you can respond to needs. Whenever you dedicate revenue sources and sort of say, x percent of this is going to go to this, that can sound very appealing to program champions, regardless of the initiative you're trying to fund. Long term though, when the legislature does that approach, you can sometimes hinder your ability to set priorities big picture. Because sometimes when revenues are dedicated for something, it sort of runs in the background, Not a whole lot of people pay attention to it. It takes priority in the funding order above everything else state government does. And it can sometimes be hard to have a focused, thoughtful conversation around what are the actual needs of the program and are those revenues keeping up. This conversation plays out in different parts of this building every session, where there are dedicated revenues going into little special funds here and there that are not keeping up with the program. I think you can slice and dice this in a lot of different ways. My top line point to you all is that there's a time and place for dedicating revenue sources, but it's not for every policy issue. I think sometimes you can get at your goal of funding something in a way that respects the legislative prerogative over appropriations by, for example, having a discussion in the budget process about moving money from the Ed Fund or the General Fund for school construction every year. And then you actually have a discussion around what are the needs. And then that policy issue remains in the conversation. Sometimes if you just say hypothetically, 5% of this tax is going to go to school construction, it runs in the background. Not a lot of people pay attention to it. And there's not always a conversation around whether that is too much or too little for the need. Because quite frankly, in the limited time you all have to set priorities, it's really easy. This is not a criticism of anybody, but it's really easy to focus on other things and focus less on the thing that already has some money going to it. And in that process, you're sometimes not giving that conversation the attention that it really deserves. So, there's also trade offs with everything. If you're not adding a new revenue source that may or may not keep up with the needs of the program, you're taking revenue away from the rest of the things state government needs to do. That's what I mean in terms of putting something in the priority order above everything else. This is not a comment on the importance of school construction by any means. This is just a global comment about the legislative branch's ability to set priorities. So that is a really long winded and rambling attempt at an answer to your question, but I don't know if I got there or not, but

[Peter Conlon, Chair, House Education Committee]: No, absolutely. Just sort of wanted a recap of that position. To me, it's kind of challenging with school construction is that you create an obligation that is gonna carry for twenty or thirty years. It has to be met year after year. If you sort of leave it up to the whims of the administration and the legislature to figure it out, can't, how do you bind the legislature to make sure they fund that obligation?

[Chris Rupe, Senior Fiscal Analyst, Joint Fiscal Office]: Yeah, well, and that's a great question because the lawyers, I'm not one, the lawyers will often remind you, oh, you can't bind a future legislature, and that might be true strictly. In practice, we know that future legislatures are bound all the time in terms of funding decisions and long term liabilities.

[Peter Conlon, Chair, House Education Committee]: Pension. Pension. We target ourselves to pay to the pension. Absolutely.

[Chris Rupe, Senior Fiscal Analyst, Joint Fiscal Office]: So I think there's ways that You can't stop a future legislature from redirecting whatever revenue source you dedicated, but I think there's ways through grant agreements and long term bonding instruments and things like that, that you can effectively require the state to honor its financial commitments in the future.

[Emily Long, Member, House Education Committee]: So this has been really helpful. What you just said is really helpful for me to think about. I mean, I'm going to give you an example. When Act 73 left the house, the supplemental spending, whatever was an additional, we had that Remind me if I'm wrong, but I'm pretty sure we had that in a dedicated school construction aid.

[Chris Rupe, Senior Fiscal Analyst, Joint Fiscal Office]: Yeah. Yeah. There was a a piece of that went in there.

[Emily Long, Member, House Education Committee]: That's what I'm saying. That that was you know? And and when it got over to the senate and went through the process there, that went to instead of focusing on school construction, it now goes to lower property. There's a fund dollars in there that goes to lowering property tax rates for everyone all around. But you're making me rethink. I was pretty frustrated because I was trying to seed a program because of the great need, and I was pretty frustrated about that. But I have never considered about the fact that it sort of sits in the background, and is it being evaluated, and is it really meeting the needs and all of that. And that was my biggest worry about setting that up, that if money's tight, supplemental spending isn't going to happen. And when it doesn't happen, that program isn't fed. So am I right?

[Chris Rupe, Senior Fiscal Analyst, Joint Fiscal Office]: No, think that makes a lot of sense. And it sort of gets back to, I want to reiterate that when you all think about the wisdom of creating a policy to dedicate revenues for anything, you should think about the long term sustainability of that revenue stream. You know, you can put money all over the place to sort of seed programs and help get started, but that's different from having the expectation that that will be sufficient to fully fund the obligations moving forward. I mean, I'll just pick on some other issue areas. The judicial branch sees a lot of fiscal pressure because fine and fee revenue doesn't keep up with program needs. So, decisions are made all the time about you pay a fine or a fee, it goes into some pot of money. But those aren't keeping up with the program needs. And then the general fund often comes in as the backstop to backfill. So there's a slight nuance in the conversation between, can you come up with a way that sort of frees up some money to help seed a program and just make some progress toward it versus relying on that as fully being able to fund it. And sometimes it's tempting for people to say, they've already got money. Let's go focus on something else.

[Emily Long, Member, House Education Committee]: But if I can just follow-up. Setting up a fund itself is one start to that and having dedicated funds going into it. But it sounds like it's more thoughtful to be more intentional about how you revisit and fund that physical fund that you've got. So, all right, this is very helpful. We need to address an issue and I don't think we've fully addressed it. Thank you.

[Peter Conlon, Chair, House Education Committee]: It's pretty hard. I was like, okay, sports betting revenue, just put that towards school construction, but of course that can change.

[Chris Rupe, Senior Fiscal Analyst, Joint Fiscal Office]: That's 6,000,000 a year,

[Peter Conlon, Chair, House Education Committee]: Small money. On the other hand, if you do it through the normal appropriations process, we got people sleeping outside. And how does we need a new fancy building compare with people sleeping outside? Guess that's kind of what our job is, but it's really And

[Chris Rupe, Senior Fiscal Analyst, Joint Fiscal Office]: Mr. Chair, want to reiterate because I think that's a really important point that I'm not by any means suggesting where school construction fits in the pecking order. I'm just trying to remind you all that you're on the education committee right now. You might be on the appropriations committee in a future session. And the old adage, where you stand depends on where you sit. Certainly applies. And I just try to remind everybody in the branch to be mindful of your prerogatives and priorities, and try to do everything you can to maintain your ability to make decisions thoughtfully. Okay, any questions?

[Peter Conlon, Chair, House Education Committee]: All right, Chris, thanks very much. Appreciate you jumping in as you did. All right, why don't we close there? Let's come back at eleven for our next time, which is just gonna be committee conversation, which may just go till 11:30. I apologize ahead of it. I really wasn't keeping a track of the agenda closely. We don't have anything, one to two. So not that I'm gonna apologize that you got a long lunch.