Vermont Legislature SmartTranscripts:

[Peter Conlon (Chair)]: Goodbye. Welcome to House Education, Thursday, January 15. We are going to spend the next block of time essentially hearing from legislative council about Act 73, but much of this is also meant to be a time for follow-up questions from community members if they may be unclear of a few things here and there. I don't know, were you prepared to open things up with some stuff? All right. I will throw it over to the floor. I have, many of these, but let's take advantage of the time. Are there questions that came up during our discussion the other day that you should all like to discuss now? We don't wanna waste this opportunity. Dan, were you just about to ask something?

[Erin Brady (Ranking Member)]: Is redistricting going to work to save money?

[Emily Long (Member)]: Oh, you know what?

[Peter Conlon (Chair)]: I guess I will speak to that question. Not even the governor has said it's going to save money, but that the goal here is to create efficiencies so that we can bend the cost curve of education from a sort of rapid increase while we have a super rapid decrease in enrollment to something a little reaching a little more equilibrium.

[Robert Hunter (Member)]: Part of the puzzle.

[Peter Conlon (Chair)]: Rob?

[Robert Hunter (Member)]: I'm not sure how to say this correctly, even if this is a thing. So this law was passed, signed, and so I know that there's many people who who have read the the redistricting task force report that these are good recommendations.

[Emily Long (Member)]: I mean, like,

[Robert Hunter (Member)]: are are we, like, actually on the hook as far as the law goes, or will we have to amend Act 73 if we wanted to not come up with new districts? I mean, does I'm a little confused about what our role is. Like, you know, how we should proceed. I mean, there a lease?

[Peter Conlon (Chair)]: First of all, it's always remind us that you can't find a future legislature. And if you look back at act and you please correct me as I ramble on here. If you look back at act 73, we really only did a couple of things last year. Ordered a bunch of reports. Yeah. Created the redistricting commission. And I'm missing one.

[Emily Long (Member)]: That's life size minimums. But,

[Peter Conlon (Chair)]: you know, and this is probably an opportunity to have you talk a little bit about the timelines and contingencies to give us a little more clarity on that. Can

[Jana Brown (Clerk)]: I speak before you do that? I guess maybe in the course of talking that through, so I've sort of thought of '73 as we set up these markers or gates that we have to walk through for certain other things to happen at So the if we don't walk through that gate legally, the law just sits there. There's no forcing mechanism. We could repeal it, we could change it. But if nothing comes through the legislature, it just exists on the books, then that's it.

[John Gray (Legislative Counsel)]: That's the answer.

[Beth St. James (Legislative Counsel)]: So Beth St. James, Office of Legislative Counsel.

[John Gray (Legislative Counsel)]: John Gray, Legislative Counsel.

[Beth St. James (Legislative Counsel)]: So if you have And we can walk through the timeline, but to answer Brett Brown's question specifically, this is a great illustration of session law versus amending your green books, statutory law. Some of what you did last year, you amended your green books and it's either current law or it's going to be current law until I 01/2026. There's no contingencies. That's not just sitting there. That's actionable law that's on the books that has to be executed with the caveat that you can't make humans do things. All of the session law that you created in Act 73 and every other time you create a piece of session law, if there's a contingency on it and the contingency never comes due, it just sits there. I mean, I don't think you have them, but every year the Secretary of State's office compiles all of the acts and resolves from each session and they're white and they're thick. And that contains everything that's in your green books, but also all of those session laws. Some of the reasons we don't like to put stuff in session law is because it just sits there and it's very hard to find. But yes, if you don't need a contingency and you don't repeal that law or you don't amend that law, it just sits there.

[John Gray (Legislative Counsel)]: Just further clarity, if you happen to be, and I don't know why you would, but if you happen to be perusing the statutes on the website and say you look at chapter 133 of title 16, which is your state funding and public education chapter, you're gonna see multiple presentations for each section. You're gonna see the currently effective section, and then you're gonna see the same exact section presented twice. Then the second one will say, contingently effective 07/01/2028. So you're gonna see two versions. But if the contingency isn't met, then that second version goes away. It never goes effective. It was never the law, effectively, is the way to think about it. And I don't know if you wanted to talk about the particular contingencies. I can also, if

[Beth St. James (Legislative Counsel)]: Are you in Zoom?

[Peter Conlon (Chair)]: Yeah. Oh, okay. Can do this. So I'm just gonna

[John Gray (Legislative Counsel)]: There's different sets of contingencies in the act, but this is kind of the big one that we talk about when we think about the full rollout of the foundation formula and homestead exemption that accompanies it. To take effect 07/01/2028, and this is kind of a version, this is the fuller version of what you would see as the bracketed language if you look at the statutes online, But then you have the two conditions, new school districts have assumed responsibility for education, and you've received that foundation form of the report pursuant to Section 45A to provide opportunity to enact legislation and consideration of party. These aren't met, then those things don't go into effect. But to answer I think the basic question, the legal question, you can change these things. This is the contingency, but if you altered the contingency such that you remove the school district component or you remove the foundation formula report, then the language would then say goes effective 07/01/2028. And there would be no contingency, those sessions would just come into effect. So the bill is set up as a package that links among different sections things that are happening, but that's choice, it's a policy choice that you have and you can change that.

[Beth St. James (Legislative Counsel)]: And buried in, or I shouldn't say buried, the contingencies say school districts are operational. And within that statement is a whole bunch of things that need to happen in order to get to school district.

[Emily Long (Member)]: So for example, if we went down

[Peter Conlon (Chair)]: the path of, hey, we're not going to do anything with the governance and we're just going to do the foundation formula, we would have to go back in, pull out all those contingencies to have those parts take effect.

[John Gray (Legislative Counsel)]: And just to remind you guys of some of the things that we talked about last week, it's not legally required, but know that in the creation of the foundation formula, some of the measures that were included, particularly the equalization measures, are predicated on a particular understanding of what the school district configuration will be. So if you make, depending on the choice you make in that space, you may still want to revisit the foundation formula as enacted, even if you got rid of the contingencies. So you may have to touch pieces, legally, but practically, might want to touch them because the effects that they would produce, because the pieces are linked practically. So there's a difference between legal linkage and then the practical linkage. And I think that's part of what people are confronting in these spaces.

[Beth St. James (Legislative Counsel)]: Yes, this isn't a question, I

[Jana Brown (Clerk)]: guess more of a comment. Follow-up on that a little bit, I think it's important for all of us to understand, seems like there are pieces of PAC 73 that folks like and dislike. And so it's a package now, but it doesn't have to be packaged forever, weekly. If there are tax policy pieces in there that we like, we've linked A to B currently, but as the legislature, we can pull that apart. And

[Emily Long (Member)]: sort of to follow on that, Act 73, and this is a comment, you'll tell me if I'm wrong, but 73 is a major change for Vermont in the system that's been in place for a long time. I've done this now long enough to know that when we pass major legislation, we very frequently My mind immediately goes to Act 16, then Act 68, and all the things that we've done. Very often we go and make sometimes very significant changes to law that we pass, especially when it is so comprehensive as this. Am I correct on

[Jana Brown (Clerk)]: that assumption?

[Beth St. James (Legislative Counsel)]: Even Act 46, you

[Emily Long (Member)]: had to go back and

[Beth St. James (Legislative Counsel)]: further clarity. And so yes, that is not uncommon.

[Peter Conlon (Chair)]: Maybe you can walk us through the timeline a bit, if possible. The

[Beth St. James (Legislative Counsel)]: of the pieces of Act 73 or the timeline to get to a specific goal?

[Peter Conlon (Chair)]: I guess why don't I say the timeline for the pieces of Act 73, or just, you know, those things that were on the nice graphic that was created.

[Beth St. James (Legislative Counsel)]: So I just, before John walks through this or whoever, however we do this, I just wanna note that this timeline reflects deliverables and goals of Act 73, it does not reflect every decision point or action you would need to take to operationalize Act 73. And I'm not trying to hide the ball here, am specifically talking about all of the governance and election law that you would need to put together to operationalize school districts. And that's not even including all of the business processes and things that need to happen in the field to stand up those school districts. That's not on here.

[Peter Conlon (Chair)]: But very important to point out.

[Erin Brady (Ranking Member)]: It doesn't work without any of

[Beth St. James (Legislative Counsel)]: that stuff, which is why I wanted to give that disclaimer.

[John Gray (Legislative Counsel)]: Do you want me to talk about pieces of the timeline or just?

[Peter Conlon (Chair)]: Yeah, kind of walk us through.

[John Gray (Legislative Counsel)]: I'll try to get some high points. So passage, creation of the redistricting task force and that voting board working group. Skip a few things in here, but there are changes that came effective 07/01/2025, which is I think the same date of passage actually related to tuitioning that Beth and you guys have already discussed the session. Lots of reports due this past December. And then I think one of things to really flag in the timeline is this intent section for the 2026 session. This is part of what Beth was getting at in identifying that there are things that are not legally required right, but are assumed to be taking place for the full rollout to happen. So the 2026 session piece that you see here is the general assembly's intent to enact those new school district boundaries, updates to CTE pre k, and begin the process of creating the voting wards. 07/01/2026, so this upcoming summer, though the idea was that those new school district boundaries would go into effect. As you know, again, is not, I just want to call out, this is not something that the act mandates, that's flowing from the intense section that you would do it in this particular way, establishment of class size minimums and roll out of that school construction program. Again, still don't know what the revenue source of that piece is, so it's just that the program would be in effect and it might be a similar posture to how you can think of the existing school construction program, which is that it's on the books but under moratorium. The difference here is that, to go back to the session law point, we do have session law provisions that place the existing program under moratorium, and now you would just kind of have a revenue less program. The bottom line is you're further in the actual getting to the rollout of Foundation Formula itself. So 07/01/2027, those graduation requirements starting with class of 2031, and then we talked about this last week, but to do the foundation formula rollout FY '29, just beginning 07/01/2028, you need some information, you need recommendations from the commissioner of tax as to particular pieces. So you'd have to go ahead and update the December 1 letter at that point. That is to say, certain pieces of this that are assumed to go into effect on a particular day do require actual things to happen in advance of them. If information collection is required or new forms are required, you need to have those things happen in advance. So whatever you're doing with the timeline, just know that you have to build in a certain amount of time prior to that. So with an FY '29 rollout, the setup we have is December 1 letter would be updated July '37, so that's next summer. Envisioned for November 2027, but again, this is envisioned rather than the actual contingent effective foundation for the roll out. Initial school board member special elections, November 2027, and this is trying to set the process of forming those budgets right for the new

[Erin Brady (Ranking Member)]: Yeah, can

[Beth St. James (Legislative Counsel)]: I say something? Your new school districts cannot be operational if you don't have this election, period. That is my legal opinion.

[Emily Long (Member)]: It doesn't

[Beth St. James (Legislative Counsel)]: have to be November 2027, but I believe that's the that's

[John Gray (Legislative Counsel)]: When the draft date was chosen, it was like, what is the absolute last?

[Peter Conlon (Chair)]: Yeah, within the boundaries of

[Jana Brown (Clerk)]: When the policy level action

[Beth St. James (Legislative Counsel)]: is correct. But also, to John's point, budget formation. And we know that we can have transitional pieces in place to develop those budgets and have that process moving along. Yes, I agree.

[Peter Conlon (Chair)]: And reason we went with November 2027 was to, actually back up further, to provide as much time as possible to create voting warrants and put into place all of the election law that needs to take place to have that happen, which can't take place until we know what district boundaries are.

[Emily Long (Member)]: Right, but I will just correct me if I'm wrong, but I'm reminded of the fact that we actually had a whole extra year tacked on to this until it changed because the final 2029 used to be 2030 coming out of this committee. So there was a change and timeline shortened once it left this room.

[John Gray (Legislative Counsel)]: I think that's right. The initial timeline was an FY thirty rollout if I remember correctly. So it would have been 07/01/2029 would have been the foundation formally going into effect. So this is a more compressed timeline and initially left. Yeah, exactly.

[Emily Long (Member)]: I just can't remember exactly where the change happened because there were so many iterations, but I think it left this body. It left this committee the body.

[Beth St. James (Legislative Counsel)]: The House passed version had school districts, new school districts operational on 07/01/2029. And so I'm just looking at the intent section and making an assumption that all the contingencies were tied to that date.

[Peter Conlon (Chair)]: Okay, thanks.

[John Gray (Legislative Counsel)]: Following that special election, 01/01/2028, that statewide school calendar would go into effect and the addition of the two new tax classifications for education property tax, this is part of a, for administration of the rollout of the new property tax, have to have the new classifications of these, as long as those remain linked as they are in that 73, again, is another provision where they don't necessarily have to be linked as part of the package, but the property tax specifications are built into the new statewide education tax.

[Emily Long (Member)]: Sure. So what you're talking about, and I'm mindful of something you just said, one of the things that we're doing with property taxes, we're taking a long resume, which we talked about this last week or this week. That doesn't actually need, that could stand on its own. We could do that at any point. It's linked to this law. We could put it into this law, but we could actually do that irregardless of other parts of it.

[John Gray (Legislative Counsel)]: I think that's a fair way to say it. The way I would typically say it is there's nothing inherently linked between a foundation formula and a particular set of property tax classifications. That's a separate choice to have property tax classifications of this country. I like the way you say

[Emily Long (Member)]: it better than my accent. Alright, thank you.

[Erin Brady (Ranking Member)]: We're talking about property taxes. This might be a question for JFO or tax, but we keep hearing in testimony.

[Emily Long (Member)]: Hold on, we're gonna finish timeline first and

[Peter Conlon (Chair)]: then you can ask a question.

[Erin Brady (Ranking Member)]: So

[John Gray (Legislative Counsel)]: this is January 2028 implementation of those new property tax classifications, and then this beautiful transition from blue to green, 07/01/2028, FY '29. This is your full rollout, foundation formula, new homestead exemption, appeal with the property tax credit, you stay on education tax, all the big things. And then the stay on my graduation requirements begin for 2028 through '29 school year. Then I don't think you guys are that interested in the last piece, but 01/01/2029, part of the bill is also these measures to change the appraisal process, so your regional assessment districts, you've moved to that full municipal reappraisal system. Know anything about that? Which is not a fair

[Peter Conlon (Chair)]: thing. Just from a process point of view, understands that if it looks like we're not there, the legislature always has the ability to move the data out further. It won't be this legislature, it will be the one that is wrestling with that issue at that time. Representative Brady has a question.

[Erin Brady (Ranking Member)]: This might be a really dumb question. We keep hearing in testimony, many of us know in our communities, a school district comes in and says, we're increasing, our budget is level funded, or our spending is only up 2% this year, 5% this year. But the property taxes in X town are going up 12% or 17% or 30%. So there's this huge disconnect between the rate of increase in a district spending and the actual property tax implication for people in that town. Does the foundation formula plan on which we are heading towards change that fundamental, I would say, problem in our system right now?

[John Gray (Legislative Counsel)]: Yeah. So I have a If so, how? I have a huge response. I will say, I think your first assessment that JFO or tax would be, the answer is a good one, but I could tell you a couple of things that I think are responsive. So one is, I think you're in part identifying the lack of link between decision making at the local level and the imposition of the property tax. I just wanted to flag that in Act 73 you would no longer have that budget vote for the EOP that you're receiving. So you wouldn't have this lack of sync between any decision made there and the imposition of the tax. It's a statewide education tax that's gonna be raised across the state, which is to speak to also part of why folks might be experiencing the situation they have. The CLA can have effects on this, but another thing that can have an effect is if your school district is maintaining relatively level per pupil spending, but the remainder of the state is raising their education spending, that increases total revenues that need to be raised across the state, so your district can see raises in property taxes as a consequence of this. You would no longer have a situation like that because it's no longer dependent on local budget folks as to what the statewide education tax is going to need to raise. Instead, the question that you'll have to confront is what are the effects of base times weighted long term membership? That's gonna explain, that's your educational opportunity payment for a district, that is what will explain the statewide revenues that need to be raised. Anything additional to that, there would be a clearer link between local decision making and the local taxes you have to impose to raise those extra funds. You'll recall that for your supplemental district spending, that spending, which is subject to a cap, is raised entirely locally. And the budget vote that you would see would state this is the rate that needs to be raised for that. I would note, you would still have, after that application of the CLA and statewide adjustments, you're still gonna see some movement to reflect whether property values in the town are at fair market value, but I think those things explain why you're in a different situation than the problem you're currently describing.

[Erin Brady (Ranking Member)]: Okay, follow-up question then. In this new state, you're not voting on budgets. You don't get to see that number and maybe be mad about it. But practically speaking, if healthcare continues to go up far faster than education spending or new districts decide not to change anything about the number of schools we operate or about class sizes or trying to think of our biggest cost drivers that were well laid out the task force facility or we continue to have zero state aid for facilities and we have way too many buildings in terrible shape and lots of money being poured into them. Could that situation, though you're not getting to vote on it, still be happening in that the district's budget is only going up 3%, but your property taxes are going up 19%?

[John Gray (Legislative Counsel)]: My quick answer is that is not what would happen in that situation. What you would have is insufficient money to cover your costs. But that sounds way scarier than it is. I think what you're getting at is it matters what the foundation amount is. And you need to know, so this would be a question for JFO, what is contained in the You're just gonna wanna be tracking what is contained in that base amount, and also what is outside of it, because not everything is covered through the Assumed,

[Beth St. James (Legislative Counsel)]: like what are the assumptions?

[John Gray (Legislative Counsel)]: Exactly, exactly, because school construction, for instance, isn't something that is built into that amount. I think you're just identifying, you need to keep tracking throughout this process what are the total costs and what's accounted for it. Is it through grants? Is it through the foundation formula amount? But yes, if costs continue to increase and you've got

[Erin Brady (Ranking Member)]: to pay for them, then yes, it will cost more and you will get to pay for them. But really, I'm gonna try to, I'm sorry I'm struggling with this so much.

[Peter Conlon (Chair)]: No, this is really important for everybody.

[Erin Brady (Ranking Member)]: But really then, what you're saying is that, so in the current scenario, I'm like, okay. Those things keep going up. Schools feel pinched or without choices, and so we raise more. And so the Ed Fund goes up. We raise more property taxes. Under the foundation formula, those things keep going up. There isn't any more other than that little whatever we decide or wherever we want to land on the supplemental spending. If those things keep going up, if we operate the system at the same kind of scale now, if healthcare costs keep going up, we have no state program for school construction. It just means school budgets are going to be just potentially, really, like you have to make it work. Don't have it, so you just are going to have to cut things or work without plumbing or whatever it takes.

[John Gray (Legislative Counsel)]: I'm hesitant to say that that is what is going on, because what is proposed is a number that adequately captures the cost that you have, and that is also inflated across time, and is also regularly revisited to capture the cost inputs. Think maybe that's the best thing to say here is that one of the updates to the people waiting section, it's the final subsection, you have to regularly reassess the inputs to the foundation formula and update as reflective of costs. I understand the question you're asking. The foundation formula is not imposing some kind of cap that alternately constrains school districts in the way that a proposed cap today would. It's meant to capture accurately cost inputs, but you will need to do the work to make sure that that happens.

[Erin Brady (Ranking Member)]: And so doing the work, and as you're saying, Beth, the assumptions, the assumptions are detailed understanding of the cost drivers or the most, perhaps out of proportion cost drivers today matter a whole lot of how they're dealt with in the foundation formula if we know they're become almost even more significant in terms of understanding health care costs, facilities, student mental health needs. Trying to go back to the task force, they did some really good work about those cost drivers. Having those extremely well examined and accounted for in the foundation formula becomes

[John Gray (Legislative Counsel)]: I think I see what you're saying. You're saying that in the current system

[Erin Brady (Ranking Member)]: It's so important because they're not like

[John Gray (Legislative Counsel)]: In the current system, the way that that growth or change is accounted for is local budget settings. And the way that it's accounted for this is incurring accuracy of cost inputs, basically. I would just note that the foundation formula report that you would be getting at the end of this year is to assess the foundation formula holistically, and in part it involves looking at nationwide data, but it also looks to Vermont context specifically, which may have unique

[Robert Hunter (Member)]: characteristics. I'm just

[Peter Conlon (Chair)]: gonna follow-up. The Foundation Formula is regularly revisited. It is done by academics looking at the cost and puts of education, So, and it has an inflator in the in between time. Yes. So that's all sort of meant to address, I think, your concerns about the impact. But the real impact on a school district in terms of the funding it receives is the number

[Robert Hunter (Member)]: of students that it has. And the student characteristics.

[Peter Conlon (Chair)]: And the student characteristics. If are a small district and you lose 50 kids over five years or 50 kids over two years, that will have an impact on what the money you're receiving is. Yes. And I just always would point out that the wild swings in property taxes when you're a school district and you've really level funded your budget, there's the pre CLA number, which schools control, sort of, and there's the post CLA, which is when you're applying the equalization, so everybody's paying their fair share. That's not a function of education spending. That's a function of making sure everybody pays their fair share.

[Jana Brown (Clerk)]: Yeah, follow-up. I just wanna, I think even under the potential new concept of a foundation formula, I think voters are going to continue to be confused by that. Like how the equalization measures impact them. I think some of the confusion, not to be pessimistic, I think will persist and maybe there's not. We can't perfectly solve for that. But my other question was, talking about cost drivers and inflators and revisiting the foundation formula, can you remind me how frequently are those issues being monitored or revisited? Is it annually or?

[Peter Conlon (Chair)]: Let me check.

[John Gray (Legislative Counsel)]: So the phrase you will hear people say is recalibration. It's the way that it would be talked about, looks like every fifth year.

[Beth St. James (Legislative Counsel)]: Which is the same as what it is now.

[John Gray (Legislative Counsel)]: Yeah, same as it is now.

[Peter Conlon (Chair)]: If you

[John Gray (Legislative Counsel)]: could change that, mean, that's the problem.

[Jana Brown (Clerk)]: The data we've seen about the curve year over year, I guess not being on ways and means, it seems like we should think about.

[John Gray (Legislative Counsel)]: But that's also just the mandated AOE, JFO task of doing this. Nothing to say, and I would expect this to happen, even the legislature each year would be talking about is this working? So that can happen always.

[Peter Conlon (Chair)]: And there's an inflator. If nobody were to do anything, they're still Exactly.

[John Gray (Legislative Counsel)]: The base is still gonna go up.

[Peter Conlon (Chair)]: Sort of

[Emily Long (Member)]: following some of this line of conversation, Got all of that, that's all in place. Somebody's school roof collapsed. Does the that burden has to be borne within the budget that you have? Well, and that, you know, it's

[John Gray (Legislative Counsel)]: This, I think we don't have an answer for. We don't know what's Could

[Peter Conlon (Chair)]: you repeat the question in here, but this is

[Emily Long (Member)]: I'm sorry, I

[Peter Conlon (Chair)]: didn't mean I didn't try it back.

[Emily Long (Member)]: It's quite alright. I'm curious about how a school district would address the issue of, given all these other things that are factored in, a school has a roof collapse over stone. How is that addressed in any given year or school district? When do you have that boxed in amount of money you're giving?

[John Gray (Legislative Counsel)]: Think we don't know that. And just to draw the place in law where we don't know this, currently your bond votes become part of your education spending, they're factored into the, and you may reach an excess spending for a period, you may get taxed in different ways, but they're built into your education spending. There is no longer a concept of education spending in the future because you're just receiving an aggregate amount of funds for the students of these particular characteristics and unresolved areas, I think the easiest way to say it.

[Emily Long (Member)]: Just as a follow-up, I use the roof collapse as a hypothetical example, but I would welcome everybody else to think, including you, about other hypothetical examples that could Right.

[Peter Conlon (Chair)]: Just today, there is this emergency fund that the AOE has. I don't think it's at all sufficient anymore. But I would say all things construction related have been not resolved yet. So I do not believe, please correct me if I'm wrong, that the foundation formula calculation, we haven't resolved how we build a new school. Who takes on that cost? Does it become part of your foundation formula payment? Does just your district vote on it? Those remain unresolved questions.

[Robert Hunter (Member)]: And I was just thinking too, and you would notice this school board, like, you get the EOP that was coming in, and now you build the budget, your teachers, staff, your electric bill. I mean, you all keep a rainy day fund? Could school boards still be doing that just in case? Just in case.

[Emily Long (Member)]: If you're asking me a dumb answer.

[Peter Conlon (Chair)]: Well, here's what I would say is that there will probably be regulations around how much money a school district could sort of stockpile.

[Emily Long (Member)]: And what I will tell you is there's a recommended amount. It's between 58%.

[John Gray (Legislative Counsel)]: Okay.

[Emily Long (Member)]: Right. And we call them in our school districts, and I can't speak for anyone else besides me, but we call them in our school districts.

[John Gray (Legislative Counsel)]: Balance.

[Erin Brady (Ranking Member)]: Well, in yours, you call

[Emily Long (Member)]: it fund balance, and we we refer to it as a rainy day fund for the roof that collapses. But five to 8%, we've often talked about it's very hard to maintain these tables. And so the sooner how far it would go in.

[Peter Conlon (Chair)]: The current way many school districts do, I think you've heard you're saying, that you've a surplus at the end of the year, you take that money, you've voted into a basically capital fund for the roof collapsing or for projects that you haven't done in a while. The bigger philosophical challenge with that is some districts budget very carefully, and they don't have those surpluses. Others budget probably in a way that almost guarantees those surpluses. Those are state dollars. Let's remember that. This is all coming out of the Ed Fund. So you've got sort of the world of inequities when it comes to education financing. You've got districts that don't have the ability to do that, or they take those dollars and use it to buy down their own tax rate rather than setting aside because they want to get their budget passed. So, you know, it seems to me, and I think that that it has been requested by ways and means of the AOE. You know, what do we do about surplus dollars? And probably, you know, I would say there needs to be guidance that says every, that we need to fund schools sufficiently so they can set aside, you know, whatever the recommended amount is in reserve. Or we had a state fund that says the roof collapses, here's emergency funds to go after.

[John Gray (Legislative Counsel)]: And helpful context I think is the EOP is just a generated figure for your school district based on needs of students and student tally, but there's nothing in Act 73 that is prescriptive as to the uses of those funds. So you have an amount that's based on probably a vision of what happens with students, but there's nothing to say currently. Right.

[Peter Conlon (Chair)]: Yeah, he's going to a manage to the money methodology. So the question is if a school district manages to the money in such a way that they are able to solve the waste of dollars, that's why that area in particular needs some real brief looking and guidance. Maybe those of you who were here in 2024, there was talk when we were looking at a very high statewide property tax increase of the state clawing back surplus fund dollars. Did not have them. These have all been very good questions. Just wanna help that out. Further questions? Do you want to follow-up at all?

[Erin Brady (Ranking Member)]: No, I'm still struggling with my understanding of it and therefore ability to communicate it. And I think as Brett Brown said, as we think about sort of why are we doing what we're doing or not doing it and consistency and clarity, I'm concerned that I'm not there, so I'm concerned the public likely won't be there. And I'm starting to feel the connection between tax and education policy here or the foundation formula and education policy. So when you said, okay, if you're under this new foundation formula and you get your EOP, but in this district, have declining enrollment at a really significant rate, you're going to have less money, like to the questions you keep asking about, Harple, like, we closing small schools? Literally speaking in the law, no. But in a material way, what happens in those places and districts, and how do you I don't even have a question. Just remind myself, the longer we keep talking about all of this, the more confused I am.

[Peter Conlon (Chair)]: And I think it's good, any other discussion we have here is excellent, even if we sort ignoring our guests. The question of swings up and down under a foundation formula due to enrollment is, for me, a case for larger districts. Because if you are a small district and you have a family of five leaves, that's a huge hit to your EOP. Much bigger districts, swings are much sort of less impactful.

[Emily Long (Member)]: No, you go ahead. I had

[Jana Brown (Clerk)]: a question about exactly So under our current funding system, there's sort of averages that sort of soften what those swings might look like under the foundation formula. Are we looking?

[John Gray (Legislative Counsel)]: Don't have someone to add. I think what you're identifying is there's kind of a hold harmless in the waiting section that says you're sub 96%, you'll be held at the 96% for declines in enrollment. Actually, don't think that's still in place.

[Peter Conlon (Chair)]: In part because it envisions larger districts.

[John Gray (Legislative Counsel)]: I'm sorry, I misspoke. We do still have that section, but it should be talked about. That's something that was not addressed, I would say, side by side.

[Erin Brady (Ranking Member)]: I guess if this is sort of questioneducation committee therapy, I am like, what you're talking about district size and the questions that keep coming up about facilities and construction money, I keep getting stuck on from an education quality perspective, which is we have to balance everything, but generally my North Star. I think that the promise of, I think there's hard, it's clear there's hard decisions and change ahead in the state. And regional middle and high schools, I think, are a positive, all change is hard, but a positive directional change that is somewhat long overdue. It will look different in different parts of the state, but I think that there's pretty clear evidence, particularly this was the part of the task force report I am most excited about. I think that there's really good work at looking at different parts of the state and saying, where is there an opportunity to give kids more opportunity at the high school level that is more in line with the world they are graduating into? But the only way to do that, and that that is where our focus in terms of some of the hard change ahead should start, that the only way to do that is going to require some facilities work. And that might not mean a bunch of giant brand new high schools, but it's going to be some serious reconfiguration of a few buildings in order to deal with excess capacity in our buildings that exist now. But there's no getting from where we are now to that without a robust facilities program and funding. And given that we still haven't sort of answered it on a state level and it's not accounted for in the foundation

[Emily Long (Member)]: formula, and I don't know how

[Erin Brady (Ranking Member)]: to get there, I'm just concerned. Are we able to proceed until we can crack that nut or say that's the money and the investment that we're going to prioritize? Because I just think that's a pretty critical hinge for all of any kind of transformation for the state.

[Peter Conlon (Chair)]: So before we go to Kate, just to sort of respond to that, not to argue with it, but to more just give us something to think about. I would say that there's probably no question that the regional models for the upper grades is a fabulous way to go. The thing to wrestle with is, we're probably not gonna have the billion dollars that we need to create all of those. And so does that mean we don't go forward with some of this change, which is also designed to bring equity and funding across the state and to have the money reflect more each student that is in every school. A rhetorical question just to think about. Representative McCann, floor is yours.

[Kate McCann (Member)]: Can you hear me okay?

[Peter Conlon (Chair)]: Great, yes.

[Kate McCann (Member)]: So I just want to get in on the therapy a little bit. I'm a little bit worried that we're talking about putting the horse in front of the cart, talking about the foundation formula without talking about the redistricting. I think we heard loud and clear from some of the superintendents that it won't achieve the equity we're looking for just paying out a certain amount per kid throughout the state because let's say you're in a district with one middle and high school and five elementary schools and two of those elementary schools are fairly small and close to other little elementary schools so that you could actually do some consolidation, but you can't make that happen because a town won't vote it through. You're going to be using up that money from the foundation formula to help continue to operate those really small schools. So I just want us to to remember what we've heard so far as we move forward and really consider how how we're gonna help districts combined with other districts in a way that works for all kids and increases opportunity.

[Peter Conlon (Chair)]: It was an interesting in the testimony yesterday, we've heard a couple of times now people say, one of the challenges is that some districts can be more efficacious with their dollars that they receive than others. I guess I would sort of counter that by saying, well, hopefully under a new funding formula, everybody will become very efficient with their dollar use. But right now, the real hardship of the system is that some places don't even get the dollars to be efficient with. And so we're never gonna level up everybody so everybody's perfectly using every dollar. But I would also caution us from saying, well, you know, this district, because this district's not gonna use its body as efficiently, you know, we somehow have to throw a biggie out with bathwater. I get the point. It's just I think the hope is that with a sort of stable, predictable funding system that isn't reliant on voters saying yes or no, the planning to be efficient can be a lot more strategic than long term thinking. Go ahead, John.

[John Gray (Legislative Counsel)]: I just wanted to offer something that, just a reminder from last week in terms of the constraints that folks might face. Just also recall that there are transitionary measures. So in the first years of the rollout, you had higher ed spending, and now your EOP that you're receiving is lower, would be gradually moved to the EOP. So at least for the first few years, there are those transition measures.

[Peter Conlon (Chair)]: And there were multiple ways. Getting a lot more money, smooth into that. Person one.

[Emily Long (Member)]: So following up on Representative McCann's comments, I've lived back because I'm looking earlier that that example is my example and I identical examples. One of the things that I havethis isn't really a good question for you, but we're in the process of discussing it here, I guess. So one of the things I've learned over the last six months since this law passed is that there's two things that my constituents don't understand and haven't grasped yet. And one of them is the change in not just structure of our education funding formula, but also the change in philosophy around our new education and funding formula and system. And they are at this point not grasping that they won't be voting on the budget in the manner in which they have. And I've spent a lot of time talking to my constituents in whatever place I can about how that is changing and what are the goals. I think that that's a really difficult situation. The other thing I think, because I think it's going come as a surprise, no matter how much I say it, it doesn't seem to hit home. That's a significant change. The other thing, there's a lot of movement going on, and I'm going to speak for my area because rural areas right now are having to make lots of decisions currently and have had to over the last number of years because the burden has been escalating in rural areas where enrollment has declined more significantly. And that is, there are decisions being made that may be undone. Mean, decisions today. If we were to go forward with mandated closure, I mean, district changes, and you've got the changes, Representative Harple has talked about this many times, whether the law says you have to close schools or not, there's going to be a situation where that's going to happen, especially in our rural areas. And some of those areas really are a long way from which one school may be a very long way from another school. And some of what happened in the redistricting task force, and especially in Appendix B, where there's an awful lot of data in there that I have never seen in my thirty years in working in this type of environment, that helped me to understand a little bit more. And so I tell my constituents all the time, go read that. That'll help you get a sense of it. I'll send the link out. But there are schools that are closing right now who may Or their voting's not close for school, and they may get close anyway. You see what I'm saying. There's a lot of things that are going to happen over the next few years. And my sense of my region is that they really haven't grasped all of that yet. And so I'm trying to be very sensitive about that as we take steps moving forward. Unanswered questions

[Erin Brady (Ranking Member)]: need to get answered. So I

[Peter Conlon (Chair)]: would also just to talk about that, we're gonna get some testimony from the state board about the whole sparsity and small by necessity, but correct if I'm wrong, that part of the foundation formula calibration includes a weight for sparse or small by necessity.

[John Gray (Legislative Counsel)]: Even the support grants. Support grants. I'm sorry, sorry, yes, that's right. Tied to the enrollment at schools that qualify for sparse, neat, or small.

[Erin Brady (Ranking Member)]: Pete, I'm now on this. Think that there's no way to deal with what we are headed towards without figuring out really, truly, and seriously construction and facilities funding. None of this works without that being accounted for in the foundation formula, in a state grant program, in a new tax on whatever it's going to be. But without that, you cannot take a system that has far fewer students, too many buildings, and buildings that are particularly old and decrepit and move towards something better. I think it's hollow to talk about improving quality if we cannot figure out facilities in the budget. We So it makes me think about our work here in this committee and what specifically we need to do. I know we're creating testimony, but

[Peter Conlon (Chair)]: No. So this you're getting a little ahead of where I was Sorry. No. No. No. In a good way. One thing I think that we're gonna do as kind of an exercise here is talk about, you know, sort of what are core principles that we wanna have as we discuss and move forward. And maybe one of our core principles is new districts are contingent on construction funding, Something along those lines. Or, I mean, we don't have to be worded that it's that direct, but what we'll start here is we'll start putting up just sort of some core principles. This is one that has been on my mind extensively. So, need to just sort of think about those. I think what we'll do is maybe at some point we'll brainstorm them, throw them all up there, and then sort of hone in on four or five that as we sort of say, okay, you know, but maybe one of my core principles continues to be newer, larger districts. One of your core principles might be newer, larger districts, but only if there's a school construction program that actually has money attached to it. So anyway, that's what I just wanted to point that out as well. Also for the committee, I forgot about this and I will have it happen ASAP. The Commission on the Future of Public Education, at one of our meetings, we had the business manager from the Burlington school system come in and talk about equitable budgeting. And it is almost they operate as if they have a foundation formula when it comes to allocating money to their various schools. And they have a whole system for doing it and it was really enlightening. So I'll make sure we get that testimony scheduled as soon as possible.

[Emily Long (Member)]: Can I ask a question about that? Yeah. That's personal worry, that Burlington does it that way. I'd love, I'd really look forward to that. Do you think in your, the testimony that you got, that since Burlington is more upscale in some other areas, that you could apply the same in very rural areas, I'm looking at.

[Peter Conlon (Chair)]: I think that what is kind of fascinating about their testimony is that they very much look at their schools with foundation formula. There was a look at the profile of all the students and the weights that are attached to them and they use that to say to the school, here's the money you're getting, manage to the money. And then they do it with a lot of community input. Anyway, we'll have them in and you can judge for yourself It how applicable it was just a really good thing and to the level that's like the barometer, but it can make you no judgment. Alright. We're gonna wrap here for lunch, back for our joint meeting at 01:50.