Vermont Legislature SmartTranscripts:

[Rep. Emilie Kornheiser, Chair, House Ways and Means Committee]: Okay, folks. We are calling our joint hearing this morning to order. This is a joint hearing of the House Ways and Means Committee and the House Education Committee for legislative council to provide us with a walkthrough of the conference committee report of H4504. These documents are printed in front of us. For those who would like to see it electronically, they are posted on both the websites of House Education and House Ways and Means. I apologize for being late. Somebody just asked me if that was supposed to be a power move. The fact is, is on Friday, I, had the job of gaveling in our token session. And when I banged the gavel down, I broke the base that the gavel hits. So I took it home, glued it, brought it back, and then left it in my car and then had to go back out and go through all the process there. Anyway, so we are ready to begin. For those of you from the Leg Council who are gonna join us at the front, I think due to time constraints, we'll go through the entire bill and then the committee members can ask questions at the end.

[Beth St. James, Office of Legislative Counsel]: Good morning. Beth St. James, Office of Legislative Counsel. I think what would be most effective and efficient is if we walk through the side by side. How does that sound? Oh, great. Okay. So just to do a little level setting, this is a side by side. On the left is the H-four 54 as passed by the House, and on the right is the report of the Committee of Conference on H-four 54. Highlighting is meant to represent differences between the two bills. For those of you who don't see me testify often, I am horrible at highlighting. I will point out places where it should have been highlighted or the highlighting was erroneous, but it should be accurate as we can get it. I am going to summarize and let the IKEA specific direction from the chairs to go into more detail. So the first section in both versions remains finding intent and plan. The findings remain the same in both versions. The highlighting is just representing a technical change I made to where the full citation for the Brigham case should appear in the binding. Subsection B, again, remains intent and plan, but there are some substantive changes here. So in the House passed version, in subdivision B2, the language reads, is further the intent of the General Assembly in the 2026 session, and then there's a list or a plan for what you all hope to accomplish in the 2026 session. The general flow of things remains the same on both versions, but the dates are different. So in the House passed version, you all hope to enact larger school district boundaries that would be effective 07/01/2027, and the report of the committee of conference that year has been moved up to 07/01/2026. Language related to career and technical education remains the same with the exception of Subdivision four. The words fully fund are inserted in front of Career and Technical Education, so enact student centered updates to fully fund CTE in the report of the Committee of Conference. And then also in the report of the committee of conference, CTE funding would be for available funds and it wouldn't exceed current spending levels, is the intent in the report of the committee of conference. And here's a prime example of language I should have highlighted. Establish an appropriate weight for pre kindergarten students. This is new language in the report of the committee of conference on the right hand side. Subdivision six there. Establish an appropriate way for pre K students as well as enact changes to the publicly funded pre K program that ensure costs are borne by the appropriate funding source depending on the age of the student and the pre K education provider. Again, this is all in the intent section for what you hope to accomplish next year. Still in the intent section but moving out of what you hope to accomplish next year and just broader intent, Subdivision B remains the same, but in the House passed version you had a goal of new initial school board member elections happening in March 2028. The report of the Committee of Conference has that special election occurring in November 2027. In subsection D, the House Path version has new school districts being operational, which means responsible for the education of their resident students, on 07/01/2029. In the report of the Committee of Conference, That date has been moved up to 07/01/2028. Subdivision three, I'm not going to walk through this. This is, again, intent language that was added in the report of the Committee A conference to ensure that the imposition of new statewide education tax rate contemplated by this act does not result in an increase of education property tax bills relative to Vermont's current education funding system for municipalities across Vermont. The General Assembly intends to mitigate or reduce property tax bills for Vermonters by, among other things. And then everything after that on page four is essentially a summary of what is happening in this bill. Moving on to section two, the Commission on the Future of Public Education. Both the House passed version and the report on the Committee of Conference substantially cuts back what the Commission on the Future of Public Education is responsible for. The first big difference here is that the House passed version of the Commission on the Future of Public Education created a subcommittee to make recommendations to you all for new school district boundaries. So you can see here, we're adjusting the membership on the left hand side there, and then here are all the members for the subcommittee and house cost version. The report of the committee of conference removes that subcommittee and therefore removes all of these extra members that would make up the subcommittee. And in section three, you'll see that the report on the Committee of Conference creates a standalone group to do what the subcommittee is going

[Rep. Peter Conlon, Chair, House Education Committee]: to do.

[Beth St. James, Office of Legislative Counsel]: Both versions, again, substantially curtail what the Commission is responsible for. The House passed version kept a lot of the same language and policy considerations, I'm on page 10, regarding making recommendations for what changes need to be made to changes need to be made to the State Board, what should be a function of local control and state control. And the report on the Committee of Conference removes all of that language and replaces it with brand new language, starting on the very bottom of page 10. The Commission's recommendations to you all need to include necessary updates to the roles and responsibilities of school district boards and the electorate, including amendments to 16 BSA five sixty two and five sixty three. Those sections are the roles and responsibilities of the electorate and school district boards. Going to page 12, the next topic that the Commission is required to make recommendations on is a process for a community served by a school to have a voice in decisions regarding school closures and recommendations for what that process shall entail. We're going to scroll back up a little bit to page 10. There was language in the House Pass version that is very similar at the very bottom of page 10 that read, including whether there should be a process for communities served by an elementary school to have a voice. So the Commission's language is what is the process, not whether. And it's not limited to elementary schools, it is just school. And then the last topic that the Commission shall make recommendations to you all on is a process for monitoring implementation of this act in a manner that is transparent and public facing. The Commission is still able to consider additional topics that they may deem relevant to their work. Their final report to you all is still due on 12/01/2025. And then in the House Pass version, everything that appears in green starting on page 15 is the School District Foundries Subcommittee. That language has been removed in the report of the Committee of Conference. And we're going to focus on Section three, the School District Redistricting Task Force. This is very much a combination of concepts and language from both the House passed version and the Senate passed version. The report of the committee of conference, again, I didn't want to highlight all of this in yellow, so the section is highlighted in yellow. But this is all new. As you can see, there's no corresponding language on the House chat side. Membership of the school district redistricting task force will be five non legislative members. The membership of the five non legislative members and the appointment authority is the same as what passed the House for the subcommittee. So two members appointed by the Speaker, two members appointed by the Committee of Committees, one member appointed by the governor. All of those five non legislative members need to be some combination of retired or former superintendents, school board members, or school business

[Rep. Peter Conlon, Chair, House Education Committee]: officers.

[Beth St. James, Office of Legislative Counsel]: And then there are six legislative members, three from the House, three from the Senate. They can't be from the same political party nor from the same school district. Powers and duties. In consultation with the Commission of the Future of Public Education, the task force shall study and consider different configurations for school district consolidation and propose not more than three options for new school district boundaries. At least one boundary proposal recommendation shall consider the use of supervisory unions and supervisory districts. Allow for the continuation tuition system that provides continued access to independent schools that observe geographic areas that do not operate public schools to the degree served by those schools and to the extent practical, not separate geographic areas that contain non operating school districts as those districts existed on 07/01/2025. Everything thereafter is what the task force needs to consider in recommending these boundaries to you all. This is truly a combination of the language that the House passed and the language that the Senate passed. In the interest of time, I'm just going to skip over reading all of it. The task force is required to work closely with the Commission on Future Public Education for Public Engagement. The task force will have the administrative technical and legal assistance of the Agency of Administration, the Agency of Digital Services, the Vermont Center for Geographic Information, and the Department of Taxes. And they are allowed to hire one or more independent contractors to provide the services the task force deems necessary. The deliverables to you all remain, again, very much the same as what both the Senate and the House passed, a report and maps by 12/01/2025. So the report needs to contain essentially an explanation of how they arrived at their boundary proposals, and then they need to include MAPS with those boundaries along with, on page 21, the information listed here: average daily membership, locations of schools, etc. This language is largely taken from the House passed version. This task force is set to begin on or before August 1. They're going to select co chairs from amongst their members, one a member of the House, one a member of the Senate. And then there is compensation and per diem appropriations. So $50,000 to the agency of administration for the hiring of one or more facilitation consultants, 100,000 to the agency of digital services to cover costs associated with supporting the task force and if necessary for the purposes of hiring a consultant, thousand to the agency of administration per diem for non legislative members, and 10,000 to the general assembly per diem for legislative members. Section four remains the same as passed by the House. The School District Voting Board task force or I'm sorry, in the report of the Committee on Conference, we're calling it a working group. In the House passed version, it was called the task force, but its charge of membership remains the same. This group is responsible for getting together this summer and fall, trying to track the work of the task force that we just walked through, and start to work on creating voting board recommendations based on the principles followed by the legislative apportionment board to achieve voting districts within each school district that are compact, continuous, and drawn to achieve substantially equal weighting of votes that meet the requirements of applicable state and federal law. They are set to begin in October 2025. Obviously their work will be dependent on where the task force is and their work, but they do not cease to exist until 06/30/2026. So if the task force makes recommendations to the General Assembly and you all get underway in January, this voting working group should be looking to the General Assembly and focusing their work on what the General Assembly is focusing on should that align. A Secretary of State is providing and the Agency of Digital Services, VCGI, is providing assistance. The Secretary of State is going to be the chair. And then there are appropriations added here. There were no appropriations in the House passed version. The appropriations here are $15,000 for per diem and compensation, and $200,000 the Office of Legislative Counsel for the contracting and software resources necessary to create school district voting awards. Anyone who's gone through legislative reapportionment knows you need a mapping specialist and some specialized software, and that's the appropriation to cover that. This piece of scale intent language in Section five of the report of the Commission on the I'm sorry, on the report of the Committee of Conference remains the same. Section six in the report of the Committee of Conference is classified minimums. These are different. The House passed version had classified minimums for kindergarten at twelve, for one through four at fifteen, and for five through 12 at eighteen. The report on the Committee of Conference excludes kindergarten from class size minimums. First grade classes have a class size minimum of 10, grades two through five have a class size minimum of twelve, six through eight, fifteen. And nine through twelve, eighteen. And then you can see kindergarten here listed in the type of courses that are excluded from class size minimums. Everything else remains the same. There's a waiver process, but there is one substantive difference here. If the Secretary determines that a school is not meeting class size minimums, I'm on page 26. The House passed version had the Secretary making a determination if class size minimums were not being met over the course of two consecutive years and require the Secretary to recommend the State Board take action. The report of the Conference Committee has the Secretary taking action if class size minimums are not met over three consecutive school years and it's a may, the Secretary may recommend that the State Board take action, not a shall. Section seven, failure to comply with education quality standards. This section remains unchanged from the House Pass version. It basically says if the State Board in response to a school not following education quality standards, thinks that there's some amount of consolidation that should be required, if that consolidation would result in school construction costs in excess of the applicable district's capital reserve account, consolidation is off the table as an option for the State Board to order. Basically, until there is a state aid for school construction program up and running, the State Board can't be ordering consolidation as a response to failure to comply with the education quality standards. Section eight in the report of the Committee and Conference State Board of Education Rules Report, I'm on page 29, remains largely unchanged. It requires the state board to update rules, the 2,000 series education quality standards to ensure that those rules comply with class size minimums that we just walked through, to adopt standards for statewide graduation requirements. The term proficiency based as a modifier for graduation requirements has been removed in the report of the Committee of Conference version. The State Board is required to update the independent school rules for following class size minimums and report back to you all with a determination of what it means to be small by necessity, and that was passed by the House. And then in the report of the Committee of Conference, we add an additional requirement that the State Board proposed standards for sparse by necessity. The school size intent, this is a piece of intent language passed by the House. It does not appear in the report of the committee of conference. Section nine, as recommended in the report of the committee of conference, aligns to Section 21 of the House passed version. It requires the agency to make recommendations to the State Board regarding statewide graduation requirements similar to the section we just walked through. The modifier proficiency base is removed from the report of the committee or the Commission. Sorry, I'm not going get this right today. It's fine. The report. I'm just going to call it the report. Statewide school calendar. This agency is still required to publish a statewide calendar and then make various report backs to you all in December year. All remains the same. Section 10 in the report corresponds to Section 26 if passed by the House remains the same, requiring the State Board of Education to essentially do a thumb fit review of their rules, come up with a plan for updating them or recommendations for rules that are no longer necessary, and an appropriation of $200,000 to do that work. Prohibition on school closure and transition to paying tuition, which would have prohibited a school district from closing a school and then providing tuition. Instead, it would have required designation, has been removed from the report. School construction, we're going to skip fast now through a bunch of sections. School construction remains the same with a couple small changes, and I will point them out. All of this language that I'm scrolling through, I'm already on page 38, remains the same. The special funds, I'm on page 38. Section 16 in the report corresponds to Section 13 in the House Pass version. The only difference here is what the special fund is made up of. The House Pass version had amounts deposited in the fund from the Supplemental District Spending Reserve. In the report that language has been removed because amounts from the Supplemental District Spending Reserve are now used for a different purpose, and John will get to that in his sections. And then in Section 17, on page 42, this is the award of construction aid. The actual award itself remains unchanged, just passed by the House, but language was added here that reads that the awards are subject to an annual appropriation for the purposes of this program. Again, Section 18 remains the same, Section 19 remains the same, Section 20 remains the same. Section 21, I'm on page 43, This is tuition to approved schools. This is the section that dictates which schools a school district is allowed to pay tuition to. This language is a combination of language passed by the House and passed by the Senate. Public schools in Vermont are still allowed to receive tuition, and if it's an approved independent school, needs to be located in Vermont, needs to be currently approved, and needs to be located within a supervisory district that does not operate a public school for summer all grades, or a supervisory union of one or more member school districts that does not operate a school for summer all grades. It has to have had at least 25% of its total student enrollment composed of students attending on a district funded basis, and it needs to comply with class size minimums. The language highlighted at the very top of page 44 came from the Senate proposal of amendment, as did the 25% and the corresponding school year. Everything else remains the same as the house passed version. The tuition transition language remains the same. Essentially students can graduate from their school if they're currently enrolled in a school that would not qualify for public tuition under the amendments that we just walked through. Section 23 in the report is a combination of intent language from the House Pass versions from Sections twenty and twenty three, but it's collapsing them into one section. I'm sorry, Section twenty and twenty two. Section 24 remains the same. This is an amendment to the State Board of Education appointment process. The governor currently appoints all 10 members. This change would have the Senate and the House appointing each one member, so the governor would appoint eight members. That includes the two student members. Section 25 is the transition for that new appointment process, and Section 26 is the conforming amendment. The governor retains removal authority over all state board seats regardless of who made the appointment, but the original appointing authority would fill a vacancy created by a removal. Section 27, tuition. This is how tuition is calculated. So we walked through who's eligible for tuition, now we're walking through how that tuition would be calculated. And this section has two separate contingencies, effective contingencies for two sets of subsections. So subsection A, I'm on page 48, remains the same as passed both the House and the Senate. Essentially tuition in your future state would be the base and the weights following a student. That would be the amount of tuition a student is bringing with them to a receiving school. That remains the same in subsection A. The report adds a subsection B. So in addition to the tuition amount calculated in subsection A, which is the base and the weights, a receiving school may charge an additional fee in the amount of 5% of the base, so not weights, just the base, for each student attending the receiving school in grades nine through 12 if the following conditions are met: the receiving school has to receive approval from the State Board of Education to charge the additional fee, and the electorate of each school district with at least one student attending the receiving school has approved supplemental district spending for the purpose of this additional fee and in an amount sufficient to cover the additional fee. And for the purposes of this subsection, a receiving school would not include an approved independent school functioning as a CTE center. Subsection D indicates that charge an additional fee because it is permissory, not mandatory, is required to charge the same fee to each school district. It cannot charge different school districts different fees. So if it charges 4%, it needs to charge 4% across the board. Subsection D says, Notwithstanding subsections A, B, and C, or any other provision of law to the contrary, the district shall pay the full tuition charge at students attending an approved independent school in Vermont functioning as an approved area, career, and technical center. That is actually current law. So subsections A, base and weights, follow the student, and D, if you are an approved independent school functioning as an area CTE center, A and D would take effect contingently on 07/01/2028 if new school districts are operational. You have received what we're calling the 45A report, and John will walk through that. And you have been given an opportunity to enact updates to the funding formula based on the 45A report, which is a report back to you all on updates to the foundation formula. Subsections B and C are also contingently effective on 07/01/2028, but their contingencies are different. B and C, which are about the additional fee for high school students, are contingently effective on 07/01/2028 if your school districts or the new school districts are operational, if the 45A report contains evidence that it costs more to educate a high school student, and if the General Assembly fails to enact secondary student weights. That's when B and C would take effect. Conforming repeals related to tuition remain the same, and Section 28A in the report is brand new. It is requiring the state board to adopt the rules on and before 07/01/2027 to govern that additional fee approval process. And those rules need to require the school to demonstrate an additional fee is necessary to educate the specific students the fee is being applied to, and that the fee will be used to educate such students and not used to shift costs elsewhere within the applicable school's budget. Sections twenty nine and thirty in the House passed version were related to all adult education funding. They do not appear in the report. That language traveled in the budget and passed. It's a little different than how it appears in the House passed version, but the general concept is law now. Sections 29 there is highlighting there, I'll come back to it 29, thirty, and thirty one in the report remain largely unchanged from the House passed version. This is requiring the agency of education to report back to you on the state of special education delivery and funding and costs associated with special education. There's one addition in the report of the Committee of Conference in Section 29, and that is a requirement that the report back to you all include recommendations for reducing the growth and extraordinary special education reimbursement costs, which shall include recommended legislative language to accomplish any such recommendations. The strategic plan requirement remains the same and the position appropriate created and the appropriation along with it to assist the agency in creation and implementation of the three year strategic plan remains the same. Sections thirty two and thirty three do not appear in the House passed version. I'm on page 58. They did appear in the Senate passed version, and they remain largely unchanged other than updating the amounts of money to correspond to different appropriations throughout this bill as passed the House. So $2,865,000 is appropriated from the general fund to AOE in fiscal year twenty twenty six to support education transformation. Dollars 200,000 of that is to support school boards transitioning to new governance models. Dollars 562,500 is for the positions established in Section 33 that we're going walk through next. And 2,102,500 is for contracted services to support school districts with the enumerated topic. Section 33 creates five limited service classified positions taken from the position pool within AOE, and you can read the titles of those positions themselves. That is all of the education policy section.

[Rep. Peter Conlon, Chair, House Education Committee]: Thank you, Beth. Thank you. Oh, John's already in the way. Look at those.

[John Gray, Office of Legislative Counsel]: John Gray. Office of benefit of counsel. Okay. Screen share. So shifting gears, we're jumping into the education finance sections, and we're starting with section 34. This is your Title 16 state funding of public education sections. No changes proposed in the conference committee report here, but this is just the section that sets out your base amount. That's your 15,033 per pupil. And it sets out the definition for your EOP, your educational opportunity payment, which is that aggregate figure that tracks the base at the school district's weighted long term membership. Section 35 is your waiting section, and there are a few changes that have been posed here. So the first that you're gonna see is child with a disability is the definition that we use to talk about special education weights. And while these look wildly different, they aren't as different as they look. The real change that you see in the conference committee report is that the special education weight is not going to be made available at the pre k level. And that's what the change on the right side is doing. Any child eligible to receive special education who's enrolled in any of K through 12. So pre k would be excluded from the special education weight under this proposal. You'll recall that this section is divided into kind of multiple tasks that have to happen. So one is that people counts have to be tallied up within particular categories and then weights are applied to pupils within those categories. The change you see here is not indicative of waiting happening for all grade levels. This is just ensuring that counts happen for the grade levels. It's not applying weights to those. Some stylistic changes that you see highlighted here that to who, no substantive change. But let's jump down to the actual weighting, and I'm gonna talk about the weights that you do have here, including those for which there's conformity. So the first change that you see here is that a pre k weight is applied in the conference committee report, and that's that negative 0.54 figure. So what current law is, so this is a lesser figure for students enrolled in pre k. And I think the intention or the thinking here is that you're gonna look to updates to pre k next year. You're gonna see some reader assistance type changes calling out what the actual weights are. So economic disadvantage weight, it's a non substantive change, but hopefully easing the reading of this section. So you have your same economic disadvantage weight that's passed the house. You have the same distinguished EL proficiency weights. So based on their English language proficiency level, you have the same EL newcomer SLEIF weights. And you have the same special education weights as past the house. So the pre k weight is the sole update, substantive update to the actual weights themselves. We do have another update in the recalibration section. So this is a subsection of the weighting section that says to every five years recalibrate the inputs to the foundation formula, which are your base plus weights. Obviously you have inflationary factors as well. And the update that you have here is that the conference committee report calls out, you need the advice and consultation of a professional judgment panel convened by the agency of education when doing this recalibration. Section 36, I'm gonna hop quickly through these. This is just your education payments. This is picking up the new ed finance concepts and striking old concepts. No change in the congress committee report. Section 37, you're gonna recall these support grants which are provided to small schools and sparse schools. The change that you see here is that as past the house, we had small schools and we had grants that were going to sparse school districts. So the determination sparsely was being made at the school district level. The concept that you see in the conference committee report is trying to get at a particular a tighter geographic area so that the location in which the school is actually situated is sparse itself. So picking up sparse schools. So those are schools that are contained within sparse areas, which is a city town or incorporated village where you have this fewer than 55 persons per land area of the geographic boundaries. And then a sparse school similar to the small school concept where you have both a check on a substantive check. You know, school has fewer than 100 pupils, but it also has the state board determination that it beats small by necessity. We have a similar structure for sparse schools. So the sparse school needs to be located in one of those sparse areas, but it also needs to be determined by the State Board to be sparse by necessity, which you'll recall Beth getting in the section talking about the State Board rules. Some just some conforming changes in the actual call out for the grant. Those grants are being provided to the school district, but they're being provided for each sparse pool within that school district. So conforming changes from the from the discussion group this time. Section 38, no change to this section. This is just picking up the supplemental interest spending revenues in the ed fund itself. And when I get to the reserve, I'm gonna talk about one change that does happen in terms of the path of the money. Section 39 is just cleanup changes to the Ed Budget Stabilization Reserve. No changes there. Section 40, similarly aligning the same payment schedules exist in current law for the new EOP concept and no change proposed in the conference committee report. Section 41 is the vote that is taken. You'll recall there's no change proposed in the report of the conference committee, but just to call out what's happening here. The EOP is set based on a mathematical formula, but if a school district is voting supplemental district spending, this is what their their ballot would look at look like. This this budget would include what the tax rate would need to be to raise those extra funds locally. Section 42 does have some substantive changes proposed. And there's actually something I should have put at the beginning of my section, which is you're gonna notice the highlighting for the effective dates. In the as passed by house timeline, the foundation formula rollout happened fiscal year thirty. So that was starting 07/01/2029. What you're seeing proposed in this is a fiscal year 2029 rollout. So one year faster that would start 07/01/2028. Section 42 does have a few updates to these are your conforming appeals for moving to the foundation formula. Along with you'll recall that in adding the special education weights, subsection c here had repealed the census block grant. But what you see additionally here is repeals of separate categorical aid for English language learners. Now that you have that tiered system of EL weights that's being pulled back. So you can think of that as a conforming change, not so much of huge substance of change from what passed the house. And similarly, the merger supports for merged districts. This section wouldn't operate at the point that you had the foundation formula because the school districts reference wouldn't be in effect. So you don't need to call out those merger support grants. Section 43 of your supplemental district spending reserve. Beth foreshadowed this. And I also mentioned that the Ed fund had some changes resulting from this. So this reserve is situated within the Ed fund and the idea is that it captures any extra funds. It recaptures any extra funds raised locally through the supplemental district spend. In the house passed versions, those would waterfall at the end of the year into a school construction aid special fund and what's being proposed here is they would no longer go that path. Instead they would be unreserved at the end of the year so they would go up to the ed fund. And in the following year they would be made available to decrease that year's statewide education property tax rate. We'll see some changes in title 32 related to this as well. Sections forty four and forty five are reports. No changes here. AOE transportation reimbursement and JFO inflationary measures and pre k. Section 45A, Beth also foreshadowed this. This is some of the contingencies hinged on receipt of this report The allowance for the opportunity for the general assembly to pass legislation in consideration of this report. So this is a general report on the foundation formula. JFO is contracting with folks with expertise in Vermont's education funding system to recommend updates to foundation formula here to move from special ed weights based on disability categories, which is what we've seen above to align some of provision of special ed services and to update any others deemed to be empirically necessary for an adequate and equitable education, taking into account the new consolidated school districts. The contractors would additionally make recommendations regarding suitable geographic measures for determining sparsity. We talked about city, town, incorporated village, but to consider what the right measure should be, whether it costs more to educate a secondary student, and if so an appropriate weight. And you'll recall some of the contingencies that Beth talked about in the tuition section would be tied to these pieces. And then how to account for the provision of CTE within the foundation formula. Those would be submitted to committees of jurisdiction 12/01/2026. And the sum of 400,000 is appropriated to JFO to hire. And this is significant here one or more contractors. So ensuring that the number here that's included is high enough that you can choose among among contractors. And substantively at the end, the contract would be required to train JFO and AOE on those methodologies. You'll recall the recalibration subsection of the waiting section. You need to know what the methodologies are to be able to recalibrate those on a regular basis to pick up any changes that have happened. Section 45 b that's proposed in the company report. This is a transitionary measure for your EOP. And basically across the first five years of the transition, it's moving school districts from their f y 25 ed spin as adjusted for inflation to the EOP in increments of 20%, basically whatever the gap between that ad spend and the EOP would be. So gradually moving folks to their EOP. The piece that I would note here that folks may not have seen in the past because I think this concept has been discussed is subsection B is dealing with a tuition transition. And this is just ensuring that the tuition measures which make money follow the student right, they pick up the base as adjusted for that adjusted EOP. So because you're getting different EOPs in those first five years, ensuring that the base that's captured in your tuition measures would reflect that adjusted EOP. That's what subsection b is doing. Section 45 c, really simple. This is just delaying the Ed Fund Advisory Committee first first meeting to 07/15/2026. Okay. Section 46, we're actually jumping to title 42. So this is the implementation of supplemental district spending and the imposition of your cap rates. Again, same timeline we're talking about that FY twenty nine rollout. I do wanna call out the highlighting you see in these sections where there's struck language. This is just clean up on our side. There's some definitions that aren't yet effective, so making sure we reference the definitions that will be effective at the time of the foundation formula rollout. So none of those that you see highlighted there are anything to worry about. That's all gonna be struck language. The substantive changes you start to see on page 80. So the first is maintaining existing law statewide adjustment. We will call this from last year, but just making sure that we maintain that concept moving forward so that it reduces the fluctuating effects of the CLA on folks tax rates. The real change that you see here is for this new concept of adjusted equalized education property tax grand lists. This matters because when we talk about the equalization measures for the supplemental district spending, we have to look at the taxing capacity of all the school district to identify the school district with the lowest taxing capacity. And when we do that, we need to make sure that the actual grand list you look at is reflective of the taxing capacity, the property tax base that's actually available. And so the adjusted grand list is accounting for the homestead exemption. So it's just capturing the proposed homestead exemption later in the bill. The definition of supplemental district spending, you'll recall that this has a cap in the as passed by the house. That cap was 10% of a district's EOP. And what you see in the report conference committee is 5% of the product, the face amount and the school district's long term membership. You can think EOP is face times weighted. What And we get most here is a 5% cap, but it's reflective of an unweighted aggregate student cap amount. So a 5% cap on supplemental district spending, but we're gonna come to some transitionary measures related to that. And just note that the supplemental electric spending yield picks up that statewide adjustment. So section 46 a, I noted that there would be a transitionary measure for the cap as well. And so in the first ten years of the law of the foundation formula, that 5% cap would actually be a different figure. In your first five years. So until school districts are fully transitioned to their new EOP in FY thirty three, you would have a 10% cap and then gradually that would be moved down so that in fiscal year twenty thirty eight, you would be at that 5% statutory figure. Section 47 is the imposition of the taxes to raise these funds. First is the setting of the statewide tax rate and accounting for the reserve provides for buying down taxes in following years. So that's the highlighted and what you see here. And then a default tax rate that wasn't present in the house passed version. So the default tax rate, if in general somebody failed to pass the tax rate would be a 110% of the preceding fiscal year's statewide education tax rate, but the idea that you would be forced to take action and actually actually pass the statewide education tax rate. Note that for the classifications that are set out here, Kirby will speak to these, the non homestead apartment has been deleted and the conforming changes for the statewide adjustment and picking up existing law references to the Secretary of Education rather than updating Commissioner of Texas. I'm just gonna go real quick now because these are a lot of conforming changes throughout these sections. Section 48 is your December 1 letter, picking up the statewide adjustment there. So conforming technical changes and picking up your adjusted equalized brand list. We talked about that definition just now in your December 1 letter, so ensuring that we're capturing actual taxing capacity. Section 48 is a tax rate transition. So these are measures that are included to ensure that tax rates don't jump up for school districts. So similar to the EOP transit, we're identifying a gap between your pre foundation formula rollout, homestead tax rate, and what the homestead tax rate would be in the first year of the foundation formula rollout. Taking that gap, dividing it into five and then applying cent adjustments to the homestead tax rate across the first five years or four years of the foundation formula rollout in accordance with that gap. Informing changes in 4950 and '51 unchanged. We're jumping to the homestead exemption creation and appeal to PTC. You're gonna see what looks like dramatic changes here but they are not so dramatic. It is just a change in stylistic presentation and I'm on page nine zero five. So what are the actual differences between these two? The stylistic difference you see is that the house's proposed homestead exemption has been presented in the form of a table now, so that's why it looks wildly different. But the actual substance of change is one, that a cap on the house site value against which a homestead exemption is made available is included here. That wasn't in the as passed by the house version. A capital $125,000 in house site value. And then one tweak to the income brackets for which the homestead exemption is made available. Had There been a 25,000 to 47 k figure and a 47 k to 5,000. So it produced this really small income bracket that's been changed here. 25 to 40 k, 40 k to 50 k. Super quickly through the main reason, I think there's no remaining changes throughout the homestead exemption sections. We can jump all the way down to page 106. And what you're seeing here is a report back from the Department of Taxes 12/15/2026 that would set out an alternative homestead exemption structure in the event that the one that's proposed here could be improved that would minimize property tax impacts for homestead property tax owner property owners and benefits less. The tax department also include with its proposal recommendations for plagiar adjustments and the an analysis of implications of moving to a 175 k as your highest income against which income subsidy measures are made available. 54, 55, 56, no updates there and they're conforming changes anyway. And then section 57 is your Ed Fund Advisory Committee directives. We're just doing conforming changes on the right hand side in the conference committee report to pick up the new foundation formula system. And the actual changes you see here, how to maintain inter district equity. These are gonna be recommendations in the new foundation formula system. Whether weighted foundation formula payments lead to improved outcomes across all populations. And then in the house passed versions, we had transitionary future contingent measures for moving to an evidence based system in section fifty eight and fifty nine, and those have been deleted. And with that, I am done.

[Rep. Peter Conlon, Chair, House Education Committee]: Thank you, John. We're going to go to Kirby, and then all the attorneys and JFO actually need to go to the Senate who is having a caucus cut billfold.

[Beth St. James, Office of Legislative Counsel]: Kirby, can you

[Rep. Peter Conlon, Chair, House Education Committee]: make that much larger?

[Kirby Keaton, Office of Legislative Counsel]: Can. Good morning. Kirby Keaton, Office of Legislative Counsel. I'm going go much larger. So I'm picking things up with section sixty and sixty one. Those are sections relating to the creation of a property tax classification system. As John said, the classification sections and when we get to it, changes to reappraisals in the bill in the conference report are being moved up a year. So you should just note that generally. And there's also some contingencies to those taking effect. So section sixteen fifty one, as I mentioned, relates to property tax classifications. John mentioned already that the non homestead apartment classification is being removed in the report, which leaves the only new category being non homestead residential. That is a classification that's meant to get at residential properties that are not being used as homesteads. So second homes, short term rentals, vacant properties. So that's a change for the report. The only other thing for those sections is the contingent effective date. It's set up so that if the general assembly does not act to set up the new system for education finance in the next couple of years, then the classifications won't happen. Next we have section 61 A which is the section on the transition from like a setup here for the classifications. So in 2027, the Department of Taxes would have to gather some information to set up the new system. That was moved up a year from the House version and also a contingency was made for that. That if you don't set up the maps next year for new school districts, then the tax department will not do this setup action for classifications. Next is 61B, it's the implementation report for tax classifications. There was one subsection added to that. What this subsection does is it has the Department of Taxes consider, if you noticed in job sections, there's little multiplier factors in the applicable statute or when you actually apply a tax rate for classification in the bill right now, that's one point zero for everything. Presumably those multiplier, those multipliers will be changed in the future so the different cost of property can be taxed differently. And what this does is have the Department of Taxes report back on suggestions for multipliers that would number one, possibly have that new category of non homestead residential properties cover the cost of the homestead property tax exemption that John walked through. And alternatively the department would look at multipliers that would possibly mitigate the forecasted property tax increases on homestead property tax payers caused by this act. So basically just giving the General Assembly a couple of options in the future for ways to adjust those things required according to the policy decisions that you want to make in the future. 61C is system of intent language about those rate multipliers that the intention is that the entire tax classification system will be reevaluated at the same time Those multipliers are set later or proposed to be set. And there's a perspective repeal of the tax classifications which I think I already walked through basically that if there's not well no, this is a different one. We've got multiple continuencies here. For this one the tax rate if the tax rate multipliers are not set by 07/01/2028, classifications will not happen. They'll never take effect. The next parts we start to get into regional property assessment districts and changes to map their presence in the future. That was moved up one year to start in 2029. And that is all for the transition for that. There's some highlighting language here, which is just for clarity. Moving on to page 117, we're getting into the there's a regional assessment district stakeholder working group that's in both of these, And nothing has changed with that. Section 65 through I think 90 or so, and that has passed by the house version, where a bunch of conforming changes to in the future move Vermont's brand list date from April 1 to January 1. That's the date in which property values go down on the books of the value as of that date. That move is still expected to happen. There's still a report for the Department of Taxes to come back and make suggestions about conforming language. The Senate had taken out adding that to the bill at this point, but my understanding is there's still the expectation that will happen. It's just not in the report now. So going through all those conforming changes, we just have miscellaneous provisions and they have not changed except there was one technical change added at the Senate that's in the conference report was not passed by the health version. It's section 69 and it relates to fixing the way that math is worded relating to the statewide adjustment. That's per our law. And that is it.

[Beth St. James, Office of Legislative Counsel]: Thank you Kirby.

[Rep. Emilie Kornheiser, Chair, House Ways and Means Committee]: Alright folks, given the fact that the bells are ringing we will