Vermont Legislature SmartTranscripts:

[Rep. Woodman Page (Member)]: We're not good. No.

[Rep. Emilie Kornheiser (Chair)]: It is still Wednesday, January 7. We're our work on the yield bill essentially by doing a walk through December 1 letter with Julia Richter. We really just have forty five, fifty minutes today, and then are going go way deeper next week. But thought it would be good to start the process today. Julie, you want to join us and hello?

[Rep. Woodman Page (Member)]: Hi. Thank you. You too.

[Julia Richter (Joint Fiscal Office)]: Hello, everyone. Good to see you all again. Good to

[Unidentified Committee Member]: see you.

[Julia Richter (Joint Fiscal Office)]: I'm Julia Richter with Joint Fiscal Office. As the chair mentioned, we're talking about the December 1 letter and the yield bill. There are a number of documents that are on your committee page. There's two slide decks that I guess I wonder, would you like to start with talking about the December 1 letter or start with talking about the yield bill?

[Rep. Emilie Kornheiser (Chair)]: I think the December 1 letter because it happens first chronologically. Okay.

[Julia Richter (Joint Fiscal Office)]: That sounds good.

[Rep. Emilie Kornheiser (Chair)]: Does that make sense

[Unidentified Committee Member]: to you?

[Julia Richter (Joint Fiscal Office)]: That's what I would have probably recommended. So that PowerPoint is on the committee page under my name titled December 1 letter update. I'll pull it up on my screen. So some of these slides will look familiar if you came to the all legislative briefing or from last year. And so this is really a reminder for all of you in terms of December 1 letter, what it means, but then also what did this year's December 1 letter say. So you know we're nonpartisan. That still true. So talking about the purpose and context of the December 1 letter. I can make that a tad bigger if that's better. Thank you. So there's really two pieces of every year's December 1 letter. There's a mandated forecast, which JFO does in consensus with the tax department, and using a lot of work and data from the Agency of Education and the Department of Finance and Management. And there's also the policy commentary from the commissioner. I'm only talking here about the mandated forecasts required under statute that JFO does in consensus with the tax department. At the end of this slide deck, I have a link to the December 1 letter, and sources also posted it on the committee page. So if you want to read the policy commentary from the commissioner, it's there as well. The December 1 letter, as you're all aware, really helps school boards understand potential general tax implications of the budgets that they're currently in the process of finalizing and helps you all understand the current status of the education fund, what we know and what we don't know. Forecast potential tax rates, potential average tax bill changes, and potential education fund inputs based on those statutory modeling parameters. Did you bold and underline that one? I sure did. It's potential. And as we'll talk about when we get to the yield build piece, you'll recall that the December 1 letter has all of these statutory guidelines for how we have to solve for property taxes. What are all of the inputs we need to assume? After that, it's really a policy decision for you all in terms of what the yield bill looks like, and we'll talk about that in more detail.

[Rep. Mark Higley (Member)]: And that December 1 letter is based on 60 some percent of budgets that have come in, is that correct?

[Julia Richter (Joint Fiscal Office)]: I don't want to testify. I don't know the exact percentage off the top of my head, but it's more than 50% and less than 100%. It varies every year. And basically, the way that that works is the agency sends out a survey to school districts and says, What is your best estimate of what your education spending is going to increase? What percentage? And then for the districts that do not submit their best estimate, the agency looks at all of the estimates they've compiled and applies a percentage against those that have not submitted. So this year's percent was an estimated 5.8% increase in education spending growth. And we will get to the Ed Fund outlook, which has all of those numbers outlined. But this is just level setting. So really a starting point. This slide is a reminder of where we are in terms of education finance and the timeline. So we know, really, it could start anywhere in the timeline. It's always happening. It's just wherever you are in the year. But school boards begin preparing their budgets usually in late summer, early fall. And then for the December 1 letter, Commissioner of Taxes publishes that letter. JFL publishes the consensus Ed Fund outlook forecasting those rates and bill changes for next fiscal year. And now we're in this big block here where, at the local level, school boards are continuing to prepare and warn their budgets for voters. They're using those impacts of the December 1 letter to inform those budget decisions and putting those budgets to a vote usually on town meeting day. At the same time, you all are working on the yield bill and other policy decisions to set property taxes for the coming fiscal year, while information continues to be updated. So it's that iterative process. Ultimately, the yield bill will pass and set property taxes or other revenues at a level necessary to fund all voter approved budgets. And then it'll go through the administration piece where Department of Taxes will put out those rates, counsel administer the taxes, and school districts will implement the budgets.

[Rep. Emilie Kornheiser (Chair)]: Could add another error here. Yeah.

[Julia Richter (Joint Fiscal Office)]: Sure. To make it more confusing. No, I love that idea. So what it tells us, I think that we know this, those preliminary projections for education expenditures, pupil counts, grand lists based on best estimates. We use those projections for the average property tax bill change. This was that number that made it into the headlines this year, that estimated 11.9 increase in the average bill change for the coming fiscal year. It also includes, and this was a new statutory mandate from a few years ago, the range of per weighted pupil spending in the prior fiscal year. So you'll recall that's that education spending divided by the weighted pupil count. Yeah, go ahead.

[Rep. Woodman Page (Member)]: So we know that there's a possibility of 11.9 increase in property or educational taxes. And there's been discussions, I guess, that the Governor is going to provide some additional funding to bring that down. Is that a done deal? Do we know that that's going to happen? Are we going to find out this afternoon?

[Rep. Emilie Kornheiser (Chair)]: I guess what I would So I'll add just sort of timeline of how those decisions are usually made. The governor did put that into the budget adjustment request. Usually, those decisions are made in a combination between the budget and the yield bill. And the yield bill, we start a conversation about usually this week and next week, and we work on it every week, sometimes skipping a week or two. And it's the last bill that we vote out before crossover. And so that's when that decision is completely made. Thank you so much. And so that's And that will be what Basically, that's going to be one of the main thrusts of the decisions we'll make starting next week.

[Rep. Woodman Page (Member)]: Okay, thank you.

[Julia Richter (Joint Fiscal Office)]: And to put exclamation mark next to that, the other slide deck that I prepared, if we have time to get to it today, is really spelling out all of those decisions for the yield bill. So one of those primary decisions is if there's additional money going to buy down property taxes. If so, how much and where is it coming? This 11.9% or 12% does not include that amount recommended by the governor. The statutory parameters are that we have to assume all education fund surplus and reversion. So all money on the bottom line is used to uniformly lower property taxes. So the estimate of 11.9% does do that and uses the approximate $21,000,000 in unallocated unreserved that's estimated at the close of FY26 to lower property taxes.

[Rep. Bridget Burkhardt (Clerk)]: And I think to clarify also, I think simultaneously the censed off stuff is still working in. So part of the increase is that some districts are experiencing a lower tax price for education because they are getting more weights and others are

[Julia Richter (Joint Fiscal Office)]: losing weight, they experience a higher tax rate. So this isn't just straight spending decisions. This is a bunch of other factors going in. Absolutely. Yeah. So in addition to spending decisions, there's also the prior year's decision to use over $100,000,000 in one time money to lower property taxes. So that's going to put upward pressure on the average bill change It could. This year that we have

[Rep. Bridget Burkhardt (Clerk)]: to dig at. Can we get testimony? I think it'd be really helpful to, since we keep using that as a policy tool, to bring in the distribution of districts that show that range of per people spending, and maybe look at who the lowest per weighted people spending districts are and the highest per spending, because I think that would

[Julia Richter (Joint Fiscal Office)]: be a very instructive activity. Oh, Mark's not here anymore. Yes. We can do that.

[Rep. Emilie Kornheiser (Chair)]: Not that Mark, the Mark that was sitting on the bench. No,

[Rep. Woodman Page (Member)]: he is. I still hear him.

[Rep. Emilie Kornheiser (Chair)]: Mark's not.

[Julia Richter (Joint Fiscal Office)]: Okay, back

[Rep. Emilie Kornheiser (Chair)]: to you, Julia. Okay.

[Julia Richter (Joint Fiscal Office)]: So we've already talked about this. It's not presenting the final policy decisions. So not presenting final property tax rates, bill growth, expenditures, appropriations, your education fund revenues. And that will ultimately depend on local and state decisions, federal decisions as well, but because we're talking about the statewide education fund, really focusing on local and state decisions here. Yes.

[Rep. Bridget Burkhardt (Clerk)]: And there was also some work being done around Medicaid. And I know that there's a bill out that's looking at placing school based Medicaid under AHS. That could have very, very significant financial impacts.

[Julia Richter (Joint Fiscal Office)]: I think I'm a post sponsor of that bill.

[Rep. Bridget Burkhardt (Clerk)]: I think we need to see that because what's happening, and there's a lot that's happening, I think we need to see that model. And I know the agency was not able to provide us any information during the task force process related to Medicaid, school based Medicaid, it'd be great to get some of that if we could during the session.

[Rep. Emilie Kornheiser (Chair)]: Who's bill is that? The chair. I think I'm co sponsoring it with Representative potent, shy, and

[Julia Richter (Joint Fiscal Office)]: conlin, maybe? It's somewhere in my

[Rep. Bridget Burkhardt (Clerk)]: Was it a request from the administration?

[Rep. Emilie Kornheiser (Chair)]: No. But there's not disagreement. One minute, everyone. Thank you. I want to just clarify, it was not a request from the administration, and the administration was not did not seem particularly uncomfortable with it on first conversation.

[Julia Richter (Joint Fiscal Office)]: Julia, let's do this presentation. Just a couple more slides until we get to the outlook. We know it's a process of extensive modeling, and it uses many inputs and many assumptions, which include the non property tax revenues, education spending and appropriations, grand list growth, prior year policy decisions. Ezra Holcombe, from JFO, he compiled a document that outlines all of the major inputs and underlying data assumptions that were used in this year's December 1 modeling. It's included at the end of this slide deck and also posted on the committee page under my name. I would encourage you to look at it if you're really trying to understand some of the more weedy data pieces. We were hoping to make it a little bit less of a black box and make it more understandable. I think it's a really exciting new addition to the December 1 setup process. I really appreciate that you all did that. Thank you. Yes? Is the tax expenditure report updated annually, too? I'm not sure if it's annual or That's every year. And

[Rep. Emilie Kornheiser (Chair)]: it's being updated this summer.

[Rep. Bridget Burkhardt (Clerk)]: Given the robustness of concern around escalating education growth, could we get the breakout for the education fund related tax expenditures that are non K-twelve, just so we have that information.

[Rep. Woodman Page (Member)]: That are non K-twelve?

[Rep. Emilie Kornheiser (Chair)]: Yes. I think that's in our testimony from last year, but we can I think have that back updated 26 numbers? Maybe let me check. I want to make sure we get through Julia's presentation. So

[Julia Richter (Joint Fiscal Office)]: I'm gonna

[Rep. Emilie Kornheiser (Chair)]: ask you to go through it, have us ask clarifying questions of Julia, and I'll ask for additional testimony at the end, the way I did earlier this morning. This is my final slide on this deck.

[Julia Richter (Joint Fiscal Office)]: So this is the next steps. So as you know, we will continue to update modeling and data that underlines all of the estimates. The data, this is not an exhaustive list, but the big things that are updated over the course of the session are grant list data, non property tax revenue. So that'll be with the e board and an economist forecast that comes out next week. School district budgets, as they come in, we still don't have the final weighted pupil count, so that will impact the modeling, and then ultimately other legislative policy decisions. So as the session continues, there will be multiple times where we will update the underlying modeling and data, and we let you know if those updates have been made. And usually, we freeze it around decision points so that you're working off of apples and apples for your decision. And then these the resources that are published under my name, but I also thought it would be helpful to include them in the slide deck. And that is all of the slides I had prepared. Should I move on to the Outlook? That'd be great. Can I go ahead? Just again, the annotated guide is fantastic. Thank you. We just published our updated one too. So that's this document. It's really small, but essentially what it is. It was also published on the committee page under my name. You can zoom in. Yes. And we created that so that you could understand what each one of the cells on the EdFund outlook mean. I'm just pulling up the outlook now. So, Madam Chair, would you like me to just walk through it big picture? So, does the mic sound for everyone? Great. All right. So this is the EdFund outlook that was published for the December 1 letter. We will continue to publish them over the course of the session, but this is the only one we've published thus far for FY 2027. You'll recall these top lines A through J represent sort of the summary lines. So, what the education fund outlook is showing us. We see those average rates in uniform rate in A through C. You'll recall that these are equalized, meaning that they will be adjusted at the local level if the local town's CLA varies from the statewide average. We see the yields that were set last year for FY Here we see the yields that were set last year. Here we see the rate and yields that were solved for in the December 1 letter per the statutory guidelines. You see the average estimated average percentage bill change compared to the prior year, here of 11.9%. This uniform is referring to the property classes. You'll recall there's homestead, nonhomestead, and income sensitized taxpayers. And for the only for the purpose of the December 1 letter, we have to model so the average bill change is is uniform or the same across those classes. That being said, we know in reality, it will be varied across the state. Even if it's solved for a uniform average, it is just that, an average. A weighted average, but still an average. Here in line H, we see the education spending growth that was estimated by the Agency of Education. That was what we were speaking about earlier with Representative Higley of the 5.8%. So that AOE collected those surveys and then used those survey results to estimate the 5.8.

[Rep. Emilie Kornheiser (Chair)]: And so when I see that last year's education spending growth was 5.5%, and this year's is just 5.8%, But our average bill change is so different between the two. Lots of policy decisions led to that.

[Julia Richter (Joint Fiscal Office)]: Yes, absolutely. One of the There's a few underlying pieces. I didn't include this chart today, but now I wish I had. That essentially shows how fast education expenditures are growing and how fast non property revenues are growing. We know that the non property revenues in the education fund are growing at a slower rate than education expenditures out of the education fund, which means that all else equal, property taxes have to continue to make up a larger share. In addition to that, this average bill change is compared to the prior year. So if in one year a lot of money was used to one time reduce property taxes, you have a lower base against which you're comparing against in the next year. So those are some of the pieces that are contributing to that difference between the 5.8 and the 11.9.

[Unidentified Committee Member]: So I would like to see that property tax chart you were just talking about versus, you know, said you have it all printed out. So is it going to be a lot of work for you to do that, Julia, or is it just running it off?

[Julia Richter (Joint Fiscal Office)]: It's just finding a slide and sending a link to Sorsha. So I'll do that as I'm soon done.

[Unidentified Committee Member]: And then we can

[Rep. Emilie Kornheiser (Chair)]: review it together next week.

[Unidentified Committee Member]: Yeah, that'd be helpful. And I'm not really clear on what you just said about lines G and H. And I don't know, maybe we will have a chance to get clarity on it later. Or should we also repeat it now?

[Rep. Woodman Page (Member)]: Can you repeat

[Julia Richter (Joint Fiscal Office)]: it now? Do you want me to repeat it or do you have a specific?

[Unidentified Committee Member]: I don't understand the difference between that 1.1% and the 5.5% this year.

[Julia Richter (Joint Fiscal Office)]: I don't

[Unidentified Committee Member]: know how we got there.

[Julia Richter (Joint Fiscal Office)]: Sure. So in this fiscal year 2026, this was the year that This is the current fiscal year that we're in right now. And when we were in this room talking about the yield bill last year, this was what you all were deciding what to do. So when we look at this in line G, the uniform 1.1%, and then in FY27, the uniform 11.9, this is referring to the estimated average bill change, average property tax bill, for property taxpayers across the state. So essentially, what this is saying is in FY '26, it was estimated that the average property tax bill increased by 1.1% compared to the prior year. In FY '27, if everything in the December 1 letter holds true, which we know it wasn't, it won't. But if everything in the December 1 letter were to hold true, the estimate is that the average property tax bill would increase by 11.9 compared to FY '26. So that's what we're seeing in line G. In line H, we're seeing a different metric that contributes to that average bill growth, but is only one of the inputs that's contributing to the average bill growth. And what we're seeing there is the statewide education spending growth compared to the prior year. And you'll recall that education spending essentially is looking at every school district budget in the state minus all of those offsetting revenues. If they're getting money for special education, transportation aid, all of that, all of those offsetting revenues subtracted out. Whatever's left is their education spending. And so what we're looking at here is that the estimate from AOE right now, which is just an estimate, is that between from FY twenty six to FY twenty seven, education spending is estimated to grow by 5.8%.

[Unidentified Committee Member]: Okay. That's helpful. Thank you, Julia.

[Rep. Bridget Burkhardt (Clerk)]: Yeah, it represents Burkhardt. Can I ask a question about line I? So statewide education grant less growth. The last two years has been 14%. What were the assumptions in the big drop to 10.4%?

[Julia Richter (Joint Fiscal Office)]: I can, I would love to phone a friend who decided to join testimony today?

[Rep. Bridget Burkhardt (Clerk)]: Actually glad you joined.

[Julia Richter (Joint Fiscal Office)]: Would you like to join us?

[Jake Feldman (Vermont Department of Taxes)]: Sure, can answer this one. Yeah. Jake Feldman, tax department. That's basically a peek into the equalization study. The equalization study is working at fair market value of property, and so peeking in for the study that's happening right now that is for FY27 CLAs, it looks like your market value is growing, but not as much as the last couple of years.

[Rep. Emilie Kornheiser (Chair)]: And is that report on January 15 or February 1?

[Jake Feldman (Vermont Department of Taxes)]: The acquisition study is out. It's done.

[Julia Richter (Joint Fiscal Office)]: Oh, okay.

[Jake Feldman (Vermont Department of Taxes)]: Yeah, it's on the website. So it's kind of like CLAs are dropping, but not as fast as they were in the last couple of years.

[Julia Richter (Joint Fiscal Office)]: Does it usually come out a little later? No? Yes? Okay.

[Jake Feldman (Vermont Department of Taxes)]: It's actually quarterly. They're required to wrap it up by the end of the calendar year. Oh, okay. And then in the PBR's annual report, it has the table. Okay. Yeah.

[Rep. Emilie Kornheiser (Chair)]: Thanks. It's a PBR annual report that is sort of the overarching thing

[Rep. Woodman Page (Member)]: that it's

[Rep. Emilie Kornheiser (Chair)]: timing Yes, representative? Okay.

[Rep. Bridget Burkhardt (Clerk)]: Will we be able to get an explanation of how this is going to interact with CHIP?

[Rep. Emilie Kornheiser (Chair)]: Yes, we are all on Friday going to go hang out and learn more about how Chip is being implemented thus far. And then we can dive into that at a later point. But Friday afternoon is all Chip. Charlie might have to go to another meeting, actually, unfortunately. Did you have something for Juliet?

[Rep. Woodman Page (Member)]: I did. I'm just thinking the grantless growth, is it just a matter of not all the grantless growth is driving the education fund? So you think a 10% increase should be sufficient to then cover a 5.8 increase, but it's not all coming from there in terms of the total education fund.

[Julia Richter (Joint Fiscal Office)]: When thinking about grant list growth and the way that the education fund is filled, it's important to keep in mind that the overall property tax bill only needs to increase if the amount that needs to be raised from property taxes increases. So, everything is equal, we need to raise the same amount of money and non property revenues are doing the same. If your property value goes up, you can lower the rate so that you have the same bill to fund the education fund. So what we're seeing here is, while the grant list is growing, that's why looking at the change in rates is really not intuitive and really does not tell the full story. It's just telling you one part of an equation. Brandless growth could be growing by 1000000000%, and property tax bills could be the same if nothing needed to change.

[Rep. Woodman Page (Member)]: I was thinking, the spending was the same and you had 10% growth, the rate could stay the same, you'd have more than enough money.

[Julia Richter (Joint Fiscal Office)]: Yes, or you could decrease the rate. Yep, definitely.

[Rep. Bridget Burkhardt (Clerk)]: Were you aware in the equalization report of I can pull it up, but offhand it's

[Rep. Emilie Kornheiser (Chair)]: Can we wait? Let's not ask that question. Sorry. Let's hold that question until when Jake comes back to actually talk about the equalization report. Because Jake just came by to hang out. Okay, back to you, Julia. And I want everyone to

[Julia Richter (Joint Fiscal Office)]: have a chance to

[Rep. Emilie Kornheiser (Chair)]: look at the equalization report while we're talking about it.

[Julia Richter (Joint Fiscal Office)]: I'm looking. Julia? Finally, in the summary lines, line J, which is the statewide adjustment, you'll recall that there was the change to the statewide adjustment. So the change to the CLA made a couple of years ago. So essentially now, the equalized rates are closer to the actual rates. So communities don't see as large of a swing from the rates that we see on the Ed Fund outlook to what they're seeing on their tax bills. And the way that that's done is they're being benchmarked against the statewide average CLA rather than 100% of fair market value. So we see here that the statewide adjustment, which really is the statewide average CLA, is 70% estimated T in FY 'twenty seven. I'll go quickly through these lines unless there's something specific the chair or others were hoping I was going to focus on. Next, we have the sources. So, are those revenues coming into the education fund. The three through nine, well, through seven are those non property revenues. That's coming from the forecast. So unless there were to be a policy change made to, for instance, the sales and news tax, those numbers are not going be updated absent economist forecasts changing. There are policy conversations starting in the GovOps Committee about changes to the lottery

[Rep. Emilie Kornheiser (Chair)]: that I'm not going talk about now and I don't know very much about. And I don't know how soon they'll get to us. But if anyone wants to check-in with GovOps folks,

[Julia Richter (Joint Fiscal Office)]: that might be helpful to have more of that information in the room. The other piece that's important to keep in mind, and I know you are all well aware that a change to a non property revenue stream, or really any revenue stream, may not see the gains from that change to the revenue stream in the coming fiscal year. Often they take another year or two now. Yes. And then what will you do with the outlook next Friday once we receive the emergency board? So once the emergency board has met and adopted the new revenue forecast, we will see an updated I'll come in with an updated outlook that shows the updated non property revenue numbers that are reflective of the news forecast. There will also likely be other underlying data updates, assuming that we get some of those inputs in time to add. The cannabis money. The cannabis money does not go to the education fund. It's in a special fund. For after school. But it doesn't so it doesn't run through here at all.

[Rep. Emilie Kornheiser (Chair)]: You mean the sales tax on cannabis goes? Yes.

[Julia Richter (Joint Fiscal Office)]: Yes. So it doesn't show

[Rep. Woodman Page (Member)]: up in the outlook. Correct. So I believe the property tax credit last year, we estimate 153,000,000, and it's actually $141,000,000 So pretty big drop. So ideas, thoughts?

[Julia Richter (Joint Fiscal Office)]: The property tax credit estimate comes from a number of underlying assumptions. One of those is how much incomes are going to grow in the coming fiscal year. That's an equation forecasted by the economists that we use in October to forecast. So I would say that that some of those, For instance, incomes didn't grow as much as was anticipated.

[Rep. Emilie Kornheiser (Chair)]: And that's also going down because incomes are going up, right? Like, are more

[Rep. Woodman Page (Member)]: Over the 150,000

[Rep. Emilie Kornheiser (Chair)]: Over the multiple years. Can you talk Can you speak to how Like, why that appropriation is I don't wanna call it an appropriation, why that's going down. Yeah. So we've

[Julia Richter (Joint Fiscal Office)]: seen the property tax credit sort of decreasing over time. We've also seen that break You'll recall there's sort of that break even point at which it's always going to be cheaper to pay on property rather than income. So that maximum household income has declined over time. Really, that has to do with the relationship between the growth in property values and the growth in incomes and how they meet with the fixed numbers that we have in statute. So we have the fixed household income of the super circuit breaker for up to 47,000 and then the 90,000 and then also the 225,000 and the 400,000 for household value. So it's the relationship there. It's also the relationship of how General Assembly chooses to set the household and income yields. Here we see the one time general fund transfer. You see that $77,800,000 that was used in fiscal year twenty six to decrease the property tax bills. Throughout Page's question, we see here that it's not being included in FY 'twenty seven. So this is where, if we were to be booking any additional general fund money in FY 'twenty seven, this is where that would show up. But that's never an assumption in the December 1 letter. Absolutely, yes. That would be a policy decision that you would need to make.

[Rep. Mark Higley (Member)]: And if I could, and there has been talk about this as far as that $77,000,000 but I think a lot of folks have talked about over $100,000,000 and I thought that that line 36 maybe, there was some 40 some million dollars that was used last year as well, is that correct?

[Julia Richter (Joint Fiscal Office)]: Yes. So, yes, absolutely. So, this is showing solely the general fund portion, but there was also the education fund surplus that you're mentioning.

[Rep. Mark Higley (Member)]: Thank you.

[Julia Richter (Joint Fiscal Office)]: This next chunk, those are the appropriations, the expenditures coming out of the education fund. You'll recall that education payment is by far the largest single appropriation out of the education fund. This is representing all of the sum of all of the education spending.

[Rep. Emilie Kornheiser (Chair)]: Then All

[Julia Richter (Joint Fiscal Office)]: the spending by each district. Each district's education spending, yes. And then we have the categorical aid and the pension and OPEB.

[Rep. Emilie Kornheiser (Chair)]: So I was just looking at the budget adjustment language, and I know reversions sorry, I know that carryforward is not included in the language of budget adjustment, but carry forward fits in somewhere here to some degree. Can you talk about how reversions and carry forward on these appropriations

[Julia Richter (Joint Fiscal Office)]: play out? Sure. So the reversions we're seeing here in line 27, that estimated 13,000,000. So this is essentially money that was appropriated to the agency for one of these specific purposes. And many of these categorical grants are formulaic. So it was not the right number. And so instead of holding onto that money, that money is then reverted back to the education fund so that it can be reappropriated. If there are instances in which, say, there's a certain amount appropriated for one of these categorical aid programs and the agency sees that for some reason they're not paying all of that money out this year, but they know next year they're likely going to need to pay some of that money out. They'll carry that forward into the next fiscal year. So what we're seeing here are the reversions which are being booked as additional revenue back into the education.

[Rep. Emilie Kornheiser (Chair)]: And that 13.2, how does it could we, next week, maybe even just talk about how that breaks up amongst those uses?

[Julia Richter (Joint Fiscal Office)]: Sure. The bulk of it is the vast bulk of it is special education at about 9,800,000.0, and then the rest is a little bit from each.

[Rep. Bridget Burkhardt (Clerk)]: And sometimes adult ed shows

[Rep. Woodman Page (Member)]: up here. Where would that be?

[Julia Richter (Joint Fiscal Office)]: That's a good question. I don't know, but I can follow-up. Do you want to share

[Rep. Bridget Burkhardt (Clerk)]: a free final sentence, please,

[Rep. Woodman Page (Member)]: with us? Oh, yeah, here.

[Julia Richter (Joint Fiscal Office)]: I guess we've really gone through all of it. I'd say the final pieces that I would note are it's also required that in the December 1 letter we fill the stabilization reserve to the full 5%. So this is reflecting that. It's required in the December 1 letter modeling for us to use all of the education fund surplus to uniformly buy down the average tax bill. So we see here that in line 37, there's 820,000.00 on the bottom line, which in the Ed Fund is as close as we can get to zero. And did we use the reserve last year? The stabilization reserve? No, it was filled. It looked over the eBoard this summer in July, it looked like there was going to need to be a dip perhaps into the stabilization reserve because of the downgrade of non property revenues to the education fund. But with other updates, including the reversions, in fact, we were able to fill the stabilization reserve to the full five percent without the need to dip into it. So nice. Thank you so much.