Vermont Legislature SmartTranscripts:

[Rep. Carol Ode]: So

[Rep. Emilie Kornheiser (Chair)]: good afternoon, and thank you all for joining in on Zoom. And we're gonna get started, and we'd like to start with Julia Richter from JFO, and we'll go over the Ed Van Deltowic latest version.

[Julia Richter (Joint Fiscal Office)]: Good afternoon. Julia Richter, JFO. There are two documents on the committee page under my name. There's the annotated guide to the Education Fund Outlook, which should look familiar to all of you. And then there's also the Education Fund Outlook that was available for the Emergency Board. So I'm going to go ahead and share my screen.

[Rep. Emilie Kornheiser (Chair)]: Which one are you going to?

[Julia Richter (Joint Fiscal Office)]: Education Fund Outlook.

[Rep. Emilie Kornheiser (Chair)]: January 16? Correct.

[Rep. Carolyn Branagan]: Yep. So

[Julia Richter (Joint Fiscal Office)]: as a bit of a reminder, there's a number of steps throughout the process where we get updated information, and we use that to update the yield model, as you all are starting to consider the yield bill. So, what was presented for the e board was using the updated revenue forecast that you heard from Tom about last week, and inputting it into the yield model. We then resolved the yields and rates following the December 1 letter construct. As you'll recall, there's really de minimis changes in the Education Fund forecast for FY 'twenty six and FY 'twenty seven, meaning that there's really no overall impact to the estimated average bill change. So you do see a slight change in the yields and a slight change in the rate, but ultimately it's rounding to the same average uniform bill change of 11.9% as we saw in the December 1 letter.

[Rep. Emilie Kornheiser (Chair)]: Representative Ode.

[Rep. Carol Ode]: According to the governor in his speech that we just listened to, he's proposing using, is that 105,000,000 to buy down from the $105,000,000

[Julia Richter (Joint Fiscal Office)]: to

[Rep. Carol Ode]: reduce property tax rates. So, how would this be? Our numbers change. I

[Julia Richter (Joint Fiscal Office)]: haven't done that modeling yet, because I also just heard the budget address. I would defer to the administration in terms of their exact proposal and how they're proposing to use that money. As we know, any one time money that's used to buy down property tax rates or property tax bills does create a one time buy down. But then in the following year, we go back to where we were again. So that's in part what we're seeing this year. So that would hold true. We also know that decreasing any of the non property tax revenues out of the education fund, all else equal, will cause property tax revenues to increase. So if we take 10,000,000 in each of the next five years for transportation fund, that will Absent any change in policy, that's 10,000,000 that would need to be made up by property taxes.

[Rep. Emilie Kornheiser (Chair)]: Both items from the governor's speech are not reflected on this page.

[Julia Richter (Joint Fiscal Office)]: Yes, that's correct. So I would I will come back. If I'm asked to do that modeling, I can certainly come back and show that, but I haven't had time to do it today. You'll recall the We other spoke about this a little bit last week, but the other pieces that this committee is grappling with or will grapple with over the coming month or so as you work on the yield bill is how to fill the education fund. So we spoke about this in that yield bill decision points last week, but it's a policy decision as to how you are filling the education fund. Is it with a uniform average bill change of homestead and non homestead being the same? Or is it a different bill change between the two property classes? Is there an adjustment to the property tax credit? Are there adjustments to education expenditures? All of those, those list of questions are really what you all are going to start working on and thinking about.

[Rep. Emilie Kornheiser (Chair)]: Representative Higley.

[Rep. Mark Higley]: Can you also tell us that penny on the tax rate, property tax rate, and what that generates?

[Julia Richter (Joint Fiscal Office)]: Approximately $14,000,000 and that's on both the homestead and the non homestead rate. Thank you.

[Rep. Emilie Kornheiser (Chair)]: Representative Branagan.

[Rep. Carolyn Branagan]: The last two chunks of information they are working from the bottom variable funds, available funds, I'm sorry, stabilization reserve. Is that money left over? Is that cash available? Or what are those things each line starting from number 31?

[Julia Richter (Joint Fiscal Office)]: Sure. Numbers 31 through 34 are showing the stabilization reserve, which is the reserve within the education fund in the instance that, for whatever reason, revenues don't perform and there's not sufficient revenue, the stabilization reserve is there to pick up for it. For instance, in the emergency board this summer, when we saw the downgrade of revenues before we had the reversions, the modeling dipped into the stabilization reserve to ensure that Ed Fund was fully funded. So the way that we look at this, line 31, that's the prior year stabilization reserve. So here we're looking at fiscal year twenty seven. So in fiscal year twenty six, there was a stabilization reserve of 54,500,000. We see the current year stabilization reserve, meaning FY 'twenty seven, because that's the year we're looking at, of $58,300,000 which corresponds with the reserve target. And the reserve target corresponds with line 33, the 5% of prior year net appropriations. So that's what we're looking at here in lines 31 through 34. Does that answer your questions for those lines?

[Rep. Carolyn Branagan]: Yes, I think so. So that that is cash money left on the table

[Julia Richter (Joint Fiscal Office)]: for emergency. For emergency, yes. I guess I would say Different ways to think about it. I don't know if I would say it's left on the table because you are raising property taxes to ensure that the stabilization reserve is hitting that reserve target of 5%. So, there is a statutory provision, and I would defer to John on all of the legal framework around it. But essentially, there's this reserve target of 5%. If the Education Fund stabilization reserve falls below 5%, then the Joint Fiscal Committee looks at what would they recommend doing to ensure that we bring that reserve back up to 5%. And the reserve, having it be fully filled, is important for the state's bond ratings.

[Rep. Carolyn Branagan]: So it's the Joint Fiscal Committee that gets to play with these numbers. Our job is to This

[Julia Richter (Joint Fiscal Office)]: is a policy decision. You'll recall a couple of years So you don't need to fill the reserve. And then you would be in a position where you might be pulling into question the state's bond rating. There are other fiscal implications of that, and it's within your prerogative to do so. A couple of years ago, the governor forgive me, I don't remember what year it was but there was the proposal of the governor to pull money from the stabilization reserve for one time property tax buy down. Ultimately, you all decided not to do that.

[Rep. Carolyn Branagan]: Yep, I remember that. And line thirty five and thirty six?

[Julia Richter (Joint Fiscal Office)]: Yep, so line 35 is saying, at the close of the prior fiscal year, how much money was left on the bottom line? How much money was on the table unreserved and allocated?

[Rep. Carolyn Branagan]: Okay, so that's in addition to the stabilization reserve?

[Julia Richter (Joint Fiscal Office)]: Correct. And then line 36 is telling you current year unreserved unallocated. So when we look at fiscal year 'twenty seven forecast, we can see right now the projection for FY 'twenty six is that there will be 21,330,000.00 on the bottom line. We're using all of that 21,330,000.00 to buy down property tax rates in this modeling. And we have 110,000 on the bottom line, which in the Ed Fund is as close as we can get to zero. So this is using all of the money and fully funding your reserve.

[Rep. Emilie Kornheiser (Chair)]: It's getting pretty small there. What's that? Our margin's getting pretty small there.

[Rep. Carol Ode]: Think I'm talking if Reporter Jean Waszazak, do have a question?

[Rep. Edward "Teddy" Waszazak]: My question was around the statutory rules of the stabilization reserve, so it sounds like that's a question for John.

[Rep. Carol Ode]: Actually, I have a question.

[Rep. Bridget Burkhardt (Clerk)]: I watched community members arguing about this in my community last week. The 41% that keeps me quoted as the amount property taxes have gone up in the last five years, does that already include, is that 41% will be the amount it's gone up if the 11.9% comes into play? Or has it already gone up 41% over the last five years and the 11.9% is on top of that? If that was the argument. Okay, great question. First of all, I'll say that's

[Julia Richter (Joint Fiscal Office)]: not my math and that's not my estimate. Detailed questions around it, I would defer to the tax department. My understanding is that looking at the forecasted FY '27 as the end piece. And if you have more questions, I would defer to the facts.

[Rep. Carol Ode]: Anyone else?

[Rep. Emilie Kornheiser (Chair)]: I wasn't here, so I don't know where you are in your presentation, Julia. Great. Thank you very much. Yes, represent Branagan. So I might be a

[Rep. Carolyn Branagan]: little tedious, Julia, I'm sorry, but so in this speech we just heard, he wants to take parts of the purchase and use money that now all gets dumped in the fund.

[Julia Richter (Joint Fiscal Office)]: No, so not all purchase and use goes to the education fund. As we see here in row four, one third of purchase and use tax goes to the education fund.

[Rep. Emilie Kornheiser (Chair)]: And we'll hear the details of the proposal later this week. And

[Julia Richter (Joint Fiscal Office)]: however much non property revenue comes out of the education fund, it needs to be made up somewhere, through cutting expenses, expenditures out of the education fund, or raising another revenue.

[Rep. Carolyn Branagan]: So the purchase and use tax really generates 153,000,000? A third of it goes to the ag fund, and then the rest stays somewhere else. Transportation fund.

[Julia Richter (Joint Fiscal Office)]: Okay. I can pull up or Sorcerer can send around the revenue forecast that Tom presented last week has all of the revenues and their forecasted amounts. And he both splits it to the funds and also tells you the total amount estimated to be raised.

[Rep. Carolyn Branagan]: I would like that absorption as a chance to print that out for me. I've had this booklet too.

[Rep. Carol Ode]: You've had that. In my booklet. Haven't done it.

[Julia Richter (Joint Fiscal Office)]: I can show you when later.

[Rep. Carol Ode]: Okay, thank you. Thank you. Thanks, Julia. Appreciate it.

[Rep. Emilie Kornheiser (Chair)]: Oh, look at all those lovely faces on the screen. Hello. So we're gonna I'm gonna invite Julia back in regularly with that. As folks know, at some point in the session, we start adding columns to see hypothetically, what if this happened? What if this happened? What if this happened? I imagine one of the what ifs will be the purchase and use changes so we can understand the impact that would have on property taxes. But for the first next few times that she comes back in, it won't be with new hypotheticals. It's just a chance to keep on digging into what's actually there now so everyone can get all their questions answered. So we've had a number of conversations in committee about the lowest spending and the highest spending districts and sort of the what and the why and the how. And so I asked School Boards Association, who deferred to the Business Managers Association gracefully to invite in some folks from districts who tend to be on the very high end or the very low end of spending so they can just better understand is included in spending. Really appreciate these witnesses for coming in. And I want to caution us that just because one district is one district, right? And one district does not make a trend, I imagine look, thank you for all nodding at that.

[Rep. Carol Ode]: Appreciate it

[Rep. Emilie Kornheiser (Chair)]: so much. And so what I would say is this is not for us to one person testifying is not the why a district might spend a lot or spend a little. It's for us to make sure that we have sort of realities to test our theories against later, not to form theories. Does that make sense? Okay, great. The lineup Tricia, I have two lists that are identical.

[Rep. Bridget Burkhardt (Clerk)]: Yeah, that's that. It's printed.

[Rep. Carol Ode]: Okay, great. Thank you. Okay.

[Rep. Emilie Kornheiser (Chair)]: Cheryl, do you want to start us off? And then we'll go to Ted and then Jacob and then wrap up with Elizabeth. Thanks for being Thanks.

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: Good afternoon. Thank you. Thanks for sharing my testimony. And I hope, when I'm done, please feel free if I haven't exactly answered the question you're trying to get at, I'm sure you'll follow-up, and I can, provide more information. So, yes, my name is Cheryl Scarcello. I am the Director of Finance for Slate Valley Unified School District. We're located in Fairhaven. This is my eighteenth year as a School Business Official. I've served on many BASBO committees, and I'm actually also currently one of the three Vermont School Boards Association appointees to the VHI Board of Directors. So, Slate Valley, which is on the border of New York State, is made up of six towns. Five towns are in Rutland County Fairhaven, Castleton, Heberton, Westhaven, Benson and one town, Orwell, is in Addison County. In 2019, what was formerly the Addison Rutland Supervisory Union merged to become Slate Valley Unified Union School District. This was under Act 46. At the time, the district was made up of four elementary schools serving Pre K through Grade eight, one middle school serving grades six through eight, and one high school serving grades nine through 12. So the merger of Addison Rutland Supervisory Union provided our district with a great opportunity to evaluate how we could operate in the most efficient manner possible. When we merged in 2019, we centralized as many district operations as possible, creating a more efficient organization and reducing redundant positions. And that's a big part of our story, is that we worked very hard at that when we merged, and I think that has really paid off for us in the long run. In July '2, in an effort to further consolidate, the middle school in Castleton was closed and sold back to the town of Castleton. The elementary schools in Orwell, Benson, Castleton and Fairhaven were reorganized and became Pre K through six schools, and the district chose to it's also important to note that the district chose to use the majority of the ESSER funds that we received to reconfigure the existing high school in Fairhaven, and by doing that we were able to bring all the seventh and eighth grade students throughout the district onto the high school campus, thus creating the Fairhaven Union Middle High School serving grades seven through 12. So again, looking at an opportunity to centralize and consolidate our operation. In 2019, the district's enrollment was approximately 1,300 students. This year enrollment has declined to about eleven seventy students, representing a 10% decrease over eight years. Currently, 44 of our students are accessing vocational education programs in Rutland at the Stafford Technical Center, and four students are enrolled at the Hannaford Career Center in Middlebury. And with the Vermont State University's Castleton campus located within the district, we have 15 students taking advantage of the early college program and three, the dual enrollment program. So over the last eight years, basically since we merged, the district has reduced staffing by 45 positions, including three administrative roles. For the FY '27 budget, we are making reductions of nearly 13 positions across the district, and this is in a combination of areas. In FY '26, Slate Valley's education spending per long term weighted average daily membership was 11,565 which is more than $2,300 below the state average. This places Slate Valley as the twelfth lowest spending in the state. Many of our neighboring districts in Rutland County also spend below the state average. Conversely, our neighbors in Addison County spend nearly $3,500 more per student than Slate Valley. Slate Valley is consistently one of the lowest spending districts in the state. Despite being a low spending district, Lake Valley continues to demonstrate a strong return on investment when viewed alongside regional spending and achievement data. Slate Valley student performance on the spring twenty twenty five BCAP shows competitive and in several cases above average outcomes across grades and content areas. Notably, the district ranks first or second regionally in multiple grade level English and math comparisons. This indicates that Slate Valley is converting fewer financial resources into strong academic results, outperforming or matching districts with significantly higher spending levels. Overall, the data suggests that Valley's instructional system staffing models and targeted supports are yielding high academic returns per dollar invested, reflecting efficient use of funds and effective educational practices relative to our regional peers. Given this low spending and above average due now comes, one might expect taxpayers to readily approve the district's budgets each March. In fact, our budget has been voted on 16 times over the last eight years, and only four of those eight years did the budget pass in March, and it took five votes to pass the budget in FY '25, with final approval occurring in June 2024. Typically, the higher spending districts to our north passed their budgets on their first vote. Notably, the FY '25 budget reflected the first year of new student waiting under Act 27, from which Slate Valley significantly benefited. Despite the District's effort to communicate this benefit, voters continued to reject the budget, which we believe was largely influenced by messaging at the state level regarding school district spending statewide. In early January, we worked with our Finance Committee to make final decisions regarding the FY '27 budget so that the ballot warning could be signed at the board meeting on January 26. The FY '27 budget reflects an increase of 2.8% resulting in a 3.48% increase in education spending per LTW ADM. And that 3.48%, that's the percentage that will appear on our ballot warning. Last year, that percentage was 3.61%, and that was on our second vote. So we're not sure how that 3.48 will play out. You know, historically, our budget gets voted down. We are unable to provide taxpayers with their actual school tax rate, which is ultimately what they most want to know. While we share extensive information each year about increases and decreases in the budget, we are only able to provide tax rate estimates at the time the budget is first voted on in March because the yield has not been set. Without the final yield being passed by the legislature and signed by the Governor, we can only provide estimates. This uncertainty is understandably frustrating for voters, and we believe it contributes to the repeated rejection of our budget. Taxpayers are being asked to approve a budget without knowing the ultimate impact on their tax bills, and it is easy to understand why that creates frustration. We are very careful in all our budget communications to emphasize that tax rates are estimates because the yield has not been set. However, I would say that most taxpayers have no idea what that actually means when we say the yield has not been set. They don't really understand what the how why that results in us not being able to give them a tax rate. In order to develop tax rate estimates, I use the yield provided in the December 1 letter from the State Tax Commissioner. At the time the warning must be signed, this is usually the only yield available. In four of the last five years, the final yield that's enacted has been higher than the yield included in the December 1 letter. There have been years, based on information presented to the legislature by by JFO, that I have adjusted the yield assumption. However, this is typically only occurs in years when we have multiple budget votes. In only two years has the yield been set by the time of our final budget vote, and only in those instances have I been able to provide tax rates with certainty. I believe it is reasonable for taxpayers to know what their tax rate will be at the time that they are asked to vote on their school budget. Education funding in the state of Vermont is complicated, and trying to understand it is enough to make your head spin even after dealing with it for eighteen years. I fully understand the frustration of our taxpayers when at the end of a lengthy budget presentation we have to say that we can only estimate the change in their school tax rate because the yield has not been set. Thank you for your time and for listening to me this afternoon, and I'm happy to answer any follow-up questions you might have.

[Rep. Emilie Kornheiser (Chair)]: Thank you, Cheryl. I would also love for people to know what their tax rates are in advance. That would be lovely. I think we're going to wait for to do questions until everyone has spoken, if that's Okay with you. If you need to leave sooner than that, then we can also No. Okay. Also, please feel free to turn anyone is welcome to turn off their camera if they're not testifying, if that just feels more comfortable for you.

[Rep. Carol Ode]: So

[Rep. Emilie Kornheiser (Chair)]: next up, we have Ted. Thank you for joining us.

[Ted Plemenis (Business Manager/CFO, Rutland City Public Schools)]: Okay. Can you hear me all right?

[Rep. Emilie Kornheiser (Chair)]: We can. Thank you.

[Ted Plemenis (Business Manager/CFO, Rutland City Public Schools)]: Great. Well, good afternoon, everyone. Thank you for the opportunity to provide public comment before your committee this afternoon. My name is Ted Plemenis. I'm the business manager and chief financial officer for Rutland City Public Schools. I've served the school district as its business manager for five years. At the committee's request, I'm glad to share several observations about the district's budget process, how the homestead property dollar equivalent yield affects our budget process and the district, the impact of the annual December 1 letter from the Department of Taxes, which conveys a preliminary yield estimate, and how the legislature's yield bill each spring impacts budgeting and voting at the district level. Last week, the Rutland City Public Schools Board of School Commissioners approved a district budget of $69,800,000 for fiscal year twenty seven, which would be a 3.9% increase in total expenditures. If approved by voters in March, this budget would result in per pupil education spending of $12,666 for fiscal 'twenty seven. That per pupil education spending would be about 10% below one projection of the median for Vermont public schools next year. In regard to the homestead property dollar equivalent yield, that yield has a substantial impact on homestead property tax rates at the local level, as you know. Let me share an example. The tax letter that was issued last month estimated a preliminary yield for fiscal year 'twenty seven that is 3% higher than this year's yield, increasing to a projected $8,849 If that preliminary yield had been applied for this current year, then the homestead property tax rate for Rutland City Public Schools would have been $05 lower at $1.55 versus our actual rate of about $1.6 My colleagues and I pay attention to the preliminary yield when it's issued each December and to its possible implications for the coming year's homestead property tax rate. That's part of a process, obviously, to prepare a budget that reflects a cost structure which is reasonable and responsible for the current year and which is sustainable for the long term. However, our school district does not develop its annual budget based on an estimated or projected property tax rate. Like many districts, we spend several months each fall and winter working with school principals, with other administrative leaders, and meeting with the finance committee of our school board to develop a budget from the ground up. Each budget reflects staffing levels and other resources that will be needed to operate our educational programs for the coming year. And each year's educational programs are designed to achieve goals that have been detailed in the district's five year strategic plan. When reflecting upon that latter aspect of budgeting being based on a multi year strategic plan, it's easier to appreciate how important it is for school districts to be able to anticipate with continuity and consistency the forthcoming local, state, and federal funding. We know, of course, that the preliminary yield estimate issued each December is subject to change and that it will not become final until enacted by the legislature the following spring. For these and other reasons, Rutland City Public Schools typically refrains from offering projections of a homestead property tax rate during our budget reviews. At most, we might refer to a range of possible property tax rates depending upon possible outcomes of the yield legislation. All that we know about such early projections is they're likely to be inaccurate until the yield bill is enacted. It might be fair to suggest that if there could be a way to provide more clarity about the eventual official property dollar equivalent yield sooner in the budget and voting process, then some anticipatory concerns might be reduced. And perhaps with more clarity earlier in the process, then budgeting and communications could be more efficient and to the point. An option to consider might be for the Department of Taxes to offer early assurance that the forthcoming year's homestead property dollar equivalent yield will be set at at least a minimum level that is determined or selected each December and which could possibly be increased later in the spring before being enacted if state finances allow. As the state's overall budget process progresses during the year, then the legislature could deal with any ensuing budgetary impacts at the state level. And as my colleague Cheryl Scarcello observed a few minutes ago, if you look back over the last five years, four times out of those five years, the ultimate yield ended up higher than the preliminary estimate. Before I conclude my remarks, I'd also like to comment on that earlier point about the importance for district budgeting of being able to anticipate continuity and consistency in funding, and how that relates to conversations about implementing a new foundation formula, which might replace current funding mechanics based upon Act 120 seven's pupil weighting and cost factors. Rutland City Public Schools is, of course, open to a foundation formula conversation. Our administration believes, however, that any new plan for a foundation formula should only move forward with full district level modeling also being provided. A school district cannot evaluate a new proposal and its potential results without first seeing the numbers. In that regard, Rutland City Public Schools and I greatly appreciate the leadership that Representative Kornheiser and the legislature provided a few years ago in implementing Act 127. Legislators who participated on the former task force on the implementation of pupil weighting factors were particularly effective in advancing a data driven policy that created more accurate and a more sustainable way of funding school districts. These legislators proved once again that sound, data driven policy can be achieved. That concludes my remarks. Thank you again for the opportunity to speak with you today. And I would be glad to answer any questions after the other presentations have concluded.

[Rep. Emilie Kornheiser (Chair)]: Thank you. And thanks for the personal shout out there. I appreciate it, Ted. Jacob, up. Jacob, do you want to share your testimony? Thanks for being here.

[Jacob Buzina (Director of Finance, Hartford School District)]: Thank you. So I'm Jacob Buzina. I'm the Director of Finance for Hartford School District. I come before you today to share testimony regarding the process of our FY twenty seven budget for the Hartford School District and the impact on the yields. In my seven years of school business administration, this budget has been the most challenging. We're in an interesting position in that we have a Career and Technical Center and two special education collaboratives. When we're talking about the impact of budgeting, we're seeing it from many different perspectives. We were in a good position with FY '26 when we finally got our reappraisals done, so our CLA, with the state adjustment, reached an all time high. Last year's yields with the buy down led to a decrease in the FY 'twenty six homestead tax rate. We ended up with an enormous homestead tax rate decrease of 39%. There have been a number of challenges that have impacted the budgeting process for FY 'twenty seven. There still remains plenty of uncertainty on the path forward. With current timeline of Act 73 set to go into effect FY29, it's impossible to know what we should be planning for. Our three negotiated agreements, professional staff, support staff, and administrators expire at the end of FY26 and are up for renewal. Where we ended up settling on salary increases was a little bit higher than what I had initially budgeted in October. Health insurance rates continue to be a significant financial burden on our budget in Hartford. Our dental rates are going up 12% for FY27. Another challenge was getting an accurate long term weighted average number. Our number changed quite a few times and wasn't finalized until January 5. It's concerning to me that we cannot seem to accurately count Vermont students. That piece of data is crucial in developing our budget. Additionally, facility needs from deferred maintenance continues to be a growing issue in the budget. In FY twenty twenty five, we reduced around $2,500,000 from our budget to try and bring tax rates down. That year, while a large number of budgets did not pass, we were able to pass both the budget and our $21,000,000 facilities bond to address a number of deferred maintenance issues. Our approach to the budget has been to arrive at a level service. As we navigate Act 73, we've tried to be very careful about not adding new positions. We're working through our staff to student ratios to be compliant with Section six of Act 73 and to explore innovative ways to strategically use the staff we already have in the District. This is the first year that we've been fully staffed at the administrative level and we are trying to stabilize our levels across the District. We have done our best to shuffle the deck chairs and continue to discuss how best to use the resources we have available. With the exclusion of our debt service, we fall below the excess spending threshold. We have no interest in going over the excess spending threshold as stewards of our community resources and on behalf of our taxpayers. We know that there are some surrounding districts to us that are over the excess spending threshold for FY 2027. As part of our budget, we are applying $1,700,000 of surplus to buy down taxes and remain within the allowable per pupil spending threshold that the state has set. Our approach to the budget each year has been to strive to find a balance between moving Hartford forward, realizing our vision and the mission work necessary to get us there, and trying to keep things affordable for our community. As the years have gone on, this has proven to be more of a challenge. Each administrator has their wish list of human and material resources that they would like to add to the budget, but we have been very cautious and have managed expectations throughout the last several years to avoid having to pivot and significantly reduce the budget without careful and thoughtful planning. When we receive the December 1 letter with the draft of the yields, it gives us a better idea about what tax rates are looking like. It gives us a chance to make some adjustments if we need to, since we also get a draft of the CLA now as well. In developing the budget, I am basing my numbers on the December 1 letter yields. As I always tell my taxpayers, each version of the budget is a snapshot in time based on the current information we have available. I know going into town meeting date that the yields are not going to be final. I want to be as transparent as I can be about what the numbers are looking like so people can make an informed decision. The future of budgeting is only going to get more difficult. The cost to educate and care for our students has gone up over the last few years. The needs of our students have increased post COVID-nineteen. It's difficult to see the future of budgeting with so much in the air as far as the path forward. I think school education funding reform does need to happen, but it should be a measured and calculated approach with collaboration from those in the field. Thank you for your time.

[Rep. Carol Ode]: Thank you so much.

[Rep. Emilie Kornheiser (Chair)]: Elizabeth, I want to use some finish out the game hockey term, but I don't, whatever that would be. That's what I just said to you.

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: All right, sounds good. And so my testimony is not specific to the particular district that I am in. I'm just coming as a member, as the president of ASBO to share kind of just an overall trend. I'm hearing a lot of familiar things from my colleagues in their testimony. I wanna thank you for allowing us the opportunity to be here today. As members of Vermont Association of School Business Officials, we are officials from across the state in varying different portions of the state. We are all working towards the same goal. We're preparing our budgets that will be approved by our boards, published into annual reports, and ultimately voted upon by our communities. This year's budget development process has been characterized by strong commitments to balancing the needs of students with the long term sustainability for taxpayers in mind. School district boards and officials engage deeply in the budget process well before the December 1 letter is issued, which provides the estimated homestead property yield. At the outset of our budget development, boards work closely with district leadership to establish priorities. Chief among these priorities is the preservation of educational opportunities and continued investment in high quality learning for our students. Achieving these goals while meeting the established financial constraints is an ongoing challenge. Common financial targets set by boards during our process typically include a percentage growth in the expenditure budget itself, percentage growth in the total education spending, remaining below the weighted cost per pupil threshold, and a percentage growth in union wide or individual town tax rates. School district officials worked diligently to meet these board established targets. However, prior to the arrival of the December 1 letter, a significant unknown remains how these collective efforts will ultimately affect our local tax rates. Once the letter is received, districts can better estimate tax implications, although it's widely understood that the yield is not finalized until the yield bill is passed by the legislature. For fiscal year twenty six-twenty seven, the yield was set in the December 1 letter at 8,849, which is an increase of two fifty three from the prior fiscal year. Districts have used this estimate to refine their budgets with closer attention to projecting tax impacts while continuing to prioritize their educational quality. This work occurs with the understanding that changes resulted from the yield bill could significantly alter the tax implementations of budgets that have already been approved by boards, warned and presented to their voters. At this point in the budget cycle, most districts with a March vote have already received board approval for their budgets, and they're in the process of warning and publishing them for their communities. During this period, districts closely monitor legislative communications for any indication that the yield may change, remaining prepared to pivot if possible prior to final publication and warning. Once budgets are warned and published, districts have limited ability to respond to any yield changes, whether the yield shifts higher or lower. The only available option to communicate updated information to our voters as quickly and clearly as possible. While a higher than estimated yield is generally beneficial for taxpayers, even positive changes can create uncertainty or confusion among our voters. Vermont's education finance system is complex and despite extensive efforts to provide caveats and explanations, changes to previously presented information can lead to questions about our transparency and our accuracy. And the last part of my testimony, just wanna talk a little bit about the current state of the district budgets overall for fiscal year 'twenty six-'twenty seven, just from

[Rep. Carol Ode]: a perspective

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: what I know. The executive team of BASBO, we collect district budget data through a shared spreadsheet that allows our members to voluntarily enter information on their current budget drafts. It's a living document. The data collected includes things like the budget status for their particular budgets, the percentage increases or decreases in total education spending, long term weighted average daily membership counts, education spending per long term weighted pupil, and the estimated district or town tax rates. Members are encouraged to update their information as their drafts evolve and to include as little or as much as they feel comfortable doing. This data is used internally by our group for trend analysis, but it has very important limitations. The first thing is participation is completely voluntary. Not all districts are represented or regularly updating their information. The data reflects draft budgets that have not been voted on by the electorate, and they remain subject to change, particularly in the response to adjustments to the homestead property yield. In the near future, districts will be submitting our preliminary budget information to the agency of education. We believe this will provide more comprehensive and standardized dataset for statewide analysis. With those caveats in mind, the internal data that we currently have from the members who have updated their information is showing the following averages. Overall education spending growth is showing a 3.3% increase. Long term weighted average daily membership is declining at 1.74%. Education spending per long term weighted pupil growth is increasing by 2.89% overall. The average lowest post CLA estimated tax rate growth is at 3.84% increase, and the average highest post CLA estimated tax rate growth is at 10.36%. It's important to note that these averages are generic. They're simple in the sense that they include both large and small districts across the state and supervisory unions. This means that the percentage increase of a larger district equates to a more substantial dollar amount, and yet when averaging a percentage increase, they're averaged in the same as a smaller district. So this could skew the information higher or lower depending on how many districts of each size and scale have been included in our data. We appreciate the legislature's interest in school district fiscal year twenty six-twenty seven budgets and the impact of the homestead property yield on those budgets. We hope this testimony assists the committee as it works toward passing a yield bill that reflects the district's good faith efforts to be responsible stewards of education funds while also providing meaningful relief to our taxpayers. We thank you for your time and consideration. And the only thing I would add to this before questions is in regards to specific to go back to the district I'm currently working in. I think there's a good example of how this can all play out. When we talk about overall education spending growth, my current district has approved a budget that's gonna be warned and presented to voters that only has expenditures growing by 3.4%, and yet the overall education spending growth is more like 6.6. Once we factor in our long term weighted average daily membership number, which declined substantially this year, we are looking at 8.5% increase in long term weighted per pupil education spending. So just to give an idea of how that can all play out in one budget cycle, And then when you project that down to a tax rate for our taxpayers, post CLA, we're looking at about 8.5. It's almost identical to our increase that we're seeing in our long term weighted per pupil growth. But the primary reason for that this year for South Burlington is because of the decline in our long term weighted pupil numbers. So just to kind of give that as an example too, we typically here we're in the higher spending range, but not close to the threshold, just to also give that as an example.

[Rep. Emilie Kornheiser (Chair)]: Thank you. And you said that you work for South Burlington?

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: I do, yes.

[Rep. Carol Ode]: Thank you.

[Rep. Emilie Kornheiser (Chair)]: It's just not listed because you were here as a BASBA representative. It's not listed on the agenda. I just wanted to make sure that the committee was aware of that. Thank you. I think I get boring in my appreciation of School Business Measures Association, but I think of you all as just the most incredible partners to this committee as we do our work. And I'm so grateful for the careful way you develop your budgets with your school boards and your school administrators and how you communicate about it with us. One thing that we've been exploring this year and in many past years is JFO, last year or two years ago, did a lot of statistical analysis on district spending and what it could possibly be correlated to, and really went through a lot of different scenarios, you know, student need and size of district and income of district and grand list of district and just, like, so many things that you could imagine. And none of them were correlated to anything. And so I I'm hesitant to ask this, but I think it's an important question. From your perspective, as people who are very, very carefully developing district budgets to meet student needs in your district, with a lot of the same costs from district to district, I'm curious why you think you have so much variability between districts. And I'll just put I don't want to sort of keep my internal punchline a secret, because there's no need. So in my understanding, the only thing it does correlate with is how much was spent the prior year.

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: Yeah, I'll start and if anybody else on the group anything to add or refute, that's fine. But basically in my history, I've not been at South Burlington very long. So I've been in other districts, particularly Addison County. And from my experience, I recall a day when I first started being in a district finance office and creating budgets where they used to, in some districts, take their prior year budget, roll it forward and say, what will this cost us in the new year? And then start from that, whether that's making cuts or making increases in any particular year based on needs. That's not a from the ground up type of budgeting process. However, that was the first few years of being a business manager and director of finance that I experienced that with a board. And now it seems like in the past five or six years that has transitioned to basically taking the floor out of it and starting from the bottom and building it from the ground up and trying to determine these are the kids we have this year, this is the student needs we have, these are the buildings we have, How much do we need to generate in order to give high quality programming to our students and population and not cut opportunities for them? That's usually one of the goals. And what I see from that is oftentimes conversations, within a school district amongst board members, administration, even teachers and those out in the schools, I think they got accustomed to the old way of building budgets in some cases. And so they feel like even when you come to them and say, well, it's only gonna cost this this year. If that is $500,000 less than it costs last year, and I'm talking 500,000 less than what they actually spent, they feel like that's a cut and they also feel like it's a cut if it's just a decrease from the prior year budget in any particular area, even if it was something that they didn't previously end up needing or spending. So there is kind of this like training and retraining that's happening in the school districts between the administration and the boards, trying to retrain that mentality that we need to basically understand what it is the needs are and that those needs change every year. It might not be the same things you need. It may still cost the same amount of money, but at the end of the day, you're not just building your budget to basically tailor how much the total cost is gonna be. You're trying to really determine what exactly is it that you need to spend your money on. And so I think there has been a transition in the last five years, and I'm not really sure what has completely driven that other than folks just trying to be better stewards of the money and better understand what kind of funding we need to be able to provide the education.

[Rep. Emilie Kornheiser (Chair)]: Thank you. And for sort of shared transparency, generally, the legislature works with the general fund in that same way that you used to do things, just looking at the ups and downs and not really sort of taking it apart and putting it back together. And this year, our appropriations committee is really trying to get to the ground floor of the budget in order to understand something beyond those ups and downs. So I'm glad we're all in this together. Does anyone else want to answer that question that I asked?

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: Yeah, I can share a little bit. I mean, you know.

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: I think we lost Cheryl a little bit.

[Rep. Emilie Kornheiser (Chair)]: I do think. Yeah. Anyone else? She's frozen.

[Jacob Buzina (Director of Finance, Hartford School District)]: I'm willing to say something.

[Rep. Emilie Kornheiser (Chair)]: Thank you.

[Jacob Buzina (Director of Finance, Hartford School District)]: Like what Elizabeth was saying in my earlier years of budgeting, know when I was meeting with a lot of principals, it was a lot of like, give me what you gave me last year and I'll still continue on with it. Now that we've gotten new leadership and everything and we have our vision of a graduate, we're starting to work towards our new goals and everything of, you know, how do you what do you need to get there and how do you wanna get there and use your kind of dollars and resources more efficiently now? So I think it's, again, kind of that retraining of not just, you know, yeah, give me what you gave me last year and I'll make do with it, but, you know, what's the path forward here? What's your plan? What's your vision?

[Rep. Carol Ode]: Thanks.

[Ted Plemenis (Business Manager/CFO, Rutland City Public Schools)]: I would echo what both Elizabeth and Jacob have said, and hopefully Cheryl, if we get her back. Our district, like others, has put a lot of emphasis in recent years on developing a fairly rigorous strategic plan, so that we avoid a scenario, you know, that the typical scenario of ready, shoot, aim. Well, now we've spent and invested many years to say, okay, what has to happen educationally and what are the needs of the student? Because as Elizabeth pointed out, I think any attempt to model or analytically evaluate as JFO has tried to do is going to run into the challenge of the student mix and the student needs can change dramatically from year to year. So as Jacob was describing, we're building it up every year but doing so with the guidance of our strategic plan. I think part of that is just improved process. And I think part of it is a response to the continuing challenges to do more with less. I think that's probably brought about additional fiscal discipline and focus vis a vis the model that Elizabeth described before. So those are all good changes, and I see more potential benefits from that coming in the coming years.

[Rep. Emilie Kornheiser (Chair)]: I appreciate that. It's interesting that you all have similar answers given that say, like, Jacob and Ted, you are from districts that spend such significantly different amounts of money, but might be very similar in terms of student demographics and even sort of your municipal makeup. Cheryl, we lost you for a minute. Do you want to jump in, or should we We were just wrapping up that question, so it's perfect timing for you.

[Rep. Carol Ode]: Why not?

[Rep. Edward "Teddy" Waszazak]: Oh, there you're back.

[Rep. Emilie Kornheiser (Chair)]: You're back. Hi.

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: I'm back. Sorry.

[Rep. Edward "Teddy" Waszazak]: Don't turn your head.

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: I apologize.

[Rep. Emilie Kornheiser (Chair)]: I don't think it's your fault.

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: I was just going to point out as I testified in the last eight years, we voted on our budget 16 times. I mean, we do have to be very aware of what that increase is from year to year and very aware of what that percent increase is on our budget. I don't have a bond. I have a bond. I think it was a 20 or 25 year bond. It's going to be retiring in the next two years. So, try to include in our general fund what we can in order to maintain our buildings. When we do have surplus, we'll use our surplus to try to keep up with our maintenance. As Elizabeth explained, we build our budget from the bottom up. We look at the number of students in each school and we adjust from year to year staff and other resources that are needed in each school. We don't roll anything forward. And I do think in terms of centralization, is something we've worked extremely hard at is looking at how do we continue to use the resources that we have and being a school district really gives us a great opportunity to look at staff, how they can be used across buildings.

[Rep. Emilie Kornheiser (Chair)]: I don't want to interrupt, I'm going to. When you say district, you mean being a school district rather than a supervisory union allows you to do those things?

[Rep. Carol Ode]: Okay, thank you.

[Rep. Emilie Kornheiser (Chair)]: Sorry, continue on.

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: Really think that when we merged, we really started focusing on that. And as I said, I think that has really helped us a great deal. And also helped us as we're seeing declining enrollment, continuing to look at, okay, what does that mean in terms of resources and how can we use them across the district with things shifting in terms of numbers of students and buildings and things like that?

[Rep. Emilie Kornheiser (Chair)]: Thank you. Represent Branagan, you had a question quite a while ago.

[Rep. Carol Ode]: Do you still have that question? I can't remember.

[Rep. Emilie Kornheiser (Chair)]: But it works. That's reasonable given that I exemplified.

[Rep. Carolyn Branagan]: But very good presentation, so I want to thank all of them for, they obviously spent a lot of time preparing for us, and I really appreciate it.

[Rep. Carol Ode]: Anyone else? Yeah. I have so many questions. I will try to keep it.

[Rep. Bridget Burkhardt (Clerk)]: My first question is, I think we know how Ted feels about Act 127, but I wanted to see if any of you could provide a little more color on the impact of Act 127 in your district. I think that it was intended to provide more tax capacity to districts that were lower spending, but it sounds like basically lower spending districts have kind of stayed lower spending districts, even with that additional tax capacity. And then Elizabeth, for you, this is a question I've asked a couple of times at specifically South Burlington School Board meetings, how much of the decline in long term weighted average daily membership is actual students leaving the district and how much of it is a change in weights as a result of the Act 127 phase in in South Burlington.

[Rep. Carol Ode]: Don't know if you

[Rep. Edward "Teddy" Waszazak]: want me

[Rep. Bridget Burkhardt (Clerk)]: to specify who just- I

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: think Cheryl's gonna- Maybe Cheryl with the first part of that question.

[Rep. Carol Ode]: Yeah, sometimes

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: I think we said we were this poster child for AC-one hundred twenty seven. I mean, we really benefited from that change in waiting. And we really saw that as a district when we were building the budget and thinking, this is a great opportunity for us to maybe build back in some places where we have had to decrease in order, sometimes in order to get our budget path. But that was the year that it took us five votes to pass our budget. And you would have thought that that year our budget would have passed easily, but it didn't. It was the most since we've merged five times. We finally passed it in June. And as a result, unfortunately, lot of the benefit that we would have received as a result of that change in waiting ultimately end up going back to the taxpayers because we had to continue to reduce our budget in order to get it passed. And I think a lot of that we had, there was so much information swirling around about Act 127. I think we were really being impacted by what our taxpayers were hearing at the state level. And that's something we have to really carefully deal with when we're presenting our budget is saying, we're a low spending district. And I have a chart where I show them graphically where we are compared to others. Because the taxpayers are hearing a lot of the other things that are going on in the state and the increases statewide. And we have to continually dial that back and say, but that's not the story here at Slate Valley and try to present that information when we go through our budget presentation.

[Ted Plemenis (Business Manager/CFO, Rutland City Public Schools)]: May I jump in to add a Yeah. Point of just want to add a little bit of context, if possible, to the observation that perhaps some low spending districts have stayed low spending districts. And I haven't looked at the data rigorously, but it's worth pointing out that there have only been two budgets approved and implemented so far under Act 27. It went into effect for fiscal twenty five. It was in effect for '26. And now we're in the process of approving the third budget under 01/1927. So the only point that I would make is that it's still relatively new. Adjustments take time. It's not like you turn on a dime with these school budgets, to my point earlier about the long term impacts and the need for continuity. And just to offer a couple of examples, because I think that's a very important concern that was raised about, well, EC 01/1927 provided additional taxing capacity, maybe they're not using it, Maybe that's not having the intended effect. So let me just give you a couple of brief examples in Rutland City. The fact that this has benefited our district and given us additional flexibility that we didn't have before. So in our 'twenty seven budget, for example, we're using some of that ability to expand teaching resources in 'twenty seven that will address student learning gaps. We're making other investments in 'twenty seven in literacy. We're dedicating attention to exploring additional early childhood learning opportunities. We're providing more access to physical education. And the one pillars of our strategic plan is to build family and community engagement. So we're offering transportation to some school events for families in need. So, I could give you many other examples, but I just want to offer that as the point that please don't come away with the impression that the benefits from twenty seven are not being used in a very targeted and important way to help us improve educational experience because it is, and it has made a huge difference for us and we greatly appreciate that.

[Rep. Emilie Kornheiser (Chair)]: Did anyone else like anything to answer that question? The

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: only part I had was the secondary part of the question in regards to South Burlington and enrollment and long term weighted ADM. I've only been here in this district since July, so I'm not even a full year into being in South Burlington. But what I discovered when I got here was as they were trying to evaluate their student counts against what the agency of education was giving us for numbers and counts, I went in and basically tried to recreate the counts using the agency of education's data spreadsheets myself to see where the changes were. And from what I can see, if you look back to, I think fiscal year 'twenty, somewhere around COVID, there was kind of an increase in some populations, some more students moving into this area. It looks like they invested in putting in some ZEMS buildings basically so that they could house all the incoming students and have adequate learning spaces for them. And then since that time, there was a little bubble of like maybe a year or two. And since that time, it's now declining in the enrollment again. So it was a brief bubble of time and now the enrollment is declining over time. The other thing I saw is it looks like it first started for you in this district last year when you were building your FY26. Because the number is a long term, meaning two year weighted average count, sometimes when you have a decline in enrollment, it takes a full two years for it to really hit you in your budget process because it'll be a slight decline in the first year and then you've got two low years averaging together in the second year. And so that's when you really see the drop. So if I look at this year, I would say about 35 FTE of the drop is actual declining enrollment. And the remainder of the drop that I saw is all in waiting. And that waiting primarily from what I can see in this district is the poverty rating and the free and reduced lunch going down pretty substantially for this district this year.

[Rep. Emilie Kornheiser (Chair)]: Criminal verification, Elizabeth, you said poverty free and reduced lunch went down significantly between last year and this year for your district? Okay. Thank you. There's some interesting things about how the numbers statewide don't seem to have got you all know that. Just so you know, we are digging into it both in the background, and we'll soon dig into it in the foreground.

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: Well, and we did really push for accurate information. I am appreciative of how the agency of education, I think they were really proactive about working with districts this year and really trying to solidify the accuracy of the information that was coming from our student data systems, our data managers to the state. And then they were kicking that information back out to us on a regular basis and giving us lots of feedback and ability to have conversations about that to make sure it was accurate. So I appreciate that. I feel like that's been an improvement since past years. Thank you.

[Rep. Emilie Kornheiser (Chair)]: Represent Waszazak and then Masland.

[Rep. Edward "Teddy" Waszazak]: Thank you. So first of

[Rep. Bridget Burkhardt (Clerk)]: all, Cheryl, I appreciate

[Rep. Edward "Teddy" Waszazak]: you pointing out the dynamic of that the increased tax capacity does not necessarily translate into voter approved budgets. I'm from Barrie, so that's a story that I know very well. So it's reassuring to know that we're not alone. Actual question is when talking about the December 1 letter and what I call shorthand the timeline issue of y'all are building budgets based off of a number that comes out December 1, that typically changes over the course of the legislative session. I think that's a really important dysfunction to name of our current education system. I'm curious if you all have other thoughts about ways in which the rollout of the December 1 letter or the information in the December 1 letter, etcetera, changes that could be made to that process that would be helpful for you.

[Rep. Emilie Kornheiser (Chair)]: And I'm gonna pause before you answer and just make a public service announcement for anyone who's not aware. In Act 73, we moved so that all of the tax rates would be available a year out of budgeting, so that everyone would have that brilliant transparency. Okay. Over to you all in whatever order Or not.

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: So, I think part of what happens for us with the December 1 letter is that when it comes out, there are lots of broad generalizations that start getting made about what's happening in school districts. And I think we often have to sort of fight against that in order to get through to our voters about what's actually happening here. And I mean, we do an extensive amount of communication and on a lot of different fronts. But I think that when that comes out, it's really hard for us to get on top of it, for lack of a better word, to get the information out about what's happening here. And also when it comes out, we may not be far enough along that we really want to start putting information out there. We're still working through, you know, what is the impact of different things? Where can we still make some adjustments? So we're not eager necessarily to put a number out too soon because again, if it changes in response to newer information, primarily this year it's been the long term weighted ADM, we were way down, but then we came back up. So that was helpful. So that's I think what happens when the December 1 letter comes out. There's so much that said about what is going on in schools and it doesn't translate across the state. So that's a challenge for, I think that's a challenge for lower spending districts. Maybe that's why we have such a hard time passing our budget because there is so much other information out there.

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: I think there's also a challenge in that a lot of times at the very beginning before the December 1 letter comes out, the agency of Ed comes and asks our collective group where we're seeing our budgets coming in. And that is so early in the stage of our budget process. As Cheryl indicated, many of us aren't ready to be giving any kind of generalized numbers that really are meaningful, especially it's kind of like which came first, the chicken or the egg, you you don't necessarily know whether that December one letter is gonna be driven off of, and the yield will be set driven off of the information that we are fueling it with. And if we've given an inaccurate number, because then later into our budget process, we determine that our budget is gonna be completely different than what we've projected or thought in our first or second draft, that that could drastically change and change what they decide ultimately to put into the yield, even whatever, you know, if it's completely different than when the December letter was published. So it's really rather hard to talk about our budgets that early of a stage, but yet I also feel like if we don't, we're not helping inform the state in how to set that December '1 letter, because my understanding is that there is a substantial portion of that that is based upon school district spending.

[Rep. Emilie Kornheiser (Chair)]: Very much so, thank you, and thanks for all the collaboration. Representative Masland, I think you had the Yeah,

[Rep. James Masland]: thank you. Thank you very much. A couple of different things, different directions. Ted, I commend you for using transportation money to build community involvement with your education. Think that's really admirable. Some people wouldn't think of that, but it turns out that it's very, very important. And generally speaking, Elizabeth and others providing us, I guess, on the ground impact of waste. I mean, we deal with that on a district wide basis or state wide basis, and it's very helpful to hear your on the ground analysis of how it affects your school district because whether we want to admit it or not, and we have to because our taxpayers require it, we realize the impacts district by district are actually sometimes very different, and we need to be cognizant of that when we do our policy work. Know, let's first do no harm, and so we have to pay attention closer than some of us would, I think, particularly within the building and abroad area. You.

[Ted Plemenis (Business Manager/CFO, Rutland City Public Schools)]: Thank you, sir. Very welcome.

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: And I do, I agree with Ted. I mean, a district, we were very frustrated that it took us five times to pass us past the budget that year. Because I do think overall it has benefited us as a district. I think if it was not for that and the change in the weights, we'd probably be in a really difficult situation in terms of our expectation of our taxpayers relative to what it's costing us in our district.

[Rep. Carol Ode]: Yes. Representative Ode. Thank you.

[Rep. Emilie Kornheiser (Chair)]: And we're gonna go for another fifteen minutes, folks.

[Rep. Carol Ode]: I wonder, December 1 letter, you ever think, I prefer that this letter would include this or not include that, I would wish that this letter would come out at a different time, but whatever. Timing, content, wording, would you wish for a historical look back? Like in the past years, X was predicted to be the increase just as this year, And point nine in the past, the legislature decreased that amount to half that amount, and if they do the same thing this year, you can expect that increase to be half what it is in the letter. I mean, maybe not even having that 11.9 be the number. What would you think of some creative ways to make that letter not be something that is so difficult to overcome the rhetoric.

[Rep. Emilie Kornheiser (Chair)]: And I just, Representative Waszazak was the person who started walking us down this road, not you, Representative Ode, but I did not ask any of you to prepare answers to that question today, so I just want to name that. You're here to talk about why high or low spending might be high or low. You're welcome to answer it, but please don't You're also welcome to come back when we have the letter as our topic of conversation. Sorry about that.

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: Oh, I think the biggest challenge for us is just as I was trying to articulate is that I think that the December letter being set is based partly on our district budget spending, and we are projecting and giving information when we're not really ready to give it. So if that's the information they need in order to be able to set that yield, that's challenging because we're not ready with our numbers at that time either. If you were to push it to later in the year when we're giving that information and the letter comes out later, then we're up against district budgets being voted on without even having any estimate of a yield. So I don't know that any of us could really answer that unless we find a way to set a different criteria for that number being set.

[Rep. Carol Ode]: May I amplify

[Ted Plemenis (Business Manager/CFO, Rutland City Public Schools)]: what Elizabeth just said? So even though it wasn't on the agenda, of course, this letter in its nature and its scope is such a key issue. And I do believe your committee could be well served by taking that up in a little bit more detail on a subsequent occasion. But just for this afternoon. If you think about it, that letter is a statutory requirement and it's a very challenging requirement to fulfill for all the reasons that have been mentioned before. I think in order to make meaningful and sustainable changes in that, you really need to, we all need to step back for a moment and sort of look at it from a process standpoint. As Elizabeth was alluding to, for example, some of the input that we provide is very preliminary. Maybe we should do a better job of providing more information upfront. Maybe working with legislators such as yourselves, we could look at a timeline and say, okay, realistically, what might be possible to change and what would make sense? But let me just offer just from a simple standpoint, one of the most interesting aspects of that letter to me. And that is, of course, if we look at the December 1 letter from last month, one of the key headlines was average property taxes will go up by 12%. And that's on the front page of the letter. And of course, all of the media grabs onto that immediately. That's what people see. And very few people actually have the time or perhaps the interest to read the three to four pages that constitute the letter. But if you do and you go back all the way to page three, you'll see that the letter includes a very specific reference to point out that the 12% is just an average across the state and an average may not at all be representative of individual school districts. And in fact, it's typically not because there's a wide range of district results in a year in which one recently, I think it was a year ago, the letter forecasted a 5.9% increase in property taxes in Rutland City public schools. It went down. So it was just a different direction, but that's the nature of an average. So maybe we need to step back and think about what we are required to communicate and then how we communicate it. But just as an anecdote, I have to tell you the impact of that messaging upfront, as several people have alluded to, is very, very powerful because, you know, back a couple of years ago, when it was advertised that the average property tax rate would go up by 18.5%, of course, it ended up by going up a little bit less than that, but it was still too much. The night before our town meeting day in our required information session, I had a resident from Rutland City Public Schools walk into that information session at the March asking me, why are my taxes going up by 18.5% next year? And of course I looked at him and I asked, are you a resident of Rutland City? And he said, yes. And I said, well, based on the metrics we have, that was an average for the state. Your taxes are not gonna go up by any more than a third of that or perhaps less. But of course what was seared into his mind was the 18.5%. And once that's out there and repeated in the media, which is beyond your control, unless we can control somehow the messaging and the communication upfront in a simpler way, then you're, as Cheryl said, we're sort of behind from the beginning and trying to catch up and provide information, some of which people will hear and some of which they won't. So it's a very complex issue that we're dealing with, and I do think it's worth coming back to when there's more time. Thank you for listening to that.

[Rep. Emilie Kornheiser (Chair)]: Thank you. And I some of my favorite parts of the letter were on page five this year. I understand your interest in page three. And I think one of the reasons that we don't ask JFO to do a lot of district by district analysis before town meeting day is for this very reason, that they're essentially estimates from districts. They are subject to change, and we wanna make sure that we're being as accurate as we can with our model.

[Rep. Carolyn Branagan]: Back

[Rep. Carol Ode]: on you. Yes? Okay. Did I miss anyone? Okay, great. You never got it. Do you have the

[Rep. Bridget Burkhardt (Clerk)]: other I have another question, and this goes to something that Jacob actually said. In previous years, I had been told by our local school district that in order to get to your projected education spending, one of the things that came out before you got there was local revenue. And I'd always been told that included in that local revenue was surplus from two years prior. So once you had gone through an audit, that surplus had to be counted as local revenue and reduce what you were asking from the Ed Fund. And I've noticed a shift in this year specifically with folks calling use of surplus from previous years a buy down, very similar to the way that we talk about it at the state level, but at the local level, I had always heard about that thought as a requirement by the state. Basically, you're putting back into the pot money that you've taken out of the Ed Fund previously before you go ask for more. But the view seems to have shifted to that being a buy down that's gonna put you in the same situation as us buying down property tax rates using money from the general fund or from some other source. And so I just wanted to know, is that something that's actually changed as a directive or is this just a way that people have changed in the way they talk about it?

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: I'll start with that a little bit. I think that there is a mis conception that folks think that automatically a surplus from the prior two years audited has to go against a budget in that subsequent budget year. There is another option for school districts and boards to put forward. They have to put it forward in front of their voters. Typically, they will put it forward in a separate article on the ballot, and that's when they ask to take surplus funds and place them into some kind of reserve. And so if you go to your voters and you say, I wanna put $500,000 of surplus from FY '25 audited financials into our capital improvement reserve fund and voters approve that, then that money does not go against your subsequent budget automatically. It is placed into that reserve fund with a specific use purpose that you can't deviate from. And then if you aren't going to put it into reserves or if your voters do not approve that, that's when you would be including that surplus as local revenue against that budget.

[Rep. Carol Ode]: And Elizabeth Two quick follow-up questions.

[Rep. Emilie Kornheiser (Chair)]: Yeah, just wanna name that Elizabeth's coming back to talk about reserve guidance next week. Okay. The two

[Rep. Bridget Burkhardt (Clerk)]: quick follow-up questions are, you said it has to be for a specific use. So how specific does it have to be? Did you just say it's a stabilization fund, essentially, for next year to tax it? Or does it have to be something extremely specific like capital improvements? And the second question that you can wrap in as well is, is there any limit on it? So is there any limit on how much you can put into a reserve fund if your voters approve it?

[Elizabeth [last name unknown] (President, Vermont Association of School Business Officials; Finance leader, South Burlington SD)]: So it all depends on how you phrase it to your voters, how you've put it on the ballot warning, and if the voters approve it in such way. So there is districts that have education stabilization funds that are more versatile, meaning they can use them for something that came up during the fiscal year that they were not budgeted for or knowingly going to have. Those are called an ed stabilization fund and they are a reserve and some voters in some communities have approved them that way. The most of what I see is typically capital improvement reserves. Those are the vast majority of the reserves that I've seen. I have also seen health insurance reserves, which are specific to health insurance. So it all depends on what you've put in that ballot language, what you've asked your voters, and did they approve? And the same goes for a maximum amount. Typically when you are asking your voters, you might be just asking for a specific dollar amount, but there are districts who basically put the language into the article that basically says up to a cap of X percent of our budget, or up to a cap of X percent of our surplus dollars per fiscal year, or whatever. So if they put something like that in there, they're allowed to continue to increase if it's a percentage versus a stagnant dollar amount cap. So it's really based on how they've worded it and what their voters have approved. And yeah, we've got lots more information about what folks do with reserve funds.

[Rep. Carol Ode]: Thank you.

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: I would say yes, as Elizabeth has said, it really does vary a great deal across the state. At Slate Valley, we have a capital reserve and that's all that we have. So, we're always looking at putting before the voters an amount that is approved out of the surplus we're working with FY '25. How much of that will go into our capital projects reserve and how much of that that will use towards our budget. We don't refer to it as a buy down. We do continue to refer to it as use of surplus. And we are always sort of balancing that. We're looking at how much. This year we balanced it a little bit in terms of how much we put into our general fund budget for building maintenance projects. And the thing is, that the idea is those projects really have to be completed within the fiscal year for that budget. And so, that can be a little bit challenging if we don't get our budget passed and we're later and later in

[Rep. Carol Ode]: starts to impact our ability in the new fiscal

[Cheryl Scarcello (Director of Finance, Slate Valley Unified Union SD)]: year past for the director of operations to get out bids and things to get projects completed over the summer, which is when a lot of that happens. So, we're always looking at how much should go into that reserve, which has more flexibility. It's not as constrained by the fiscal year. But in Slate Valley, that's all we're working with is a capital projects reserve and it's not large. I mean, hovers around a million dollars. I mean, we don't have a large capital projects reserve. Again, we're continually putting as much as we can back into our budget. Surpluses, that's another thing where the surpluses come from. They come from a lot of different places. Think more recently we're finding our surplus is coming from positions we've not been able to fill and that generates pretty quickly generates surplus. Hope that helps.

[Rep. Emilie Kornheiser (Chair)]: Thanks, Cheryl. That's really helpful. And as we have the reserve guidance conversation next week, think there's an interesting piece also of when artificial cost containment measures are placed on districts, how they play out so differently district to district, depending on how much reserves you have, how you've spent them down recently, all of those things. So I'm looking forward to that. I wanna thank you all so much for coming. I'm gonna make two public service announcements before you go. Actually, just one. I said one of them already. Ted, you mentioned the desire for modeling with regards to the foundation formula. I really appreciate that. One concern that I have with doing it too soon is we have not figured out rules for a transportation categorical grant for special ed for how we're measuring pre K students and what to do with district debt, just as some examples. And so we would be very far from even an apples to oranges comparison at this point. It would be more like pomegranates and mangoes. And so I wanna make sure that we can come a little bit closer before we start creating comparison scenarios. And so I'm hopeful that we can get there. Okay.

[Rep. James Masland]: Thank you so much. Thank you.

[Rep. Carol Ode]: And with that, I'm going

[Rep. Emilie Kornheiser (Chair)]: to thank everyone for a great and very full day and such thoughtful testimony and see everyone tomorrow. We're going to be talking about pre kindergarten. First thing in the morning, based on the work that Joint Fiscal Office has been doing this year, we don't have a report yet. So if anyone's looking for the report, it's not, like, in a secret place. It's just not available yet. So we'll be working from that PowerPoint that Emilie Byrne shared with us last time she was here. We only went halfway through it. And then also hearing from Morgan Crossman and Jenna McLaughlin on their thoughts on the situation, pre K, as it is now. Thank you all. Have a great night.