Vermont Legislature SmartTranscripts:

[Speaker 0]: Good morning. Morning.

[Rep. Emilie Kornheiser, Chair]: What day is today? Are we in Wednesday, January 21? We are going to spend the morning talking about pre kindergarten

[Emilie Byrne, Joint Fiscal Office]: with the goal of

[Rep. Emilie Kornheiser, Chair]: really figuring out a path to a more appropriate ADM for pre kindergarten students and understand the impacts of that. And so we're doing that all morning. And then this afternoon, we're going to continue our work on corporate taxes before the floor. And then after the floor, folks could come back. We are already receiving bills. And so we are going to do a quick walk through of H-six 48 and potentially a vote, which is banking, insurance, and securities. At some point today or tomorrow, we are likely going to receive and vote on the immunization bill. It's not going to get referred to us. We're going to do it as a

[Emilie Byrne, Joint Fiscal Office]: what people do call that?

[Ezra Holden, Joint Fiscal Office]: It's a tribe.

[Rep. Emilie Kornheiser, Chair]: I really don't like that. I'd like a new thing, I'd call it. Okay. Anyone has any

[Emilie Byrne, Joint Fiscal Office]: ideas? Yeah.

[Rep. Emilie Kornheiser, Chair]: And that's our plan for things. With that, Emilie, Ezra, pre kindergarten. Thank you. Oh, for our studio audience, there is not a report yet. So folks are looking for the magic document. There's no bill. There's no report yet. We are engaging in understanding content and the issues at hand, and we'll eventually turn that into a committee bill, likely in partnership with the Education Committee Human Services Committee. Now the floor is yours. Emilie and Ezra, thank you.

[Emilie Byrne, Joint Fiscal Office]: Great, thank you. So for the record, Emilie Byrne from the Joint Fiscal Office. Who else?

[Ezra Holden, Joint Fiscal Office]: Ezra Holden, Joint Fiscal Office as well.

[Emilie Byrne, Joint Fiscal Office]: And then we have Ted Barnett in the corner. We are going to pick up where we left off last week. I'll do a very quick This is what I talked about when I was skiing last

[Rep. Emilie Kornheiser, Chair]: week. You can even do it sort of slowly because we might have already forgotten what happened. Great.

[Emilie Byrne, Joint Fiscal Office]: Okay. So on some level, maybe it's good the report's not out yet because we can set all the groundwork so that you are ready to consume it when it drops, which should be soon. We are dotting I's, crossing T's, making sure everything's Really, the framework before we read the report is helpful. Yes. So, as we've got some slides, so I'm going to start kind of a refresher of what we talked about a little bit on Friday or Friday, I don't remember what day it was, a couple last week. And then, Edward's going to talk specifically about incentives in the school system. And then, Ted will jump in and talk about the providers. And then, we will wrap it up from there. We don't get into recommendations or anything specific. This is really laying groundwork. Got folks from PDF and DCF to talk about I think when I testified last time, I mentioned that JFO is not here to talk about outcome. We're really talking about program mechanics, the academic exercise that we went through to talk about what incentives may be underlying the system, whether or not people actually act upon them or not, but just that based on our read, things that could happen. So having folks here to talk about the outcomes, how it's working, what's going on the ground is really important context as well. Isar, do you want to share the slides? Sure. So we're here to talk about early care and learning. This is part two. We go to next slide. There we go, sorry. This is just our remember who we are, what we do. Go to the next one. But a high level, what I just talked about, we'll do a quick, very quick, but maybe I'll go slower, reminder of what we did in part one. Then we'll talk about pre K and school incentives, and then the childcare financial assistance program. Slower retention. Slower the better. Oh boy. Okay, I'll do my best. Stop me if I start talking faster.

[Rep. Emilie Kornheiser, Chair]: You're talking too fast right now.

[Emilie Byrne, Joint Fiscal Office]: Emily, I'd be like, really need to caffeinate Emily. All right. So, recap of the first part. So, Act 73 had this intense language about establishing an appropriate weight for pre kindergarten. So that's really the chart to represent the board and measure alluded to in terms of what this committee needs to examine and what hopefully this report and all this information will help inform decisions you need to make. So the pre K weight, Ezra will talk more about this, but it's currently in the bill is the same weight that exists today. But with education transformation, that weight may need to change depending on what happens with the pre kindergarten space.

[Rep. Emilie Kornheiser, Chair]: And I guess I would just say, we acknowledged in the study that led to the task force, that led to one hundred twenty seven, in all of those spaces, that the weight was not the right weight and just kept on punting this decision. So no matter what happens with education transformation, the weight needs fixing.

[Emilie Byrne, Joint Fiscal Office]: Okay, so that's set up. That's the intent of that's in Act 73 that sort of frames this initial discussion. So we talked about last week, the existing programs in the early care and learning system. The report that we did and are working on talks about three programs specifically that interact with each other. Head Start, which is a federal program that supports lower income families. The Head Start programs, as we talked about last week, has both Head Start programs utilize childcare financial assistance and universal pre K funding as their state match. There's a state match requirement with Head Start programs. So then off of that, there's the childcare financial assistance program. Ted will talk more about the incentives around the childcare financial assistance program, but this is the program that provides state subsidies to families to make childcare more affordable for families. And then there's the universal pre K program. So this is an education program paid for through the education fund provided by both public schools and community and private providers to three, four, and five year olds not yet enrolled to kindergarten. It's ten hours a week, for thirty five weeks a year to provide pre kindergarten education prior to enrollment in kindergarten. It's important to remember these three systems are interconnected with each other. Entities, private providers use childcare financial assistance program and pre kindergarten program funds to help support their program. As I said, Head Start utilizes all three funding streams. There are some public schools that receive childcare financial assistance program that offer full day programs in addition to their universal pre K programs. So they're all interconnected with each other.

[Rep. Bridget Burkhardt, Clerk]: Is there such a thing as triple E anymore? Yes.

[Emilie Byrne, Joint Fiscal Office]: We did not get into the special education components of pre K.

[Rep. Bridget Burkhardt, Clerk]: Okay, so it's only special ed kids who qualify for the triple E?

[Emilie Byrne, Joint Fiscal Office]: Yes, I believe so. Let me double check. But yes, I believe it's if you are identified when you're three, four, and five as getting an IEP or additional supports, then you are able to access the EEE special early education funding.

[Rep. Bridget Burkhardt, Clerk]: Okay, thank you.

[Rep. Emilie Kornheiser, Chair]: If we can hold any more details on that for when we receive some special education tests.

[Emilie Byrne, Joint Fiscal Office]: Yeah, that would probably be good for the agency to talk about, because there's also federal special education funds for our kids. Thank you.

[Speaker 0]: Just think it'd be important to note that it's not an additional student, it's on top of some of these other students too. Think that came up in the context of the counts last year. Wow, so one kid could be receiving all of these? There are two federal streams for special ed, one for K-twelve and another for younger kids, and so the triple year, the younger kids were identified as early intervention. And it is often delivered in one of these settings.

[Rep. Emilie Kornheiser, Chair]: The same way at a public school, you have the funding for the public school services, and then there's also special education funding.

[Speaker 0]: Thank you.

[Emilie Byrne, Joint Fiscal Office]: So the report that was in Act 73 in charge of Joint Fiscal Office with reviewing the financial incentives that exist in the Early Care and Learning system. So that is mostly what we're going to talk about today. What we talked about last time I was in was the incentives for families. We're going to talk about the other pieces of the system. Again, I would qualify that this was largely an academic exercise and that while some of these incentives do exist, that some families and providers and schools are making decisions based on the financial, how the money is working, there are lots of things that are driving behaviors of all of these entities. And we go into some of these scenarios, there's no way to know that how much of it is actually happening on the ground. But that was the charge in the report, so that's what we worked through. Now this is your favorite graphic created by a non graphic designer, yours truly, but this is just a frame, right? I think, right, part of it not being perfect, but it also like is memorable. And that it's, you've got parents, we've got schools, we've got providers trying to weigh all of the incentives in the systems to try to deliver services to the youngest Vermonters. So this was in the report that we did, the last presentation that we did, but just as, again, to sort of frame the incentive conversation, so we try to figure out what entities are trying to do when faced with the current programmatic structure and some of the financial incentives that they create. The incentives may cause people to behave in certain ways and then interact with the system in certain ways, but not necessarily. These are hypotheticals. We don't talk about all of the incentives. We mostly focused on the financial incentives. There are lots of non financial incentives that drive people to make choices within the system. And there's probably things we didn't consider, and I'm sure other folks will point out some places where we could have done more diving or could provide additional context to things. And there are some of these incentives that we will talk about. We don't have any way of knowing if people actually behave in a way of that. There's no survey to say, did you opt out of universal pre K because it changed your out of pocket costs? Question isn't something that's asked of parents. So this is, again, academic exercise of like, this could be happening based on our analysis, but we don't actually know to what extent it really occurs. Because again, I I mentioned this last time, there are a lot of people interacting with the system successfully day to day. So there's to the extent there are, this gets to the next point, right? These incentive behaviors really happen at the margins, right? Like If the structure of the system works for your family, then you're going to interact with the system in a way that it's structured and works. It's really when you get to the We talk about the benefits cliff sometimes that exists in these spaces. If it's one more dollar, maybe I'm not going to do it. Or if it's one more that changes in the number of hours. And that's not unique to this system. That happens in lots of programs. And I just mentioned, there's lots of reminders enrolled in that system. And again, like I said, we're not the expert on the outcomes. You have the folks here that are the experts on the outcomes and you should hear from them about how this is working right now. Vermont And is, I think We were reading some stuff for the report, but we're number two in terms of access for kids in terms of pre K in the country. So last time, just a real quick recap. I won't go too quick. Last time I was here, talked about incentives for families. The families have a lot to consider when they're interacting with the early care and learning system. Recall that based on the changes that were made in Act 76, a family earning up to 575% of the federal poverty line can qualify for a state subsidy in the child care financial assistance program. We looked at how families are considering their out of pocket costs for their child care tuition as it compares to the family share that they're paying. So, as you move up the income scale, the amount of your determined family share increases. There are instances where the tuition that the childcare provider charges, your weekly share may be less out of pocket than it is in payroll and student feedback. Families So, are making those decisions. Additionally, depending on how if the child is of age for universal pre K, if you're enrolled in universal pre K, how those funds are applied to your tuition may impact whether or not from a financial perspective, it's cheaper for you as a parent to pay straight out of pocket to enroll in universal pre pay, to enroll in CCPAB, sort of balancing all of those things. And finally, just remember that the CCPAB benefit is based on the number of hours a family needs. So CDB is looking at whether or not a child is enrolled, how many hours the family needs, whether or not they're enrolled in UK, and then calculating number of out, whether or not they qualify for full time or part time care or extended care based on how those things

[Rep. James Masland, Member]: are interacting with each other.

[Speaker 0]: Can you explain how this interacts with eligibility for Tripoli? I can't,

[Emilie Byrne, Joint Fiscal Office]: I don't know the answer to that. So is your question if they are

[Speaker 0]: The child needs services, additional services. How does that influence where they're likely to involve and how influence is that decision? Yeah, we can look into that. And there are cost implications to that.

[Emilie Byrne, Joint Fiscal Office]: Yeah, we can find out.

[Rep. Carolyn Branagan, Member]: Asking for a friend, CDD means? Child care, child

[Emilie Byrne, Joint Fiscal Office]: development division, DCF, CDD. Janet, did I? Yes.

[Rep. Carolyn Branagan, Member]: Child Division.

[Rep. Emilie Kornheiser, Chair]: Department Children

[Emilie Byrne, Joint Fiscal Office]: and Family and Human Services.

[Rep. Carolyn Branagan, Member]: Yes, there's a lot of them.

[Rep. Bridget Burkhardt, Clerk]: Yes. And CCFAD? Child

[Emilie Byrne, Joint Fiscal Office]: Care Financial Assistance Program.

[Rep. Emilie Kornheiser, Chair]: Representative Ode.

[Rep. Carol Ode, Member]: I'll be back. I'll take testimony on the 575% cap.

[Rep. Emilie Kornheiser, Chair]: In the thought that we would change the five seventy five percent cap? That might be beyond our capacity this year, but we can see how it fits into the other pieces.

[Rep. Carol Ode, Member]: Yeah. Well, the more I hear families having choices, forth, I know that that half is

[Rep. Emilie Kornheiser, Chair]: Heard. I just, you know, you pull the strings, you're pulling all the strings. Yes. Okay, represent them.

[Speaker 0]: Different related question. In the past, in our areas, some providers did not take subsidies. They just didn't engage with the CPAP program at all. And I'm wondering if extending CPAP has changed the composition of our programs and if

[Rep. Carol Ode, Member]: we can get evidence on that as well.

[Emilie Byrne, Joint Fiscal Office]: That might be a good question for Jan. Yes.

[Speaker 0]: I'm concerned about people, and I

[Rep. Carol Ode, Member]: don't know whether this would be our committee to not, people being able to access the hours that they are entitled to, to transportation.

[Rep. Emilie Kornheiser, Chair]: I think those are great questions for the Human Services Committee to take on.

[Emilie Byrne, Joint Fiscal Office]: The only other thing I would add that I realize is not on here is that childcare financial assistance is also tied to the number of kids that you have. So there is a maximum out of pocket cost, whereas if have two kids or six kids, let's say, based on your income, this is your share of spending. And sometimes, if you've got multiple kids, it's different. The decision making may be different than if you have one child, since that out of pocket is capped, regardless of the number of children. If there are no more questions, that is what we talked about last time. And I'm going turn it over to Ezra. I'm going go in the corner.

[Speaker 0]: Cool. Yeah, thanks.

[Rep. Carolyn Branagan, Member]: Thanks, Emilie.

[Ezra Holden, Joint Fiscal Office]: All right, so I think, like Emilie, the challenge for me is getting me to talk faster, so let me know if I'm talking too slowly. But I have had my coffee this morning, so maybe that'll help you all out a little bit.

[Rep. James Masland, Member]: That you know might help.

[Ezra Holden, Joint Fiscal Office]: Well, that might help as well. So I think Emilie did a nice job teeing up my segment of this marathon testimony here with the three of us, but just for my own sake, I'm going to remind everyone that as was touched upon in Act 73, we were asked to examine fiscal incentives that may or may not exist in the system, not to necessarily say this is exactly what is happening, or this is why decisions are being made, but instead to just focus our lens on if there are fiscal incentives, what could they be? And so just want to throw that out there. Not saying that schools are 100% making their decisions based on anything we're talking about here. However, that's how we took the charge from Act 73 when it asked us to do this report. So just want to clarify that for everyone.

[Emilie Byrne, Joint Fiscal Office]: Thank you.

[Ezra Holden, Joint Fiscal Office]: So universal pre kindergarten, this is going to be, as mentioned, a little bit of a recap of what was talked about last time, but you can never hear too much about EPK. So universal pre kindergarten, all districts are required to provide access to publicly funded pre K. However, we'll have to say that the parents do need to find a slot. So if the school itself isn't operating a program in house, the parent still needs to find a slot for their child to attend, because pre K is not mandatory in the same sense that first grade or second grade would be mandatory. So that's just something to highlight that the parents still need to find program slot if their district is not offering the program in house.

[Rep. Emilie Kornheiser, Chair]: We guarantee funding for it, but we don't guarantee access?

[Ezra Holden, Joint Fiscal Office]: Right, exactly. And we guarantee the funding at the statewide rate, not necessarily the funding that you would need for your child to be enrolled in the total number of hours that you need. It's the rate statewide for those ten hours for thirty five weeks here, just to clarify.

[Emilie Byrne, Joint Fiscal Office]: Yeah. Can I have one clarify?

[Rep. Bridget Burkhardt, Clerk]: Can also stay sitting there if

[Rep. Carolyn Branagan, Member]: you want.

[Emilie Byrne, Joint Fiscal Office]: For sure. I'm gonna have to be still there. The public schools also a lot of times have a fixed number of slots. So they don't necessarily, not every kid that would like to go there necessarily can. Are sometimes, there are often only a certain number of slots that go to schools.

[Ezra Holden, Joint Fiscal Office]: All right, so UPK is available to three, four, and then five year olds who are not yet enrolled in kindergarten. And it can be provided at a qualified public district, either the district where you reside or a parent can choose to send their child to another district's program or a pre qualified private program. And just mentioned, if the program does not operate its own program, or if they can't find a slot at that program, as Emilie just touched upon, or if the parent decides that another program would be a better fit for their child, they can enroll in a different qualified program. And the district where they reside would then send a tuition payment to the place that they're attending, whether that's a private provider or a public provider who has a program who's able to accept.

[Rep. Emilie Kornheiser, Chair]: So if a public If, say, Windham Northwest was running a public pre K program, and someone from Windham Southeast wanted to send their child there and enrolled them, Wyndham Southeast sends money to Wyndham Northwest?

[Ezra Holden, Joint Fiscal Office]: Yes.

[Rep. Emilie Kornheiser, Chair]: And is that for the full cost, or is the education spending in Wyndham Northwest carrying some of that cost?

[Ezra Holden, Joint Fiscal Office]: So, and I have a slide.

[Rep. Emilie Kornheiser, Chair]: Oh, then I'll wait. I'm waiting.

[Ezra Holden, Joint Fiscal Office]: Believe we have a slide on that. Can

[Rep. Emilie Kornheiser, Chair]: Don't jump ahead.

[Emilie Byrne, Joint Fiscal Office]: Okay. You

[Rep. Emilie Kornheiser, Chair]: can keep on going. Okay. Thank you.

[Ezra Holden, Joint Fiscal Office]: So from a broad perspective, it's going to be the tuition payment of the district sending that student is gonna be part of the sending district education spending. And if that student's going to a public district, and this is maybe kind of around your question, Chair Kornheiser, then the program or the district providing that program, that student's impacting their education spending as well, both in received tuition, which would be an offsetting revenue to their ed spending, but they're operating a program. So that means that there's a cost associated with that. That student would be effectively touching upon both of those districts, the district that is sending them, and the district where they're being served because of those two different components. And we're gonna talk about that a little bit more when we talk about who is paying So for I just wanna mention that now. Maybe let's sink in a little bit. And then when we talk about it again, maybe you can answer your question more specifically. So, the existing Pre K weight under current law and in Act 73, Pre K weight is a negative point five four. Now, that means, and I'll be discussing that a little later, that means two different things, but just right now it's negative 0.54 for pre K students under both systems. And so what that means effectively is that when a student is enrolled in universal pre K, regardless of where they're attending, the district, their residing district, is going to receive at least a 0.46 net of that weight in their long term weighted ADM for each child participating. So each child in the current system and x 73 starts out as a one. Okay. And with pre K, you then add a negative 0.54 grade weight, which nets out to a district receiving 0.46 in their long term weighted ADM count for pre K child. However, that pre K child, just like other children, can receive additional weights based on characteristics. That includes economic disadvantage, English learner, any other weights that they would receive. And so there's an impact on their district, but the impact differs. We're going to talk about that in a little bit under current law and Act 73, which is current law, but we're not operating under foundation formula yet.

[Rep. Carolyn Branagan, Member]: As we're in the chair's example, it would be the sending district that counts that 0.46 in the long term weighted average daily membership.

[Ezra Holden, Joint Fiscal Office]: Yes, absolutely. So yeah, the sending district, if you reside in the piece, as Chair Kornheiser mentioned, and you're sending your child to a different district, that home district or residential district counts you in your ADM, and they're the ones who are sending the payment, and the idea is that ADM is helping them offset the cost of that tuition payment that they are then sending on to the program that serves the child.

[Rep. Emilie Kornheiser, Chair]: But ADM is not money, it's tax capacity.

[Ezra Holden, Joint Fiscal Office]: Correct, it is tax capacity. However, I believe that the idea is that since they are the ones who are sending the cash payment for that statewide tuition rate, that's why they are the ones who are counting the child in their long term weighted ADM count. So, yes, currently, that point four six translates to taxing capacity, which is not linked to a set cash amount. It allows the district to raise funds at a certain tax rate. However, under Act 73, it becomes part of a district's calculation for their educational opportunity payment, which is in the form of a payment of point four six of the base amount, which we'll talk about in a little bit. So, who pays for UPK? We've talked about this. We're just gonna keep talking about it, because I think this is really important to understand, is that if a child is enrolled at a UPK program in a public school in their district, then the cost to operate that program is going to be the district. So if you live in district A and district A has an in house program and you're attending that program, then the child is still in the district, that cost is staying in the district that's operating the program. But if the child lives in district A, but is enrolled at a program either in a separate district like district B's public program or a qualified private provider within and it doesn't matter if it's within district A, B, or C, it's a private provider, so it's not part of the education fund then the district where the child resides is going to be sending a payment, which it's a statewide tuition payment for UPK, and that covers ten hours a week for thirty five weeks of the year. And so for the 'twenty five and 'twenty six school years, so that would be fiscal year 2026, that's the year we're in right now, it would be 3,982. That's the payment that every child would have if they're being sent to a public district that's not their home district or a private provider.

[Rep. James Masland, Member]: Thank you. Interesting. Does the state collect and publish statistics or whatever you want, you know, numbers on the percentage of kids that go to school be gay within their district or those that go across town lounge or or to another district?

[Rep. Emilie Kornheiser, Chair]: That's such a great question.

[Rep. James Masland, Member]: Represent private institutions, so money goes elsewhere.

[Speaker 0]: Repeat that first question.

[Rep. James Masland, Member]: Yeah. Sorry. My concern is if if, for instance, the town of

[Rep. Mark Higley, Member]: I don't know what.

[Rep. James Masland, Member]: Doesn't have a pre k offering.

[Rep. Emilie Kornheiser, Chair]: I don't think anyone heard your original question, so giving the context for it.

[Rep. James Masland, Member]: So, these are interesting numbers, but it only seems to provide part of the question, part of the answer. So, my concern is, and there's concern out and about about state money going to private schools. And boiling down to your presentation, Ezra, does the state retain or compile information on how many kids and therefore, how many kids go to out of district programs, and of those, how many are are basically private as opposed to just another school system? Probably end up where figure out where I'm going, but I'm just curious what the state can tell us. Sure. Data is of the you can, and I'll Thank you. Move my question around as appropriate.

[Rep. Emilie Kornheiser, Chair]: The short answer is no, and that's why we had JFO do this entire study. And there was a study before that and a study before that, And this has become this most absurd white whale of legislative studying. And I think other people will testify to that as well.

[Rep. James Masland, Member]: It would be good to know that. Yes.

[Rep. Emilie Kornheiser, Chair]: Yeah, Representative Holcombe.

[Speaker 0]: I think one of the takeaways is maybe we need to, before we implement complex policy, do baseline, identify what the baseline data is we need to collect so we actually collect it and can actually evaluate the programs that we're rolling out. Because otherwise, we really have no idea what the impact is.

[Rep. Emilie Kornheiser, Chair]: That would be delightful. And if anytime anything's going to leave this room, you could help us do that, that would be great. This will also be my moment to put in my personal plug. Think it would be great if we had capacity, specifically at JFO, for that, but that would mean adding more staff to JFO. Ezra, back to you.

[Ezra Holden, Joint Fiscal Office]: All right. So are there any further questions on this slide? I think we've touched on these bullets, but I'll just retouch on the last one again. So if a pupil is attending a public program, they're also part of that district's budget. And now if it's their own district, again, we're staying in the same district, student A, residing in district A stays in their program. However, when that student goes to a program that's outside of their district, whether it's a public program or a private program, you then have a cost in their district of residence, because they have to provide that tuition payment. And if the student is being educated at another public in house pro Excuse me, another public program in house at another district, then that second district is also counting that student within their education spending both as an offsetting revenue from that tuition payment that they've received and also as an expense on their budget, because they have to educate that child in their program. So that child is really touching upon both of those districts' budgets in different ways. Or if they're going to a private provider, then they're within that private provider's budget, which doesn't affect the education fund as an expense, except for the fact that they have a tuition payment that they're receiving from their district of residence, their sending district.

[Rep. Emilie Kornheiser, Chair]: One question I'm gonna be sitting with and carrying through is, where does it actually, and this is not a question for you right now, Where does it actually cost $3,982 to educate a kid for ten hours? And are there any families that actually only send their kids for ten hours of early care and education? So those are two of my streams I'm going be carrying through this.

[Rep. Carol Ode, Member]: I just have a clarifying question. You said that if the people are trying have another public school program, they're also part of that district's budget, are they counted in the long term ADM? Yeah, receiving school does not count as a kid because it's just a tuition payment in their local revenue that comes out before they get to what they're asking. Yes.

[Ezra Holden, Joint Fiscal Office]: Yeah, that's correct. So what happens is the district of residence, since they are the ones providing that payment, they are also counting that student in their long term weighted ADM, which goes to their taxing capacity. And so that student's tuition payment goes into the district's education spending, which then is being divided by their long term weighted ADM when helping to determine that district's homestead tax rate.

[Rep. Emilie Kornheiser, Chair]: And then also the cost of providing that care is part of their education spending.

[Ezra Holden, Joint Fiscal Office]: Yeah, if they operate the district. Excuse me, if the district's operating the program.

[Rep. Carol Ode, Member]: Back to your question, is that 3,009 and 82 really covering the full cost in that district's budget? Because they have to have the teacher, they have to have the space, they have

[Speaker 0]: to have all the things.

[Emilie Byrne, Joint Fiscal Office]: One other question, yeah,

[Rep. Emilie Kornheiser, Chair]: represent the goals.

[Speaker 0]: In terms of breaking it down, this becomes germane when we shift to a foundation formula, if we shift to a foundation formula, the cost, the district of origin, that is counted on a student on the ADM, also has costs associated with that child that are above the value of the tuition. So if we automatically shift to giving the full 0.46 in tuition, we may not be acknowledging some of the costs associated with managing that child. So the tuition may be over.

[Rep. James Masland, Member]: Okay, did that make sense?

[Rep. Carol Ode, Member]: Are you talking about administrative costs? So confused. Administrative costs.

[Speaker 0]: Like, all the costs. Like, when we talk about tuition, we need to also Let me just frame it this way. As we talk about tuition in any setting, we need to be asking what that tuition is covering because there are costs to managing a child in a tuition construct that are not embedded in that actual tuition payment. So this is germane to the larger conversation we're having about funding ordinance.

[Rep. James Masland, Member]: It's not

[Speaker 0]: just pre K, it's at every level. Tuition understates the cost of education.

[Rep. Mark Higley, Member]: Yes, restrictions on the use of your tuition. Do use that for out of state?

[Ezra Holden, Joint Fiscal Office]: For Pre K?

[Rep. Mark Higley, Member]: For Pre K.

[Ezra Holden, Joint Fiscal Office]: Oh, that's a great question. I don't actually know off the top of my head.

[Speaker 0]: We have dinner.

[Rep. Mark Higley, Member]: Mean, we have some remote areas that, like, dressics.

[Speaker 0]: I think our next two witnesses can probably answer that question.

[Emilie Byrne, Joint Fiscal Office]: I was just curious. Yeah, that's a

[Rep. Emilie Kornheiser, Chair]: great question. Yes, Representative Bridget.

[Rep. Bridget Burkhardt, Clerk]: I think this is a quick question, but I'm looking at the outflow statement education fund outlook, one Julia carries around. Can't find it until the early end of the year. I can find her to leave, but it's not listed under the appropriations. So would it be under the Ed payment? Yes. It's not set out separately. So we don't know how much total for the state that costs us. We just know the full amount.

[Ezra Holden, Joint Fiscal Office]: Right, so a student goes into a district's education spending, just like all the other grades are. So we don't break out statewide. This is our statewide cost of grade one, grade two, grade three. It all gets wrapped up. Education spending put into that education payment. So it's all within there.

[Rep. Emilie Kornheiser, Chair]: Another reason why we want this study.

[Emilie Byrne, Joint Fiscal Office]: Yeah. Early

[Rep. Bridget Burkhardt, Clerk]: ed is in here. Essential early education aid.

[Rep. Emilie Kornheiser, Chair]: So that's, again, that's a special ed program for younger kids. And that's why that's broken out, because it's a categorical program like the special ed line ISIS.

[Rep. Bridget Burkhardt, Clerk]: We must get offsetting money from the

[Rep. Emilie Kornheiser, Chair]: federal government. And we will take testimony on Triple E when we talk about special ed. One of the, I think, challenges for the committee to navigate this is, one, the staying in our lane enough. And then two, it's just actually understanding what's happening right now is incredibly difficult and confusing, and there's lots of other pieces of it. And so if I overly control it, it's just so that we're managing to even understand the basics of what's happening before we go into the depth of what's happening. Yes, representative Ode. Is there a question for Ezra? Okay, let's attempt to Okay.

[Speaker 0]: This goes back to just trying to understand what the data gaps are, because they've been long and persistent. Does the state actually collect data on where early childhood students who have been identified as having a disability are

[Rep. Emilie Kornheiser, Chair]: placed? Let us ask the Agency of Education or Child Development Division that question.

[Rep. Mark Higley, Member]: Yes. As a parent, do you have to enroll your child

[Emilie Byrne, Joint Fiscal Office]: in pre K-?

[Ezra Holden, Joint Fiscal Office]: Yes, so It's a state requirement.

[Emilie Byrne, Joint Fiscal Office]: No, no, I'm sorry. If

[Rep. Carol Ode, Member]: you want the payment, you

[Emilie Byrne, Joint Fiscal Office]: have to pay Right. But if you use it.

[Rep. Bridget Burkhardt, Clerk]: Let's let Ezra correct.

[Ezra Holden, Joint Fiscal Office]: So to clarify, I guess when you say when you use the word has to, I guess you can take that two different things. If you want to receive the benefit, then yes, you have to enroll your child, and you have to secure a slot. But it is not mandatory, like you have to do it. So I guess I jumped the gun when I heard the term, Does the parent have to? Yes, if they want to receive this tuition payment, but no, it is not a mandatory. You must enroll your child like middle school.

[Rep. Mark Higley, Member]: What about homeschooling? Does that fit in here at all?

[Ezra Holden, Joint Fiscal Office]: Well, since it's not a mandatory grade, you can keep your child at home, and this tuition payment needs to go to a pre qualified provider, not necessarily if you educate your child at home, for example, you would need to be And there's different requirements. Yeah, there's requirements that the agency could probably speak about more specifically about what it takes to become a pre qualified provider. But yes, there are requirements that must be met.

[Rep. Carolyn Branagan, Member]: From just a budgeting standpoint, so the sending school includes the calculation of spending per pupil per long term weighted average daily membership for anybody who is part of the pre K program, even if they don't have that trial in their program, that one that they run. And then the receiving, if it is placed at a different, they receive the revenue, but it's not included in the calculation of per pupil spending per long term weighted average daily membership for the receiving district, correct?

[Ezra Holden, Joint Fiscal Office]: So it's included in that calculation, what's not included is the 0.46.

[Rep. Carolyn Branagan, Member]: They're not raising money for that. So

[Ezra Holden, Joint Fiscal Office]: the receiving district in your example would have to include the cost of that student when they are calculating their education spending per long term weighted ADM.

[Rep. Emilie Kornheiser, Chair]: Can I back up for a second? What if we try to use the word budget for a minute instead of education spending and then move to education spending.

[Rep. James Masland, Member]: Can try to explain it that way? So

[Ezra Holden, Joint Fiscal Office]: if a school district is setting up a budget, like the business manager's assuming that it's going to cost x number of dollars to run their pre K program, then they would need to factor in the cost of educating these additional students, because that takes staffing and space utilities and stuff. So yeah, the pre K student that they're receiving would have to be included in the budget both as an expense, but also as revenue, bringing in that tuition. Does that make things more clear?

[Rep. Carolyn Branagan, Member]: It has different permutations than what is your for the excess spending threshold and other calculations as to what your spending is per long term weighted average daily membership. So that all factors into it. So I understand you have to provide the teachers, the space, the services, everything else if you're receiving that child, got it, and their budget, but in the calculations on the other side, that's what I'm interested in.

[Ezra Holden, Joint Fiscal Office]: Yes, I believe you would include that student's costs when you are determining your district wide long term weighted because you're receiving that offsetting revenue, which brings that number down. And that number is set statewide and then increased every year by inflation. So you're not able to charge a different amount because your district is offering this service at this cost. Have to accept I mean, you can charge a parent for hours outside of the ten hours a week, but for these ten hours a week for thirty five weeks, yes, you would have to accept this, use that to reduce your total education spending, but you would still be including the costs that Any costs that aren't covered by this would go into your spending per pupil.

[Rep. Carolyn Branagan, Member]: Thank you. It's easy to think, well, we're double counting students, but we're not.

[Rep. Emilie Kornheiser, Chair]: We might be in other places, don't we?

[Emilie Byrne, Joint Fiscal Office]: Yeah. Fine.

[Rep. Emilie Kornheiser, Chair]: Ezra, back to you.

[Ezra Holden, Joint Fiscal Office]: Okay, so if there are no more questions on this slide, I'll

[Speaker 0]: Yeah, so this is making me think more things. So Hypothetically,

[Rep. Carolyn Branagan, Member]: let's

[Speaker 0]: just say under a foundation plan, the payment for a student would be $4,000 You've got a home provider with four students, all of them are economically disadvantaged, four times eight is 32,000. So the payment would be, if we're doing this under foundation plan or proposing to treat early ed the same way we're treating K-twelve, we're proposing now for a child.

[Rep. Emilie Kornheiser, Chair]: I don't think anyone's proposed that yet. Well, it was one of the hypotheticals on the previous slide. Finish finish your sentence. Just wanna

[Emilie Byrne, Joint Fiscal Office]: be I'll

[Speaker 0]: come back to

[Rep. Emilie Kornheiser, Chair]: it. Okay. Think we're gonna at some point soon, we're gonna need, like, some sort of diagrams that do just that.

[Speaker 0]: What I'm imagining is Boston, which tried to put high pressure water through wooden pipes and blow that off the base. So I think you just need to think about how it's gonna play out. Agreed.

[Ezra Holden, Joint Fiscal Office]: Okay, so we've talked, this is all just the recap, we're just getting to the new stuff now. I mean, it's

[Rep. Emilie Kornheiser, Chair]: why? Sourish was not even being able to schedule too much time for this.

[Ezra Holden, Joint Fiscal Office]: Never too much time. So now let's talk about, again, we kind of teed up this whole conversation with Act 73, charging JFO with looking at financial, fiscal incentives around early childcare. So we're gonna talk about the school district incentives for UPK that are financial. And then later on, I also have a slide to talk about some nonfinancial, but we're going to talk about financial since that appeared to be our charge from Act 73. So what are some financial incentives for UPK? So I think you'll recall because we've just spent a lot of time talking about this, a district is required to offer UPK to parents, but that parent still needs to secure a slot at a qualified program. And so if a parent is not able to secure that slot, the district doesn't have to give them a payment. But if they do secure a slot, then the district is required to make that payment. This can be provided inside of the district as well if they're operating in house, assuming they have a slot in house. If they have an in house program and someone can't get a slot in that program, then again, they have to go find a slot, and then you talk about a tuition payment rather than operating costs of that student inside the district. And so under Act 73, there are some financial incentives that may arise that are a little different than what you have in the current system as you transition from taxing capacity to a foundation formula, and a base in weights are associated with students. And in that sense, some districts may be incentivized, not saying that they will, but some may be incentivized to only provide UPK tuition, to not want to offer any sort of in house program, just make that tuition payment. On the other hand, other districts may be incentivized to operate a program and receive other students from surrounding districts. And so there are different incentives for different districts around their UPK delivery. If you've seen one district, you've seen one district. Every district is different in the state, as I'm sure you're all aware, but it's always helpful, I think, to just reiterate it. So, current incentives and when I say current, I'm talking about the taxing capacity system that folks use right now, not the Act 73 foundation formula, which has now gone into effect. You have to meet certain criteria to get that into effect as a legislature down the line. So currently, the impact the fiscal impact of UPK varies by district because as districts make different decisions on UPK, overall education spending is changing. And I think this is great. We've talked about some examples from some questions. So district A might be able to provide a program in house for their students at one cost. And another district might not be able to provide a program in house that is, for them, financially viable, where they decide that their students would be better served if they just tuition them to a different district in their program or to a private provider. And so when you think about from a fiscal perspective, every district is gonna have a little bit of a different calculation when they figure out what can they do for their students with their current portfolio, their education spending. And under the current system, your long term weighted ADM translates to taxing capacity and not a concrete set of funds, which, as you all know, is different with the foundation formula. So with Vermont's tax capacity weights, pre K weight, that negative 0.54, that results in a district receiving a net long term weighted ADM of 0.46. That does not directly correspond with funding amounts because it's a tax and capacity weight. Districts still will build their own budget. It's approved by the voters, And that results in different education spending and therefore different fiscal incentives. But under Act 73, pre K weights do correspond for funding amounts because, as you will recall, we will be moving to a foundation formula as envisioned under Act 73. And so that weight is still a negative 0.54 for the pre K student, but now you're going to be using your long term weight ADM to calculate your district's educational opportunity payment or EOP. And so this EOP would include the PK students. So remember that net 0.46 that you get to count after removing the weight as it currently stands, and also any other weights that they would receive. So remember earlier, we mentioned you could receive a economic disadvantage weight. If you're a pre K student, you could receive an English learner weight, and those are the full weights. Under Act 70, those would not be a negative point five four for each of those weights, so you would still receive the full amount of your economic disadvantage weight if you're a pre K student. And so taking act 70 threes in fiscal year twenty twenty five dollars, base amount of 15,033, and you multiply that against a student's net point four six as a pre k student, that would mean that your district with that student would receive about $6,915 in fiscal year twenty twenty five terms. And now, in fiscal year twenty twenty five, when we're talking about the UPK tuition, and we talked about the fiscal 2026 rate, but since I'm talking about the foundation formula in 2025, we're gonna just step back a year to the 2025 UPK rate, which was $3,884 So assuming no changes, a district, after making that UPK tuition payment, would be left with about $3,031 in funding left over at the district after accounting for that tuition payment. And of course, that is not including any administrative costs that the district may or may not have. But, and this is really important, I feel, small line, but big important, any additional weights a student receives will increase its amount. So if your pre K student is considered economically disadvantaged, that student would be receiving an additional $15,000 in change, a little over $15,000 in addition to that $6,915 And if you are a district that is only tuitioning your students, you only are having to send whatever the UPK rate is for that year, which in fiscal year twenty twenty five would be that 3,884. The remainder of that funds would remain with the districts and not be used for that UPK tuition rate.

[Emilie Byrne, Joint Fiscal Office]: So I think this is

[Speaker 0]: the question for us. Leaving aside the incentives this creates across the two sectors, effectively what this is saying is if we do what's in the third bullet, let's say you're a home provider, you have four kids, two of them are your own, and they're all economically disadvantages counted in the Ed system. That would be four times two times four times, let's say it's 4,000 rounding up. So the payment to that provider then would be 128,000 for those four kids.

[Rep. Emilie Kornheiser, Chair]: So I think this is a question for legislative counsel about whether it would default to that provider receiving the 3,884, and the district winding up with all of that money, even though they're not spending it on that care, right? That's part of what we need

[Speaker 0]: to unpack. I said 4,000. So even if that, I think it still holds. I mean, there's an awful lot of money moving here, I think that's something that Ledge Council needs to level out. Yeah.

[Ezra Holden, Joint Fiscal Office]: Yeah, I would recommend Ledge Council to come and give you further testimony. In my conversations with them, I've received the answer that has influenced this slide, which talks about the district retaining that additional funds, I would welcome you to talk with legislative counsel and see if your understanding aligns with their understanding. But my conversations with them is what influenced this difference about what the district is receiving in their EOP versus what they would have to send out in the UPK tuition rate as it currently stands.

[Rep. Emilie Kornheiser, Chair]: So the way I see that is that the financial incentives that I see there would be for the district to not provide in house pre K, but instead send the youth out for the ten hours.

[Ezra Holden, Joint Fiscal Office]: Exactly, kind of stole my thunder a little bit in my continued slide. With remaining UPK, excuse me, with remaining pre K funding, After removing your UPK tuition rate and assuming no other changes, assuming that's all operating as it is today, a district may fund itself in a position where they would be financially incentivized to only tuition out their students. There are, as I'll touch upon later, non financial incentives, which certainly play into a district's thought process about do I offer a program in my district? Do I send my students elsewhere? We're just talking about financial incentives right now. However, other districts may benefit from offering a program in house, especially if they're able to convert, if they have the infrastructure already in place, if they have enough funding to operate it themselves and can receive students from other districts, they may find themselves in a good position to continue or to start operating their own program and receive funding from other students, but that depends on how the district looks, the district's capacity, the logistics would play into that decision. So really each district will have a little bit of a different calculus and their decision to expand or tuition pre K students or to just operate as they currently are.

[Rep. Emilie Kornheiser, Chair]: I'm wondering if

[Rep. Carol Ode, Member]: you could look at the numbers and say, well, you'll send some of kids to your district, you send kids to our district.

[Rep. Emilie Kornheiser, Chair]: Oh, fun. Yeah. Yeah, I think that is exactly the bizarre situation we have incentivized. Yeah, for example. I'm just gonna

[Speaker 0]: say, I'm really uncomfortable with this conversation because we're implying that all the decisions are entirely just incentivized financially. I think, I also would say that I'm having trouble with this conversation about us talking about the triple E students because districts have a very strong incentive to make sure early education students are receiving high quality pre kindergarten. And many of them operate pre kindergarten for precisely that reason. And when parents leave the sector, they aren't always entitled to that special ed. But if they don't get that early intervention, it actually impairs their readiness for school. And so another piece of data I think we ought to be looking at is both where the students are located who are receiving triple E supports through the school districts, but also what is the rate of identification for kids who are in public providers and private providers when they hit kindergarten? I think it's

[Rep. Emilie Kornheiser, Chair]: a really important thing to look at. And I think that's something that the Human Services Committee and the Education Committee would need to look at, because it's about the services being provided and not the physical. It's just an attempt to

[Speaker 0]: narrow this. I know. Conversation here and us talking about it there.

[Rep. Emilie Kornheiser, Chair]: And I want to acknowledge there are hundreds of different incentives for all of these decisions. We're focused on the fiscal incentives. I don't think any schools are I don't think anyone's working at a I think there are very few people working at school because of the financial incentives of the school. People are doing it because they want to care for kids. And so there's lots of really important reasons why all of this is structured. But we need to start somewhere with this piece, and this committee is focused on making sure that the fiscal incentives in policy line up with the policy goals. But it's uncomfortable to talk about children only in the context of money, but that's sort of what we do every day. So I'm not

[Rep. Carol Ode, Member]: Yes, representative. Tax policy, set a rule,

[Speaker 0]: no matter what bids, literally many, say, well, does

[Rep. Carol Ode, Member]: it work when I comply this, this and this way through? And so we just make sure that the rules go with the policy of providing education for kids so that they do as well as possible through their educational experience, but also that we look at what we're doing when we set out policy to school districts who to figure out how they're going

[Speaker 0]: to budget going forward. Thanks. Or maybe we should consider having joint testimony. I guess my concern is, we know, for example, the way we've set up the special ed reimbursement schedule financially penalizes districts that do the right thing, but at great expense to the Ed Fund. And so if there's no way to have that recursive conversation, I don't know how to ever fix these problems. We're just digging.

[Rep. Emilie Kornheiser, Chair]: No, joint hearings are great, and we've been scheduling them really regularly. And we have someone from human services who's following along with us so that they can be looped in. Hi, Mark. I don't even ever think I said hi when you came to committee today. Nice to see you. Good morning, Ezra?

[Ezra Holden, Joint Fiscal Office]: Yes, great. So just want to segue into my next last couple of slides here by calling out the footnote that there are many non financial incentives aside from the financial ones that we've just discussed about tuition and EOPs and dollar figures. And that can be the non financial incentives. For example, a district may offer you Acadian House to provide enhanced service to their community. At the end of the day, a school district is run by a school board and serves a community. And so there's certainly input from the members of that community and the people who have those children. And so that could be one. That's a great reason that a district may choose to offer this in house. A district may also offer pre K in their district, even if it's not financially the best for them, because there's nowhere else for those kids to go. They could be in a childcare Desert. And so each district and their community within the state is unique, and the decision is going to be equally unique about providing pre K in house. What does that look like at the district? And then their decisions around, do they not offer one with the idea that parents can use the tuition and UPK mechanism? Or if it's a combination of the two, if the district's able to provide some capacity, but they can't provide a slot for all the kids in their district, you might have a combination of in house and pre k. You know, there's a lot of different reasons and a lot of different programs across the state. So it certainly is not necessarily all a financial decision. However, under Act 73, we decide to touch upon some of the incentives that's laid out in fact. So are there any further questions around UPK and schools? If not, my coworker Teddy Waszazak Barnett is up next.

[Emilie Byrne, Joint Fiscal Office]: I think probably there are lots more questions, that's good

[Speaker 0]: for now. Thank

[Emilie Byrne, Joint Fiscal Office]: you very much.

[Rep. Carolyn Branagan, Member]: Focus on CBD, but then AHS or DCF and then AHS.

[Emilie Byrne, Joint Fiscal Office]: Format of B? But then it's OB. Absolutely.

[Ezra Holden, Joint Fiscal Office]: Okay. I promised I'd work to the computer before.

[Rep. Emilie Kornheiser, Chair]: Hey, Chittenden, how else is your

[Ezra Holden, Joint Fiscal Office]: I was gonna ask. I would anticipate at least, like, fifteen, twenty minutes. So if you all wanted you're scheduled for a break, I think, in a couple. So if you wanted to take

[Emilie Byrne, Joint Fiscal Office]: a break. I think

[Speaker 0]: I'm