Vermont Legislature SmartTranscripts:

[William Canfield (Vice Chair)]: Good morning. This is House Ways and Means. It's 02/04/2026. And Chair Kornheiser is gonna be a few minutes late, so we're gonna get started. And first, we have Logan Mulberry,

[Bridget Burkhardt (Clerk)]: my fiscal office.

[Logan Moulton (Joint Fiscal Office)]: Morning. Yes. For the record, I am Logan Mubre with the Joint Fiscal Office, and I'm going to present some information on the motor vehicle purchase and use tax. A presentation, which I'll pull up. All right, let's get started. So as mentioned, motor vehicle purchase and use tax. This presentation will go through a general overview of what the tax is. We'll look at sort of the history of it, when it was enacted and how it's changed. We'll then look at how the purchase and use tax is currently being allocated. As many of you will know, two thirds of it goes to the T Fund and then one third goes to the Ed Fund. We'll look at that. And then lastly, we'll look at the the gov reg proposal to sort of change the purchase and use allocation and how that looks for each of the funds. So brief overview of the purchase and use tax. There is a 6% tax on the value of a motor vehicle. So that's on most motor vehicles. There are some exceptions as we'll see. There's also a maximum amount that this tax can be of 2,486 on trucks weighing over 10,099 pounds. These are the big trucks that you see, semi trucks, stuff like that. There are also certain other vehicles that apply for this sort of max cap. For example, trailers have a maximum amount so that when you get a vehicle with a very large dollar value, the tax, even after calculating the 6% will never go above that 2,486. But for most pleasure vehicles, most of the cars you see on the road, they will just be taxed at the 6% of the value. This tax is collected by the DMV and is levied at the time of purchase or when you register the vehicle for use within the state. So even if you have a vehicle that you buy out of state, when you bring it into Vermont and originally register it, you will then pay that 6% tax, unless you have already paid a tax in another state that is similar to this 6% tax. Then there is the 9% tax on rental charges for short term vehicle rentals. So this is when you go to rent a vehicle from one of the companies, there will be a 9% checks on the sort of charge of that vehicle rental. And then as mentioned, there are several exemptions to the purchase of new specs. There's just a few examples there. So, if it's state or federally owned vehicle, a religious or charitable owned vehicle, and then vehicles that are transferred between close relatives. So, if you give your son or daughter or someone your vehicle, they don't have to pay that tax as well. And there's another ones, these are just a couple of examples there. Now to look at the history of the purchase and use tax. This chart goes back to 1960 when the tax was first implemented. And I should note this chart doesn't show everything, all the changes that occurred. This is just highlighting some of the more pertinent ones to the conversation this year. So, you'll see in 1960, it was created that at 2% there, 61 raised to 3% with a maximum, 68 raised to 4%. We raised the maximum for a few years there, finally eliminating that maximum for pleasure cars as we have it today. '91, we raised the rate from four to 5%, but then we set it to sort of revert back. That never came to pass in 'ninety three, 'ninety five and 'ninety six, they decided to extend that rate, keeping it at 5%. Then down at the bottom there in 1997, as part of Act 60, that was the Education Reform Act back then, the rate was increased to $6 Additionally, as part of Act 60, the gas tax was raised 4¢ to 19¢ per gallon. And that's important as we'll see here on the next slide, because in 1998, it was decided that all revenue from the purchase and use and gas tax increase that we saw last year. So that 1% in the 4¢ was directed to education funding. The Ed Fund was created effective 07/01/1998, and defined to include one sixth of the purchase and use tax and 21% of the gas tax in 1999 and sixteen percent of the gas tax thereafter. So that's how it was allocated up until 2004, when in a revenue swap, the gas tax allocation to the education fund, that 16% was reallocated to the transportation fund. And the portion of the purchase and use tax was increased to one third as it is today. And then there have been changes after that, but as far as the current discussion goes, these are sort of the main ones.

[Rebecca Holcombe (Member)]: There's no reasonable way you should know the answer to this. Do you happen to have any idea politically or what was going on that made this swap of revenue sources?

[Logan Moulton (Joint Fiscal Office)]: I don't know the intent behind it other than what was stated in statute. As for the thinking and the building, I couldn't tell you.

[Rebecca Holcombe (Member)]: Thank I

[Logan Moulton (Joint Fiscal Office)]: don't know. This is just a chart that goes back in time and looks at this allocation. I took it back to 2003 before I ran out of space on the page. So, there, I've highlighted what we just walked through. Pre-two thousand and five, the Education Fund received one sixth of the purchase and use tax and 16% of the gas tax. The T Fund then received the other, the five sixth purchase and use and 84% of the gas tax. Then in post 2005, after this sort of revenue swap, the education fund received one third of the purchase and use as it does today and no gas tax. And the T fund received two thirds and 100% of the gas tax. So, the chart down there sort of breaks out the allocations between the transportation fund and the revenue fund or the education fund. I won't go through all these, but if you want to look at them, you're welcome to, and sort of breaks down how the money has been allocated between the two funds.

[Rebecca Holcombe (Member)]: I mean, Oh.

[James Masland (Member)]: Go ahead. Sorry.

[William Canfield (Vice Chair)]: Representative Branagan.

[Carolyn Branagan (Member)]: Thank you, Mr. Vice Chairman. May I ask the presenter a question? By all means. Okay. So I was actually on a committee back in 2005 and even before that. I remember when we made this change up to one third, And the feeling at the time was that we might not have to do that forever. But I went to the Senate in 2016, and at that point, we were still using a third. So, there any hope to go Oh, that was

[James Masland (Member)]: a no. Okay. I

[Logan Moulton (Joint Fiscal Office)]: don't know. I can't tell you what the future will hold for either of these funds. I think it's largely up to you all to decide how they're allocated. I can just tell you how they were allocated and how they currently are allocated. But other changes, I can't tell you.

[William Canfield (Vice Chair)]: Representative Masland. Yeah, thank you.

[James Masland (Member)]: Yeah, my phrase is, to a certain extent, purchasing used access progressive and more expensive your vehicle the more you pay is on straight linear function. And I'm of two minds here, but I'm asking a question for the committee, which is there any interest in making the collection of the purchase and use tax more progressive? Granted, some of the vehicles that are out there on the right are pretty darn expensive, so you pay more, at least the first go around. First time to register something. But I wonder if there's any appetite within the committee to examine whether or not we could bake that formula for collecting the purchase and use tax more progressive. There are some ridiculously expensive vehicles out there, and I wonder if there is any I would be willing or interested in exploring whether or not we find a way to co collect more purchase for very, very expensive vehicles. And I also wonder whether or not there's much revenue because I actually don't know. I have to get some some data to figure out whether there's there would be any whether the squeeze would be worth it. You know? But, anyways, it's an idea for us to explore here. Could

[William Canfield (Vice Chair)]: you repeat, Jim, so I can

[James Masland (Member)]: check and understand? Oh, yeah. Yeah. Question of the purchase and use tax is progressive in this much and it's linear. The more expensive vehicle you get or you correct. I wonder but it's but it's not necessarily progressive. There are some really expensive vehicles there. Wonder if there's any interest in the committee and exploring whether or not there's more juice there if we squeeze it differently so that we make the the formula for collection of purchase and use more progressive. This is that. Thanks. I

[Woodman Page (Member)]: would just say, yes, there are some expensive vehicles out there, but your average vehicle today

[James Masland (Member)]: is not cheap either. Understood, and I drive July 11.

[Rebecca Holcombe (Member)]: Representative Holcombe. Just trying to make a very basic observation, is just that right now part of the challenge is that we put the T fund on a revenue stream that is not growing significantly,

[Logan Moulton (Joint Fiscal Office)]: and

[Rebecca Holcombe (Member)]: off of a revenue stream for benefit worse. That's not, just the obvious statement is that are, that purchasing is experiencing growth in the way that the gas revenues are.

[James Masland (Member)]: Yeah, so I'm interrupting, back to the question of the allocations might be for fixed line.

[Beth St. James (Office of Legislative Counsel)]: Page?

[Woodman Page (Member)]: Yes, have a question. Has there been any studies on how much money we would bring in if we changed the way we collect some of these funds by looking at taxing your mileage. There's been some talk of that around the country and I'm just curious whether Miles driven every year?

[Logan Moulton (Joint Fiscal Office)]: Yes. So yes, there is talk about that and that would be a large discussion that I'd be happy to come back and talk to this committee on if you want to get into it. It's called an EMBA, mileage based user fee, and your transportation committee has been looking at that extensively.

[Woodman Page (Member)]: Is there more money coming in with that? We can take testimony

[Emilie Kornheiser (Chair)]: on that. I know I'm walking in halfway through. Do you have more to explain to us? And do we have questions specific to what you have explained to us?

[Logan Moulton (Joint Fiscal Office)]: For this slide, am done with, but I have more slides.

[Carolyn Branagan (Member)]: Great.

[Rebecca Holcombe (Member)]: Yeah, I think that's a request from representative Page asked for.

[Woodman Page (Member)]: I didn't ask for it.

[Carolyn Branagan (Member)]: Think there

[Rebecca Holcombe (Member)]: were some discussions. It would be helpful to know at least.

[Emilie Kornheiser (Chair)]: We took testimony last year. We can take some more testimony this year. Yes. Moving

[Logan Moulton (Joint Fiscal Office)]: on then. So this is the purchase and use revenue forecast as it currently exists. So under current law, as mentioned, transportation fund receives two thirds, education fund receives one third. You can see the breakdown there of funds. And as noted, the purchase and use is a growing funding source given that it is sort of just based on the value of cars. So, as cars have increased with inflation and other costs, the 6% that we receive has also increased. These two charts look at purchase and use as a percentage of transportation fund revenues in total, and then also the education fund non property tax revenues. So, you can see there on the left hand side is the transportation fund. Purchase and use makes up about 32% right now, growing to around 34% in 2031. And then for the Ed Fund non property tax revenues, purchase and use makes up about 6% and looks to be about steady five years out in 2031.

[Carolyn Branagan (Member)]: But I thought that money we put into the chief fund got multiplied with federal money, big time.

[James Masland (Member)]: Does that sound right?

[Logan Moulton (Joint Fiscal Office)]: So the transportation program does utilize a fair amount of federal dollars, and roughly speaking, we can leverage to an extent T Fund dollars, one T Fund dollar to 4 federal dollars, and this is roughly speaking, but there's a limit to how much federal money that we can draw down. We have a set allocation that we get every year, and every year we try to bring down as much federal dollars as we can by matching it with state dollars. Again, that is not an unlimited source of funding though. And there are also a lot of things that the transportation program funds which are not federally eligible, such as maintenance, which is one of the largest sources of transportation dollar expenditures within the budget, over $100,000,000 most years, that we don't get much federal funding for at all. So, it's not a straight every dollar can be used to leverage a federal dollar, but we do try to leverage as much federal money as we can with our transportation fund.

[Rebecca Holcombe (Member)]: And is that

[Emilie Kornheiser (Chair)]: not considered part of the transportation fund once that federal money comes in?

[Logan Moulton (Joint Fiscal Office)]: It's considered part of the transportation budget, but not the fund itself. So then moving on to the purchase and use revenue forecast under the governor's recommended proposal.

[Rebecca Holcombe (Member)]: Remember, it's not Logan's proposal.

[Logan Moulton (Joint Fiscal Office)]: It is not my proposal. Okay.

[James Masland (Member)]: Thank you. Back to you, Logan. So

[Logan Moulton (Joint Fiscal Office)]: in this year's budget, the gov rec proposes to phase down the purchase and use tax through the education fund by $10,000,000 per year, reallocating that money to the T Fund. And I should note here that the numbers you see there on the bottom for the Ed Fund allocation, those are sort of set in statute. They won't change with increases or decreases to the actual collection of the purchase and use fund or forecast changes. Those are numbers that have been set and the governor's recommend. So, under this proposal, the PNU tax would be fully allocated to the T Fund by 2031. You can see that on my chart, zero allocation to the Ed Fund and then the full 174.9 going to the T Fund. And the last point there, when all else is equal, shifting PNU out of the Ed Fund will put upward pressure on property taxes, as I'm sure all of you know. Then- Never

[Carolyn Branagan (Member)]: hurts to say it again.

[Logan Moulton (Joint Fiscal Office)]: It doesn't.

[Emilie Kornheiser (Chair)]: Even say it one more time.

[Logan Moulton (Joint Fiscal Office)]: Right there. So the gov rec proposes this year to transfer $10,000,000 from the general fund to the ed fund to sort of offset the impact of shifting the 10,000,000 PNU to the purchase news. And it is currently unclear whether general fund will be available in future years to offset the future impacts that this proposal will have. And then my last slide, this is very similar to the other slide we just saw. This is just reflecting the governor's recommended proposal. So you'll see T fund revenues as a percent of total currently, as you saw on the other slide, 32% increasing once the entire PNU going to the transportation fund up to 44%. And then for the Ed Funds, forecasted non property tax revenues going from 6% this year to asset zero as it would not going into the Ed Fund. And that is all I had. Happy to take any questions.

[Mark Higley (Member)]: So the purchase and use tax on a new vehicle, is that tax applied to the bottom line that you may purchase a vehicle for? So in other words, trading value comes off that. What about any subsidies?

[Logan Moulton (Joint Fiscal Office)]: The subsidies I would have to go and look at. I do know there is a trade in allowance. So, when you trade in your vehicle, that is reduced off of the purchase price and then you pay the tax on sort of the difference between those two. I would have to go back and look at subsidies. I'm not sure off the top of my head. I'm getting a nod that yes, subsidies are also included.

[Mark Higley (Member)]: Can the company have $5,000 in subsidy in one place and $7,000 subsidy in another place that would come off the top for payment of the purchase of new stocks?

[Christopher Rupe (Joint Fiscal Office)]: Chris, would you to this one? I think the answer is yes, but it depends. And it sort of depends on how the transaction is structured because sometimes it depends on whether like a lease or an outright purchase can be taxed slightly differently. So if it's like the federal tax credits for EVs, a lot of dealerships were taking that and passing it on differently in a each transaction. It just kind of, it doesn't really show up in detail, but at a high level the purchase and use applies to what you're paying for the transaction. So it factors in things like the trade in allowance, that's probably the biggest tax expenditure in the purchase of new space, but it gets really complicated. If you have a nominal transaction, I sell you a car for a dollar, if you don't have the paperwork to back that up to the fair, like you know the book value of the car, DMV is going to make you pay based on the book value of the car. We can't get around the tax by doing sort of nominal transactions on paper.

[Mark Higley (Member)]: And I guess I'd bring that up because again I did just recently hear about an individual that got $12,000 in incentives in electric vehicles and I don't know if there's any way to look at what that amount overall of electric vehicles that sold it or not adds up to, but you know again, know, when we're talking about the overall loss of DMV money or whatever, that's certainly a big part of it as well.

[Emilie Kornheiser (Chair)]: I bought an electric car a year and a half ago with a huge number of federal tax credits and state subsidies, and I paid the full purchase on the value of that vehicle.

[Rebecca Holcombe (Member)]: As for a refund. What?

[James Masland (Member)]: As for a refund.

[Emilie Kornheiser (Chair)]: Yeah. I guess I'm Can you explain a little bit more about the difference between a purchase and use tax and a sales tax, Felix?

[James Masland (Member)]: Yes, I

[Logan Moulton (Joint Fiscal Office)]: can. So the purchase and use tax's full title is the motor vehicle purchase and use tax. That's essentially that 6% tax on motor vehicles purchased in the state and the value of motor vehicles purchased in the state. And motor vehicles are I have it here. Presentation again. That's 6% of the value of motor vehicles, which you can see, I'm not gonna get into all the details of the definition, but at the bottom there, a motor vehicle includes all vehicles propelled, drawn by power other than muscular power. And then there are lists of some sort of acceptance and it gets complicated and stuff like that. But generally speaking, this is a tax on a vehicle or a trailer that is propelled by a motor of some sort. And then we have the 9% rental charge on short term rentals. So that's vehicles that are rented for less than one year and They have to be rented for at least thirty days every year. How

[Emilie Kornheiser (Chair)]: much comes in on that part?

[Logan Moulton (Joint Fiscal Office)]: The rentals? I'd have to

[Woodman Page (Member)]: go back and look. I know

[Logan Moulton (Joint Fiscal Office)]: it's broken out, but I don't know off the top of my head. It's substantially less than the 6% for the purchase. The majority of it comes from the 6% on the tax of the vehicle.

[Emilie Kornheiser (Chair)]: Yeah, Representative Waszazak?

[Edward "Teddy" Waszazak (Member)]: I feel like I asked

[James Masland (Member)]: you this during her hearing, I just can't remember. Does that include rideshare? Like, word-of-mouth?

[Logan Moulton (Joint Fiscal Office)]: No. Okay. That would not include rideshare, to my understanding.

[James Masland (Member)]: Yeah, Representative Masson. Alright, thank you. Do we have data on airport rentals, which are definitely short term, that sort of stuff?

[Logan Moulton (Joint Fiscal Office)]: As far as people getting a ride from the airport?

[James Masland (Member)]: The Jukes. Yeah. I fly into Burlington from Timbuktu, rent a car for a week. That's subject to the rental tax. Do we have data on what percentage of, or a, what's the cumulative total airport, know, very short term rentals and also as opposed to parsed out from long term rentals.

[Emilie Kornheiser (Chair)]: Representative Masland, are you trying to understand sort of the difference between, say, renting a car from the Burlington Airport or, like, renting a car from the car rental place in Montpelier?

[James Masland (Member)]: I'm trying to understand whether it's how useful it would be to look at the revenue generated from short term rentals at Burlington Airport. Rentals. Car rentals. Yes. Sorry. Sorry. Versus longer term rentals that are in the course of doing business in Vermont for a longer period of time.

[Logan Moulton (Joint Fiscal Office)]: So, like, tourist rentals? Or vehicle leases, which are different than

[James Masland (Member)]: So to restate the question, how much data do we have on those different areas of collection, should we say, and what's available for the amount of money? And I'd be interested in knowing that if it's worth to look.

[Logan Moulton (Joint Fiscal Office)]: As far as short term rental leases, I can tell you how much short term rentals for the state total are. I don't think I could break it out by those at Burlington specifically Okay, to restate, it may

[James Masland (Member)]: be worth looking at, but if it's not very much, not a big deal. But it's worth considering at a high level level. Thank you.

[Rebecca Holcombe (Member)]: I'm sort of skidding out here. I'm trying to figure out what problem we're trying to solve.

[Emilie Kornheiser (Chair)]: I think the small problem we're trying to solve right here is what to do about the governor's proposal to move the exact same amount of money between free funds. The bigger picture problem we're trying

[Katie McLennan (Office of Legislative Counsel)]: to solve, which I think

[Emilie Kornheiser (Chair)]: is what the governor might have been trying to solve with the leapfrogging of money, is the fact that the transportation fund has a hole in it.

[James Masland (Member)]: And this is one tiny corner of that hole. And I think we are

[Emilie Kornheiser (Chair)]: a bit trapped in that conversation because it doesn't seem like there's will for new revenue, and it's really hard to fill a hole in a fund without new revenue. It would be helpful. That was very helpful. Thank you for doing that.

[Rebecca Holcombe (Member)]: You're welcome. And it would be helpful to me if, when we're talking, we explain to which of those two problems we're trying to solve because he would ask very different questions based on which of those problems you think is I

[Emilie Kornheiser (Chair)]: think the problem we're trying to solve, and I'm sorry, I was late to committee, I didn't get to do my usual over framing, is what to do about the governor's proposal. Are you asking for opinions? No, not yet. Let us digest and then have opinions in the near future.

[Katie McLennan (Office of Legislative Counsel)]: I don't like to

[Emilie Kornheiser (Chair)]: I think sometimes people's initial reactions to testimony cause them to put a flag in the ground that they might prefer to not have later on, and so I like to wait for opinions until a bit of time has passed.

[Rebecca Holcombe (Member)]: I just appreciate the fact that the larger issue is that the T Fund clearly has a problem, and what we can't lose sight of is that we

[Emilie Kornheiser (Chair)]: need to address the T Fund. Yeah, absolutely. Thanks, Logan. Love to have you here. Doesn't happen often enough.

[Logan Moulton (Joint Fiscal Office)]: Glad to be here.

[Emilie Kornheiser (Chair)]: And folks, Representative Kimbell is over at the tax department with someone from the appropriations committee to sort of go deeper on the budget and preparation for them coming in to

[James Masland (Member)]: do their budget testing with us at some point later in week. Thanks.

[Emilie Kornheiser (Chair)]: We are going to switch gears in big ways and look at pre kindergarten language and fiscal impacts. As

[Rebecca Holcombe (Member)]: Beth moved

[Emilie Kornheiser (Chair)]: to the chair, I'm going to

[Beth St. James (Office of Legislative Counsel)]: reiterate that this is not my proposal.

[Emilie Kornheiser (Chair)]: This is an opportunity for us to understand the real policy implications, trade offs, etcetera, of anything that we do in how we count pre kindergarteners, how we fund pre kindergarten, all of that stuff. And that we do It would be very much in the best interests of the education fund and probably Vermelters if we could make a decision about how to count pre kindergarteners this year. And would you want to wait for Kirby? I'm so sorry, Beth.

[Beth St. James (Office of Legislative Counsel)]: It's not Kirby. It's Katie. Katie. I'm happy to start. Great. Beth St. James, Office of Legislative Counsel. We are going to be talking about prekindergarten education today. Hi. Hi.

[Katie McLennan (Office of Legislative Counsel)]: We're running a minute ahead, and

[Beth St. James (Office of Legislative Counsel)]: I saw Beth, so I started. I'm sorry. I was about to explain that I share the portfolio with you. I'm going to

[Rebecca Holcombe (Member)]: walk Thank in the you.

[Beth St. James (Office of Legislative Counsel)]: I'm not sharing my screen network.

[Carolyn Branagan (Member)]: Katie McLennan, your office of legislative council.

[Beth St. James (Office of Legislative Counsel)]: We share the pre kindergarten education straddles both of our portfolios. The education Title 16 component for me, and then for Katie, the childcare piece of things. So I think it would be best to start with an overview. And I am signed in to Zoom, so I'm going to share my screen. But I just have to say, can't take credit for this PowerPoint. I appear enough in this committee that you know I don't do PowerPoint. So if you love it, it's all Katie.

[Katie McLennan (Office of Legislative Counsel)]: And if you hate it, it's also Katie too.

[William Canfield (Vice Chair)]: I just wanna wait. What's going on?

[Beth St. James (Office of Legislative Counsel)]: I'm gonna share my screen.

[Emilie Kornheiser (Chair)]: First one.

[Katie McLennan (Office of Legislative Counsel)]: I just wanna sort of start by saying, I know you've gone over or had an overview of pre K a few times. It's fine. Okay. So anyway, if it's too slow or too basic, tell us and we can speed up and move along. I think we just wanted to sort of, before we look at any language that could potentially change what pre K looks like now. It would be nice to sort of remember what is in statute and what the current program looks like. So that is what these slides are designed to cover. You have a link in that first bullet to section eight twenty nine, which is where in Title 16, the universal pre K language exists. And as you know, this program was enacted a little over ten years ago in 2014. The program requires all school districts to provide access to publicly funded pre kindergarten services for not fewer than ten hours a week for thirty five weeks of the year. And this is for children who are ages three or four on the date established by their district of residence for kindergarten eligibility or children who are five years of age, but have not yet enrolled in kindergarten. So that is who the program is currently serving. And it's a voluntary program. So it's for parents or guardians who are opting in to enroll their children into the program. And I'm gonna, sorry, jump

[Emilie Kornheiser (Chair)]: over one second with more framing I didn't add. One, we are gonna be with legislative council on this topic until 10:30, at which point we're gonna take a brief break, and then we're gonna switch to having the same conversation with JFO until noon. Ideally, five to noon, so people can get to their noon appointments on time. And as we're doing this work, I want to keep a concrete list, maybe even on the whiteboard, if representative can do the honors, thank you, of just very clear policy decisions that we need to have another committee make other than us. Okay, back to you. Thank you. The

[Katie McLennan (Office of Legislative Counsel)]: language that we use when we're talking about these

[Rebecca Holcombe (Member)]: Oh, yeah. Just some factual clarification. Years ago, was some discussion about what it meant when they were five years of age, but not yet enrolled in kindergarten. And what is the status of that now? If someone is old enough to be eligible for kindergarten, are they eligible for universal pre K? If it's a parent's decision to redshirt?

[Katie McLennan (Office of Legislative Counsel)]: I'm not sure I can answer that question. My understanding is that the benefit is for two years. So if you are using it when the child is three at date that the district specifies for kindergarten and then they use the benefit again at four, then they have used the full benefit.

[Rebecca Holcombe (Member)]: If we could get clarification on that, that would be helpful because it used to be that there were people asking for three years because they were repeating.

[Beth St. James (Office of Legislative Counsel)]: The law is silent on that. And so I think this is a question over the field, on how school districts are prosecuting these requests.

[James Masland (Member)]: Can you write that one down?

[Emilie Kornheiser (Chair)]: Oh, yes. Not your schedule. Thank

[James Masland (Member)]: you. There

[Rebecca Holcombe (Member)]: was a lot of administrative work around this, and maybe it was made as an administrative decision. Yeah, I will.

[James Masland (Member)]: Okay.

[Katie McLennan (Office of Legislative Counsel)]: So a lot of the language that you'll see talks about a pre qualified program. So I thought it would be worthwhile to talk about what we mean by a pre qualified program. A pre qualified program can either be a privately operated program or a publicly operated program. But pre qualified is the terminology we use to say that this pre kindergarten program has met certain criteria so as to be eligible to participate in what we know as universal pre K in Vermont. So, a school district can choose to operate its own pre qualified pre kindergarten program, but it doesn't have to. And then the parent or guardian who's seeking to enroll the pre K kiddo in Vermont's universal pre K program can choose between a private pre qualified program or a public pre qualified program, either that's operated outside of the child's school district of residence or that is inside the child's school district of residence if the school district has opted to operate a pre K program. If the private pre qualified program or the public pre qualified program outside of the student's district of residence is selected by the student's parent or guardian, the school district of residence must pay the statewide pre K tuition rate to the selected pre qualified programs.

[Rebecca Holcombe (Member)]: If a public school district is operating a pre kindergarten program and the parent opts to enroll outside of that. Even if the child is eligible for services for students with disabilities, are they opting out of those services?

[Katie McLennan (Office of Legislative Counsel)]: I would have to get

[Rebecca Holcombe (Member)]: you an answer on that, unless you know. I

[Beth St. James (Office of Legislative Counsel)]: think that I don't know the answer to that question. There are federal entitlements regardless of choices under this program and how those entitlements and choices intersect. I'm not sure we can answer by reading the law. Again, this might be another question for the field. I would like us to look

[Rebecca Holcombe (Member)]: at that because my understanding is that if the district is providing a placement and you choose to not take that placement, you're effectively foregoing access. So it would condition the choice of families with children with disabilities. It's just nice to know if that's true or not.

[Bridget Burkhardt (Clerk)]: Can you restate that as a question, like, can I write that?

[Rebecca Holcombe (Member)]: If a public school operates a public pre kindergarten and is placing students with disabilities in its region in that public provision, if the parent opts outside, do they use, Are they forfeiting access?

[Emilie Kornheiser (Chair)]: You would type that question at some point and email it to Charlie. Yes. Thank you.

[Beth St. James (Office of Legislative Counsel)]: Yes, you may. I was just gonna say, there's one statute on pre K. It is very sparse, and it is mostly mechanical on how the money flows. There is a rule series that we'll get to, and so there are some nuances in there. But even within that rule series, there is not a ton of nuance. And so I really, I'm sorry if we're going to be unsatisfactory in some of our answers. A lot of this are questions for the field. Okay. I just want

[Rebecca Holcombe (Member)]: to clarify. I think you're being very satisfactory. You're just trying to understand. So this is not my dying of years. This is just we need to know what's going on and what isn't going on. And those are both important things.

[Emilie Kornheiser (Chair)]: Represent Masland, did you have a

[James Masland (Member)]: question It's out here in the room, we seem to be getting to it. Okay, great.

[Logan Moulton (Joint Fiscal Office)]: Thank you.

[Emilie Kornheiser (Chair)]: Back to

[James Masland (Member)]: you all. Okay.

[Katie McLennan (Office of Legislative Counsel)]: So I'll keep covering what is a pre qualified program. In statute, we know that AHS and AOE are required to jointly develop rules that govern what pre qualification looks like. And there is a whole list of items that have to be covered. I pulled out a few items here that these are minimum standards that have to be met for pre qualification. So there has to be a receipt by the program of accreditation from the National Association of the Education of Young Children, or four stars in the Child Development Division STARS program, that's their program for quality, or the program could have three stars, but can have a provider plan that's been approved by AOE and the child development division to achieve four stars. Also, there has to be a licensed provider must employ or contract for the services of at least one teacher who is licensed and endorsed in early childhood education or an early childhood special education under title. And if it's a registered home, a registered childcare home that we're talking about, the registered home provider who is not a licensed and endorsed teacher with endorsements in early childhood education or early childhood special education, they shall receive regular active supervision and training from a teacher who does hold those endorsements. And the question of qualified, pre qualified, what qualified means, how

[Emilie Kornheiser (Chair)]: it all works that is outside of our, most of that is a combination between human services and education. We are gonna skip that policy to the greatest extent we can.

[Rebecca Holcombe (Member)]: Except that it does have implications for the funding formula. It does. And so what this doesn't talk about is what are the requirements on public licensed providers as opposed to private licensed And they are different, and that has implications for funding. Does

[Emilie Kornheiser (Chair)]: the statute speak to that?

[Katie McLennan (Office of Legislative Counsel)]: This is what the statute says. Hello? A program for pre kindergarten education, whether provided by a school district or private provider, shall have received NAIC accreditation or four stars or three stars with the plan, and then the licensed provider to contract or employ a licensed teacher, the family child home to have the supervision of a teacher. So that comes from statute. And then we have a list of rule requirements or topics that have to be covered in the rules for pre qualification. And when we get to the language that we're gonna go through, we

[Rebecca Holcombe (Member)]: can walk you through what is there. I think the challenge is that this is a representation of what the pre K law does, but when you read it in the context of other rest of Title 16, if you are delivering pre kindergarten in a public school, the pre kindergarten has to be delivered by a certified teacher. In contrast, if you're in a private provider, the program director could be the certified teacher, but the services themselves, the pre kindergarten classrooms are not necessarily delivered by

[Beth St. James (Office of Legislative Counsel)]: a certified teacher. So we

[Emilie Kornheiser (Chair)]: have a big picture question about are the requirements on a private pre K program different than the requirements on a public pre K program?

[Rebecca Holcombe (Member)]: And the student's well documented, so yes. Yes. Okay.

[Katie McLennan (Office of Legislative Counsel)]: The language in the statute is pretty clear about a licensed provider shall employ or contract for services from one teacher. So it's not saying that the teacher is providing the services, but rather that the pre qualified provider is contracting or employing the teacher. So there is sort of that nuance there that a teacher isn't necessarily providing the pre K services in a private program.

[Carolyn Branagan (Member)]: What it's worth, Madam Chair, I would like to know more about this ability parents have to go to a private provider. It seems just on first blush unfair to me or not. Don't know if it's unfair, but something's not right there about when the school has openings and they're offering the opening to the parent, the parent still has the right to go outside the system and be paid for it. I think I don't like that, but I want to know more about how that works, what the thinking was to allow that in the beginning and what the results are. It's been a while. Hold on to that, so I

[Emilie Kornheiser (Chair)]: think we might get there.

[Rebecca Holcombe (Member)]: Thank you. Yep. We'll do. Representative Masland.

[James Masland (Member)]: Yeah, I've had the same question, and if we're gonna get there, we

[Emilie Kornheiser (Chair)]: can- I think we'll get there, and if we don't

[James Masland (Member)]: get there, let's talk about it. Thank you. Okay.

[Emilie Kornheiser (Chair)]: I'm gonna try to have us focus on clarifying questions in the interest of time and ask people to write down topics that are rising up that we need to do more study on, if that's okay. This is gonna be far from the last

[Beth St. James (Office of Legislative Counsel)]: time we talk about this. So under current law, the entitlement to ten hours of publicly funded pre K education is funded through the Education Fund. So a school district may include a pre K child as one full time equivalent people in its ADM. If the child is enrolled in ten or more hours of pre K per week or receives ten or more hours of EEE services per week. And EEE is essential early education, and that is essentially special education services. So you get to count every child that's enrolled in pre K that you're paying for, whether they are in your public program or whether they are using that ten hours to go to a private provider or a public provider outside of your school district. If they are a resident child, that school district can count them as one full time equivalent pupil in their ADM, just like all their other kiddos and we'll get to the wait in a second if that kiddo is getting ten or more hours of pre K a week. If the child is enrolled in six or more but fewer than 10, then it's prorated. The pupil count is prorated. And if the child is enrolled for fewer than six hours, you cannot count the child in your ADM. And there's no limit on the total number of children who may be enrolled in pre K education or who receive essential early education. But pre kindergarten students are weighted differently in our current law. So currently, they receive a grade level rate of negative 0.54. So you count each student as one if they're receiving ten or more hours a week, but then the weight is bringing that total number down because it's a negative weight. Act 73 did not change this. It retains the pre K weight as the only grade level weight in the foundation formula. However, Section one of Act 73 expresses legislative intent for you all this year to establish an appropriate weight for pre kindergarten students?

[Bridget Burkhardt (Clerk)]: It's important again to the fact that the weights in Act 73 are about how much money is sent to that school, whereas in existing law, it's about taxing capacity and not money being distributed.

[Beth St. James (Office of Legislative Counsel)]: So if you take no action between now and the contingencies are met and the foundation formula springs to life on 07/01/2028, pre K students would still have this weight.

[Katie McLennan (Office of Legislative Counsel)]: So this chart is very simple. I apologize. I know that you probably already know this inherently. But for me, sometimes having the visual helps and the language we're going to look at changes how this works. We have another slide to show you how the language will look at is different from what is in Kirkloft. Basically I actually love a basic way. It's like a favorite way. As you know, now the money, whether it's going to a pre qualified public provider or pre qualified private provider is coming from the education fund and it moves through the child's school district. So this is all this is showing. And again, the language we'll look at will change this and I'll have another slide to show you how it's different under the language we'll look at. So speaking of the language that we're going to look at, we put this together just sort of as a kind of quick way to sort of compare what's in current law compared to the language that we'll look at. I think this also serves as places to make decisions, some decision points that this committee might have as you start talking about where are the places for different policy decisions as we think about pre K. The existing statute serves three and four year olds. The draft language serves four year olds. So that is a policy point. Do you want to cover this one?

[Beth St. James (Office of Legislative Counsel)]: Sure. In the draft language that we're about to look at, there is language that requires each school district to maintain and support a universal pre K coordinator to oversee public and private pre kindergarten education. There is no requirement in current law for that position, although my understanding anecdotally is many school districts and supervisory unions do have a position akin to this.

[Katie McLennan (Office of Legislative Counsel)]: As we just looked at, currently pre qualified private providers are funded through the education fund. In the language that we will look at, pre qualified private providers are funded by the Child Care Contribution Special Fund. That's the fund used to pay for CCFAP childcare financial assistance program. Also in existing law, the enrollment and payment mechanism for pre qualified private providers is administered by the student's school district of residence. And the language that we'll look at, the enrollment and payment is provided through DCF's Child Development Division. Oh, I should have flushed out this.

[Beth St. James (Office of Legislative Counsel)]: It just says weight. So under existing law, the weight for prekindergarten students is negative 0.54. And under the foundation formula created in Act 73, there are no grade level weights. Prekindergarten students would be treated the same as elementary students in the draft language that we're about to look at. So there would be no weight because there's no grade level weights in general.

[James Masland (Member)]: Can you

[Rebecca Holcombe (Member)]: help me understand, maybe it will become clear in the language, but the second and third, each school district is required to maintain support and pre qualify private providers. Are districts still required to play pre kindergarten vouchers for four year olds? I think that question would best

[Beth St. James (Office of Legislative Counsel)]: be answered once we walk through the language. Oh, sorry, go ahead. No,

[Emilie Kornheiser (Chair)]: I think we have another question.

[William Canfield (Vice Chair)]: I'm just reading that this coordinator is going to be paid for through the school district.

[Beth St. James (Office of Legislative Counsel)]: Yes, it would be a position maintained through the school district. And then I think the entitlement to ours is another big decision point for you all, policy decision. Both current law and the draft language that we're going to walk through next has an entitlement of ten hours of publicly funded pre K. Under current law, the source of that funding is all the Ed Fund. And in the draft language we're going to look at, there's a split in where the funding comes from, depending on who the pre kindergarten education provider is. But I think all of that is a policy choice.

[Emilie Kornheiser (Chair)]: I'm gonna add a little more meat to that policy choice. So I always, with absolutely no reason for thinking this, just like one of those weird assumptions that you carry through your legislative time and never actually verify. Sure, I'm not the only one who has some of those rocking around in my brain. Thought that the ten hours of pre K was an arbitrary political negotiation that happened before my time. And that someone was like, ten hours is

[Katie McLennan (Office of Legislative Counsel)]: how much we can pay for it. That's cool. Because there are lots of

[Emilie Kornheiser (Chair)]: other numbers in statute that I know for a fact that's how they wound up there. Digging more into this, I realized that, in fact, a school day is not very well defined, and kindergarten is hypothetically only ten hours in statute, even though in reality, most kindergarten days are much longer than that. And so I have Representative Conlon and I. The decision of how long a school day is is very much one of the education committee. But representative Conlon and I asked the agency to offer us some language better defining the number of hours in a day. So hoping that will arrive soon. Yes. And is this still saying if parents can find a slab, they get good to know? We will get there.

[Katie McLennan (Office of Legislative Counsel)]: Well, this is part two of my graphics here to show how the language that you'll look at sort of changes how the money flows. So you still have, thank you, you would still have education fund money for pre qualified public providers that would still move through the school districts. But this language adds is that pre qualified private providers would be funded through the childcare contribution special fund. And instead of going through the child's school district, it would move through DCF, the child development division.

[Beth St. James (Office of Legislative Counsel)]: That's it.

[James Masland (Member)]: So the

[Bridget Burkhardt (Clerk)]: one question I raised, we'll probably get to that with JFOs, is there enough money in a childcare fund to pay for that pre K?

[Emilie Kornheiser (Chair)]: We might or might not get there. And we're gonna go through the statutory language from here. That was just a PowerPoint prepping us for the statutory language. Representative Masland?

[James Masland (Member)]: Yeah. Thank you. On your right hand picture, finding to go through DCF, how complicated is that? Is that pretty straightforward?

[Katie McLennan (Office of Legislative Counsel)]: Oh, we have language in this draft. I think it's drafted in a pretty straightforward way. There are a few pieces of the language that I think read simply, but administratively might be fairly challenging to calculate, so I will flag those as we go through those.

[James Masland (Member)]: Thank you, the question begets to your use of the term, it's said, but they didn't quote it. Complicated. Oh, yeah. Are we are we is it worth the squeeze? I'm assuming yes. We decided to do this, but it's it's a question with resources, availability, applicability, common sense. Well, think there are a

[Katie McLennan (Office of Legislative Counsel)]: lot of fiscal implications, I think the CFO will be happy to sort of walk you through what the benefits are.

[Beth St. James (Office of Legislative Counsel)]: So we're going to walk through this draft language. Starts with section one. So this is section eight twenty nine, title 16. This is the pre kindergarten education statute. There's not a whole chapter devoted to pre K education. It is just one statute. And we're going to, in the interest of time, walk through at a relatively high level and point out some of the major changes that we talked about on the slides. So you can see the first major change here is the definition of prekindergarten child. Current law, as we've been over a couple of times now, is three or four years of age or five years of age. This language proposes that this prekindergarten child, for the purposes of universal prekindergarten education, would be a child that is just four years of age or five years of age, but is not yet enrolled in kindergarten. We're adding a new definition here. Prequalified private provider under current law serves to encompass all of the different providers. But because we have different funding sources in this draft and the funding sources are tied to who the pre qualified private or pre qualified provider is, we've added a definition for a pre qualified public provider, which means a school district that provides pre kindergarten education and is qualified pursuant to subsection C of this section. So they still have to meet all of the same qualifications that they would under current law to be prequalified. Some drafting convention changes here, but we're not changing the entitlement. Current law is ten hours. This draft is keeping it at ten hours. I'm on page two now. We're getting into the mechanics. So if a parent or guardian chooses to enroll a pre K child in an available pre qualified public school program, then the district of residence would pay tuition if the public school is located outside the student's district of residence. We're taking pre qualified private provider out of here. This subdivision is tied to when a school district of residence is paying tuition. So school districts of residence are now only programs. So the option is pay the tuition to the public program outside the district or enroll the child in your district operated program.

[Emilie Kornheiser (Chair)]: Again, this is not my proposal. This is just language. I'm not faking. I don't have a secret plan. It was really just we needed some language, and this language was sort of already drafted in either. And I also, just like when we're done, I'm gonna ask folks to read it on their own, and then we'll get into decision making at our next meeting. But yeah, go ahead.

[Rebecca Holcombe (Member)]: I'm just trying to understand.

[Emilie Kornheiser (Chair)]: No, no, no, totally. Yeah. This is Any high judgment. Judgment. It's

[Rebecca Holcombe (Member)]: it from a public private voucher program to a public voucher program, I would ask them.

[Beth St. James (Office of Legislative Counsel)]: I don't know that I would agree with that phrasing. I would encourage us to walk through all of the language because I think it will make sense what's happening once you see it all in context. Unfortunately, the way that we've drafted this is we've split apart. Everything lives in title and section eight twenty nine, and everything's the same for public and private, but we've split them apart now. So right now, we're only walking through the language related to public schools. There is separate language that governs public money being provided for those ten hours a week for a private program.

[Rebecca Holcombe (Member)]: So to go back to Representative Branagan's question, let's say Hardwick is operating a public pre kindergarten program, but the parents all choose to enroll in Montpelier at the public school in Montpelier. Is that still allowed I under

[Beth St. James (Office of Legislative Counsel)]: don't think this language prohibits that.

[Rebecca Holcombe (Member)]: That's all I need to know.

[James Masland (Member)]: That's a policy.

[Katie McLennan (Office of Legislative Counsel)]: Just to build off of what Beth just said, how this drafting is kind of bifurcated, this subdivision B is just a cross reference saying that the way the funding will work for private providers is dealt with in Title 33, which we'll look at in the second half of this language.

[Bridget Burkhardt (Clerk)]: Doesn't say what the amount is.

[Beth St. James (Office of Legislative Counsel)]: We'll get there.

[Emilie Kornheiser (Chair)]: Thank you. Represent Branagan, and then I'm gonna encourage everyone to be patient. Yes.

[Carolyn Branagan (Member)]: Yes. Okay. Go ahead. I need to be patient.

[Emilie Kornheiser (Chair)]: No, maybe you don't. I don't know.

[Carolyn Branagan (Member)]: My question regards Tripoli kids. I have people in my district who send their children to preschool because the child qualifies for Tripoli. So are all those services offered in this draft?

[Beth St. James (Office of Legislative Counsel)]: Essential early education is funding for that and the entitlement to that lives separately outside of this statute. Okay, so it's not part of this. I can't say it's not part of it because I don't want to This statute does not address essential early education. Essential early education is covered in other areas in Title 16. How those two programs intersect in the field as far as processing paperwork and the flow of money, I can't speak to that. And this language certainly does not.

[Emilie Kornheiser (Chair)]: And I'm going to encourage us to stay away from a conversation about EEE for as long as we possibly can, because it adds a layer of complication to all of this that I don't think we'll be able to manage quite yet. It's an important question. I just want to sort of It's another layer on the whole thing.

[Carolyn Branagan (Member)]: My constituency will ask me

[Emilie Kornheiser (Chair)]: for Oh, of lot course. Yes. No, we're not going to vote on anything until we understand it. I just want us to stay away from it as long as possible.

[Carolyn Branagan (Member)]: I understand.

[Emilie Kornheiser (Chair)]: And I asked JFO to do that, too, because it was adding a layer to the fiscal modeling that was also really confusing.

[Rebecca Holcombe (Member)]: Okay. I

[Logan Moulton (Joint Fiscal Office)]: get it. Sorry. Thanks.

[James Masland (Member)]: So

[Beth St. James (Office of Legislative Counsel)]: this is, again, just There's some current law language that we're striking through here regarding There's no requirement for a district to begin or expand a program to satisfy demand. This draft proposes striking that language and instead inserting a language that actually encourages school districts to begin or expand the program to satisfy demand. And then here's the language regarding maintenance of a universal pre kindergarten coordinator, which that position in collaboration with AOE would oversee pre kindergarten education and public, private and family child care home programs at a local level. Costs associated with this position would be included in the district's pre kindergarten education costs, and universal pre K coordinators would be maintained and supporting at the individual school district or SU level through a contract with one or more school districts or supervisory unions, or through membership in or purchase of services from the Board of Cooperative Education Services or BOCES. So school districts can have their own. It could also be at the SU level. School districts or SUs could share jointly through a contract, or you hire your pre K coordinator through BOCES. Prequalification remains the same. So all of the qualifications, regardless of whether they're private or public, remains the same.

[Rebecca Holcombe (Member)]: And then in Do you want me just to put all my questions on a separate list, or is it worth raising right now?

[James Masland (Member)]: Because I think Why

[Emilie Kornheiser (Chair)]: don't we, in the interest of Charlie's handwriting, why don't you put them all together, everyone put them together, and then we'll write them all on the whiteboard, like, today, but not in the middle of meetings?

[James Masland (Member)]: How's that feel for you? No. Okay, cool. So

[Beth St. James (Office of Legislative Counsel)]: you'll see big changes here. This is the tuition section. Again, under current law, the tuition flows through school district budgets, through the district, to the pre qualified provider, regardless of who that provider is. Now we have the district paying tuition for pre K students to a public school outside the district if that school district is pre qualified pursuant to subsection C. And tuition under this section will be paid pursuant to subsection 823A of this chapter. That is a reference to, under the foundation formula, the tuition statute. So currently, that is elementary tuition for K-twelve. Under Act 73, we amended that statute to be the tuition statute for K through Sorry, eight twenty three in current law is elementary tuition, so that's K-six, I believe. And then Act 73 amends that statute to be the tuition statute for all of K through 12. And you'll see that the funding pieces in Title 16, the language are all amendments to the language that was passed in Act 73. So this draft has changes in the funding for pre kindergarten education coinciding and taking place at the same time as implementation of the foundation formula. So this language is saying, if you are a school district and you have a pre K child who's going to a pre K program outside of your district and it is a public pre K program, you're going to pay tuition the same way you would pay tuition for K-twelve. And if we can all remember, that is base plus Wait, base. Okay. I would like more quizzes.

[James Masland (Member)]: No, thank you. Right

[Beth St. James (Office of Legislative Counsel)]: now under current law, there is a separate pre K tuition rate, and that is calculated through a formula that AOE and DCF manage. But this language would have pre K for public providers being paid at the same rate as K through 12. And then this language just talks about how that money is flowing. So when tuition is being paid, there has to be notice to the district, etcetera. And then we just cleaned up some language about what information needs to be presented to voters. Some of this information is inherently part of development of the school district budget. So we're just cleaning up any language that's not automatically already included in school district budgets. So you got to include all your pre K costs in your budget, period. Let's see. Again, this is referencing to average daily membership when you can count a student. So when it's part of your program or they're going to a public provider located outside the district. Under this language, school districts would no longer be counting in their ADM any district student who is attending publicly funded pre K in a private provider, regardless of where that private provider is. So you're only counting your students attending public programs, regardless of whether they're in district or out of district programs. The rules, Secretary and of Education and Commissioner of DCF are still required to develop rules. And then we've done some cleanup here. In the interest of time, I'm gonna skip over this so that we can get to Katie's sections. A lot of this is aligning with the changes that we've already talked about. So for tuition, making sure that the rules align with this new tuition situation that we are watching for. And here, so current law has these rules establishing a statewide tuition rate for all of pre K, and now we're asking the rules to establish a statewide tuition rate for just pre qualified private providers.

[Katie McLennan (Office of Legislative Counsel)]: Well, this is, yep, parody piece. So we're still in a section requiring rules from AOE AOE and AHS. An existing requirement is to provide administrative process for parents or guardians to challenge an action of the school district or state, and B, the school district to challenge an action of the state. And so C and D are creating parallel processes for a parent or guardian to challenge an action of a pre qualified private provider, and then D, a pre qualified private provider to challenge an action of the state. So it just creates process for everybody.

[Beth St. James (Office of Legislative Counsel)]: Geographic limitations. This allows school districts to have to limit where their students can take those ten hour payments to in a geographic area. And this language is structured. Again, that's a policy choice.

[Katie McLennan (Office of Legislative Counsel)]: And then here we have the double dipping quiz. Oh, right. So you'll see this language a couple of times in this draft. This is basically saying that CCFAP and universal pre K funding cannot be used for the same ten hours of UPK. I will flag this as one of those places that this is easier said than done. I know that this committee has spent a lot of time with JFO and will spend a lot more time understanding the rates. But when you're looking at how CCFAP and UPK are paid for, we're not really comparing apples to apples. We have a rate based on how many hours a child is in CCFAP. They're either full time or they're part time, whereas the UPK is calculated more hourly. So figuring out that issue of double dipping. Anyway, I think this language makes it sound simple and I'm understanding from JFO that it may not be a straightforward calculation. So you'll continue to see this and it might be something worth thinking through as you continue your conversation.

[Rebecca Holcombe (Member)]: This observation on the pre painted region from having been on the other side. When this body doesn't designate an entity to be in charge of decisions, it's really problematic. Yes, and that's part of why I love teaching. Somebody has to be a dual. So we have

[Emilie Kornheiser (Chair)]: to designate? A body to make decisions.

[Bridget Burkhardt (Clerk)]: Of the amount of the tuition payment?

[Beth St. James (Office of Legislative Counsel)]: Everything. Anything.

[Carolyn Branagan (Member)]: You can't

[Rebecca Holcombe (Member)]: have dual management and not accept, mean, I the default becomes when they can't agree that nothing's happened.

[Beth St. James (Office of Legislative Counsel)]: We're gonna move on to the second section of the language, page 13, very top of the page, line one. This is the amendment to section eight twenty three I talked about. This would be the section that governs tuition for the foundation formula for K through 12. And so we're adding that tuition for students in grades kindergarten through grade 12 and pre kindergarten students attending a pre qualified public provider located outside the student's district of residence shall be paid by the district in which the student is a residence. And then you can see here we have the base and weight language. And then we add the definition here just so that we can reference back easily a cross reference to pre qualified public pre kindergarten education provider in section eight twenty nine that we just walked through. And I should have gotten rid of all that language because we don't need it. And then section three, this is your determination of weighted long term membership statute in title 16, section forty ten. This is where all your weights live. I'm at the top of page 15. Again, this is making changes to the language of the foundation formula. So none of this language would take effect unless the foundation formula took effect. But as passed by Act 73, the foundation formula kept current pre K weight. And so this language is repealing it, which means there's no grade level weights anymore. Pre kindergarten students would be treated the same as K-twelve when it comes to grade level weights.

[Bridget Burkhardt (Clerk)]: Maybe I'm confused, which could happen. So this, we don't have weights for students in Act 73.

[Beth St. James (Office of Legislative Counsel)]: Correct, other than pre K. We did keep pre K. So this repeals the pre K weight.

[Bridget Burkhardt (Clerk)]: Still at B and C?

[Beth St. James (Office of Legislative Counsel)]: B and C? Where are you looking?

[Emilie Kornheiser (Chair)]: Do you know about that, D?

[Bridget Burkhardt (Clerk)]: No, never mind. I might be looking at a previous draft.

[James Masland (Member)]: Never mind. You're going

[Beth St. James (Office of Legislative Counsel)]: to keep the count of pre K students because we're going to apply all the other weights to them, we're just no longer going to apply the grade level weight to them. Now we get into the

[Carolyn Branagan (Member)]: I think I may be confused too, but so does that mean 15,000?

[Beth St. James (Office of Legislative Counsel)]: Right. So here's a really fun

[Rebecca Holcombe (Member)]: thing. We

[Emilie Kornheiser (Chair)]: all talk about it as a weight of one, but people who do the math think of it as a weight of zero. And maybe they'll can explain that to us when they're sitting in the chair.

[James Masland (Member)]: We have

[Carolyn Branagan (Member)]: to raise some money, right? Even though when they're calling it zero, we have to raise

[Emilie Kornheiser (Chair)]: some It's one human with no weight applied to it. Single human. If you apply no weight, there's still one human. But if you multiply it by zero, you end up with zero. So that's pretty confusing. But they can explain it more than I can. So let's go back to Beth. This

[Beth St. James (Office of Legislative Counsel)]: is a common term that we all use differently and we shouldn't in these conversations. I often hear folks say an ADM of one or something like that when we're talking about weights. It's not an ADM, it's a weight. And if there is no weight, then there is no weight. It's just fifteen thousand and thirty three. And now we have no grade level weights in the foundation formula.

[Bridget Burkhardt (Clerk)]: If you go back to one page, Bridget Burkhardt.

[Beth St. James (Office of Legislative Counsel)]: This is all current law.

[Mark Higley (Member)]: Yeah. Okay. Good. Thanks. Yep.

[Bridget Burkhardt (Clerk)]: Super. All set.

[Rebecca Holcombe (Member)]: Yes. Sorry, representative.

[James Masland (Member)]: Briefly. Thank you, madam chair. With regards to this weight, no weight, couldn't we say if there's no weight, there's no multiplier? Is that a good way to explain it?

[Beth St. James (Office of Legislative Counsel)]: I'm not gonna answer math questions.

[Christopher Rupe (Joint Fiscal Office)]: Okay.

[James Masland (Member)]: Stephen can fit up here, but if I'm wrong

[Emilie Kornheiser (Chair)]: Well, they will we're gonna Okay. Perfect. Thanks.

[Katie McLennan (Office of Legislative Counsel)]: Okay, we're transitioning to title 33. This is our human services title. This section 3,512 is where CCFAP lives, Child Care Financial Assistance Program. The only thing being added here is the same language you've already seen about double dipping. Told you it appears in multiple places, so it appears here. I won't spend time on that. What we're also doing in section five is we're creating a new subchapter in the childcare chapter. We're going to rename the chapter to be child parent early education. And there's section a on pre qualified private education. So this sort of discusses what is a parallel route to what we discussed in Title 16 about how pre qualified private pre K providers are paid by CDD. So in subsection A, a parent or guardian may choose to enroll a pre kindergarten child in a publicly funded pre kindergarten education program operated by an available pre qualified private provider of the parent or guardian's choice, pursuant to 16 BSA eight twenty nine that we just looked at, by providing written notice to CDD on a form created by the department for this purpose, and the child is or will be admitted to the pre- and the child is or will be admitted to the pre K education program operated by the pre qualified private provider. Essentially, the parent is giving notice to CDD on a form provided by CDD that they have selected a private provider. The private provider has space for their child. And so the plan is for the child to receive pre K at this private provider. In Subdivision B1, upon receiving this written notice, the department is to pay tuition to a pre qualified private provider for not more than ten hours per week of publicly funded pre K education for thirty five weeks annually from the child care and early education contribution Special Fund. This is the current child care contribution special fund. And the next section, it's renamed to be Child Care and Early Education Special Fund to encompass that it would be used to pay for pre K. At the top of page 17, subdivision B2, DCF is to determine whether to pay UPK using the UPK rate or the CCFAP rate. First prioritizing what would be best for families. Second prioritizing what would be the best rate for the provider. So the concept here is that maybe rates would have a different impact on the providers and result in a different copay to the family. This language is saying DCF, figure out what's going to be the best use of the rates for the family and for the provider. This is one of those places where the language seems fairly simple, but it's probably pretty administratively complicated to figure out. So I just flag that as a policy decision as you know, as further to, conversation needed on this piece. In Subdivision B3, the department is to pay tuition on a schedule that doesn't inhibit the ability of the parent or guardian to enroll the child in the pre K private education program or the ability of the private provider to maintain financial stability. In subdivision 4, prior to making an initial tuition payment, the department must enter into an agreement with a pre qualified private provider to which it will pay the tuition regarding quality assurance and other matters. The agreement is to require that provider to notify the department if the child from which it previously received tuition is no longer enrolled in that private program. Subsection C is that double dipping language. And then we have where in subsection D, we're pulling in the definition of pre K child and pre K education and pre qualified private provider from Title 16 that we already went over. That brings us to section six. This is your childcare contribution special plan. Again, the name is being amended here to not just capture childcare, but also using early education to capture the pre K. In Subdivision A1, we have a list of everything that the monies and the fund can be used for. So A, this is existing language, the Department of Taxes for the administration of child parent rental leave contribution. B, DCF can use it for benefits provided through CCPATH. And then we, at the top of page 19, have a new C that the Department for Children and Families can use it for publicly funded pre K education provided by a pre qualified private provider. So it's being added to the list. And then D is existing law departments for necessary costs incurred in administering the fund.

[Emilie Kornheiser (Chair)]: I'm going to let you do the effective dates in the

[Beth St. James (Office of Legislative Counsel)]: this is all policy, really, except for your education funding sections. But this language would take effect on 07/01/2027, which doesn't really make sense given what I'm about to say. So that would maybe need to be cleaned up. But I think the big piece to think about here is your education funding changes. This language is tied to the contingencies for the foundation formula actually taking effect. So if the foundation formula were not to take effect, then the education funding, the weight and the tuition payments sections would not take effect. And so I think there is an overall policy question of, do you want any of this to take effect if the foundation formula didn't take effect?

[Rebecca Holcombe (Member)]: Yeah, Representative Higley, hope you're

[Mark Higley (Member)]: Thanks. I just need a little simpler verification of the difference between who is paying public and who is paying for private. Am I correct in saying that the private would be paid for by DCF through the CCFAB?

[Katie McLennan (Office of Legislative Counsel)]: As the language is written, yes.

[Emilie Kornheiser (Chair)]: Okay, and

[Mark Higley (Member)]: that money through that CCFAT is from the new childcare program through payroll tax?

[Katie McLennan (Office of Legislative Counsel)]: Yeah, it's the childcare contribution fund, which currently is funding parental leave and CCPAT.

[Mark Higley (Member)]: Okay, and I guess the question I got then is how easy would it be for the transformation of a student that is in a private three ks program to revert to the public, I mean, in midstream, is there gonna be such an issue with the way it's funded?

[Katie McLennan (Office of Legislative Counsel)]: There's no language that specifically addresses that. I think it would be a question for the folks who are operating the program. I'm imagining that the private providers are receiving funding on a monthly basis. So it could be a matter of the family notifying the provider, the provider notifying CDD, and those payments from the private fund from CDD would stop. The language doesn't really address that though, so it's a better question for folks who are actually doing the administering of the money.

[Rebecca Holcombe (Member)]: Do you remember that question?

[Emilie Kornheiser (Chair)]: Do you remember that question or Andrew, send

[Rebecca Holcombe (Member)]: it to Charlie? Thanks. Representative Holcombe? I'm just curious on the end of that last piece of language, what substantively is the difference between kindergarten and private provider and early care learning in the audit process, basically.

[Katie McLennan (Office of Legislative Counsel)]: Meaning why did I change the chapter heading? Yeah, I'm just curious. I was thinking that early childhood would be, or early education would be more encompassing of pre kindergarten education, because right now it's only entitled childcare and pre K is broader than childcare. So I was trying to find a term that was broader to cover

[James Masland (Member)]: pre K

[Rebecca Holcombe (Member)]: as well. Guess I'm wondering if, as you were thinking about this, did you see any potential areas to reduce dual regulation? Because one of the things that we haven't talked about is state level transaction costs. And if substantively nothing is different in a preschool classroom that is an early care and learning setting that isn't pre qualified and a pre kindergarten pre qualified classroom, does that additional level of regulation and oversight make sense? I don't know.

[James Masland (Member)]: I think

[Emilie Kornheiser (Chair)]: that would be a great question for you to carry through when you look through the draft and flag places where you're seeing dual regulation that we could reduce. You're welcome to answer it.

[Rebecca Holcombe (Member)]: I'm assuming they might have thought about places where we could reduce costs without impairing the quality of what people are working really hard to provide.

[Emilie Kornheiser (Chair)]: Representative Waszazak.

[Carolyn Branagan (Member)]: I have a question.

[James Masland (Member)]: So I'm looking at the top of page 17, where it talks about the department may determine whether to pay the child's tuition for pre K education hours using the provider reimbursement rates offered through CCFEP or the publicly funded, how does that interact with the rulemaking of the agency earlier if the language sets that tuition rate on a variable basis? Just not Yeah.

[Katie McLennan (Office of Legislative Counsel)]: I don't know that there are rules that specifically address this. The rule change that is being proposed to set the tuition rate is just that, a proposal at this rate at this point. So I think we would need to wait and see how the two departments feel those pieces could be brought together. But like I said, I think it is administratively complicated. Otherwise, it could have been easily addressed here instead of deferring to the department as to how they think best to do it.

[James Masland (Member)]: Yeah, because I appreciate the spirit of wanting the department to prioritize the families, but if we're having the agency calculate the tuition rate, it seems like it would get a little messy.

[Katie McLennan (Office of Legislative Counsel)]: Yeah, write down

[Emilie Kornheiser (Chair)]: the messy. There's a lot dig into. Like I said, it's not my proposal. I think what's extraordinary about this is

[James Masland (Member)]: just a single draft allows us to eliminate all of the deep confusions in what we have and add more or maybe take some of them out. Okay.

[Emilie Kornheiser (Chair)]: We're gonna hire from Charlie and then go ahead.

[Bridget Burkhardt (Clerk)]: I just said last

[Mark Higley (Member)]: Oh, sorry.

[Bridget Burkhardt (Clerk)]: I think that maybe I'm wrong, but if the child's family is eligible for subsidized care. So in other words, if they earn more than what CCFAP would give them assistance for, paying for that, a family would not be eligible for any financial assistance to pay for pre K in a private setting if they don't qualify. Is that correct?

[Katie McLennan (Office of Legislative Counsel)]: This is a better question for JFO, but I think some of the tables that you saw in the previous slide presentations, Ted will definitely tell me if I'm wrong, but show that if a child was receiving full time CCFAP, and they were enrolled in UPK, that the provider was getting both of those rate payments. And let's go into that.

[Rebecca Holcombe (Member)]: Representative Page, I missed your hand, I'm sorry.

[Woodman Page (Member)]: I'm just curious, why do we have two funding levels? Why don't we just have one?

[Emilie Kornheiser (Chair)]: Two funding levels?

[Woodman Page (Member)]: Well, mean, we have one that's paid by the education department or education fund. We have DCF paying for private.

[Katie McLennan (Office of Legislative Counsel)]: So that is the way this language is drafted. What you currently have in place in statute is only money coming from the education fund. So money right now, whether it's a private provider or a public provider, pre qualified, it's all coming from education fund through the school district. Does that help The education fund through the child's school district. That if you go back to those two charts and the slides that we went to, The first one is status quo. The second one represents the change in this language that we just walked through. But this is not happening currently. Is what we have happening. This is the current.

[Beth St. James (Office of Legislative Counsel)]: Pre K currently is funded in school district budgets. And this draft is proposing, which is the policy choice for you all, to split those sources depending on who's providing it.

[Woodman Page (Member)]: I guess I just don't understand the pros and cons of my splitting it up. That's just, I just don't understand.

[William Canfield (Vice Chair)]: And I

[Woodman Page (Member)]: think we're making it more complicated than it needs to be. Maybe.

[Emilie Kornheiser (Chair)]: Yeah, no, no, Like I said, it's not my proposal. I think in some ways it makes it

[James Masland (Member)]: more complicated, in some ways it

[Emilie Kornheiser (Chair)]: makes it less complicated, that's what we're going to work through.

[Rebecca Holcombe (Member)]: I think we should also say this isn't our proposal.

[James Masland (Member)]: No. Thank

[Rebecca Holcombe (Member)]: you. So we're going

[Emilie Kornheiser (Chair)]: to go back through all of this language again next week for information and time under our belts. And we're going to take a brief break, five minutes, and then we'll be back here to talk to JFO.

[Rebecca Holcombe (Member)]: Good question.