Vermont Legislature SmartTranscripts:

[Rep. Emilie Kornheiser (Chair)]: Here we are still in ways and means.

[Rep. Carolyn Branagan]: Still the twelfth.

[Rep. Rebecca Holcombe]: And

[Rep. Emilie Kornheiser (Chair)]: we are working on pre kindergarten. And we're having a conversation. So converse.

[Rep. Carolyn Branagan]: Let's go ahead.

[Rep. Rebecca Holcombe]: Can you remind me of

[Unidentified Committee Member (likely Rep. Woodman Page or Rep. Mark Higley)]: the question

[Rep. Carolyn Branagan]: we need to answer?

[Rep. Emilie Kornheiser (Chair)]: Yeah. The question we need to answer is what questions do we need to answer? Seriously, not trying to I mean, it's cute, but it's not really my intention. What questions do we need to answer in order to move forward with prekindergarten so that it fits into the future state. Thanks for bringing that really awkward phrase back. I do appreciate it. So the weight that we have right now, we're from current law, we're bringing from past law. Will it work in the future law? Are there rules? If it does, are there more rules that need to be added? Are there guidance that needs to be added? How do we minimize harm if we make changes? How do we make sure that kids are getting what they need? Etcetera, etcetera. But really, what questions do we need answered in order to set an appropriate weight? And in setting an appropriate weight, you need to add guidance for when weight's applicable, basically. Did I miss anything there that makes sense that anyone else would add to that? I think

[Unidentified Committee Member (possibly Rep. James Masland)]: that makes sense. Question on that is what are sending some of this to human services? Questions are we responsible? I have questions about whether it's the three or four age bucket that's appropriate versus four or five. Is that an Us question to answer? Is that something we're relying on? So what are the questions that this committee is going to answer as opposed to what the other two of us?

[Rep. Emilie Kornheiser (Chair)]: So ideally other committees answer all of the questions about what is in the best interest of students? How do we make sure that our very extensive and diverse system of early care and education stays robust and serving kids? How long is a school day is a very important question that needs to be answered for any of this, and that is also not our jurisdiction. And so once sort of the way that they would like to optimize the system, given the restraints we have in the universe, then we would just say, What is the best way to finance that?

[Unidentified Committee Member (possibly Rep. James Masland)]: And then I think so, on the money side, then questions about whether because in the proposed language, some money was coming from childcare special funds, some was coming from the FF funds. I have So lots of questions about that one.

[Rep. Emilie Kornheiser (Chair)]: That is My hope is that once all of these other big picture questions are answered, including that how long is the school day, then we would be able to say, what is the right financing mix to meet those programmatic ends?

[Rep. Bridget Burkhardt (Clerk)]: For me, it's just really coming down to what are our assumptions about the total cost? So if it is, what is the cost of providing pre K for a child in a public school setting? What is the cost of administering the program where we're sending tuition payments to a private provider that is absorbed by that private public school? How does that public school and a foundation formula actually absorb those costs, or is it an additional fee? So I wanna know that.

[Rep. Rebecca Holcombe]: I'd like to know how the small star swing is gonna interact with pre K. I'd like us to keep in mind that everything that we do to cover, I'm thinking, everything we do to cover the cost to the district to provide for this portion of education will be more money that has to be raised.

[Rep. Emilie Kornheiser (Chair)]: Will it?

[Rep. Rebecca Holcombe]: I don't know. Maybe it's

[Rep. Emilie Kornheiser (Chair)]: money that we're already using.

[Rep. Rebecca Holcombe]: Why do you think it's money we're already using? I just don't know. That's true. We don't know if we're giving 0.6, negative 5.54, and that they're actually spending more than that or less than that.

[Rep. Emilie Kornheiser (Chair)]: No idea. That's true.

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: All right,

[Rep. Rebecca Holcombe]: all right, then here's my It's more ridiculous Everything to be doing that we provide here impacts the provision of regular pay. Yeah. So that is a concern.

[Rep. Emilie Kornheiser (Chair)]: Everyone can self organize, like feel

[Unidentified Committee Member (possibly Rep. James Masland)]: like it just gets off

[Rep. Emilie Kornheiser (Chair)]: the rails and then it'll

[Unidentified Committee Member (possibly Rep. James Masland)]: shut So if we're going to

[Unidentified Committee Member]: mandate a pre K coordinator for what, each district?

[Mike Pieciak (Vermont State Treasurer)]: There's cost.

[Rep. Rebecca Holcombe]: And is that mandate of a pre K coordinator, is that coming from a different committee? Yeah.

[Rep. Emilie Kornheiser (Chair)]: And my question would be, what capacity is already in the system versus what would need

[Rep. Rebecca Holcombe]: to be added?

[Rep. Carolyn Branagan]: Because, is

[Rep. Rebecca Holcombe]: there already an administrator that is doing a lot of this in a lot of public schools and could add more if we decide that they need to add more? Or is this really a brand new person?

[Rep. Emilie Kornheiser (Chair)]: And I'll offer for me that we were working with this bill because it was a way for us to have all of these conversations. I think it would be a perfectly legitimate choice of human services or education to never look at that bill at all. It's not a bill that's on the table. We're not referring the bill. We're just referring the topic to them, and they're welcome to be working with that bill or not. It's not a committee bill. It's not like an introduce bill. It's just a thing. So I guess what I would say then is if you want the topic of pre K coordinator to move over to those people, we should ask them really explicitly it.

[Unidentified Committee Member (possibly Rep. James Masland)]: Good idea, though. Again, in

[Rep. Bridget Burkhardt (Clerk)]: the foundation formula, is it accounted for in the costs? No idea.

[Rep. Emilie Kornheiser (Chair)]: Really, you can just talk to each other and all. I think

[Rep. Carolyn Branagan]: we should make sure that whatever we do, it doesn't make things more complicated and less productive for families. So we're thinking a lot about the Ed Fund, but that's the way we're wired here in this. Think about money, think about how much tax capacity there is out there and all of that. But don't forget, you sent us here, what is going to be convenient for them and work for them. So, I'm thinking, if just mentioning that there are some parents who would like to stay home all the time with their children. If we somehow work out a plan for parents of one and two year olds, because they're not involved in this at all, if we were somehow to give them some incentive to stay home with those children and not send them to take care of, And I know that's not always the ideal situation, but for those parents who want to do that and who are capable of doing that, if we freed them up somehow to stay home with their kids, that might end up being a more positive outlook behaviorally and health wise and so forth later on when a kid got to school. So they don't get any money from the state at those levels, except that if they qualify for this thing that we set up a year or so ago, the payment for daycare. So if we were to come up with some estimate and reduce their income tax to make that more attractive for one parent to stay home, I think that might work. It might not. And I know I presented this bill for like eight years in a row and it never goes anywhere. So maybe you guys don't like that idea, but I'm just saying that what that would do is allow some parents who want to stay home with their kids and maybe that little bit of tax savings, because now they don't need a car, mommy doesn't need to buy expensive clothes to dress up to go to work, they don't need hiring a babysitter, maybe that reduces their household costs enough to allow one parent to stay home.

[Rep. Emilie Kornheiser (Chair)]: So are you suggesting that we expand the child credit? I mean, passed one a few years ago.

[Rep. Carolyn Branagan]: Right now, some of those parents are using that money to pay for daycare. They wouldn't be using that money anymore. So we would save that money. The money that we would use to save on income tax would be a hit to the general fund because it's income tax. But

[Rep. Bridget Burkhardt (Clerk)]: I

[Rep. Carolyn Branagan]: don't know how much of a reduction that would be because we don't have any data on who wants to stay home and who doesn't want to stay home. But I don't think it's too many. And it would only work for those first two years of life. I

[Rep. Rebecca Holcombe]: would propose that some of the assumptions within that idea are the work of other committees, maybe. I know. So whether it's better for kids to be home at one or two, that doesn't feel really like our work necessarily. The only part is the income tax and the

[Rep. Carolyn Branagan]: job fair tax. Our feeling.

[Rep. Rebecca Holcombe]: And you brought up another good

[Rep. Carolyn Branagan]: question. Well, you brought

[Rep. Rebecca Holcombe]: up another question for me, which is, is there anyone, I should probably know this, that helps

[Rep. Emilie Kornheiser (Chair)]: parents sort out where they fall with all these different programs right now, in terms of these different funding, that helps them make these choices. Yeah, there's-

[Rep. Bridget Burkhardt (Clerk)]: Our child centers.

[Rep. Emilie Kornheiser (Chair)]: Our child centers who are downstairs in the cafeteria today, if you'd like to have good time in on your question. And then there's essentially folks who help figure out your eligibility for all of those things. And sometimes they're at parent child center. In my area, they're not

[Rep. Rebecca Holcombe]: the parent child center, but there's, yes. This is interesting. I was totally unaware of what our kids were. Oh, little interesting. Are

[Unidentified Committee Member (likely Rep. Woodman Page or Rep. Mark Higley)]: they in school systems? No. They're private?

[Rep. Emilie Kornheiser (Chair)]: No, they're not. Matt can you explain this to us, please? Thank you so much. Please

[Rep. Rebecca Holcombe]: do, thank you.

[Unidentified Committee Member (possibly Rep. James Masland)]: Good I

[Rep. Emilie Kornheiser (Chair)]: need to testify, thank you for sitting here.

[Matt Levin (Executive Director, Vermont Early Childhood Advocacy Alliance)]: Good morning. Matt Levin, executive director of the Vermont Early Childhood Advocacy Alliance. So there are 12 childcare resource and referral agencies around the state. I actually just coincidentally looked them up yesterday, and if you'd like, I have a list in my portfolio. They are regional, match the AHS districts. As the chair was saying, about half of them are parent child centers, about half of them are not. They are everything from Winston Prouty is the agency that does it in the Brattleboro area. Sunrise Family Sunrise Parent Child Center does it in Bennington. So these are large multi service agencies that are embedded in the community, and they have a staff person who does resource and referral. So they help parents understand what the options are for for child care, different settings, different options, and help them do eligibility screening for CCFAP and other programs. And they also help the providers understand what's going on in the community and help the providers match up. In the old days, it was like speed dating because it was a marketplace that was much different in the autism teams, much different marketplace than it is now. But they still do a certain amount of that matching up of that they're supposed to know what's going on out there in the world and helping parents link into the activities.

[Rep. Emilie Kornheiser (Chair)]: It's like navigate waitlist stuff.

[Matt Levin (Executive Director, Vermont Early Childhood Advocacy Alliance)]: Navigate waitlists, again, look for options, do eligibility, so on and so forth. So the state actually has a contract, which is a whole another subject that we're discussing down the hall. The state has a contract with each of these 12 agencies to provide this service, and there's a whole discussion about the rate and so on and so forth that, again, is subject for the Appropriations Committee and Human Services Committee.

[Unidentified Committee Member (likely Rep. Woodman Page or Rep. Mark Higley)]: Is advertised it for parents?

[Matt Levin (Executive Director, Vermont Early Childhood Advocacy Alliance)]: Well, obviously not well enough. I would say that like many other agencies in the world, they do everything they can to toot their horn, hang out their shingle, let people know about it, spread information through elementary schools and pediatricians offices and other places where folks with small children tend to be. And obviously they don't get to everyone, but they are, yes, I would say they are doing their best to get the word out to as many families as

[Rep. Emilie Kornheiser (Chair)]: they can. What I see in my area is that when a parent asks another parent a question on, say, the early childhood Facebook group for the area or whatever it is, another parent almost always jumps in and says, Here's the link to our resource and referral agency. You can give them a call and we'll

[Rep. Carolyn Branagan]: help you.

[Rep. Emilie Kornheiser (Chair)]: I see happening in my area.

[Matt Levin (Executive Director, Vermont Early Childhood Advocacy Alliance)]: My personal experience, we have two children. We went through all sorts of, I didn't know, or, hey, did you know? I mean, it's the world of having a family. Sometimes you know things and sometimes you don't. Sometimes you get lucky enough to run into someone who shares information, or you have a grandparent or, you know, someone it's hit or miss. They're doing their best to get the word out.

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

[Matt Levin (Executive Director, Vermont Early Childhood Advocacy Alliance)]: You're welcome. Happy to answer any other questions. Glad you're here. That's why I'm here.

[Rep. Carolyn Branagan]: And I think, like, following up the

[Unidentified Committee Member (possibly Rep. James Masland)]: general theme of that discussion, the system of funding that we have now is extremely complicated. Depends. Feel strongly about simplifying things, just generally otherwise cool. But we've also seen how successful our program is right now. So trying to find that balance of simplifying the system while not breaking the fact that we've extremely successful as compared to the rest of the nation.

[Rep. Rebecca Holcombe]: I agree with that. And I also am mindful that the less complexity, the lower the transaction costs at the state level, which means more money for direct support of young people and providers. So in that, I hope we can at least evaluate if you do separate the funding streams, whether if the agencies agree on what the standards are. I don't know that dual regulation is still necessary if they have a shared sense of what we're looking for. And just reducing the complexity of dual regulation, free capacity or resources for what we say are real intended goals. And I would also just observe that when we did our pre K analysis in our region, people observed that if we actually had paid leave of three months for families of newborns, that would half the demand for infant slots in a region.

[Unidentified Committee Member]: Half the demand

[Rep. Rebecca Holcombe]: for slots, because between two parents, you could take six months at home with your kid. Did they like that? They've like, Wonder Your Legs doesn't do that.

[Unidentified Committee Member (likely Rep. Woodman Page or Rep. Mark Higley)]: I

[Rep. Rebecca Holcombe]: can pay like a regular pay in school program. Right,

[Rep. Carolyn Branagan]: Rebecca? And it failed?

[Rep. Rebecca Holcombe]: One vote. Vote.

[Unidentified Committee Member (possibly Rep. James Masland)]: By the veto.

[Rep. Emilie Kornheiser (Chair)]: It was overriding the veto that failed. Was not the actual passage that failed. Sorry. Yes. I don't think, as much as I personally think that universal family medical leave would make enormous a difference to improve the lives of Vermonters, I think that is outside of the jurisdiction of this committee today. I do think it is exactly why you're asking for Representative Branagan. I think,

[Rep. Bridget Burkhardt (Clerk)]: I

[Rep. Rebecca Holcombe]: don't know, I don't know how many eons we are away from universal paid leave, but I think targeted paid leave at parents and children, it could be a cleaner and cleaner, a place to start.

[Unidentified Committee Member]: So I'm going to bring up the parents that took their kid to Utah for a week. Emilie? How difficult is it for them to get back in the queue?

[Rep. Emilie Kornheiser (Chair)]: Oh, they were already

[Rep. Carolyn Branagan]: in the queue. So

[Unidentified Committee Member]: you missed that week's That family would lose the one week of benefit.

[Unidentified witness/participant]: Well, we still, the family would still pay

[Unidentified Committee Member (possibly Rep. James Masland)]: for the

[Unidentified witness/participant]: care that you often not take that week.

[Rep. Rebecca Holcombe]: We should pay 100% of what it would cost without the subsidy, without the help?

[Unidentified witness/participant]: Yes, and if the family wasn't able to

[Unidentified Committee Member (possibly Rep. James Masland)]: hold the university pre k then we'd have

[Unidentified witness/participant]: to pick up the rest of it.

[Rep. Emilie Kornheiser (Chair)]: In terms of things

[Unidentified witness/participant]: you learn talking about, there's families and parents, That's

[Unidentified Committee Member (possibly Rep. James Masland)]: the thing. Think it's possible.

[Rep. Bridget Burkhardt (Clerk)]: I'd be interested to look at what the other committees feel about the original ten hours of pre k then quickly

[Unidentified Committee Member (possibly Rep. James Masland)]: became optional,

[Rep. Bridget Burkhardt (Clerk)]: it seems like in the public setting, so I don't know if they're thinking that they want to regulate the

[Rep. Emilie Kornheiser (Chair)]: What minimum do mean by option?

[Rep. Bridget Burkhardt (Clerk)]: Many school districts decided they would offer more than 10.

[Rep. Carolyn Branagan]: Ah, okay.

[Rep. Bridget Burkhardt (Clerk)]: Even in supervisor unions there's one school offering 10, there's one school offering more, so it's not the same amount of benefits in different schools. So there are other committees, the education committee saying no, you can only do this, so to our point of view Or you have to do this. Right, supplemental district spending, let's say you only get ten hours but if your school wants to do more, do you then say well you've got a ticket to the voters?

[Unidentified Committee Member (possibly Rep. James Masland)]: What's your thought?

[Rep. Bridget Burkhardt (Clerk)]: Or 15 or 20, whatever the number is.

[Unidentified Committee Member (likely Rep. Woodman Page or Rep. Mark Higley)]: Curious about how other states pay for their, those that participate, pay for their preschool. Are we doing something similar to other states or, I don't know what the answer is

[Unidentified Committee Member (possibly Rep. James Masland)]: to Yes that

[Rep. Emilie Kornheiser (Chair)]: and no, but we can

[Unidentified Committee Member (possibly Rep. James Masland)]: take it.

[Unidentified Committee Member (likely Rep. Woodman Page or Rep. Mark Higley)]: I mean, other states doing it more, have it more simplified than what we're looking at? They are

[Rep. Emilie Kornheiser (Chair)]: Canada has it more simplified.

[Zoe Saunders (Vermont Secretary of Education)]: I don't know other US states have it more simplified,

[Rep. Emilie Kornheiser (Chair)]: though other US states have certainly done a lot

[Unidentified Committee Member (possibly Rep. James Masland)]: of what we do, and

[Rep. Emilie Kornheiser (Chair)]: we were really a leader in this. New Mexico and New Yorkers think are sort of like the next frontiers. Minnesota did it a little bit after us, but we can certainly learn more about that.

[Rep. Rebecca Holcombe]: I think some states have done some management of the market with respect to MINIS scale, for example, and there are many cities that are managing it through a contracting approach. So they wouldn't say part of the challenge for some private providers in some regions is that it's difficult to expand your capacity if you can't guarantee you can fill your seats. So what they would say, the municipal entity would say, we need 20 slots, so we're going to ask this provider to provide 20 slots. And then that you know that you've got guaranteed revenue for those 20 slots because usually demand will see supply, so they manage it municipally.

[Rep. Bridget Burkhardt (Clerk)]: So the municipality pays for the slots and then they're to buy for that paid slot?

[Rep. Rebecca Holcombe]: They're trying to manage supply to ensure there's a gap, because if you just leave it to the market, we're going to under provide in higher poverty rural areas, we're going to over provide in wealthier areas, and so what they're trying to do is they're trying to contract in ways that guarantee access. It doesn't work quite like that here because we need to actually pay at a higher rate for some of those students, whether in many places, contracting is used as a way to stabilize dividers and to guarantee supply where supplies here.

[Rep. Emilie Kornheiser (Chair)]: We do a lot of that with capacity grants here rather than contracts. Mean, like we- I'm happy to discuss that.

[Rep. Rebecca Holcombe]: I'm not sure I agree with you, but

[Rep. Carolyn Branagan]: I don't think that's a

[Rep. Bridget Burkhardt (Clerk)]: good chance for it.

[Rep. Rebecca Holcombe]: We also lose a lot. Like, you think of some of places where we've invested in capacity grants and subsequently closed, there's also no clawback. In fact, that is we aren't stably accounting for provision, so we can invest a lot of capacity to close, it's just a loss, it's our cost. I you said this would be for us, but I

[Rep. Emilie Kornheiser (Chair)]: feel like I should get you a t shirt that says that, Carol.

[Rep. Rebecca Holcombe]: I'm sorry, have the pants. It's a little bit more. Do we know what the cost is of those first three months in childcare? And then see what the cost would be of

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: Carol,

[Rep. Emilie Kornheiser (Chair)]: we have to actually get our work done, and that's clearly not on the table this year, as incredible as it would be. And Representative Branagan is going to sponsor the bill next year. Great. I'm glad we've established that. We'll wait till you get reelected, and then maybe we could co sponsor it next. Great.

[Rep. Bridget Burkhardt (Clerk)]: Okay. So

[Rep. Emilie Kornheiser (Chair)]: we just have a couple of minutes left. And so I wanna make sure that all the questions that we want to send and organized have been sent to Charlie or spoken aloud in the last thirty minutes.

[Unidentified Committee Member (possibly Rep. James Masland)]: Yeah, so the ones that are most important for me for other committees is that bucket of kids, which between three and five, not year olds, etcetera. Can you So in the language, know that they could just ignore that bill, but had people dropping three year olds, if you remember correctly. I'm curious if that's the right choice or not, and that's another committee problem. And for our committee moving forward, also in the take it or leave it bill, some money being paid out of the Ed Fund, some money being paid out of the childcare fund. Is that the right choice? My instinct would just be to say, if we're funding pre K out of think

[Rep. Carolyn Branagan]: we should just

[Unidentified Committee Member (possibly Rep. James Masland)]: have one bucket that we're working with. I think it would make the most sense just to fund all pre K programming through the childcare special fund, if that might be adjusted for payroll tax, but that's something I want

[Rep. Rebecca Holcombe]: to talk about more next time. And we didn't put it up there, but I assume we're all assuming that the goal is to protect stable access to care, right?

[Unidentified Committee Member (possibly Rep. James Masland)]: Right.

[Rep. Emilie Kornheiser (Chair)]: Okay. Seeing no further questions. Closing up shop. We're gonna take a one minute breather while we await Jennifer Carpe. Here we are still in the Ways and Means Committee, and we are moving to H577 and actually relating to establishing the Vermont prescription drug discount card program. Since we were last here together yesterday, Jen and Nolan have worked with the treasurer's office to add a little bit more language around the need or not need for a special fund and the fee authority.

[Jennifer Carbee (Office of Legislative Counsel)]: Good morning. Jen Carvey from the Office of Legislative Council. I have new language for you. It actually addresses those concerns you have by taking out the special fund and removing references to fees because it turns out they're not necessary. So hopefully you like that.

[Rep. Emilie Kornheiser (Chair)]: And so what we're gonna do is we're gonna hear from Jen and Nolan, and then we have some testimony from some pharmacists, and then we're gonna close out with the treasurer.

[Jennifer Carbee (Office of Legislative Counsel)]: All right. So here is an amendment. It's instances of amendment. It's not a strike all. So you are reporting that you have considered this bill and you recommend that the report of the Committee on Healthcare, which was a strike all, be amended as follows. First, we're striking out section one, but putting it back in with some changes. So I've prepared this in markup so that you can see what the changes are. And then if this is the direction you wanna go, then throw a big clean copy that doesn't show the structure language. So it still creates the Vermont prescription drug discount card program, still allows.

[Rep. Rebecca Holcombe]: It's just line 17. Let's

[Rep. Carolyn Branagan]: let her start

[Rep. Rebecca Holcombe]: showing all the changes now.

[Jennifer Carbee (Office of Legislative Counsel)]: Yes. So I will let the treasurer's office discuss, but I did discuss that with them and they asked that the language remain the same in that piece. So what I have changed here, so it still allows the treasurer to cooperate with other states and territories, regional consortia, or non governmental organizations to pull prescription drug purchasing power. It strikes the language, authorizing the treasurer to require reasonable fees to be charged to defray program costs, and determining what that is. Although I did, if folks are interested, I think others and staff may be preparing to report back to you. But there are a number of instances in statute either where you give authority to an agency or department to establish a fee or in several cases do this same notwithstanding 32 VSA six zero three language to authorize that. But I got some more clarification, I think after the treasurer's office got more clarification. And so we have kind of combined a bit of the concept of the special fund with some recognition of the funds flow. So this would say that monies received by the program from appropriations, transfers, gifts, grants, donations, or any other source, including any monies provided to the state for a cooperative arrangement authorized by this section, shall be available to the Office of the State Treasurer to defray costs associated with administering the program. So it's my understanding and the Treasurer's folks can give you more detail, but that there is that the consumer, when they pay the amount that is due with their discount card, that includes a fee that goes to cooperative ArrayRx. So ArrayRx is taking those fees from all consumer transactions. And they're using that money to pay for the work of the consortium and administering the program. But if there is more money than they need, if more money comes in for fees than the cooperative needs to operate the program, then they return the access to the states on a kind of pro rata basis based on the number of prescriptions filled. And that money could then be used by the treasurer's office to help pay for their costs in administering the program on the state side. So this language is recognizing that money may come in for that purpose and that whatever money has come into the program can be used by the treasurer's office to help defray the cost of administering the program.

[Unidentified Committee Member (likely Rep. Woodman Page or Rep. Mark Higley)]: Is there a listing of who donates to these programs?

[Jennifer Carbee (Office of Legislative Counsel)]: I would have to you'd have to ask the treasurer's office that. Know this is some fairly standard language around, you know, anybody who wants to give money to a program for the state to operate it, we're always happy to take that money. But I will exactly. Offer stands. Take it. Alright. So then the rest of the languages in here is the same about recognizing that the amount somebody pays for the drug after application of the card, if they're on a health insurance plan has to get attributed toward their deductible and out of pocket responsibilities. The language that actually says that more clearly is in Sections two and three of the bill, you are not making changes to those, at least not in this amendment. I did take out the reference here in the annual reporting to the balance in the Special Fund because below we are kicking out the Special Fund. So that is the end of the first instance. The second instance is just in Section four, which is an implementation report due next January. It strikes out a reference to the treasurer's office reporting on any fees to be charged to participants because the expectation is there will be none, at least by the state.

[Rep. Emilie Kornheiser (Chair)]: And again, okay, great questions for Jen.

[Rep. Carolyn Branagan]: I don't see the 50,000 appropriation.

[Jennifer Carbee (Office of Legislative Counsel)]: Yep, this only makes changes in sections one and four. Section five was the appropriation section. So that would be as it came over from health care. Yep.

[Rep. Rebecca Holcombe]: Nope. Thank you. Do you think there's going to be rulemaking as a result of this?

[Jennifer Carbee (Office of Legislative Counsel)]: I think I would have to have the treasurer's office weigh in on that. This doesn't specifically call for rulemaking. I don't know if any would be necessary, but if they believe some is necessary, we can add authorizing language. I have not heard of any of these rules.

[Rep. Carolyn Branagan]: Hey, Jennifer.

[Rep. Emilie Kornheiser (Chair)]: That language, I did not have a chance to run by the appropriations language folks and the full JFO team. And so I don't want to double amend. I don't want to amend that paragraph and then have the bill get to appropriations and then they amend the same paragraph because that's just messy, unnecessarily messy. And so I am now thinking aloud about if it makes sense to hold our vote while we do that or if it makes sense to consider a possible floor amendment. I'm gonna continue thinking about that while we hear our next testimony. I just wanna say it aloud so everyone, I'm now being overly transparent. Yes. Represent Meslis.

[Unidentified Committee Member (possibly Rep. James Masland)]: Yes. Thank you. The language as presented seemed perfectly spaced one with three. Great.

[Rep. Emilie Kornheiser (Chair)]: Thank you. I agree. But sometimes the budget people, they have feelings about like, commas, I don't know.

[Rep. Rebecca Holcombe]: I'm just struggling with the 12 Vermont residents and maybe Well, we're gonna hear from the treasurer. Yep.

[Rep. Emilie Kornheiser (Chair)]: Yes. So we're gonna hear from Nolan if he has anything he wants to add. Nope. Okay. Because we have not changed the fiscal impact of the bill in any way. Yeah. Okay, great. So next up, we're going to hear from the pharmacists, and then we're going to hear from the treasurer's office, who can answer any questions about this language that they propose. Ryan? You're not Ryan.

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: Oh, I'm not. I'm sorry.

[Rep. Emilie Kornheiser (Chair)]: Ryan's first on my agenda. But I don't feel strong. Thank you for joining

[Rep. Carolyn Branagan]: us. Absolutely.

[Dr. Ryan Quinn (Pharmacist, Lakeside Pharmacy, Burlington)]: Yeah. So I'm Doctor. Rang Quinn. I am a pharmacist. I work out of Lakeside Pharmacy in Burlington, Vermont. I've been there for a number of years, but I've also worked within Burlington Community Pharmacy since 2012, if memory serves. I've been within the community. I've been working within here for quite a while. And so I can see the impacts that H577 can have on both Vermonters and on community pharmacists. And through the data that we've compiled that we sent out in, the memo that hopefully you all received, if you look at the data that's actually being presented, pharmacies are being asked to pay administrative fees in order to basically do business with RayRx. In the best of scenarios, is non inferior to GoodRx, which as we all know, they sell data, that's how they keep the prices as they were, at least that is what they like to advertise. ArrayRx oftentimes winds up charging higher fees to pharmacies, expecting lower co pays from the patient, which in turn has lower reimbursement rates for pharmacies. Even in the scenarios where ArrayRx, will sometimes outperform GoodRx pricing, the pharmacy will at times make anywhere from $1 to $3 of profit on a prescription, which it's very much a death by a thousand cuts. 4 is not enough to keep a pharmacy running and that's a lot of the reason why we've I think it's 32 pharmacy closures of independent pharmacies between now and 2007. It is very much of an opinion that ArrayRx and what this is pushing forward would be wildly detrimental, not only to Vermont pharmacies, but to even the patients themselves when they would be asked to ask, co pays the time off.

[Unidentified Committee Member (possibly Rep. James Masland)]: Thank you. Yeah, absolutely.

[Rep. Carolyn Branagan]: Any questions? Yeah, Representative Branagan. I represent two communities of Georgia and Fairfax up in Franklin County.

[Unidentified Committee Member (possibly Rep. James Masland)]: Yeah, Notch. Yes.

[Rep. Carolyn Branagan]: So that's not a pharmacy, used to be Fairfax Pharmacy, but it got bought out, and I'm sure you know more But about that than I I called them, and they told me that they accept array Rx, but only people from out of state can take advantage of it because Vermonters aren't allowed to. So he said sometimes people from out of state get great reductions in cost, the neighborhood people can't pay the same because they don't have a card. So I don't understand what's going on.

[Dr. Ryan Quinn (Pharmacist, Lakeside Pharmacy, Burlington)]: So while they do have access, if I'd say someone from Connecticut or Arizona, came with their ArrayRx information, they could go to the pharmacy that and as far as I'm aware from my conversations that I've had with the other independent pharmacies, in Vermont, because of our contracts we have with Navitas who owns the ArrayRx card, we all have to engage with the discount cards no matter what. So yes, the patient themselves, the day of when they go and they could accept these, you know, what seem on the surface as wonderful, you know, tax you know, wonderful cost reductions to them where they're only paying a handful of dollars is done so at the explicit, expense of the pharmacy. So it's the patient makes the day when they go and pick up

[Rep. Carolyn Branagan]: their

[Dr. Ryan Quinn (Pharmacist, Lakeside Pharmacy, Burlington)]: medication at that day, but the pharmacy is at best making pennies or at worst, as can be seen in some the data, we wind up losing money if we go through them. Then that's a surefire way to have a pharmacy desert open up from a pharmacy close.

[Rep. Emilie Kornheiser (Chair)]: Sorry, you may not, but you're gonna be up next. Representative Ode, let's have our next witness testify and we can ask them a few questions and then everyone can have their input if that's okay with you. Okay. Thank you so much.

[Unidentified Committee Member (possibly Rep. James Masland)]: Really appreciate it. Thank you

[Zoe Saunders (Vermont Secretary of Education)]: for your job.

[Rep. Rebecca Holcombe]: Thank you.

[Rep. Emilie Kornheiser (Chair)]: Lauren, please join us. And I'm sorry that I corrected you twice. Please have a seat.

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: Oh, my apologies. No, it's fine.

[Rep. Rebecca Holcombe]: It's a weird place to be.

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: So I'm Doctor. Lauren Bodie. I'm the legislative liaison for the Vermont Pharmacists Association and a resident of Franklin County. So I had a beautiful drive down here. Yeah. And so I can speak a little bit to just the overall thought process that I can say that personally, I was feeling really optimistic about this. I don't think there's anyone more than pharmacists that takes drug costs seriously, more seriously in the healthcare system than pharmacists, because we're often the ones who are having to tell patients that the medications that they need are not affordable to them, and that's an absolutely terrible position to be in. And so as such, we're also extremely engaged in trying to find solutions that actually can meaningfully make a difference. I was really optimistic that this was going to be one of them, but the more information that we get, the more I'm convinced that this is not going to be value added to the state. So I'm going focus on the fees because that's the business in front of us today. I think the information that we were getting from ArrayRx that this was a fee free system is not quite the reality that we see on the ground, as you can see from the information that was provided in memo. So you can see that there is money going back to ArrayRx with every single transaction. This is coming from a combination of the patient and the pharmacy. So there is money flowing out of the system and it's flowing to our ARX. Now, the degree to which it flows back in, that I'm not clear on. But the idea that there's no money coming out of this from Vermonters not appear to be correct on the basis of the information that we've been able to compile. I didn't see that in the presentation we had yesterday either. Okay, so I saw that there was something that said no fees, and that whether we call it a fee or not, it doesn't necessarily seem that that is how I would interpret the word fee. You can also see that in this, that seven out of 10 of these claims ArrayRx is recouping more money than the pharmacy is retaining. And so this is certainly problematic, because this is essentially money that's getting pulled out of the system by functionally a middleman, and so that's something we're concerned about. To speak specifically to the Notch, they operate in a somewhat different system. When this was first brought forward, I did seek out the advice of the director of pharmacy of the Notch to get his opinion on this. And what he told me is that this is largely not something that they do because they have a better system. They operate basically on a sliding scale, an acquisition, like a real acquisition cost plus a small professional fee, and they pass on that saving directly to the patients. So, they do not have access to RARX. And generally, it seems that they do not need it because the pharmacy themselves is discounting medication. So, that is, while somewhat unique to Notch, that's that dynamic. It's a cleaner system with a different cost structure, and it's based more on the actual prices of medication and the actual costs of medication, as opposed to when you're looking at the costs that say I noticed in the presentation that ArrayRx was listing that thirty days of lisinopril was $60 It's not. That is not a real cost. And so reflecting a reduced cost of $7 is not a $53 savings because it never costs $60 to begin with. There is a real cost, it's just not that. And so, it's just difficult to say how the money is flowing, but as best we can tell, getting to the question of who's winning and who's losing, from the information that we have by trying actual claims, it seems that the only consistent winner is ArrayRx. And the losers in this system have a tendency to be a combination of either the patient, the pharmacy, or both. And so, it's just something that I would want us to be clear eyed about if we're going into this system as a way of Because I think we all really do want to have better prescription medication costs for Vermonters. And I think there are some questions that have not been answered to a degree that would allow assurances that this is actually a solution as opposed to a repackaging of an already existing idea that thus far has not generated meaningful results for anyone in the system other than the PBM. So that's kind of as I'm looking at it, I wanted this to be good, and it's not as far as I can tell.

[Rep. Emilie Kornheiser (Chair)]: Thank you. Yes, represent Mass.

[Unidentified Committee Member (possibly Rep. James Masland)]: Right. The book chart starts to what what you said in the graphic form.

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: In we could. I'll tell you that I would

[Unidentified Committee Member (possibly Rep. James Masland)]: I don't mean to make your life more complicated. It's just some of the stinking pictures.

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: Basically, relevant We can almost make this a flowchart in terms of what the copay is, what the patient is handing over at the point of dispensing to the pharmacy. The remit is what the pharmacy is handing back to ArrayRx. So that's where the money is sort of flowing from the patient to the pharmacy, from the pharmacy back to ArrayRx. Also from the pharmacy is going the net cost, as in this is the cost of the medication that a pharmacy pays to its wholesaler. And then what's remaining is the net profit. And there are some times where that net profit is positive. There's also seven out of 10 times, though, where the amount that the pharmacy is paying GoodRx is or excuse me, Hooray Rx. See even I'm having a hard time keeping these two different right now. I was hoping that there was going to be a big difference between Hooray Rx and GoodRx, and seems that that's not necessarily the case. So the amount that the pharmacy is paying back to ArrayRx is often seven out of 10 times more than what it actually keeps in terms to dispense the medication. So that's sort of the spreadsheet diagram of how the money is flowing from the point of the pharmacy. And I just,

[Rep. Emilie Kornheiser (Chair)]: Representative, just ask a question, yes.

[Unidentified Committee Member (likely Rep. Woodman Page or Rep. Mark Higley)]: I'm curious, how many cards are out there? And could you not just say we don't accept this particular card or what have you?

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: So that would be a protection that would be helpful to have. Unfortunately, the way oftentimes these contracts are structured is because this card is run through Navitas. That is a PBM that several employers in the state use. Functionally, to take care of our patients, we need to be able to accept because it is our duty and mission to take care of people, and that is through Navitas. There's not necessarily a way, for most of the time, the way those contracts are written, there's not necessarily a way to say, We're going to accept Navitas in this circumstance, we're not going to accept Navitas in the other. And this is also one of the issues that we have with GoodRx is that it's packaged in with other PBM contracts, and so it's not functionally

[Rep. Emilie Kornheiser (Chair)]: We're not talking about GoodRx

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: at all. No, I bring it up because it's a recognized comparator. And so like, again, I came into this thinking, oh man, if we could at least get to a point where we wouldn't have to use GoodRx, then this will be a win. I am not quite at that point anymore. It's really quite comparable in terms of its business practices. Folks, I see everyone has a

[Rep. Emilie Kornheiser (Chair)]: lot of questions. We're not going to vote on this right now because we probably need to make a couple tweaks to the language regardless. I'm going to remind folks, we have now removed essentially all of our jurisdiction over this bill with this amendment. And we have significant testimony that was submitted electronically in support of the bill. But again, we have really removed all of our jurisdiction over this bill. And so I just want to

[Rep. Carolyn Branagan]: I don't see what you're saying.

[Rep. Emilie Kornheiser (Chair)]: Because we removed any fee language from the bill with our amendment. And so I understand that this is very interesting and folks are gonna need to vote, but I'm gonna ask you to get your other questions answered offline.

[Rep. Rebecca Holcombe]: But we didn't vote on

[Rep. Carolyn Branagan]: the feedback,

[Rep. Rebecca Holcombe]: which being

[Rep. Emilie Kornheiser (Chair)]: moved No, we did not yet. Still there.

[Rep. Rebecca Holcombe]: So it

[Rep. Bridget Burkhardt (Clerk)]: is in front of us.

[Rep. Emilie Kornheiser (Chair)]: Yes, it is absolutely in front of us.

[Rep. Carolyn Branagan]: So we could ask questions,

[Rep. Rebecca Holcombe]: but you don't want to

[Rep. Emilie Kornheiser (Chair)]: I would like us to be able to hear from everyone and move on, and we have the Secretary of Education coming in at 11:30.

[Rep. Rebecca Holcombe]: Well, now I have concerns about the bills.

[Rep. Emilie Kornheiser (Chair)]: Yeah. Yeah. No, I hear that.

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: Yeah. Which we'd be happy to talk offline.

[Rep. Emilie Kornheiser (Chair)]: Thank you very much. Really appreciate it. Treasurer Pichak, would you like to join us? If you could offer any clarification that you'd like to, as well as your thoughts on the language that we have in front of us as an amendment.

[Mike Pieciak (Vermont State Treasurer)]: Yeah, for sure. Mike Michak, for the Records Day treasurer, great to be here with everybody. Thanks again for taking the time to hear about this bill. On the fee language, wanted to make the case that Nolan and Jen did a great job. We proved that that language. Really, what we needed was the ability of ArrayRx to collect a fee, which really is a private contractual matter, and then us to be able to receive revenue, which this language does. So we appreciate that. Certainly happy to get rid of the special fund. That was something that probably would have equaled a few thousand dollars a year. So we can take care of that on the accounting side without a special fund. But in the past, we've had desire for there to be a special fund from various parts of our office and other parts of state government. So we had that as the initial proposal. I just wanted to follow-up on a couple of questions I heard. Representative Page asked yesterday about the fee, although I haven't gotten the number for what a new state would be charged. We did get in writing that Vermont would not be charged this fee regardless. In terms of representative Ode's question, on rulemaking, because we're not administering the program like we are with other programs, we really don't need rulemaking authority. It's really just the marketing piece that is important to us. On the residency question, I think maybe Representative Ode asked as well. We talked to ArrayRx on that. They don't monitor or police the address, whether it's a residential or a business or a vacation home or a friend's home. So we don't know what moving that language would do for the eligibility. So we decided to leave it in because functionally, it's the same thing. Anybody that has a Vermont address can be eligible to use the card, whether it's a friend's address, an Airbnb, a commercial address. So we were confident and comfortable with that. In terms of the discussion that we're having today, just wanted to backtrack a little bit. The Green Mountain Care Board came out with a prescription drug report a couple of months ago. In that report, they recommended that the state pursue an arrangement with ArrayRx. We were happy to see that because we've been working on this for some time and have been collaborating now with the Care Board. We presented this information obviously to House Health Care. House Health Care heard the same debate. They voted the bill out 11 to zero. We've talked to ArrayRx about the concerns that we've heard from independent pharmacists, and they continue to reassure us that their model is a maximum allowable cost model with dispensing fees built in. That basically costs that a pharmacist is getting for the drug, plus a margin on top of that so that they are not being driven out of business when they make sales. But in fact, it is balancing the deep discounts to consumers with pharmacy sustainability and also consumer protection by not selling the data to third parties as well. They're a collaboration of states. We know that they don't have a business motive or profit motive, which is important to us. And then we have to look at the data that we've seen from states that are part of this. Connecticut, Washington, Oregon, Nevada, Arizona. In Connecticut and in Oregon, they've talked about the significant savings that their individual residents have received, about $234 in Connecticut. Again, if we get the same uptake as Connecticut, that would be about $18,000,000 a year in savings for Vermonters. So it's significant impact to Vermonters and to their ability to get drugs at a lower price. And the other part about it with Connecticut and with Washington and with Oregon, there are other states that are moving toward this partnership we want to be in, but so does New Hampshire and so does New York. And I think this will continue to grow. And as it grows, there'll be more and more power to purchase drugs at volume discounts and enter into arrangements that will be beneficial to this sort of balance that ArrayRx is trying to achieve. The other thing I just wanna point out is from a governance standpoint, you know, we are and we will be if this passes, you know, on the steering committee of ArrayRx. We have a strong voice with that organization. If there are issues that continue to present themselves, there's an opportunity for redress through our office, through the steering committee. ArrayRx has given us every indication that they are open eared and open minded about challenges that are being faced on the ground if there are operational issues. They said, for example, that they are talking to their PBM about not requiring a contract to be included for RayRx if they have other contracts that are under agreement with the pharmacies. They would look at individual drug costs if things are not working as anticipated. But in the global sense, the goal here is to balance those things, the discounts with pharmacy sustainability and consumer protection and privacy protection, and to do it in a way that allows pharmacies to get their costs and to get a margin as well so that they are sustainable.

[Rep. Rebecca Holcombe]: You. Yeah. Just ask one quick question? Is there research or did it come up in the healthcare committee, the actual impact in other states that have tried this on independent pharmacies and whether they've stayed open or challenges in other states where this card has decent uptake.

[Mike Pieciak (Vermont State Treasurer)]: No, I guess my opinion or my thought on that is, we down in Brattleboro were close personal friends with the G Martinos that owned a hotel pharmacy. And my dad was actually their accountant for decades and decades and decades. That independent pharmacy model is facing a lot of challenges that are well beyond anything that we're discussing here. And those challenges will continue to persist well beyond anything that we do with this bill. So I think it's kind of hard to suggest that there's a cause and effect for anything that is in this bill as to their business model. It's a business model that's challenged, and we've seen that in Vermont and across the country as well. Hotel Pharmacy recently had to sell to a national chain. So that is sort of the reality of the marketplace.

[Rep. Rebecca Holcombe]: I just struggle because independent pharmacies do some work that the big national chains don't do. No doubt. Especially if have a medically challenged person in your house. A lot of times you are really dependent on an independent pharmacy to do compounding or drugs

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

[Rep. Rebecca Holcombe]: just simply can't get from other places.

[Mike Pieciak (Vermont State Treasurer)]: And to your point, the purpose of the RayRx model is to do better than other discount cards that exist because of those balancing factors and their goal of having their drugs on the whole, not just cover the costs that the independent pharmacists are paying for those drugs, but to provide a margin as well. So that is better than what other discount cards do. And that's what we hear from Oregon and their independent pharmacist association. That's how Trevor, their point person, relates it to us. So that's like data that shows what the impact is. But it is sort of qualitative data from a state that has been doing this since 2006.

[Rep. Rebecca Holcombe]: President Branagan? Can the

[Rep. Carolyn Branagan]: pharmacy still withdraw from

[Rep. Bridget Burkhardt (Clerk)]: this program?

[Rep. Emilie Kornheiser (Chair)]: If they

[Rep. Carolyn Branagan]: get in, it's not working well, they're losing money, can they pull out?

[Mike Pieciak (Vermont State Treasurer)]: So I think there's two questions to that. One, the state of Vermont could remove itself from the arrangement if that is the choice that we want to make down the road or we think that's the choice that benefits the most people in Vermont. So that's sort of one point. And the other point around the contract, we have had conversations with ArrayRx around are they required to participate if they have a broader contract with the PBM pharmacy benefit manager? And they say that they relay to the PBM that they don't want to force pharmacies into this if they don't want to. So that is their direction to the PBM. And we want to follow-up with them and make sure that that's happening on the ground if there were particular pharmacies that were having issues.

[Rep. Carolyn Branagan]: That would be important to know before we

[Unidentified Committee Member (possibly Rep. James Masland)]: go. Yeah,

[Mike Pieciak (Vermont State Treasurer)]: understood.

[Rep. Rebecca Holcombe]: What do you do? Don't think it's the right questions to ask, but I'm wondering if the fees of a RadarX are set on the price of the drug or just per prescription?

[Mike Pieciak (Vermont State Treasurer)]: Yeah, think there's not the same fee for every prescription, if that's the question. Yeah, I think it sort of depends on the cost and the negotiation that occurs on the suite of drugs that are under that contract.

[Rep. Rebecca Holcombe]: So, do you know if they make more or less money? You know pharmacies are able to make more or less money depending on the drug prices?

[Mike Pieciak (Vermont State Treasurer)]: I think on certain drugs, certainly the margin would be higher than others. So I think it all is very dependent. Mean, you have an example, I think, 10 drugs. We don't know the name of those drugs. I don't think that was provided in the memo that was sent over to the committee. So I can't tell you about what any of those drugs mean or what the reality of those numbers are. But I will say there's 20,000 FDA approved drugs what this card covers, and the vast majority are getting significantly deep discounts with the cost being covered and the margin being added in for the dispensing fee.

[Rep. Rebecca Holcombe]: I'm just having a hard time with testimony that we've heard and the testimony you're giving about the independent pharmacy.

[Mike Pieciak (Vermont State Treasurer)]: Yeah, no, understood. Again, I just would back up that the care board recommended that the state of Vermont enter into this partnership. We heard this testimony in House Health Care and got an eleven-zero vote out of House Health Care that that's dealing with these issues on a regular basis.

[Rep. Rebecca Holcombe]: Do you know if that committee heard testimony from the independent departments?

[Unidentified Committee Member (possibly Rep. James Masland)]: They did.

[Rep. Emilie Kornheiser (Chair)]: Thank you very much. I think what we're going to do is I'm going to give folks over lunch and extend it to talk to colleagues on the health care committee, to read all the testimony that was submitted on this, and to have whatever conversations you need to have, including talking to the treasurer's office more extensively, and to remind everyone that we essentially hoping that we make an amendment that removes essentially any authority we have over the bill in the first place. So it's a fairly narrow vote that we're going to be making when we make a vote. Thank you very much

[Rep. Bridget Burkhardt (Clerk)]: for waiting.

[Mike Pieciak (Vermont State Treasurer)]: Thank you very much for the committee's time, happy to answer any questions that folks have. Thank you.

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: Thank you.

[Rep. Emilie Kornheiser (Chair)]: And I think there will be some small tweaks to

[Unidentified Committee Member (possibly Rep. James Masland)]: the language content and Nolan are talking

[Rep. Carolyn Branagan]: about that. Cool. And you're

[Rep. Rebecca Holcombe]: gonna talk to Jen. Great. Okay.

[Dr. Lauren Bodie (Legislative Liaison, Vermont Pharmacists Association)]: So we're making we are still live. Hi, everyone. We're still on the record.

[Rep. Emilie Kornheiser (Chair)]: So if folks could leave quietly and rejoin quietly, that would be lovely. Thank you. There's another meeting. And here we are. Wow, that was a lot of people leaving. A lot more air in here now. Okay. You really can't play around. Yes, indeed. Okay. Secretary Saunders, can you please join us? So we invited you here today because the governor has a proposal regarding the use of the estate tax being entirely moved to fund school construction. And we were

[Rep. Rebecca Holcombe]: told you're the person to tell us about that.

[Zoe Saunders (Vermont Secretary of Education)]: Thank you for having me. For the record, I'm Zoe Saunders. I'm the Secretary of Education. I fear that my testimony will be underwhelming to respond to that particular question. I do believe that the tax department is better positioned to describe how the formula works. But I was here to share just kind of the order of operations in terms of the governor's approach as we think about funding school construction aid. But you are correct that the governor has identified a tax mechanism that could be leveraged to support some additional revenue for school construction aid in the future. I'm not clear in how much money that would generate or what the variability would be year from year. So those questions would be better served for the tax department. I can really quickly, I'm going have a quick testimony around where we are, if that would be of interest to the committee. I know you've already benefited from testimony from Bob Donahue, who's an expert So on our you have an understanding of that foundation. So what I can relay is some of the preparatory work that is underway in order to move us forward and also to provide some clarity around the other steps that need to be in place that also come with some cost to them in order to deliver on the program. So that can be pretty quick and then open questions if there are related to the Agency of Education's role. But if you have questions around the specific tax and revenue, that would be the tax department.

[Rep. Emilie Kornheiser (Chair)]: Okay, go ahead, and then we'll get into that

[Zoe Saunders (Vermont Secretary of Education)]: part. Okay, so Governor Scott has been consistent in communicating and recognizing that there will need to be school construction aid, but that there is an order of operations around how we proceed in terms of funding. And that mainly is looking at two points. So one, we have to understand first the future configuration of our system in terms of the larger districts before we're making significant investments in buildings. If we do that now, we run the risk of investing in buildings that will not be operating or fully leveraged or utilized in the way that they currently are. So there are some strategic planning work that needs to be in place in order for us to be responsible with the use of state dollars in investing in building infrastructure. Additionally, there are still some work to finalize the funding formula. It's important that we understand the full cost of the education system before identifying additional pots of money that need to be invested to support the overall system. And I also want to recognize that all of the modeling that's been part of the foundation formula in Act 73 does consider our existing portfolio of schools. So the funding is designed to support the existing portfolio of schools that operate now and does not require immediate mergers or consolidations of schools. So just to put that in perspective. And then with all of that in mind, we recognize that there's still a lot of preparatory work that is required in order for us to prepare the system for implementing an updated school construction aid program. And we're taking that responsibility very seriously at the agency. So as part of the governor's budget proposal, he did include a request for making five positions at the agency permanent. So last year, there were limited service positions that were approved. We've recognized the critical need of those roles. One of those roles is specifically designed to support with the facility planning. That role would be really embedded in the field, working with districts, working with schools to really think about the operational capacity of the buildings and how to address the deferred maintenance needs of buildings. So that's one immediate next step that we've put in place to ensure that we have the resources at the agency to really support with the program. It's also to recognize in terms of other costs as you're looking through this, there is a requirement for school facilities master planning, and there is a grant that has been put into place, but there's no appropriation that has been allocated for that. So that also is a first step to this work. But we would contend that that needs to happen once we're clear on how the districts are going to be configured. So that that would be funded to support the broader facility planning across schools to really maximize that school portfolio. Within that is considering the future enrollment projections. So for schools to really identify how they want to expand, it's important for them to know how many students will they be expected to serve. So as opposed and there may be the need for what we've talked about is kind of specialized schools that are smaller in nature. But those decisions do need to be considered within the larger districts. And so it wouldn't be responsible with fiscal dollars until we've done that due diligence of the fiscal planning. And I think this body agrees with that part. In terms of questions around rulemaking, that would really be led by the school construction team that would be part of the agency. So we've put forward a recommendation of how to structure that team. That was a report that was delivered in January around the specific roles, what their scope of work would be. We're currently not funded for those positions, Those positions would be needed to really engage in the depth of rulemaking. However, we're still looking at how rules need to be adjusted and modified, but the actual process of really engaging in the deep thinking, there would need to be staffing in place for that. So I think mainly what I wanted to highlight for you is that there absolutely is a recognition of school construction aid being part of the equation for education transformation, but that there is a very clear order of operations of what we need to determine first, which is understanding the new district configurations, the final funding system that will be implemented. And then there are steps to actually resourcing the school construction aid grant and the staff at the Agency of Education to support with that implementation. You can see here in the testimony that I think was just recently updated some of the reinforcement of the topics that Bob Donahue shared with you around the work that we're currently leading at the Agency of Education. So if you have deep questions about that, certainly our team would be willing and excited to come back and review that with you. But we are really, I think, leading the way and evaluating what that deferred maintenance is, working with districts to implement school safety checklists. Also within our district quality standards, we have very clear rubrics for how to do facility planning and to do appropriate budgeting for addressing deferred maintenance. So all of that is going into place right now, which we think is really critical to the overall implementation. So I wanted to make sure to give you color to the level of work that the agency is doing to ready the system for the school construction aid as other decisions are being finalized around how our structure will be organized through the transformation. I have a few questions, and I'm

[Rep. Emilie Kornheiser (Chair)]: Representative Kimbell, Doctor. Oz, I know that's one of your favorite topics. I have small questions and then bigger questions. When you say that you say you need those, I just want to understand your timeline. You need those positions to be in place before you can really do fulsome rulemaking. And so does that mean that if those positions are included in the budget, and then you would start hiring and then rulemaking would be like you'd start rulemaking in November or something? So I

[Zoe Saunders (Vermont Secretary of Education)]: would say with anything, right, if you're going to signal that it's a priority to the agency, we have to evaluate our staff. So it's not to say we don't have competent people doing the work, but they also have other jobs. So it's evaluation around, can they actually stop the work to engage in rulemaking? So I think for the purpose of timeline, yes, we want to have the team in place to do the full rulemaking.

[Rep. Emilie Kornheiser (Chair)]: So when would you be able to start rulemaking?

[Zoe Saunders (Vermont Secretary of Education)]: So rulemaking, I don't know. Let me get back to you on the timeline for that.

[Unidentified Committee Member (possibly Rep. James Masland)]: Okay.

[Rep. Emilie Kornheiser (Chair)]: Then you described the I have three, and then I'll Okay. You just talked about the order of operations and sort of the need to have districts in place before we evaluate sort of what the appropriate buildings will be. And that makes sense to me on the things of it, absolutely. Because you don't really know what you need until you know what you have or what you're planning. You can't plan until you do that first step planning. But I think one of the biggest hesitancies, very reasonable fears that I'm hearing from the field, and I think we've heard from the field consistently, is how can you ask us to consolidate when we have no idea what the resources will look like for those new buildings? And so it makes some sense to me to not begin a school construction program until after the new districts are in place. But it does not make sense to me to not establish a new construction program until the districts are in place. Because I

[Zoe Saunders (Vermont Secretary of Education)]: think the establishment and the clear funding stream is what provides the reassurance to the field that changing district structures will actually work. And so I think those are two different kinds of timelines. And I'm curious your thoughts on that. So establishing the school construction aid program is important to signal that there is an understanding that will be needed to get us to this future vision. And I think we all share in that future vision. There's a lot of energy and excitement around building regional high schools, for example, and integrating that with tech centers. I think we actually have the components of establishing that. The working group that was put together, the school construction advisory group, has really landed on a solid proposal that is very strategic around how we would manage the program. We're clear around the staffing that would be needed for the program. We're clear around the planning that's needed for the program. I think the missing piece of the puzzle is the funding. And the challenge with that is that we're trying to figure out funding for the entire education system. We know school construction aid will be quite costly. But we need to make sure we're doing that with a full view of how the cost of funding the entire system and education delivery. So that's what I would just say. I think that's the intent for the governor is to begin to identify those creative ways where we can generate some of that revenue through the potential tax reallocation of funds. So it's definitely a real concerted effort to identify some measures and to signal a commitment that this needs to happen, but it needs to happen after we have a better understanding of the full cost of the system, a better understanding of how we're going to organize our system so that we're actually investing those dollars, which are significant because full construction is quite expensive. But we're doing that in a way that's aligned to our vision. And we have to be clear about those ed specs as well, right? And when we do that approval process to ensure that it's a high return on investment. I said it would be underwhelming to you.

[Rep. Emilie Kornheiser (Chair)]: I'm not underwhelming. These are really important issues in group. So if you

[Zoe Saunders (Vermont Secretary of Education)]: think about there's opportunity for cost savings in the current system, we're having a full view around where those are applied. And also, when we brought forward the original fundus formula and we have evolved that thinking, there is a consideration around how we're funding that maintenance and operations in a way that we can prevent this problem. We all recognize that we have an aging facility portfolio, and some of the pieces we're putting into place with the district quality standards are designed to prevent that so that we're doing budgeting in a way to proactively address those building needs, because that's the first thing to go when you have that or to fund a literacy program or literacy coach. And so we're really trying to be thoughtful around the whole system and putting those parameters in place. And then also understanding within the funding formula itself, how we're going to allocate a portion to the building maintenance and operations. What does that look like? Think is an important part of the conversation for sustainment or for sustaining the building infrastructure. And then where does the money come from? I mean, I think this committee knows this the most. I mean, we have a very expensive education system. We can't have everything. And so we have to start making choices around how we're going to spend our dollars, recognizing that school construction will be needed in the future. We have to do that with recognition of how we're funding the overall system. There still a lot of outstanding questions that we hope will be resolved very quickly. I I hope this legislative session, there'll be some decisions made around the final foundation formula, at least directionally, so that we can have a better sense of how we might contemplate funding for school construction.

[Rep. Emilie Kornheiser (Chair)]: So the question about the trade offs. So we've seen a lot of testimony. We don't need to actually hear from tax on the estate tax, because we received a lot of testimony on the estate tax and how it works. Perfect. And so the two things I would say about it that I'd love your thoughts on. One, that money is already going somewhere. And the place where it's going is scholarships for low income Vermonters to go to college, which is also within your portfolio at the Agency of Education to some degree, right? And so if you're thinking of the birth to never remember what the Cradle Cradle to career. Thank you. It seems like you're I don't have the right idiom for whatever that is, but it seems like maybe not a strategic choice. And then the second thing about the estate tax is it's probably the most unstable revenue source in our entire portfolio of revenue. And so it strikes me as sort of like a wild choice to create a funding formula. And so I understand it's the one that was chosen. But do you have when you evaluate what would be needed to stand up school construction funding, do you have a sense of how stable a revenue source you'd need or how you would need that money to actually be flowing?

[Zoe Saunders (Vermont Secretary of Education)]: Yeah, mean, think that this is a conversation starter. Think if it was easy to fund school construction aid, that would have been done already, and it's a significant cost. So what we're trying to put forward is there's different ways that we can creatively pursue this. There are tradeoffs to every change in how we align revenue sources. But it is an important conversation starter as we're trying to, in earnest, understand how we can meet the full needs of the system.

[Rep. Bridget Burkhardt (Clerk)]: So I have a few questions, as So you can I can appreciate the logical process you go through saying we need our strategic plan, we need the districts, we need to then go through that? At the same time, we have done a lot of homework, so some facilities are already identified as having significant physical needs. And this process is like three, four years long, if you look at it even so. So there are schools, I can speak from personal experience, let's talk, that are looking at a school bond even coming up in March. So what do you do with that, that the school currently isn't meeting that it's physical needs, that Band Aids have been approached, that's really pressing needs?

[Zoe Saunders (Vermont Secretary of Education)]: So there is emergency funds available for those schools that are really contending with challenges that prohibit them from opening and operating a school.

[Rep. Bridget Burkhardt (Clerk)]: It's like $300, right?

[Rep. Rebecca Holcombe]: It is. It is.

[Zoe Saunders (Vermont Secretary of Education)]: So they're target, but that's also after accounting for insurance reimbursement as well for some of those failures that can be covered through other recouping dollars through insurance. Yes.

[Rep. Bridget Burkhardt (Clerk)]: Spending more than that on our boiler from 1952. Yeah.

[Zoe Saunders (Vermont Secretary of Education)]: And so there are definitely, as we've

[Rep. Bridget Burkhardt (Clerk)]: done

[Zoe Saunders (Vermont Secretary of Education)]: that facility needs assessment, we recognize that there's a tremendous amount of deferred maintenance. We also know that there are certain schools that have more severe needs, and there are certain schools that have had to navigate that just in the last year and are pursuing ways in which they might actually consolidate or change the way that they're configuring the delivery. So we know that that's happening and our team is on the ground supporting. I think it would be helpful to have Bob Donahue and Jill Briggs Campbell back to kind of talk you through, because I think you're at a point now where you're really evaluating that school by school, the ones that you have concerns. And I think they would be better served to share more around that facility risk index and just kind of the levers available to support those immediate needs that are arising.

[Rep. Bridget Burkhardt (Clerk)]: And we've had Bob, and he was great.

[Zoe Saunders (Vermont Secretary of Education)]: He's wonderful.

[Rep. Bridget Burkhardt (Clerk)]: And one of the things he was talking about is that master planning grant, so necessary, and it's not really in the budget for this year. Just wondering and I don't think there's a budget correct me if I'm wrong for the four positions or five positions for the school school construction divisions in this year's budget, right?

[Rep. Rebecca Holcombe]: That's correct.

[Rep. Bridget Burkhardt (Clerk)]: So it really seems to put things behind the eight ball, it's not even the next fiscal year, it's in the following fiscal year in order to come up with that stuff. We're lucky. That really puts it out a long way.

[Zoe Saunders (Vermont Secretary of Education)]: I think we've been signaling a sense of urgency to make policy decisions around the education transformation for this very reason, because it delays other decisions. And so I think the governor's been really consistent. We have to have clarity around how we're going to be organized, so understanding the district.

[Rep. Emilie Kornheiser (Chair)]: Do you think the governor did not put those positions in the budget because we haven't voted on school districts yet?

[Zoe Saunders (Vermont Secretary of Education)]: What I'm saying is all of these are a series of choices around this is a very difficult budget year. So what governor put forward in this budget proposal was to make those full time positions permanent to support with the transformation activities that are immediate and necessary to guide the change management of our system. There's not an unlimited amount of resources and positions. So the fact that he's coming forward in a difficult budget year to ask and request for five additional permanent positions at the agency is definitely showing a commitment to education. In terms of additional staffing needs, it needs to be timed with how we're actually going to be overseeing and supporting that work. And so what we're saying is there are some decisions that still need to be made around the education transformation that are outside of school construction aid before those teams are stood up and additional resources are allocated for that purpose. Does that help answer your question?

[Rep. Bridget Burkhardt (Clerk)]: Yeah, I guess I just had one last question. We talked a little bit about it because it already exists in rules, a lot of rules for school construction for the previous program, even the school planning guide and all that kind stuff.

[Zoe Saunders (Vermont Secretary of Education)]: There's a lot of resources, right? So when you say establishment, I think we have clarity around what that looks like.

[Rep. Bridget Burkhardt (Clerk)]: And I was thinking that would give us an opportunity to just revise those easily, to reflect what the current program is. So it wouldn't take the full rulemaking process that is normal for standing up in

[Zoe Saunders (Vermont Secretary of Education)]: the program. So we can come back to you and evaluate what and share with you the evaluation that we've conducted on what rules need to be modified. I'll share that in my purview, I've done that within CTE and some other areas, but that's not been my focus for the school construction program. Bob Donahue and Joe Burkhardt's Campbell would be best to identify that. But yes, we have been looking across our portfolio of programs at the agency and identifying what rules need to be updated. In many cases, in some cases, are small tweaks and to modernize our certain programs like in CTE. In other cases, they're more extensive. So I would want to wait to comment on the scope of those revisions until I had a chance to look back at the review that they did of mapping. But we can certainly provide that. And I hear your point. There's a tremendous amount of free work that's already been done. And I think really thoughtful work that's happened over the last couple of years in a really collaborative way to understand how we can strengthen the program so that it's more strategic. So to your point, we can follow-up with that and do a little mapping of what we think would need to be amended for the pools. Other team members would be better served to share that with you.

[Rep. Rebecca Holcombe]: Senbruker. Secretary Saunders, you mentioned two things that I wanted to just draw together and ask a question about. One was you mentioned regional high schools that we've talked about that have CTE embedded within them. And then I watched your testimony yesterday in Commerce about CTE. And I'm just confused about, you seem very clear about the strategy of sort of talking about districts, working through school construction, and then getting to that vision of regional high schools. Why as the governor and you, why are you proposing to do this full standing up of an educational service area for CTE that seems to pull CTE back out of the regions and up to a centralized level only to then later down the road, supposedly push that back out into regional high schools that are comprehensive. Thank you. Think one, I think there'll be a lot more conversations around this to provide clarity. This is definitely a new concept. And so I appreciate you lifting up the question.

[Zoe Saunders (Vermont Secretary of Education)]: There was a lot of debate over the last couple of years. How do we modernize our career and technical education system so that it results in expanding opportunities for students and improving quality? And as we've gone through three years of studies, a few barriers have emerged. Those barriers are related to inequitable funding. So that's true in the K-twelve space. We also hear a lot about competition of funding between high schools and CTE centers, transportation being an issue with students' proximity to a tech center largely predicting whether not they will participate in the program, and inconsistent quality across the state. So as we grappled with the best way to approach that, we recognized that a one governance unit would be supportive of ensuring that there was consistent quality and allowing us to be strategic and equitable around how we deliver resources across the state, understanding that certain CTE centers might be in need of standing up new programs or have different needs in terms of their lab space or whatnot. And so what a single governance allows us to do is to accept the Perkins funds as one district, essentially where they can distribute those funds in a more equitable and strategic way that can benefit the whole system moving into modernizing. Additionally, there's a recognition that it will take time to build these regional high schools. Even if there were school construction need today, it would take multiple years until that was actually established. And so we want to make sure that there's a way to push in resources and supports into our existing system. So in essence, this education service agency, we initially contemplated maybe this should be its own district. And the reason that we decided that it shouldn't be is that we didn't need that level of structure and rigidity to achieve the policy goals. And there's a certain level of permanence to a district that we didn't think was the right approach during this particular time of transformation. Another thing that factored into the discussion was thinking about scale. And so we recognize and we've been consistent in describing that larger districts achieve scale and you can pool your resources differently. Even when the governor proposed the original Education Transformation Plan, which had five districts, we at that time still contemplated that there would need to be an entity to oversee CTE simply because of the scale. Being able to achieve scale is challenging. And so one governance entity allows us to do that. And we've kind of gone through an evolution of it being considering it as a BOCES, considering it as a district to then moving forward as an education service agency. And the reasons for that are to allow for us to have kind of more agility and responsiveness to the changing demands of the state, but really ensuring that there is an entity that has the specialization in CTE that is pushing in support and coordinating with our middle schools and high schools and tech centers across Vermont to deliver a consistent level of quality programming and training for teachers. So that those were the reasons that we move forward with adopting. I know there's been, I think, questions that you're bringing up is, does this create separateness? And what we're contending is that we need that level of specialized support and that the state is, in this scenario, the state is saying, yes, we believe that career and technical education is a priority. We want to fund it as a priority and we want to resource it as a priority. So that means that we're creating this unit that actually is kind of coming alongside our districts and supporting with early career exposure in terms of helping to design the coordinated curriculum at that level, at the middle school level, helping to train college and career counselors so that they have an understanding of the different industry and then operating the actual what we would traditionally call as the CTE cohort model in the eleventh and twelfth grade. So it's designed to be really supportive and collaborative with our existing districts so that we can actually deliver quality now and address some of the barriers to access. So within this kind of coordinated statewide planning, it allows us to look and say, Okay, this middle school may not be benefiting from any pre tech program. Here are coursework that you can integrate into your training and we'll also train your teachers to support that. Or you might have a high school that is far from a tech center, but that high school has classroom space available. And so taking the big view, say, well, we could actually the ESA could support that high school in developing that, turning that classroom space into a lab where it's appropriate. Right. If you're going to do like a media or something like that, not welding, that's not going to go into your empty classrooms, superintendents. So that's kind of the thinking is that with the ESA different than a district, it's really also responsible as a true service agency in delivering services and programs in everywhere where students are educated. There still will be a need for transportation for those students that are concentrators, and we need to address that. But the idea also with this is when you look across the state, there's different levels of program demand or program capacity. There are some programs that are oversubscribed and some that are under enrolled. And so part of this view is to think about how do we ensure that those programs that are really aligned to industry needs and of interest to students are being offered accessibly across the state? And so it takes that statewide view of ensuring that we're really creating those programs of interest so that they are more accessible. Thanks. And we're going to

[Rep. Emilie Kornheiser (Chair)]: take more testimony about CTE when an AFM bill emerges from the education.

[Zoe Saunders (Vermont Secretary of Education)]: We're excited about the conversation. Think we all share the goals, and we're trying to name what are the barriers. This is a solution we put forward that we think addresses many of the barriers that have been persistent. And we look forward to continuing to refine the policy as we engage in committee. And thank you for coming in to discuss school construction.

[Rep. Carolyn Branagan]: Yeah. Okay.

[Rep. Emilie Kornheiser (Chair)]: Thank you. And we'll thank you for having today, we're back here