Vermont Legislature SmartTranscripts:

[Rep. Emilie Kornheiser (Chair)]: Good afternoon. It is ways and means. I'd it's February 24. We are really making progress through the calendar here. And it's Tuesday. It's Ed Finance Tuesday, just like every other Tuesday. So fun. So we are going to start with our now weekly school budgets update from Kelly and Ted. You want to join us? Thank you. And y'all, next time we do this, which will be in two weeks, we'll have the town meeting votes. And usually, the school board association tracks all those votes and shares them with us. The delightful survey, too.

[Kelly Murphy (Education Finance Director, Agency of Education)]: Good afternoon. This is becoming a more regular thing for me. I'm Kelly Murphy, education finance director. So I'm going to go ahead and share my screen. We do have some new numbers for you. So just getting started here. So just going through the whole kind of song and dance. So the deadline for these budgets for the preliminary collection was February 15. When we came in last, we didn't have everyone in that we were anticipating. At this point, I can say that we do, we do not have all the budgets. So right now, as it stands, we've got 105 of the 122 or 119 if you're not counting the unorganized towns. And that's about where we were last year at this time. So I think that that's pretty good progress. And so what we have been collecting are the budgeted expenditures, offsetting revenues, and calculated education spending. And so that puts us at about 88% in at this point. In terms of the long term weighted ADM and the budget, we're at about 93%. So a pretty significant amount of the budgets are in, see what those factors are in that bullet. And so this puts us at 4.2%. And so that's slightly lower than last week. We're at 4.3 last week. And so a good showing, I'd say. Each week we've been bringing it into focus just a little bit more. And we're sort of getting to the point where it's only by shades and hair. So it's not a ton different from what you saw last week. And so then just scooting on down here to the tables that we've been sharing each week, the budgeted expenditures, there's a change of 3.6% of the budgets that are in. You'll notice that there's a shift in the offsetting revenue, where it's 0.6% to the good or positive, rather than the negative in those revenues being offsetting. And then you can see where education spending is here at the 4.2%. And so the second table that we've got here just shows where we were on December 1 and where we are now currently with the projections built in. And so that's what I have for today. And I can blow this up a little bit just so you can

[Rep. Emilie Kornheiser (Chair)]: Anyone have any questions? Yep,

[Rep. James Masland (Member)]: representative. Can you clarify for me, maybe us, but certainly for me, that 4.2% is, and what can we expect from that?

[Rep. Emilie Kornheiser (Chair)]: I mean, what's the impact on our taxpayers? So the impact from taxpayers, we'll get from Julia. Okay,

[Unidentified Committee Member]: all right.

[Rep. Rebecca Holcombe (Member)]: Have a seat, seat.

[Rep. Emilie Kornheiser (Chair)]: Yeah, Representative Ode and then Mark.

[Rep. Carol Ode (Member)]: Thank you. So do you have the numbers for how much health insurance premiums and health care costs went up for

[Unidentified Committee Member]: the

[Rep. Carol Ode (Member)]: entire state compared to, I mean, how that folds into this 4.2% degree? Do you mean specific

[Kelly Murphy (Education Finance Director, Agency of Education)]: to these budgets? So we right now have collected the preliminary higher level information, so in those three categories that I referenced earlier. But when we get the final budgets in, we will be getting more of the budgeting detail in. So I would be able to sort of a statewide assessment of what healthcare costs would be at this time. But we don't have that in this version. It's all wrapped in, of course, we just don't have it to pull out.

[Rep. Carol Ode (Member)]: It's fair to say that the is it fair to say that the health expenses for all school employees went up in double digits this year? Is that double digits or single?

[Kelly Murphy (Education Finance Director, Agency of Education)]: I don't know that I could say that because I think it would be dependent on those districts and their experience. I think we might be able to show

[John Gray (Office of Legislative Counsel)]: an average of an increase, but I'm not sure what the increase would be at this time. It's certainly a cost driver.

[Rep. Carol Ode (Member)]: It makes the, depending on what that information is, it makes the 4.2% seem like a huge effort to get to 4.2% considering the other pressures, especially that one. Yes. Okay. Representative Holcombe. Thank you.

[Rep. Rebecca Holcombe (Member)]: Do you have any data on who has not submitted a budget at this point, and are they substantively similar to or different from the ones that already have?

[Rep. Emilie Kornheiser (Chair)]: You're having pop ups from your email. Okay,

[Kelly Murphy (Education Finance Director, Agency of Education)]: well, I may stop the share now. Thank you for that.

[John Gray (Office of Legislative Counsel)]: So

[Kelly Murphy (Education Finance Director, Agency of Education)]: we do have details on funds that are not in. They are who we would anticipate seeing at this time compared to last year. And in the last round, some of the budgets that we didn't have in yet were some of the good sized districts that we wanted to see in this election.

[Rep. Emilie Kornheiser (Chair)]: We do have them now. That's awesome. Thank you. Thank you. That was one of my questions as well. The change in the reserve or sorry, the offsetting revenue, can you talk about that a little bit?

[Kelly Murphy (Education Finance Director, Agency of Education)]: So that's based on the budgets that did come in, and so some of them were using probably more offsetting revenues than the other budgets that we had received previously. And so it just bumped it up a little bit.

[Rep. Emilie Kornheiser (Chair)]: To what degree are you going to be able to have eyes on how much is still on the bottom line for districts that they could have used as offsetting revenue? Does that question make sense? It does.

[Kelly Murphy (Education Finance Director, Agency of Education)]: It's an interesting one. So we could certainly get at that information. What we currently have, we collect through a supplemental worksheet, which is in the stat book. And so it's backward looking. It's not a real point in time collection. We could certainly gather details on that information if you're interested.

[Rep. Charles Kimbell (Ranking Member)]: Okay. Yeah. Very much so. Thanks. Sorry, Howard. Howard's left in the month. Okay?

[Rep. Emilie Kornheiser (Chair)]: Sure. Yeah. Okay. That's what that means.

[Rep. Rebecca Holcombe (Member)]: I'm sorry, didn't hear what you said.

[Rep. Charles Kimbell (Ranking Member)]: How much powder is left in

[Unidentified Committee Member]: the keg?

[Rep. Emilie Kornheiser (Chair)]: Not that we're blowing anything up under any circumstance. I just,

[Rep. Rebecca Holcombe (Member)]: I truly didn't hear, in my head.

[Rep. Emilie Kornheiser (Chair)]: I don't think you have to write it down. Use of reserves. Yes.

[Rep. Rebecca Holcombe (Member)]: And whether it's, how significant of a difference, I'm asking myself how significant a difference would it make, whether we have or not have policy about reserves and how much does it really impact that final number from year to year, maybe someone's holding a reserve because of a, everybody likes to talk about a gymnasium floor, but gymnasium floor they're saving up for two years and then that's done and then they wouldn't have much of a reserve in subsequent years. I just wonder about what, if you could, you've paid, tell me anything you can tell me about, does it make a big difference, what, considering everything, you've looked at that over time.

[Kelly Murphy (Education Finance Director, Agency of Education)]: I'm going to try to answer what I think you're asking me, which is that with the reserves, I think that they are important. I think that there is also variability in the difference between different districts and the types of reserves that they would have available to them. And so I think just generally, they're important and they are a financial management tool. And I think, depending on policy, it's helpful just to even have a common understanding of expectations. So I think that might be helpful.

[Rep. Rebecca Holcombe (Member)]: Common understanding of

[Rep. Emilie Kornheiser (Chair)]: what again? I think we're gonna, kind of a cheat in mind, what's funny, so Representative Ode, the next item on our agenda is reserve guidance.

[Julia Richter (Joint Fiscal Office)]: All right.

[Rep. Rebecca Holcombe (Member)]: I was really specific wondering about the numbers, how much the numbers on that sheet are really going to change if we If we what? If we have some kind of reserve policy and define reserves and that's what I'm asking. If you have any sense, millions and millions and no hands in both places.

[Rep. Emilie Kornheiser (Chair)]: Well, I think there's an interesting question about districts that would need to put more in their reserves and would need to increase their spending in order to do that. And then there's the districts who might have more in their reserves than a max and it would then become offsetting revenue in that sheet. So I wonder if you could speak to that.

[Kelly Murphy (Education Finance Director, Agency of Education)]: So it depends on what people have currently. I think it also depends on what their financial profile is, what they've got coming down the line. So you referenced a gym floor, for example. There may be some construction costs. And so I think depending on what is happening in that district, they may have more or less on the bottom line. I think guidance would be helpful to help make sure that there's For them

[Rep. Rebecca Holcombe (Member)]: to have on their bottom line?

[Rep. Emilie Kornheiser (Chair)]: Yes. So guidance is something about that. Thank you. You're welcome. Anyone have any more questions about the numbers that we got from Amy? Okay. Seems like we're closing in on final numbers, which is great.

[Unidentified Committee Member]: Yes. Thank you.

[Rep. Emilie Kornheiser (Chair)]: And then we'll have you back in just a minute to continue the exact same conversation as John, that's

[Rep. Rebecca Holcombe (Member)]: hi. Hello. Nice to see you. Happy Tuesday. Thank

[Unidentified Committee Member]: you.

[John Gray (Office of Legislative Counsel)]: John Gray, offensive legislative council. This should be pretty quick. Maybe? I'm gonna pull up you'll recall we went through a draft last week for reserve guidance that was updating the language requiring rulemaking to amend the district quality standards to include recommended reserve fund account standards. I had just two tweaks from last week, as I recall it. One, as you'll see here in highlight, is to require the agency to specifically adopt rules to define appropriate accounting terms to facilitate data consistency and improve data quality across the state. So this is looking for conformity, consistency across the state. The other was just changed to the effective date. This is previously said 07/01/1926, now effective on passage, but the soonest that you could have this in statute or in law. That is it. That is all I have for you.

[Rep. Emilie Kornheiser (Chair)]: Thank you. Does anyone have any questions for Dunham about said

[Julia Richter (Joint Fiscal Office)]: language or thoughts about it

[Rep. Emilie Kornheiser (Chair)]: or whatever type of talking you want to do? I always say questions, and then I feel like people don't actually have to ask anyway.

[John Gray (Office of Legislative Counsel)]: Excited. I'm very excited. Yes.

[Rep. Charles Kimbell (Ranking Member)]: I've stopped sharing. And

[John Gray (Office of Legislative Counsel)]: I'm standing. Hey, exit.

[Rep. Emilie Kornheiser (Chair)]: Representative Masland, do you have to

[Unidentified Committee Member]: Just to say, obviously, when you're dating, you're

[Rep. Rebecca Holcombe (Member)]: asking questions. Okay, good. I'm glad. Great. Do you have a question? It's more about mulling it over and thinking about it.

[Rep. Emilie Kornheiser (Chair)]: Would you like John to sit there while you mull, or would you like him or shall he mull?

[Rep. Rebecca Holcombe (Member)]: No, I'll agree. Thank you, John. Great. It was kind of like what I was talking about before. What problem are we trying to solve? Maybe I just need that spelled out. The problem we're trying to solve is X and this is Y.

[Rep. Emilie Kornheiser (Chair)]: So when we first passed this, the problem that we were trying to solve was we were focused on district quality standards related to good financial practices. And wanted to make sure that districts had the same way, sort of education quality standards, hypothetic, which I shouldn't talk about, very vaguely, our support to districts to be focusing on instructions, things like that. The district quality standards were focused on good governance, including fiscal stuff. We spent a lot of time looking at what Massachusetts, I believe, does for their district quality standards. And one of the areas that came up as having an enormous amount of variation around the state was reserve guidance. I think since then, we've heard testimony from someone, I don't remember who, but I do think it was in the last few weeks. I don't think it was the Agency of Education, but maybe it was, About Hong Kong. Maybe. Chris? Chris, answer. About the fact that in talking to a school board or a superintendent in talking to either their school board or their voters would be better able to engage in quality financial practices if we had guidance available to them about what those sort of quality financial practices were. In some districts, there might be a tendency to spend everything on the bottom line, because that's what the cultural zeitgeist might be. And that by this by this being part of the district quality standards, those districts would have tools in order to engage in essentially best financial practices. But I don't really know if I answered your question. And that was me really going into a little bit of a way I didn't hear that. Does anyone else want to add a refresh?

[Rep. Rebecca Holcombe (Member)]: Go ahead. Yeah. Two questions. The first is just a legal clarification. What does the word prescribed mean in statute? Is that a mandate or is it a recommendation?

[John Gray (Office of Legislative Counsel)]: In this case, the requirement in the language is that they adopt respectable is to satisfy the standard.

[Rep. Rebecca Holcombe (Member)]: So they have to, there's gonna state a minimum and a maximum to which districts have to adhere.

[John Gray (Office of Legislative Counsel)]: Yes, although I think if we start going down the path of what the effect of the district quality standards are, think it would be helpful to bring in Beth just because she's the one who knows that sign.

[Rep. Emilie Kornheiser (Chair)]: You mean how much teeth the district quality standards I

[John Gray (Office of Legislative Counsel)]: did pull up 16 BSA, 165, but I know that Beth has the best information on this.

[Rep. James Masland (Member)]: I'll ask a follow-up. This is, I don't

[Rep. Rebecca Holcombe (Member)]: know what the basketball term is, but when you just throw a ball out, everyone jumps at it. Charlie, Sorry for the sake of smacking yourself, laughing at me. If we are moving to a foundation formula where the state is telling districts how much they spend per people, why are the residents at the local level not at the state level? It's a really good question.

[Rep. Emilie Kornheiser (Chair)]: Representative Masland?

[Rep. James Masland (Member)]: Why are we deciding to sell local? I was just a question. I don't Yeah.

[Unidentified Committee Member]: No. It's a good question. Why are we setting budgets on local levels?

[Rep. Rebecca Holcombe (Member)]: No. That's a different question.

[Rep. Charles Kimbell (Ranking Member)]: Okay. We already

[Rep. Rebecca Holcombe (Member)]: voted on that one.

[Unidentified Committee Member]: Understood. Doctor. Holcombe, I understand your question, but you just phrased it incorrectly.

[Rep. Rebecca Holcombe (Member)]: But why wouldn't a district wanna have a reserve in case there is some unexpected thing that the foundation formula isn't designed to cover that comes up and they don't have enough capacity to raise supplemental district spending. How are they going to cover that cost? Why wouldn't that be at a local level? I'm not arguing one way or against it. I'm just trying to understand what you're asking. Because if the state has prescribed what the level of funding was, and so the state is making the decision about what it means to fund, and if you held the reserves at the state level, then the state would be flexible around the so called conditions under which reserves were allocated. I'm not saying we should do this, I'm just saying that's the logical question that I think has a new statewide foundation invites. I'm so sorry, have a question for John that I just realized. I'm so sorry, John, that I didn't ask while you were in the chair. What is this prescribed minimum and maximum balance levels? Is that language broad enough to say that it could be percentage minimums and maximums based on how big the budget is? Because what's going to fit for one is not going to fit for the other. Okay. I just wanted to make sure.

[Rep. Emilie Kornheiser (Chair)]: That's okay. Thanks. It's great because I've been imagining percentages, but it's great that going Bill here should really match that. Thank you. Yeah, Representative Ode.

[Rep. Rebecca Holcombe (Member)]: I wasn't thinking to the question that you asked, but I was also thinking, what if some, for example, we have class size, student teacher ratio, I'll choose class size, requirement in 'seventy three, But we're allowing for people to go to the agency and to ask for an extension, then another extension. So I wonder if we should have something that would allow for a district to go to the secretary to ask for guidance or an exception or whatever.

[Rep. Emilie Kornheiser (Chair)]: You think there's a process like that built into the district quality standards, but we can

[Rep. Rebecca Holcombe (Member)]: ask Beth for more. And I was gonna say, it's probably not a bad idea, because if a district does go to the secretary, that raises a, not a bread, it just raises a flag that, oh gee, maybe that district is struggling with something, let's see what we can do to help that district out and some other mass ball members to help each other out, whatever. Just, I wonder if we have to be so strict in this, that we're not even being strict in something else, education.

[Rep. Emilie Kornheiser (Chair)]: I think we can get more testimony about how the district quality standards and the education quality standards are enforced, because I

[Julia Richter (Joint Fiscal Office)]: think that's sort of where your question's leading. So when I

[Rep. Emilie Kornheiser (Chair)]: think more about the problem we're trying to solve here, sort of one of them, some districts are entirely spending down their reserves in the lead up to implementation of new districts, hypothetically. And other districts are really sort of preserving the reserves in a very serious way in order, as a way of sort of preparing for new districts. And if two districts merge that have both been doing that with their reserves and two districts merge that haven't been doing that with their reserves, what does that mean for fairness in a new system? Or if one district has lots of reserves and the other district doesn't have a lot of reserves, how will they feel about coming together in a new system? So I think that's also part of the problem, see what you're seeing solved. Because I think lots of districts are making very different financial decisions in this very unstable, unclear policy environment we've created for them. I see that. Then I So this is a way of adding a little more clarity at a time of very little clarity.

[Rep. Rebecca Holcombe (Member)]: Alright. But on the way to becoming several districts combined, I would think that doesn't happen overnight, that there have to be

[Rep. Emilie Kornheiser (Chair)]: I don't think this will Let's get more about the district I think you're imagining that this will happen significantly faster than it will.

[Rep. Rebecca Holcombe (Member)]: I wasn't. And you started saying those things, thought, oh. So if you're on the path to that, you would have time, I think. There be a written agreement, this is how we're going to, things are going to go on this day and Charlie's shaking his head, yes.

[Rep. Charles Kimbell (Ranking Member)]: It has to be.

[Rep. Rebecca Holcombe (Member)]: So yeah, I would think so, just so instead of maybe us trying to anticipate that, maybe we leave it to those people who will be, I'm just saying maybe, I have no horse in this race, but maybe we leave it to them as they are making agreements for how they'll come together to sort that stuff out. I was always thinking about all the districts together, and I was thinking about the numbers on the screen that we just saw, and now I'm thinking, when you bring up that example, it's reminding me that, yeah, but that's another thing to think about, the way it is today versus when things are consolidated. It's kind of similar to the debt discussion, we've been having districts with different debt levels come together, all about merging balance sheets essentially for districts. Do you envision that as something people sit down and they talk about because it's very factually fact specific? Think we're trying on the debt side to come together with some guidelines at least about how net is going to be treated as they come together. Because right now the way folks are behaving with reserves impacts all of our tax rates. So you can imagine

[Rep. Emilie Kornheiser (Chair)]: a district that's putting a

[Rep. Rebecca Holcombe (Member)]: whole bunch of fund balance leftover from last year into a giant reserve that artificially keeps all of our taxes a little bit higher this year. It could be offset, but we don't have the numbers in progress by districts that are completely spending down every single thing they have, which is essentially of buying down our tax rates a little

[Kelly Murphy (Education Finance Director, Agency of Education)]: bit. But

[Rep. Rebecca Holcombe (Member)]: I don't know because I don't have the numbers in front of me to say where that balance is coming up. Yeah, Yes. I think I'm gonna think Yeah,

[Rep. Emilie Kornheiser (Chair)]: and the agency of education, I think, has something to add on this topic too, we can

[Rep. Rebecca Holcombe (Member)]: have them What I'm about is, if we're into year one or two of 73 of actually using a foundation formula, then what happens? And maybe this is what they would want to talk about, what happens when you get a sum of money that you, and I know we're going phase that in, I know these things, but if people just say, well, we're just not going to use it on reading intervention, we're going to play a basketball, Neither But one is bad, no value judgment. But maybe we're thinking in our minds of something different than everybody else.

[Rep. Emilie Kornheiser (Chair)]: So I think that that's what the education I mean, one, that can happen under current law, right? So the idea is that the education quality standards and the district quality standards are what we have in place to work with that. And then the other piece that we've been we had we just took one little bit of testimony on, but we need to do more work on, is the intradistrict equity question, because we don't have quality standards or statute related to that, and that's an important piece of the puzzle. And that was when we heard from Burlington School District. Is anyone yeah, Representative Holcombe.

[Rep. Rebecca Holcombe (Member)]: I just wanted to push back. I don't see debt as quite the same as reserve balance because when you bring a building that is depreciated, that is a liability. When you bring debt, that's a liability. So I think it's a little different than a reserve account. So just want to say that I think we need a reserve policy because if we are shifting to a tax foundation formula, which is now awarding some districts much more money than they've been used to getting, When we give them twice as much per student, for many of their students, I think the intent is that they spend it on improving educational opportunities for their students, but the other thing they could do absent the reserve policy is just bank it and take the tax holiday. So I think that's why this is coming up as a question. With respect to And I've raised this question before, think the tax holiday thing is not a thing that can happen. Don't think that's Can gonna it? So what happens if they choose not to spend money? I

[Julia Richter (Joint Fiscal Office)]: spent, I

[Rep. Emilie Kornheiser (Chair)]: think that all the time.

[Rep. Rebecca Holcombe (Member)]: So I think we don't, I guess my answer is the way it's written, it seems like we don't know. I don't think we know.

[Rep. Emilie Kornheiser (Chair)]: So I think the way it's written, and I'll defer to John and Julia, the one thing that we do know is that they can't take a tax holiday because the tax rates are so What we don't know is, are they forced to spend it? Will it sit there forever? Does it go back to the state? But the incentive to

[Julia Richter (Joint Fiscal Office)]: have it go back to

[Rep. Emilie Kornheiser (Chair)]: the state when there's no tax release I was like gonna say return. Was like, that's something else. It's different.

[Rep. James Masland (Member)]: Yeah. Can I ask

[Rep. Rebecca Holcombe (Member)]: the questions before we go ahead? No. Okay. No. Just was a lot of conversation. I agree in the inter district equity. I think there we also, I'd be curious to know if we could model the impact in the context of tuition, because when you're buying retail, not wholesale, you have a different issue or set of risks around reserves than if you were operating a school, and you can accommodate changes in enrollment with much less fiscal impact. It's just much less variable. And then also with respect to intradistrict equity, particularly given what Hauzazak is talking about, but also inter district equity, we actually have different sets of standards for different settings. And I think that has funding implications and probably has to be addressed as well. Did that last happen?

[Rep. Charles Kimbell (Ranking Member)]: It's still public private versus public.

[Rep. Rebecca Holcombe (Member)]: Yes. Thank you. That was so. Okay. Thank you.

[Rep. Charles Kimbell (Ranking Member)]: Representative

[Rep. Emilie Kornheiser (Chair)]: Ode, and then I'm gonna No, no, it's great. And then I'm gonna bring the agency of education.

[Rep. Rebecca Holcombe (Member)]: I was thinking if we go forward with this, and then we also allow as districts are schools are merging, We also allow specific schools to make agreements to come together in a way that they see fit on this particular issue, for example, know, making rumors, I'm probably so sorry, but there's room for that. Is this true or not true?

[Rep. Emilie Kornheiser (Chair)]: I think that the education committee is working on whether the sort of articles of agreement process needs more definition to it than it has under current law. And so I would talk to colleagues on that committee about it. Alright, alright. But I do know that we'd heard from the superintendents and especially the business managers that the more we can make clear in advance, the smoother their journey will be.

[Unidentified Committee Member]: Okay, alright. I

[Rep. Rebecca Holcombe (Member)]: just want to make sure that there's room for We can't pick everything at all. Absolutely not. So that there's room for But we

[Rep. Emilie Kornheiser (Chair)]: don't need to ask people to reinvent the wheel when we could have the wheel. Between the sports and whatever it is. Okay.

[Rep. Rebecca Holcombe (Member)]: Kelly, hi, do you want

[Rep. Emilie Kornheiser (Chair)]: to come back? Will you come back whether you want to or not? Thank you. Yeah.

[Kelly Murphy (Education Finance Director, Agency of Education)]: Great. So just for the record, Kelly Murphy, Education Finance Director. And I also do have Cassandra Ryan here with me, the Chief Financial Officer. And then I didn't introduce Ted earlier, but Ted's also here, always a good wingman, our senior fiscal analyst. So I can certainly share my screen if you'd like. Did prepare some comments on the language.

[Rep. Rebecca Holcombe (Member)]: Kelsey, you can walk around and sit down if you want.

[Kelly Murphy (Education Finance Director, Agency of Education)]: That's totally fine. Go for it. It's totally official. Okay, I'm not going to go word for word. But what I do want to just express first is that, first, we are committed to initiating rulemaking. So I just want to say that we said that last time, but I wanted to make sure that's clear. Hope it is. And then we really also appreciate the opportunity to come and talk about the specifics. So I'm just going to take it paragraph by paragraph without reading specifically from the text. For the first piece is that in the language, the proposed timeline is 12/31/2026. And so I just wanted to flag this as we were kind of going through the language, were really thinking in terms of key considerations that would help inform future recommendations. And so with this piece, I just want to register it because it could potentially abbreviate or shorten the length of time that we could pull in input from the districts. And also, what we may be looking at for language. So depending on how robust that process is, what we need to do for legal review, and then the actual process itself. So just wanted to kind of get some guidance on the firmness of that date. If you would like to have sort of the rule in place by December 31, or if it's in process, if that's sort of okay or not. I'm just raising sort of certain things that we've been thinking about as we've kind of been working through this.

[Rep. Emilie Kornheiser (Chair)]: I think there's an interesting So there's a usual We were actually gonna take testimony on rulemaking last week, and I really just lost it in the agenda. We're trying to just out on bench. There's an interesting construct that usually we focus on the date that rulemaking starts and not the date that rulemaking ends. And sometimes that means that rulemaking can go on for a very, very, very long time. And so we are trying to be clear that it's the deliverable we are interested in here. And if you shared back a timeline that was really explicit about how you could get to a different, very explicit endpoint, I'm sure we would be happy to consider that.

[Rep. Rebecca Holcombe (Member)]: Does that make sense? That does

[Kelly Murphy (Education Finance Director, Agency of Education)]: make sense. I think it certainly brings us back to that effect. So the second piece, there's a couple of things in the definition of reserve funds. So we talked about the types of reserves. And then also, there's consideration here wrapped up in the statute around the classification or purpose of that reserve. So for instance, if the reserve is truly for operational uses, that would be different than say construction. So we did cite the statutes here specifically associated with capital reserves and also with surplus, Just because I think as we're working through this, we'll want to make sure that we're really clear on what that means and that we're in alignment. Because right now, depending on what the intention is, those things could potentially be out of alignment. Or there may be different ways that guidance could be approached. So for instance, just thinking about construction first, in the session right now, there is a timeline. There's a five year time period. But if you're thinking about a construction project, typically that much may be longer. That. So just contemplating, what do you mean? Or what if you're going to set the standards for construction, for instance, wanting to make sure that there might be some guidance there around what and when and for how long you could reserve that money. In terms of the surplus language. Right now, as it is the money kind of falls to the bottom line, unless if a district were to assign some of that fund out fund balance pre audit, which would then categorize it differently than just having it fall to an unassigned line within the within the audit. So there's just some nuances there that we would want to really tease out. And so I'm just mentioning those things. We just wanted to flag them for the record. There are certainly things that we're considering as we're talking through this with the business managers and also internally. So the next piece is this max min balance level. So there's a lot of variability right now in terms of what we see within individual districts, on what their financial state is. And so I think just getting some clarity around what that means and making sure that it's a good size for all, because there is no one right size fits all. And so we did take a little bit of guidance from the states and from the districts and just thinking about GFOA and what the best practices. And so the two month operational balance is, I think, good one. We probably would consider that. But I think we'll want to try to figure out what a good balance would be between establishing hard and fast maximum and minimums so that then they're used appropriately and in the way that they're intended. So just a little more language there. We just want to be clear on what it would mean, how we'd be collecting it, and then just making sure that if there are caps, we're clear on what the understanding is that they there wouldn't be a penalty or that they might be binding. So or there could be, it's just I mean, I think just sort of thinking about what you might consider when considering sort of the thresholds or what the intent is with that. I'll just keep on going. So the next piece here contemplates just the predictability of sort of the expenditures and also thinking about credit ratings. So, again, there's a lot of variability across the districts. And so, we would want to make sure that we're preserving enough flexibility when we give guidance on how we get at some of these conditions. And then next, we're looking for clear guidance on how reserves will be replenished. So the way that money might fall to the bottom line can happen for a variety of different reasons. It could be because of vacancy savings. It could be because maybe there's a change in programming. Maybe the math that falls bottom line is attention. Maybe it's not. Maybe it's just the way that happens the course of time. And so just making sure that we've got some clear thoughts on that. Mean, are the things that we're almost like a stream of consciousness a little bit, but these are the things that we're thinking about as we're thinking about reserve guidance. And then just want to make sure that I catch everything. This last paragraph here, we talked a little bit about the standard of two months, and we just want to make sure that we're finding a way to meet districts where they are. I think I've captured all of the main points that are in the memo that we put together. And so we're still really thinking about what the language looks like and how we would implement what you put forward.

[Rep. Emilie Kornheiser (Chair)]: With the exception of the dates, which of this is sort of a request for change in the language that we have on the table? And which pieces are you making your thinking transparent so that when we're moving together together, we're all on the same page? So I think that the intent in putting this together was really just to be

[Kelly Murphy (Education Finance Director, Agency of Education)]: transparent in our thinking and to sort of make call some of the questions that we have around what the guidance might end up looking like. I don't think any of them are recommendations at this point. They're really considerations. And so I know that you would like our recommendations, but we wanted to put this out there first before getting recommendations on the table just so that we had a clearer understanding so that hopefully we can go through together.

[Rep. Emilie Kornheiser (Chair)]: Okay. And so for next steps, would you like us to get clearer in our intent related to these pieces you flagged? Or are you wanting to take these big questions to your other stakeholders and engage in rulemaking that way?

[Kelly Murphy (Education Finance Director, Agency of Education)]: We could

[Unidentified Committee Member]: I don't

[Rep. Emilie Kornheiser (Chair)]: have to answer that now, but that's a if you'd rather not. Both. Okay, great. Great. Yeah, or so? As

[Rep. Rebecca Holcombe (Member)]: a person observation, I really appreciate that you identify things that need definition, because I think successful rulemaking depends on clarity around what it is that you're working with. Reading the recent class size guidance, I realized that we probably should have done some work on definitions before asking for guidance. I also just noticed that and my question is, I hope if there are other terms that you feel need to be defined specifically so that you are clear about what you need to do in. And then the other is I did notice that you said a phased approach reduces the risk of unintended physical disruption and ensures that reserve standards are evidence based and aligned with Vermont's broader education finance system. And I just am observing how much that parallels what tax has been saying in terms of go slow to get it right, and I just think it's worth reflecting on that. This is way too detailed a question, I don't know if I'm asking. I looked at the things that you were describing in the two months. Know, a school district might know that there's a lawsuit they have to deal with coming up, or a workers' compensation claim they're gonna have to deal with that would be maybe outside that two month reserve?

[Rep. Emilie Kornheiser (Chair)]: You just

[Rep. Rebecca Holcombe (Member)]: talked about that. Don't know.

[Unidentified Committee Member]: Can you say what you addressed?

[Rep. Emilie Kornheiser (Chair)]: Well,

[Kelly Murphy (Education Finance Director, Agency of Education)]: so I think two things. One is you're starting with the audit and starting with the report out of the actual amount that you have available in reserves that you have and all of that, it's point in time. And so there are some things that you could probably plan for and plan for the use of that reserve. But there are some things that you wouldn't know about. You might not know about a lawsuit, but you know that you're going to have legal fees, and you're going to need to try to use some of your fund balance for that. And so I think and I'm not sure if I'm answering the question that you've raised, but it's just making sure that there's enough flexibility in the bottom line to cover those one offs. Is that sort of what you're getting at? And I guess I'll offer that. I was

[Rep. Emilie Kornheiser (Chair)]: having a conversation with John Gray yesterday about the school district debt language that we're looking at, and that maybe we've been talking about in the context just of construction debt, but it might make sense to expand it slightly to, like, debt from a lawsuit, for instance. I don't think of that

[Rep. Rebecca Holcombe (Member)]: yet, but actually it would

[Rep. Emilie Kornheiser (Chair)]: It's an outstanding fit, it's And

[Rep. Rebecca Holcombe (Member)]: an outsize compared to the two months, which is more, to me, because my mind more operating than,

[Unidentified Committee Member]: if

[Rep. Rebecca Holcombe (Member)]: there's anything else I can think about before dinner. I

[Rep. Charles Kimbell (Ranking Member)]: was just wondering, in your letter, you're talking about surplus versus designated balances. And we had a conversation last week about a different chart of accounts and how many types of reserves you might have. But just thinking about that out loud, without knowing the answer, can you give us an idea of how many types of designated reserves are in the school system? And then what is a surplus, which I'm thinking is an unobligated balance?

[Kelly Murphy (Education Finance Director, Agency of Education)]: So in the term surplus, you're going to have some of the definitions of reserves wrapped up in it, because it is a bucket of funds. So we did pull together actually, I'm going to share my screen again. So I thought that you might ask about the uniform chart of accounts and what that might actually look like. And so I think that this will probably and actually, bear with me while I get So just to show you here, I can make sure that we've got this in your records. It's not currently. But this is online. So this is our uniform chart of accounts. Just to kind of, I think, speed ahead to what you were looking for. So this just outlines all the details, but these are the function codes associated with those charts. I'm trying to get there off the fly. But right here, so you can see the categorization of those functions. And so you've got the fund balances or net fund position. And so you've got the non spendable funds, restricted fund balance, committed fund balance, assigned fund balance, and then the unassigned fund balance. And so these codes are specific to the types of classification that we talked about in the first presentation on reserve guidance. And so you can track the types. And then depending on what you're trying to do, you might classify those funds in a certain way. And so there are a couple, they are standardized. They are standardized by accounting standards. And they are followed by the districts and they're within the handbook.

[Rep. Charles Kimbell (Ranking Member)]: Assuming there are probably some sub accounts underneath each one of those account titles, numbers as well. So if you come up with a restricted fund balance, restricted fund balance for this, for that, for this. And the requirement of having to respend any kind of unobligated fund balance in the, I can't remember the statute, but the requirement is that after it's been sitting in the accounts for two years, and then it has to be then reallocated in terms of spending that reserve,

[Kelly Murphy (Education Finance Director, Agency of Education)]: or is that not Are you speaking specifically to the surplus statute?

[Rep. Charles Kimbell (Ranking Member)]: Yes. I

[Kelly Murphy (Education Finance Director, Agency of Education)]: can certainly pull that up, and I would want you just to take a look at the specifics and then see how that's sort of working through in action.

[Rep. Charles Kimbell (Ranking Member)]: I just can't remember the When do you have to spend it? How much of it?

[John Gray (Office of Legislative Counsel)]: The surplus statute doesn't just speak to any requirement to that effect. It's just that it carries forward to revenue unless you have a vote otherwise to put it in reserve. And then the construction piece subjects after five years of holding those funds to excess spending of 150%. But I'm not aware of any independent requirement to that. Exactly. Is I think why you guys are

[Rep. Charles Kimbell (Ranking Member)]: having the conversation. Exactly. Okay, thank you.

[Rep. Emilie Kornheiser (Chair)]: Thank you very much. Really appreciate the transparency and focus on the details. Thank you. We're gonna take, not a break, but sorry, we're gonna move to the yield bill with Julia. Is she right there? I was jumping ahead at 03:15. There's a fun new piece in this. So Julia has some updated little pieces of numbers. Then there's, I think, maybe and then there's also the conversation we need to have about, are we the general fund transfer in the three years and all of those things that we've been having over and over again. I'm going to really we have another spot on the agenda to have this conversation on Friday. And on Friday, I hope folks really come with opinions. But there's a new piece that I asked Julia to put in here, which is in the governor's recommended budget, he recommended that there was a general fund transfer to the education fund of $10,000,000 that purchase and use statutorily moves to the transportation fund, which could create an inadvertent whole, not a What's the opposite of inadvertent? Avertent? Is that a word? An inadvertent hole. It's intentional. Thank you. I really wanted the one to work. An intentional hole in the education fund year over year That seems not possible in this education fund moment. But one possible solution is while we make that shift of purchase and use to the transportation fund. But what if we take something in the general fund that has a split and change the ratios of that thing in the general fund? So Julia's gonna that's also in the outlook, just for fun.

[Rep. Charles Kimbell (Ranking Member)]: So sorry. Was looking at the

[Rep. Emilie Kornheiser (Chair)]: No, it's Julia. That's a row, actually, what I was just describing.

[Julia Richter (Joint Fiscal Office)]: Good afternoon. Julie Richter, joined Fiscal. There are a few documents on the committee page under my name. Two of them are the same as every week, the annotated guide and the yield bill decision points. There's a new Ed Fund Outlook, so going go ahead and share my screen. Before walking through what is captured in each of the columns, I want to do a little bit of level setting. So the first piece is that we have now included the updated budget data that was just shared by the Agency of Education. Because we don't have all school district budgets, for the school district budgets that have not yet been submitted, their education spending were still carrying the December 1 projection. Education payment has come down by about $30,000,000 compared to the December 1 letter projection. That's now included in all of the FY '27 scenarios. That's the only underlying data change to the modeling compared to last week, but it's a significant one. The other piece that the chair mentioned that exists in all of these scenarios is a change to the revenue picture, to the ongoing revenue sources to the Education Fund. So as you know, in current law, one third of all purchase and use tax is dedicated to the Education Fund and a quarter of all meals and rooms tax.

[Rep. Emilie Kornheiser (Chair)]: What the

[Julia Richter (Joint Fiscal Office)]: chair asked me to model is, what if $10,000,000 were to be phased out of the Education Fund for purchase and use, and that were to be replaced by $10,000,000 from meals and rooms? Net, it's $10,000,000 down and then $10,000,000 back up, so it's not going to have an impact on the FY27 scenarios that we're looking at, assuming that the movement of that purchase and use tax out of the Ed Fund is exactly the same as the meals and rooms tax moving into the education fund. So that's what we're seeing captured in all of the lines four and five. Can you help me Woah. Do you want me to go back? No, please. I thought you were going to ask me to

[Rep. Emilie Kornheiser (Chair)]: make it bigger. I appreciate you anticipating my needs that way. On row five, the comparison between column A and column B and that that's 13,000,000 and not 10,000,000, is that because that's That's because

[Julia Richter (Joint Fiscal Office)]: they're different years. Okay, great. So column A is FY '26, and then column B forward through the right is FY '27. So if you were to be looking at the Ed Fund outlook from last week, and you were to be looking at the FY 'twenty seven purchase and use tax, it would be 51,900,000.0. But we've decreased it by 10, which is why we have the 41.9.

[Rep. Emilie Kornheiser (Chair)]: And then the row five would be 76 less. Exactly. Yeah,

[Rep. Bridget Burkhardt (Clerk)]: represent Burkhardt. Which tax is more stable, purchase and use tax or rooms and meals tax? Which one varies from here?

[Julia Richter (Joint Fiscal Office)]: That would be a great question for my colleague, Barnett, who is the expert on our consumption taxes. We will schedule him to answer that question soon, because it's a great question.

[Rep. Rebecca Holcombe (Member)]: Have that question also, and then the other question I had, was thinking, well, maybe we just always knowing what we want to have transferred to of the purchase and use tax to transportation, you just, of course every year it would be negotiated, but if you just say, okay, this year it's 10,000,000 and we'll take the percentage we need this year from the general fund to cover the 10 and then the next year it's another 10 or whatever it is, and you just do that calculation each year, okay, it looks like one fifth of it, can you talk about fifths, one fifth of it, because the big purchase and use year might be 13, and then so good, they get the 13 plus the 10 plus whatever it is. I wanna make

[Rep. Emilie Kornheiser (Chair)]: sure I'm understanding you because I feel like you're describing what the previous outlooks that we've looked at did, which was essentially say, okay. We're just talking about dollars and not ratios. And so we're moving 10,000,000 from the general fund to the trans transportation fund because that's how much money is needed this year.

[Rep. Rebecca Holcombe (Member)]: I don't know. Okay. I'm trying to decide, trying to say if we make a permanent one fifth of purchase and use to go to transportation and that versus something would change from year to year. Yes. So, I mean, to me, you'd take the take the, just make the adjustment this year, and then you live with whatever, they live with their purchase and use gives off, and we live with whatever, rooms and meals gives off, up or down.

[Rep. Emilie Kornheiser (Chair)]: Which is like we're

[Rep. Rebecca Holcombe (Member)]: doing here. And then the question is, how likely are we to have, how stable will that room's meals be, and will it go up, hopefully, and help the Ed fund even more.

[Rep. Emilie Kornheiser (Chair)]: And I wanna be, so this was intended as sort of a revenue neutral proposal, but we can get more from Ted about that. Julia and then Representative Branagan.

[Julia Richter (Joint Fiscal Office)]: One piece that I will add, which perhaps I tried to be really clear in the labeling of lines four and five, perhaps it's not clear. It would be an outstanding decision of percentage purchase Looking at purchase and use tax, what percentage of the split would be going to the T fund and what percentage of the meals and rooms split would be going to the Ed fund. So this isn't saying meals and rooms tax, one quarter of total plus 10,000,000. The decision could be, I'm making this up, 30% of meals and rooms tax dedicated to the Ed fund, which would be a five percentage point increase. And I

[Rep. Emilie Kornheiser (Chair)]: think that we would need Ted to help us. Exactly. Represent Branagan?

[Kelly Murphy (Education Finance Director, Agency of Education)]: Well, I'm not really clear

[Rep. James Masland (Member)]: on what we're doing here. The purchase and use tax, the estimate for that was like $150,000,000 the estimate of what it was going to bring in, right? 150,000,000.

[Rep. Rebecca Holcombe (Member)]: Total for the year. Total for the year.

[Rep. Carolyn Branagan (Member)]: And we get a third of it so far, current low. So that's 50,000,000. That's where we're getting 50,000,000. And the proposal, well, two proposals back, the proposal was for us to shrink down that 50,000,000 to nothing over five years, 10 mil a year back to the transportation device. So they get their two thirds plus ten and two thirds plus twenty and thirty. On the fifth year, they get it all. Okay, so first, before I stop, how did we get in column B down to 41.9? So that's only 8,000,000, right?

[Julia Richter (Joint Fiscal Office)]: No. Are you looking at the difference between columns A and B? We're looking at two different fiscal years. Yes, but shouldn't

[Rep. Carolyn Branagan (Member)]: B be and B should be 40. Oh, no. Shouldn't. B should

[Julia Richter (Joint Fiscal Office)]: If there were no change to the split of purchase and use tax, column B would have $51,900,000 coming in from purchase and use tax in FY '27 per the economist And here, this is saying it would have been 51.9, but 10,000,000 is being dedicated to the transportation fund, which leaves us with the 41.9 seen in column row four.

[Rep. Carolyn Branagan (Member)]: Okay. I think I remember now seeing that in some scenario and wondering at the time, where did that come from? So, okay, great.

[Julia Richter (Joint Fiscal Office)]: We just got the answer to that one.

[Rep. Emilie Kornheiser (Chair)]: I think you've helped me figure out a better way of explaining what my intention was here. The governor's proposal was to permanently move money from the Ed Fund to the Transportation Fund for next year, but to only temporarily move money from the General Fund to the Education Fund to replace it. And is that our idea? That idea was the governor's idea. What I'm saying is, okay, let's take the governor's idea, governor's team's idea, I mean, I don't know if

[Kelly Murphy (Education Finance Director, Agency of Education)]: it was his personal idea, to move

[Rep. Emilie Kornheiser (Chair)]: purchase and use permanently more of it to the transportation fund, but also replace it with a permanent source. So we don't have this mismatch of permanent and one time, but in fact have permanent and permanent. I am totally silent right now on this idea of the year after. Let's even just talk about this year first

[Unidentified Committee Member]: so that

[Rep. Emilie Kornheiser (Chair)]: our brains don't explode. Representative Higley has been Julia,

[Rep. Mark Higley (Member)]: do we know what those two taxes have done over the past five years?

[Julia Richter (Joint Fiscal Office)]: Ted can follow-up with that. The answer is yes, but I don't know that. And I would like to phone a friend.

[Rep. James Masland (Member)]: You.

[Rep. Emilie Kornheiser (Chair)]: That's not here. I did not think to schedule him in. Sorry. Oh, oh, which this is a great moment. They the pre k hearing that was supposed to be on Friday but got canceled because of snow is rescheduled. But the other two, we are not joining them because, frankly, we took all of all of the testimony that is being given at that joint hearing is the testimony that we heard over the course of those five, four, however many sessions we had on it. But I would love for two committee members, maybe one from each party, to go hang out with those folks and report back. It's two thirty. I much thanks to representative Burkhardt for reminding me about that.

[Rep. Rebecca Holcombe (Member)]: So, yes,

[Rep. Emilie Kornheiser (Chair)]: if in ten minutes,

[Julia Richter (Joint Fiscal Office)]: I would like two of you

[Rep. Emilie Kornheiser (Chair)]: to go away and go Not permanently. Carol, let's go.

[Julia Richter (Joint Fiscal Office)]: All right. Okay, great. Thank you. Okay, so you can stay

[Rep. Emilie Kornheiser (Chair)]: for ten more minutes. No, you're staying for ten more minutes. We're good. Okay, Great. It's Room 11. That's great. Thank you. You have matching names. It's perfect. You said across from each other. Love it. Thank you. Okay. Represent a mess.

[Unidentified Committee Member]: Yeah. And what I like, madam chair, about your revision of the language of robbing Peter to pay Paul is we're not permanently robbing the education document. Yeah,

[John Gray (Office of Legislative Counsel)]: absolutely.

[Unidentified Committee Member]: It's a much better idea, as recently explained. Thank you.

[Rep. Emilie Kornheiser (Chair)]: Just reminding myself meals in room is a general fund.

[Unidentified Committee Member]: I don't know what's baking.

[Rep. Emilie Kornheiser (Chair)]: Okay, other thoughts or questions pending head testimony on rows four and five?

[Rep. James Masland (Member)]: Yes. I don't think I mean it won't.

[Rep. Emilie Kornheiser (Chair)]: I'll wait until text. Okay. And I'm certainly not taking the end of the questions as consent.

[John Gray (Office of Legislative Counsel)]: I'm just And

[Unidentified Committee Member]: I have

[Rep. James Masland (Member)]: a lingering question for, it can be, it's sort of related to this or not.

[Rep. Emilie Kornheiser (Chair)]: Okay. Well, I think we're ready to go to other columns if we want to.

[John Gray (Office of Legislative Counsel)]: Cool. The

[Unidentified Committee Member]: 4.2

[Rep. James Masland (Member)]: and our last lady who testified 4.2 was

[Julia Richter (Joint Fiscal Office)]: the estimated increase for school tax over statewide average. What does that mean for our people? So I would actually rephrase what the 4.2% is reflecting the education spending. Kelly's nodding. So that's the estimated increase in education spending growth compared to the prior year. Can you show us the row? And I'm realizing right now that these rows are not plugging back what they should from the model. So this is a typo on our behalf, but this should say 4.2% rather than the 5.8% that was reflected in the seven letter. I apologize for that. I'll follow-up. Row, are you in? Well, it's not here because that's my mistake, But it should be in row H. It should say the 4.2 rather than the 5.8%. The challenge is that we don't have all school budget data in yet. So the school budgets that the agency has not yet received are still carrying the December 1 letter projection, which is either what the district told the agency they projected or 5.8% growth. So when we change that down to 4.2 It's already included in all of the modeling. So these rows up here, this is probably more information than you want about my spreadsheets. But rows one and down are the outputs of all of the modeling that we're doing. As two are rows A through F. The following G, H, I, J are summary lines that we need to update each week, which is why you're not seeing the full point, either. So basically, what does that mean? That means that school district budgets, school districts education spending growth compared to the prior year is coming in lower than what was originally forecasted in the December letter, which means, all else equal, property taxes will need to increase less because the education fund total uses are not as large as they were forecasted to the December 1 letter. Do our columns again. We're just going

[Rep. Emilie Kornheiser (Chair)]: to keep on repeating the things until we all So these are

[Julia Richter (Joint Fiscal Office)]: the columns that the chair asked me to include with the budget updates. So column B, this is using that updated budget data that Kelly presented, same the grand list and long term weighted ADM data that we have updated, and all of those December 1 assumptions, which are: we use the entirety of the Ed Fund surplus to uniformly lower property taxes on average, and we solve for an average bill change. You'll recall that the December 1 letter forecasted an average bill change of 11.9% compared to the prior year. Because budgets, because education spending has come in lower than forecasted in the December 1 letter, after resolving for the rates and yields, the average bill change would be 10.1%, with no one time money beyond the Ed

[Rep. Rebecca Holcombe (Member)]: Fund surplus to use increase compared

[Unidentified Committee Member]: to the prior year. Yeah.

[Julia Richter (Joint Fiscal Office)]: Yeah? Then would that be applied What if we did other things? So then the next column, column C, is using the $104,900,000 of general fund to uniformly lower property taxes all in FY '27. So of course, that would mean that property taxes would not even make up that 104,900,000.0, And that would result in a uniform average increase in FY '27 of 3.8%. But of course, that would be a one time buy down like what we looked at last week.

[Rep. Emilie Kornheiser (Chair)]: And then what would happen the year after if we did that?

[Julia Richter (Joint Fiscal Office)]: The year after column C, where, if you remember that image of pushing the increase forward, we would see all else equal in FY 'twenty eight, there would be a significant increase in property taxes because property taxes would need to make up that difference, and then any increase on top of that.

[Rep. Emilie Kornheiser (Chair)]: So we'd likely see, if all else was equal, we'd likely see an even higher average bill increase than the 10.1. Yes. And just to connect a few conversations, if we remember back to when Tom Covet was here with us, our expectation of revenues going forward into all three funds is our growth is slowing in really significant ways. And so the money that we have this year for the transfer is not money that we will necessarily have in out years for the transfer, and likely won't have in out years for the transfer. Slowing. I'm sort of googling. Okay, what happens in column D?

[Julia Richter (Joint Fiscal Office)]: Column D is one third This is that idea of using one third of the one time money in FY 'twenty seven and then saving two thirds for the following years. So if one third of the 104,900,000 were to be used to uniformly lower property taxes, and then the other two thirds were to be held in a reserve of about 70,000,000 the average bill change would be an 8% increase across all three classes, homestead, non homestead, and income. What is the range when you say average? The range of the average bill change?

[Rep. Emilie Kornheiser (Chair)]: Very wide.

[Julia Richter (Joint Fiscal Office)]: It depends on so many factors that I don't know the bounds, and they're significant. And it's really important to keep in mind that it is an average change.

[Rep. Emilie Kornheiser (Chair)]: Let's see the next column.

[Julia Richter (Joint Fiscal Office)]: The next column, column E, this is showing, again, you would use onethree of the $105,000,000 to lowering property taxes in FY27, but the entirety of that onethree would be used to lower homestead property taxes. There would be no one time money dedicated to lowering non homestead property taxes. So again, you have the $70,000,000 $69,900,000 in reserve. You're still using the 105,000,000. And the homestead and income average increase for one year in FY27 average would be an increase of 5.4. Because no monies would be used, one time monies beyond the Ed Fund surplus would be used to lower non homestead, non homestead would still experience the same 10.1% increase on average.

[Rep. Emilie Kornheiser (Chair)]: And what happens in the final column?

[Julia Richter (Joint Fiscal Office)]: The final column, column F, again, this would be using one third of the 104 and $900,000 of one time in FY '27, but then it would be split in half, so into six. And one sixth would be used to lower homestead property taxes, average bill change. And onesix would be used to increase the property tax credit. So property tax credit that folks are seeing on their FY27 bills would be increased by 13%. That would result in an average homestead and income average bill increase of 7.7% before factoring in the increase in the property tax credit.

[Rep. Emilie Kornheiser (Chair)]: Before Representative Masland goes, Representative Branagan and Ode, this is probably a good chance for you to

[Rep. Charles Kimbell (Ranking Member)]: bring up the

[Rep. Rebecca Holcombe (Member)]: I keep asking, correct, but only somewhere am I forgetting the book. Can we have it presented in this committee geographically where are people taking up their credit and health pain? I can ask

[Rep. Emilie Kornheiser (Chair)]: the tax department. Age wise, I feel like We should are not going to ever know the age. We would have to change method stuff to find that

[Unidentified Committee Member]: out. Alright. Okay. Well

[Rep. Rebecca Holcombe (Member)]: You wanna know where

[Rep. James Masland (Member)]: where this money is going? The help the help. Yeah. And I'd

[Rep. Emilie Kornheiser (Chair)]: We can have the tax department come in. I'm just fairly sure they're not going be able to do the age part at night, but we will have them come in. We have a service,

[Rep. Charles Kimbell (Ranking Member)]: we just don't have them out.

[Unidentified Committee Member]: Without age, yeah. But there's

[Rep. Emilie Kornheiser (Chair)]: a town by town spreadsheet. In Drive Room 11.

[Rep. James Masland (Member)]: It's in Room 11.

[Rep. Emilie Kornheiser (Chair)]: I think Representative Masland was next up.

[Unidentified Committee Member]: Yeah, thanks. A couple of things that you've mentioned in the last five minutes or ten minutes, I favored residential tax rates versus nonresidential, since we we're taking advantage of the system and balancing one against the other. I very much appreciate it.

[Rep. Emilie Kornheiser (Chair)]: Appreciate it.

[Rep. Charles Kimbell (Ranking Member)]: Julie, one of the columns that's missing is one they used to have on there before, which was applying 100% of the general fund transfer to non primary homeowners. And that is now not on spreadsheet items.

[Julia Richter (Joint Fiscal Office)]: That was a direction from your chair.

[Rep. Emilie Kornheiser (Chair)]: I'm just trying to have a few I thought

[Rep. Charles Kimbell (Ranking Member)]: it made sense to take it off. I just wanted to point out that it's not there.

[Rep. Emilie Kornheiser (Chair)]: And we can add it back in. It's also

[Julia Richter (Joint Fiscal Office)]: There are other permutations you've looked at that are also not included. It's like dance of how

[Rep. Rebecca Holcombe (Member)]: many columns. Too many columns. With respect to the decision to put 86 towards the property tax credit, that's just increasing the credit that people receive in the proposed program. Has there been any discussion of trying to expend the eligibility, the VAD, yeah, who's eligible? I

[Rep. Emilie Kornheiser (Chair)]: haven't had that conversation. Think, Julia, do you want to speak to that? Yeah. Sort of the implications.

[Julia Richter (Joint Fiscal Office)]: It's a great question. I would say that the challenge is because these are credits that were already earned in FY twenty six, the data hasn't been collected for folks to expand the property tax credit that would be showing up on FY27 bills. So in order to expand the property tax credit eligibility, not just the credit that folks are seeing on their bills, it would need to be a change for the upcoming year in order to collect sufficient information. The other place that you can work on that, which would be reflected on the '28 bills because it's the credit earned in '27, is the income yield, which in these scenarios, the income yield is being calculated for an average change that corresponds with the homestead. That's a policy choice. But beyond that, I'm not aware of a way to expand the credit eligibility for the credits that have already been earned. That is a very worthy pursuit, though. If there are ideas, I'm happy to work on them. I just don't know how it be done.

[Rep. Emilie Kornheiser (Chair)]: And I think one of the all other policy implications aside, I think one of the real benefits of the property tax credit changes from page 73 was that system, you can adjust thresholds in a way that does not have sort of all the same bubble effects that this does.

[Rep. Mark Higley (Member)]: Representative? Remember, Greg, last year in the yield bill, there was what, 77,000,000 of buy down and another $40,000,000 in a reserve that we used, correct? But we put it all towards, we didn't break it out in regards to residential or non residential, it

[Rep. Emilie Kornheiser (Chair)]: was across the board. Correct. We almost always do it across the board. A few years ago we did something with the property tax credit that was slightly separate.

[Julia Richter (Joint Fiscal Office)]: A couple of years ago or a few years ago, there was a one time increase to the property tax credit and a uniform average bill change. There is precedent, which precedes me, so I don't know in which year of doing them at different rates. And you can do that. It's just a policy decision. But over the last This is my fifth year doing the outlook in this committee. It's been uniform every year, with the exception of the one time increase of the property tax credit.

[Rep. Rebecca Holcombe (Member)]: Anyone else?

[Rep. James Masland (Member)]: Thanks, Julia. Yeah.

[Rep. Emilie Kornheiser (Chair)]: Okay, now we're going to take a break.

[Rep. James Masland (Member)]: And we'll be back

[Rep. Emilie Kornheiser (Chair)]: here. Oh, that's me? That seems clever. But that's what we're doing.

[Rep. Charles Kimbell (Ranking Member)]: Three.

[Rep. Emilie Kornheiser (Chair)]: Three.