Vermont Legislature SmartTranscripts:

[Emilie Kornheiser (Chair)]: Fantastic. All right, committee. This is April 1, really, and it is Wednesday. This is the meeting of the House Wastes and Means Committee, and we are continuing our discussion on the type of financial incentives or other incentives that were used under Act 46. And with us today, we have Patrick Ream, the superintendent of Mount Eyed. So Patrick, welcome to our committee. We are anxious to hear from you about what your experience was during Act 46, and hopefully we can learn from what you did in the southern part of the state.

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: Great, thank you very much. Thanks for having me. So again, my name is Patrick Green. I'm the superintendent for the Mount Ebe School District in the Bristol, Vermont area. Also a trustee for the Vermont Superintendent's Association. I'm in my tenth year as superintendent for MAUSD, so I was actually here when we were A NESU and merged under act 46 into MAUSD. And and thank you for the opportunity to share that experience that I had through the act 46 merger process and as it relates to possible incentives for future voluntary mergers. So the former Addison Northeast Supervisory Union with member districts in Bristol, New Haven, Moncton, Lincoln, and Starks Boro voluntarily merged to form the Mount Abraham Unified School District in which began operating in July 2018. While the voluntary while the merger was voluntary two of our towns passed by a very narrow margin. As superintendent for AESU, as they transitioned to MAUSD, I would offer that from my perspective, the tax incentives, in particular temporary tax incentives while well intended are sufficient motivation for communities to make a significant and lasting decision such as merging school districts. As I reflect on the act 46 process, I don't recall any community members citing the tax incentive as the primary reason for their support of the merger. There were community members who recognize the efficiency that would be created in a unified district, and I definitely heard folks speak about the opportunity to improve equity for our students. But I would say what I heard more consistently than any of that was a desire for local agency. Community is one of the opportunity to shape what merger looked like for them rather than having that imposed on them by the state. I think it's also important to note that the structure of the act 46 tax incentive, which started as high as a 10¢ tax reduction on the tax rate and then decreased by 2¢ each year until it sunsetted after five years. And while it was a tax reduction, the effect of decreasing the tax break by 2¢ each year effectively added an additional 2¢ tax increase to the change in the tax rate for all but the first year that you received that benefit. And that would have been on top of any other spending driven tax rate change that you would have experienced through the budgeting process. And I think for some voters, that really diminished the perceived value of that tax incentive and, at times, complicated the financial narrative when it came time to vote on school budgets. So as you consider incentives for future mergers, I would encourage consideration of incentives that align more directly with the long term nature of the decision that communities are being asked to make. So as the VSA has noted in prior testimony, district consolidation is unlikely to produce substantial cost savings, at least not initially. However, it does hold potential as a strategy to improve equity, expand opportunities, and strengthen outcomes for students. For me, it is with that in mind that incentives that have a lasting and visible impact on student experience may be more compelling for communities. For example, significant state support for school construction of capital improvement projects, especially those that enhance educational opportunities, could serve as a meaningful incentive. Additional consideration might be given to projects that also reduce the overall footprint of facilities, which would support long term sustainability. I also think that the timeline for any such incentive is really important. Newly formed districts need time to become operational, build trust, thoughtfully assess how best to improve equity, opportunity, and outcomes for students. It would be very challenging to undertake and implement major facilities planning within the first few years. So for that reason, would suggest that any incentive window extend for at least five years and ideally up to ten years following the formation of a new district. I think if we're asking communities to make enduring structural changes, then we should consider incentives that similarly offer during enduring benefits, particularly those that are clearly connected to improving the educational experience and outcomes of Vermont students.

[Emilie Kornheiser (Chair)]: Great. Patrick, you had mentioned that the 2¢ decrease or the incentive actually resulted in a 2¢ increase on the property tax. Is that because you're saying that the statewide education property tax was actually paying for those incentives, so you had to raise taxes in order to pay for the incentives?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: Well, so when if the year prior we got, say, a $0.10

[Unidentified Committee Member]: tax break, and now for this next budget we're building is

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: an 8¢ tax break, that's less of a tax break, still a tax break, but it has the effect of creating sort of this perception of an increase because you're getting less it's not unlike the effect of the use of one time funds, right?

[Emilie Kornheiser (Chair)]: Sorry. Glad you could slide that in, Patrick.

[Rebecca Holcombe (Member)]: Did people talk about, thank you for coming by the way, first of all, did people talk about that? My recollection of the conversations is it wasn't so much an incentive, but it was supposed to help cover transition costs associated with mergers. Did that come up at all in your local conversations?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: No, again, I heard very little talk in our community about the tax benefit, whether it was perceived as a reduction or a transition facilitation support. It really was a little bit about the efficiencies that would be created and the opportunities, and I heard a lot more about, you know, we want to sort of have a say in what we do and not have that something that's imposed upon us.

[Emilie Kornheiser (Chair)]: And you had some school districts that did not vote to merge for all grades. Is that correct?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: No. All five of our did well, six districts at the time, counting the Mount Abe Union Middle High School District, voted to merge fully. We subsequently had a district withdraw from our unified district, but when we merged from ANESU to MAUSD, it was all five towns, all six districts merging into one unified district.

[Emilie Kornheiser (Chair)]: Okay, so I must start It was a later withdrawal, not an election not to merge for that one particular town.

[Unidentified Committee Member]: Yep.

[Rebecca Holcombe (Member)]: So you've mentioned the effect of the break on your tax rate, but other than that, were you able to keep the tax rate pretty stable? Or was there any change at all?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: I would say I do think we were able to slow the growth better as a unified district than we would have been able to without unification. But we did not keep our tax rate as stable as we would like to have in part because we've been experiencing declining enrollment for more than ten years. So that that struggle between declining enrollment and increasing expenses made that hard for us to kind of level the tax rate despite our ability to manage it better as a unified district.

[Rebecca Holcombe (Member)]: Thanks.

[Emilie Kornheiser (Chair)]: Thank you.

[Rebecca Holcombe (Member)]: Do you know why one school decided to withdraw?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: I do. They made that pretty clear. We actually had one one town successfully withdraw and another town nearly withdrew, both really citing the same reasons. So Lincoln was the town that that withdrew from MAUSD and that the the reasons cited were fear of their school being closed. Likewise, in Starksboro Starksboro so Lincoln voted to withdraw as a town, and that vote was then supported by the other member towns in MAUSD, so their withdrawal was successful. Starksboro also voted to withdraw, for a similar reason, but one of the other towns voted no to allow them to withdraw, and that stopped their withdrawal effort.

[Rebecca Holcombe (Member)]: So who was the voting? I

[Emilie Kornheiser (Chair)]: mean, do

[Emilie Kornheiser (Chair)]: you not have The withdrawal

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: the withdrawal process involved, you know, to put it simply, the the town has to hold a vote to move forward with withdrawal, and then the other member towns each have to vote in the affirmative to allow that town to withdraw, and then it needs, you know, state approval and things of that nature as well. And so that was successful for Lincoln, and the only difference between Lincoln and Starksboro is one town said no to allowing Starksboro's withdrawal.

[Rebecca Holcombe (Member)]: Thank you. Representatives? Thank you. When Lincoln pulled out of the larger district, it also gave up being part of the Union High School and began tuitioning to other places as well. What did that do to your per pupil rate at the high school level?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: It increased it some, in part because, especially initially, it was hard for us to anticipate how many students from Lincoln would still attend Mount Abe in grade seven twelve. So we had to make some assumptions, and and typically in budgeting, we budget conservatively so that had an impact on our cost per pupil. But we still anticipated the majority of students from Lincoln would come to Mount Abe. That was sort of the messaging, so I think we used probably maybe a 70 or 75% of the students attending estimate. I think we've seen that you know hold true. It's maybe been closer to in the 80% range of Lincoln students still attend Mount Abe through tuition now rather than, you know, being part of the a member of the district before. So it it has had an impact, though most

[Emilie Kornheiser (Chair)]: of the

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: students are still coming, so less than it would have otherwise. I think the greater impact is we have fewer students with a similar overhead cost even in terms of central office. If you just look at that one aspect, right, we have Lincoln's 180 students or 200 students in their district leaving doesn't change the central office staffing need for MAUSD. So we carry a similar overhead cost but had fewer students, have fewer students to divide that amongst. So it does have an impact on on the cost per pupil in that regard.

[Emilie Kornheiser (Chair)]: You don't recapture that through the tuition that's charged market?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: We capture some of that through the tuition for seven twelve, but we aren't able to capture that for k six.

[Rebecca Holcombe (Member)]: I don't know about tuition right now. So can you tell me, couldn't you say, alright, you decided to withdraw for elementary purposes, but once you get to the high school, you will be you are part of consolidation. So hold out partial and not. Could you do that?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: I think maybe what you're referring to is designation. So as part of the withdrawal, Lincoln Lincoln could have selected could have designated a high school or up to three high schools, middle perhaps middle high schools for their secondary students to attend. They did not designate, so they they are full choice, and most students choose to come to Mount Abe.

[Rebecca Holcombe (Member)]: So if they designate, then then there's no tuition involved.

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: Right, so the, yeah, don't know if we technically call it tuitioning or not, but

[Tammy Kolbe (Professor, University of Vermont)]: they would

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: designate one, two or three high schools and that is where students go and the dollars will flow from the Lincoln School District to those designated schools. And if parents chose to attend a school that's not one of those that are designated, it's the parents' responsibility for that tuition and not the town's responsibility or the district's responsibility for that tuition.

[Rebecca Holcombe (Member)]: What I'm intrigued, what I'm wondering is under the model that you're operating under, what if we tweaked, what if there were a tweak, just saying, what if maybe you can, they could have opted out for being part of your, your bigger supervisor, maybe, but they couldn't opt out for high school, they can only opt out for elementary school because they're not really worried about what their worry was, was closing the elementary school. So, if that's taken away from them, then can still, then you would be helped with your costs a little bit more, with administrative costs on top of everything without having to pay tuition. Is that true?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: I would say that's true. I guess two things come to mind. One, the statutes around withdrawal are very different now than they were when these two towns were active in their withdrawal. I think the the legislative or the or the the statutory threshold to meet is much higher now than it was years ago when this happened. So it's it's a different landscape. I think that's important to know. And, also, what you just described, it it's a very minor impact because, again, most of the students that attend Lincoln Community School attend Mount Abe grade seven through 12 through tuition right now. So we'd be talking about, you know, that 15 or 20%, of the Lincoln students that don't attend Mount Abe is the the incremental benefit that you were describing. So it's a you know, we're talking about four students probably. That would be different from our current reality. So not that much of an impact.

[Unidentified Committee Member]: I'm just curious, is there any look ahead to more consolidation or redistricting in your neighborhood, in your district?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: So we I'll say yes and. A little another historical piece that is perhaps worth knowing as I talk about where we might go from here. And it so we we in MAUSD a handful of years ago obviously looked at school repurposing. That's what created the fear of school closure that led to the withdrawal efforts that we were just talking about. In addition to that MAUSD and the Addison Northwest school district which is our partners over in Regens engaged in a 706B merger study process. We spent eighteen months with a committee made up of community members from the Virgins community and MAUSD community And in the end, almost unanimously that study committee agreed that a merger of the two districts was in our best interest. That merger was put to a vote in the Addison Northwest community and in the MAUSD community, so in that case MAUSD voted as a whole and Addison Northwest voted as a whole and we needed two yeses for the merger to happen. We got two resounding no's out of that work. So the merger didn't happen. Fast forward now four or five years later, MAUSD is once again looking at our continued declining enrollment, much sharper increases in costs, and the pressure that's creating on our cost per pupil, and looking once again at how do we utilize our school buildings differently, first and foremost, to create opportunities for students, to create a better teaching environment for our employees, and thirdly, to save some money. And we are currently exploring three options in pursuit of that. One is keeping our current structure as it is, which is four elementary schools and one middle high school. Another option would involve both of the other two options we're exploring involve two schools closing, two elementary schools closing. In one scenario, would have two grade banded schools. One of our two elementary schools would be a pre K through two where we could really focus early literacy, early numeracy, early intervention and prevention, really support that foundation. Another school would be grades three through five and we would move our sixth graders into the middle school and have a six through eight middle school at Mount Abe in the same building as the high school nine through 12. And then another option we're looking at would also close two schools, but one school would be a pre k through five and another school would be a k through five and sixth graders would go to Mount Abe. That has reignited a lot of the concern around school closure. So there's, you know, there's talk of positioning for potential withdrawal again. It's kind of drumming up a lot of the similar challenges from from our past conversations.

[Emilie Kornheiser (Chair)]: Patrick, the resounding no's that you got five years ago, were those do

[Tammy Kolbe (Professor, University of Vermont)]: you

[Emilie Kornheiser (Chair)]: have thoughts on reasons for those other?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: I have thoughts. They're not they're not really grounded in anything other than kind of word on the street, if you will. And it was, you know, in a nutshell, it was this it was a few different things. One was a big concern was that the drafted articles of agreement because our process through the act through the the seven zero six b study process was to create the articles of agreement as we were studying this so that in the end, if we decided this was the direction to go, we had our articles of agreement formed. And what was unique about our situation, Addison Northwest had articles of agreement that gave the authority for school closure to the school board. MAUSD had and still has articles of agreement that gave the authority for school closure to the town. And in this merger study, the language that landed in the draft articles of agreement was that the board of the newly formed district would have the authority for school closure, so that was definitely a major driver for many. I would also say that there were some that were concerned about distancing governance further away from the town and the school, which was related in some ways to the potential for school closure authority as well. And then there was this sort of deeply held like, but they're the commodores and we're the eagles and how can our arch rivals be formed together in a unified district? So I think it kind of those are examples of the spectrum of responses to that, I think.

[Emilie Kornheiser (Chair)]: Do you have anything that you think the state could have set up differently that would have changed that?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: I can think of terrifically unpopular things the state could have set up differently that would have changed that, and it lies in who has authority to make what decision. You know, in that in that particular case, it was very clear that the merger study committee who invested 18 months of deep research understood that this was the right direction to go from a financially sustainable perspective to an opportunity perspective, and they didn't ultimately hold any authority to make any decision. They could recommend something. And and ultimately, the two school boards then, right, so that merger study committee recommended to the two boards that this move forward for a vote. The boards then had to sort of warn that vote, and they agreed to do that, which supposedly suggests that there was some support to move in that direction, that they were willing to call for a vote, and then ultimately didn't receive that support. When I fast forward now and I think about the class size language in x 73, Mount Abe is struggling to continue to offer the breadth of programming that it has been and meet the minimum average class size of 18. Virginia's struggling probably more than Mount Abe to do that, and so to to think about what could have been in the face of what we're struggling to do right now, the idea of high schoolers from the two communities being together and what that would mean for opportunities for students and likely tax savings as well, Yeah, it feels like a missed opportunity for sure as we're wrestling with this right now.

[Rebecca Holcombe (Member)]: I have two pretty small technical questions, and just trying to understand the incentives on the ground. The first is that when Lincoln pulled out, it currently spends about the same amount per ADM. It has a slightly lower poverty rate than Mount Abe, and yet it has a much lower spending per weighted ADM. Do you know why?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: I only have speculations. When I think about cost per pupil, I think the long term weighted ADM is obviously one way to look at it, and that's the way that drives the tax rates. I think another way to look at that is what is the announced tuition rate? Those are two different ways to calculate cost per pupil and one of the differences is where do the various sources of revenue come from? There are incentives in Vermont to be small, be rural, there are things that provide some financial benefits there that help lower a cost per pupil that not everyone has available to them. So I think a deeper dive into the the true cost per pupil to educate is warranted if we're gonna sort of try to make comparisons across different schools and communities and and the ultimate cost to educate students in Vermont. Because those dollars come from somewhere, even if there are various funding sources and whatnot. So the totality of the spending, I think, is a factor in a lens that matters too.

[Rebecca Holcombe (Member)]: One follow-up question. One of the things that we're also looking at is pre kindergarten. The language currently says students who are three, four and five who are eligible for pre kindergarten reimbursement. Do you have any five year olds who are currently enrolled in a private provider? And are you providing special ed services in those contexts? And if so, how is that funded? Because it wouldn't be funded by EEE, but they wouldn't count on the count because they're a pre K student.

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: Yeah, so it's a multi parter. Let me see if I can catch all the parts. So I believe it is true that we have five year olds that are in private preschool settings because we we do operate one, but total for four and five year olds, we have about 30 students. So there for sure are other students in MAUSD that are not in our pre k program that are five year olds. So, it stands to reason that that would be true. And we do provide special education support, and that is a partially grant funded position in the MAUSD budget, but not fully grant funded. And I will add that it is is not cost neutral for MAUSD to run its public pre k program. The weights that we get for pre k students don't cover the cost to deliver pre k instruction at our rate of pay and our benefit package and those sorts of things.

[Unidentified Committee Member]: Did I get all of that?

[Rebecca Holcombe (Member)]: I think my question's a little bit different, but that's okay. I don't even know if you would have the data to know it, but what I'm trying to figure out is because of the way these two laws, the laws around pre K and then the laws around K-twelve are structured, I'm trying to figure out if you are even funded to provide services to kids who are five years old in a private provider, because they're not gonna appear on your account, but they're also not eligible for triple E. I'm just trying to figure out how that all lies.

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: Yeah, I know that's a partial grant funding. Would have to do a little digging to see which grant specifically is providing some of that funding.

[Emilie Kornheiser (Chair)]: Thank you. And let's go back to what worked and what didn't for mergers. Yeah, Representative Woodman.

[Rebecca Holcombe (Member)]: Well, you mentioned if you could see that's true cause for people, and that would help. How would you, how do you think we should do it?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: Yeah, I think you we can't get away from weights. I think weights are critical because it recognizes that it costs different amounts of money to educate different students. That's that's just a reality that needs to be accounted for. And given the various funding sources and and incentives, I think we need to we need to account for the total cost as well. And and I think the announced tuition rate speaks to total cost. Right? So the announced tuition rate is almost always, I would say probably always, going to be higher than the long term weighted average daily membership, but it does reflect the actual dollars flowing in from various sources to a school district to cover the expenses to educate the number of students educated in that district. So it's it's not totally irrelevant even though it isn't it doesn't reflect the different needs of students and what it takes to educate them.

[Emilie Kornheiser (Chair)]: How do you see the intersection of that idea and the challenge that we're weighting a variable base under current law?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: Can you tell me more about the I'm trying to understand your question.

[Emilie Kornheiser (Chair)]: So the way our current law weights work were they represent a different amount of tax capacity or a different amount of money, depending on how much a district is spending. Because one district might be spending $8,000 per pupil and one district might be spending $12,000 per pupil. The weights, way they work with tax capacity, would be a different amount of money per kid living in poverty because it's a percentage applied to a number of base that changes. And so I'm trying to figure out how sort of the And I feel nervous saying it that way because it is tax capacity and not dollars, but it's sort of the easiest way to explain it. And I'm trying to understand how the incentives that are sort of built into that variation intersect with what you're saying about the incentives of the average announced tuition question and sort of the full cost of meeting a kid's needs.

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: Yeah, I think I have a better understanding

[Rebecca Holcombe (Member)]: of question. The

[Emilie Kornheiser (Chair)]: I'm sorry.

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: No, that's okay. So I guess so the thoughts that are going through my mind, right, there are lots of good reasons why the the weights or the incentives, if you will, as you described in the weights that currently exist are what they are. That said, the the in incentives, right, the money that is delivered through those weights comes from somewhere, That's still dollars spent on education. And so I think that's part of what I'm trying to get. I believe it is true from information I have seen that a school can have quite a high announced tuition rate per pupil and quite a low long term weighted average daily membership cost. Like, less than half. I I can think of from a spreadsheet couple of spreadsheets I was looking at. I'm sorry. I didn't I wasn't prepared for this level of conversation and details I don't have in front of me, but I'm thinking of a school that has an announced tuition north of $30,000 per student and an LTW ADM of less than $15,000 per student. I haven't done the digging to understand where the other sources of funds, like what the weights are, how that comes to be true, but I think it's in that conversation somewhere that highlights the advantages of the weights that some receive that others don't and acknowledges the cost of education, Those $15,000 different and again it's not an apples to apples, we have a weighted ADM and we have effectively an enrollment count, those are not the same, but there is a significant enough difference there that there are funds coming from sources to enable a $30,000 announced tuition to be a 15,000 LTW ADM that are presumably distributed throughout the state somehow to account for that. So it just makes me wonder what is the conversation there that helps inform what makes sense going forward.

[Emilie Kornheiser (Chair)]: Yes, thank

[Rebecca Holcombe (Member)]: you. So, I'm thinking about sensors and disincentives, and you have an excess spending threshold or penalty, and if you take that and you apply it to the whole budget and say, well, if your budget goes up by more than x, you're going to meet that threshold, you're going to be it's not gonna be good. So, what if, that's a really blunt instrument because we don't know how the spending is happening in that district. So, going to your true cost for people to educate, what if the excess spending were tied instead to something that the education community decided was a goal for the state. And so maybe it was more tied to what are your class sizes, what's your school size, not right now in writing in '73, but what is your pupil to staff ratio? Would that get more closely with what you're talking about, the real true cost to educate and then you could really look at, well, is that the direction that we want a school to be going in or not?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: I think there's some merit to that. I think there's a key piece that would be missing from the conversation if we focus just on the staffing ratios. And that is what is it we want our students to have for opportunities and support, right? If we say what's driving this is staffing ratios and if you have to cut your programming for your students to meet that staffing ratio but another school can increase their programming and meet that staffing ratio, we're missing that really key piece of equity of opportunity for students. So if we start from a place of kind of getting on the same page around what is it we want for students in Vermont? One of my colleagues often speaks about vision. Right? We're we're sort of in that vision realm. Like, what is it we want for our students? Okay. What will it take to deliver that? How can we ensure our schools are large enough to meet a staffing ratio, a class size requirement while ensuring that they're getting this sort of guaranteed and viable curriculum? And then we sort of right size to make sure that we're not sacrificing instruction and opportunity and outcomes for students while also ensuring that we're meeting some minimum standards for class size and staffing ratios. But if we don't have bring both of those aspects into the conversation, we're missing a a key piece of it. So I can hit any staffing ratio you might set as long as you don't care what I provide to our students.

[Emilie Kornheiser (Chair)]: Yeah.

[Unidentified Committee Member]: I think

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: we care about what we provide to our students, and so we have to bring that in. But it ranges tremendously right now in terms of what we provide for our students, and that's part of what I think we have a responsibility to figure out how to address.

[Emilie Kornheiser (Chair)]: Agreed. This is changing the subject somewhat from the last question, but I what I heard you say earlier in this our time together, and I don't wanna put words in your mouth, but I also wanna be transparent about my takeaway, is that it's not clear if there's any sort of cost point or pressure point where folks in your area would be willing to move towards greater scale if it meant that they would not have control over school closures?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: I think that is very true for some. It's hard to know exactly what the critical mass is. There's a particular town that has been very vocal recently about their feelings around school closure. Other towns have been less vocal, and some have even said if school closure is you know? And and this is, again, word on the street. There's been no official poll or even unofficial poll necessarily. Others have said if if my school needed to close because that's what was best for our students and manage our taxes, then others are more willing for to accept that. So the perspectives definitely range, but I think we do have a history of the towns speaking out pretty strongly against their school being closed.

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

[Rebecca Holcombe (Member)]: you think that if we can, if we were to keep the law of control, but say the choices that you make, if they're not getting it, if you're not meeting an equal educational opportunity, however we define it, you can make a choice to keep your school open at the size it is, at the cost it is to run, but it's going to cost you at the local level. Yes, local control, but cost at the local level. What do you think of that?

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: I think that would probably prompt a legal challenge to see if that's even allowable. And then my initial reaction, I guess, without obviously giving it a deep thought, concerns around equity come to mind for me. Some towns might be able to afford that additional cost and other towns wouldn't. And so how does that play out when we think about it on a statewide scale from an equity lens? I don't know. It's more of a wondering than necessarily a firm reaction to it, I guess.

[Emilie Kornheiser (Chair)]: I think that's what we're doing together here today, Patrick. And I thank you for your time doing that with us very much. Please be in touch if you think of anything after we get off or if you just have any thoughts going forward.

[Patrick Reen (Superintendent, Mount Abraham Unified School District)]: Great. Thank you all very much for your time and for your efforts.

[Emilie Kornheiser (Chair)]: Yeah. Thanks for joining us. Thank you. Reearnthing myself where we are and what we're doing. So one of the policy tools that we have is sort of the weights and the grants. Act 73 legislation that we moved changed the weight for small schools to a grant for small schools and attached new rules to it as a way of making sure incentivizing scale. So one possible way, in addition to some of the tax policy we've heard about from Act 46, that we could incentivize scale in a voluntary merger system is by moving from a weight to a grant that can be more tightly controlled. And so I asked John to draft blanks on that, and John and Julia to both think about that somewhat. And that is the next thing on our agenda to discuss. And then Professor Colby, who has expertise from our Act 127 weights, is going to join us to talk about if changing a weight to a grant sort of is consistent with how she did that research.

[Rebecca Holcombe (Member)]: What I don't understand about the direction of that discussion is not everybody has the same weights. And you could have a district that's 100% weighted students and they're at capacity and another one, I don't get how you can, what does the weight have to

[Emilie Kornheiser (Chair)]: do with where you're trying to go with? So if the weight is for small schools, it's not all the weights. It's just the sparsity of weights. Sparsity of small school weights. We're gonna have a whole slew of testimony that we're going to move into. Who wants to begin that slew of testimony? Why do I feel like I just made this up? Okay, cool. Shall we take a brief break?

[Unidentified Committee Member]: Maybe I can go first. I'm just thinking I have to go to Hackett a little bit.

[Emilie Kornheiser (Chair)]: Okay. Wait, go for it. Thanks. Does Sorcea need something?

[Sorsha (Committee Assistant)]: That's what I was asking.

[Emilie Kornheiser (Chair)]: Okay. We're going to take a two minute break. Okay.

[Bridget Burkhardt (Clerk)]: Still weighs me in

[Emilie Kornheiser (Chair)]: till April 1.

[Rebecca Holcombe (Member)]: We have Julia Richter here. Hello, Julia. Hi, I'm Julia Richter.

[Emilie Kornheiser (Chair)]: Jump on it.

[Julia Richter (Joint Fiscal Office Analyst)]: Okay. So there is a slide deck posted on the committee page under my name. Let me go ahead and share my screen. So, I was asked to put together some materials as a bit of a refresher about cost adjustments for sparsity at small schools, both in current law and under Act 73. So I've split it into three pieces. One, a review of pupil weights under current law, specifically sparse and small. Second, to talk about the sparse school grants and the small school grants in Act seventy three and third, a few considerations. Pupil weights under current law. This should look very familiar, but I think it's helpful to remind ourselves. So current pupil weights adjust student counts and do not directly determine funding levels, as you all just spoke about. They're used to account for the potentially higher costs of educating students with certain or differing needs or circumstances. So these were changed in Act 127. And our current law pupil weights, we've included here in this table. As you're just talking about, pupil weights are tax capacity weights, meaning that they impact a school district's homestead property tax rate by being the denominator in that per weighted pupil education spending. Pupil weights do not determine the amount of money that a school district spends or receives, and they do not determine how funds must or must not be used. So specifically, current law sparsity weights. Under current law, sparsity is calculated at the district level. It's calculated as the number of people per square mile within the district. All people, not just kids. And the sparsity weights are tiered, meaning that the more sparse a district is, the more weight each of its students in that district receives, regardless of if that town or that district is operating or not. If a district is deemed sparse, then all of the students in the district receive a sparsity weight. And you can see those weights here in this table. So you can see the smallest weight is for districts that have 55 to 100 persons per square mile, and each student in that district would get 0.07, in addition to the rest of their weighted student count. And then as sparsity As the district becomes more sparse, meaning fewer people per square mile, the weight would increase. So that's how we account for sparsity in the current law education financing scheme. Did

[Rebecca Holcombe (Member)]: we make these up ourselves here in Vermont versus federal? This

[Julia Richter (Joint Fiscal Office Analyst)]: is state policy. This comes from Act 127. The weights in Act 127 come from that 2019 People Waiting Factors report, which I've linked further down in the slide deck. And then there was the twenty nineteen People Waiting Factors report. The principal investigator was Doctor. Colby and Doctor. Baker. And then following that report, there was the People Waiting Task Force that your chair and others served on. And then following the People Waiting Task Force was Act 127 that adopted the weights from those years of work.

[Rebecca Holcombe (Member)]: Okay. So we can change them. It's a policy decision.

[Unidentified Committee Member]: Thank you. So a community in the Northeast Kingdom, which is our sleep population, would receive more funding, more

[Julia Richter (Joint Fiscal Office Analyst)]: More tax capacity. Let's say that you had a school district that had After looking at all of the square miles of that district and all of the persons, they had 20 people per square mile. Then each student in that school district would receive an additional 0.15 to their waiting count because they are from that district that is sparse. And that weighting count is used It's our tax capacity weights. So the impact that those weights have is if you think about the way that homestead property tax rates are calculated. The local adjustment is the district's education spending divided by its weighted pupil count. So the more weights that a school district has, the more money they can spend for the same tax rate. Or if they spend less money, they can receive a

[Emilie Kornheiser (Chair)]: lower tax rate than if they didn't have those weights. But it's not directing the school district of how much money that school district should or shouldn't be spending. And there are a number of districts sort of, I think before we passed 127, I think to some degree, the hope was that some rural and sparse districts would take the opportunity to spend more once they received this increased tax capacity. And some districts decided not to spend more. They decided to keep taxes the same or reduce taxes with it, which was absolutely their policy choice to make locally.

[Unidentified Committee Member]: So if we changed rates or eliminated them, is there anything to take their place?

[Julia Richter (Joint Fiscal Office Analyst)]: That would be a policy decision. I think it's a broader question is if you were to change weights or eliminate weights, I think the first question would be, do you want to replace them with something? And the second question would be, what is the goal you're trying to achieve? And then lastly, are we talking within our current financing scheme? Or are we talking within the financing scheme established by Act 73? And the idea that I'm putting on the

[Emilie Kornheiser (Chair)]: table here that we're gonna sort of build up to is that we would take this weight and replace it with a corresponding grant. When we moved to Act 73, we took all the weights and we turned all of the weights into dollars. Some of them weights that were dollars, and some of them became grants that were dollars. These two weights became grants. And it's saying, let's implement these grants sooner rather than later.

[Unidentified Committee Member]: Maybe.

[Emilie Kornheiser (Chair)]: And I don't like thought everything works. Let's see how works. Let's implement this part of the Act 73 package sooner rather than later. So make this change now. Or in two years as part of whatever, as a way of incentivizing scale. To incentivize camp.

[Unidentified Committee Member]: But if the weights are the same as the grant funding, do you even bother changing it?

[Emilie Kornheiser (Chair)]: Because the grants have a little more definition attached to them. Geographic necessity. And a few other things, which we're going

[Julia Richter (Joint Fiscal Office Analyst)]: to go through right now. Yeah, the other piece that I would say too, which I've included here, are the way that the weights are structured in current law versus the way students are identified for sparsity and small school weights in current law is different than the way students are identified for SCARS B and small school grants in Act 73. And so we'll walk through that. So this is one thing that I pulled. We pulled the In FY 2026, we're doing FY 2026 because a lot of the ACT-seventy three modeling that we're looking at is in FY 2026. Sparsity weights, they're approximately 4,490, which is about 3% of the total statewide long term weighted ADMs. So that's 3% of all students, plus the economic disadvantage weight, plus the EL weight, plus the grade level weights, all of it. Of the weights, sparsity weights made up approximately 7%. About 92 districts or 77% received sparsity weights. And about 51% of ADM, so about 51 of students received sparsity weights. And you may be looking and saying, how do these two last bullets square with one another? It's important to keep in mind that our districts are not uniform. So you can have a higher count of districts, but that doesn't necessarily correspond with a higher count of students because we have such variance in terms of district size.

[Emilie Kornheiser (Chair)]: Sorry, Julia, I'm lost. Okay. I may not be the only one, but I may be, which is fine.

[Julia Richter (Joint Fiscal Office Analyst)]: Shall I just try to explain this again?

[Emilie Kornheiser (Chair)]: In the first one, sparsity weights approximately 3% of long term weighted average DN. So of all the students, only 44.9 are included in sparsity grades. Okay, see, I missed it.

[Julia Richter (Joint Fiscal Office Analyst)]: Okay, so taking a big step back. We have essentially just the number of kids, butts in seats, which we capture with long term ADM. Just like generally how many kids are in school. That's long term ADM. That's around 80, some odd thousand. We then apply pupil weights to all of those students based off of all of the characteristics that they fit into, which we were looking at earlier. So that would include poverty, EL, so on and so forth. Together, the long term ADM plus all of the weights gives us that 140 some odd thousand of weighted pupils. So what we're looking at So this first bullet is saying, of all of those weighted pupils, the 140 whatever thousand, three percent of that is attributed to sparsity.

[Emilie Kornheiser (Chair)]: But

[Julia Richter (Joint Fiscal Office Analyst)]: then when we look at Okay, so we've got long term ADM being I'm just making these numbers up and rounding them. 82,000, Long term weighted ADM, 142,000. That difference is made up from weights.

[Unidentified Committee Member]: So

[Julia Richter (Joint Fiscal Office Analyst)]: poverty plus EL plus grade plus sparsity plus law school. Of that weight chunk that's added to the long term ADM, 7% of that weight chunk is sparsity. The other 93% is poverty, EL, grade level, everything else.

[Emilie Kornheiser (Chair)]: I was

[Rebecca Holcombe (Member)]: wondering about the shift. Does that suggest that districts that are receiving sparsity weights are also slightly bumpier on average, because they appear EL students, or economically disadvantaged students, and that's why these sparsity is a bigger proportion of total weight? Or is that not? I don't know.

[Julia Richter (Joint Fiscal Office Analyst)]: It could be. I don't feel like I can jump to the conclusion from these two numbers. I think that really what we're looking at is the jump from the 3% to the 7%, is you're looking at the same numerator compared to a smaller base. So this 3% is being Or the converse of what I just said. So this 3% is essentially 4,490 divided by 140,000, whereas the 7% is 490,000 divided by our

[Emilie Kornheiser (Chair)]: For the Republican subset they have.

[Tammy Kolbe (Professor, University of Vermont)]: Yeah.

[Rebecca Holcombe (Member)]: And I don't understand how this benefits the district. It's their choice to use their increased tax capacity to get more money. Or is that the only thing they

[Julia Richter (Joint Fiscal Office Analyst)]: can do with it? Or they can have a lower tax rate.

[Rebecca Holcombe (Member)]: Does that help student achievement?

[Julia Richter (Joint Fiscal Office Analyst)]: Not my place to say one way or the other. I think that's the question that the school boards are grappling with. The trade offs.

[Emilie Kornheiser (Chair)]: For me, one of the things that I like about a foundation formula is that school boards and superintendents don't have to grapple with the trade off of a lower tax rate or meeting student needs. They have a guaranteed amount that they can meet student needs with. However, they might see fit for that cultural and social situation. But that is not where we are right now. Right now, we have a system of weights.

[Tammy Kolbe (Professor, University of Vermont)]: And

[Emilie Kornheiser (Chair)]: trying to figure out what we can do with them as sort of a bridge to the

[Julia Richter (Joint Fiscal Office Analyst)]: next thing.

[Unidentified Committee Member]: The grants, how long are they good for? Forever more. They'll be reissued every year for every student?

[Emilie Kornheiser (Chair)]: Until we do what they Until we do what? Do whatever we do. That's fine. Mean, just that none of our decisions are ever permanent, but I don't have a grand plan of removing them next year personally or any time ever. It's going to be important forevermore. A geographically necessary small school is going to be more expensive. And I think the state will have a responsibility to meet the needs of that situation as long as those schools exist and need to exist, which they will unless demographics change wildly. Right?

[Rebecca Holcombe (Member)]: What I understood you were asking is a different thing than The US. When you said how long have the grants been for, I thought, and then how much time does the school have to use it or maybe lose it? Oh, was that what you were asking? No. But it made me think of this question, which is if you give a grant then I think you've got to say it must be spent by such and such a time, otherwise if you could just put it on your Put it on your what? Do other things so that you could put it in the reserve, then you could use to lower your taxes the next year. You would never actually have to use to improve educational opportunities. I think that's a question for

[Emilie Kornheiser (Chair)]: the foundation formula as well.

[Rebecca Holcombe (Member)]: Yeah, it is. Yeah. All right.

[Mark Higley (Member)]: Agreed. Representative Higley? Yeah, just a little confused on what we're attempting to do here. At one hundred twenty seven, that was just past, what, two years ago? Years ago?

[Julia Richter (Joint Fiscal Office Analyst)]: I think four or five years ago.

[Rebecca Holcombe (Member)]: Oh, rather than that one. 01/2027?

[Julia Richter (Joint Fiscal Office Analyst)]: Yeah. It was my first session here, and this is my fifth session.

[Emilie Kornheiser (Chair)]: Janet Ansel was here. Yes. That's all I have. We were still downstairs.

[Emilie Kornheiser (Chair)]: I

[Mark Higley (Member)]: just am concerned that we're gonna change something yet again in this whole collage of Act 73 that it looks like currently 92 districts are receiving it and know how to deal with it. I just don't know what the transition is going to look like as far as yet again one more things to fix up to figure out, comply with, rather than what we've got now. I don't know the real reason, I guess, why we're changing from weighted

[Rebecca Holcombe (Member)]: reducing to a multiplier the function Just a grant. We

[Emilie Kornheiser (Chair)]: had a small school grant for many years. And then we'd move to having this weighted system. And if the goal of all of the act 73 work and all of the merger incentive work is to move towards greater scale, then we would want our fiscal tools to be sensitive to that. And we have AOE doing rulemaking on geographically necessary small schools. And so we wouldn't want to be delivering funds to districts who are making choices that were counter to that if they were able to do something else.

[Mark Higley (Member)]: But it's gonna be calculated basically the same way.

[Emilie Kornheiser (Chair)]: Yes. It, yeah. But we can attach more rules to it than we can with the weights.

[Mark Higley (Member)]: We want to do that because

[Emilie Kornheiser (Chair)]: because it might help incentivize a move towards more and better scale. Yeah, no, go for it. I just want to make sure that Julia could get her stuff, but go for it. Ask her question.

[Rebecca Holcombe (Member)]: So I'll say this nicely. I see the bill, the weight change bill that everybody complained about and all the budgets went down and they blame the weights, changing weights. That's what we're talking about, that change that happened five years ago. Sure.

[Emilie Kornheiser (Chair)]: Okay. So we're changing some of that.

[Rebecca Holcombe (Member)]: Okay. What's been happening with that in the meantime? They've been dealing with it. It didn't change, did it? It changed when Janet

[Emilie Kornheiser (Chair)]: was here, and it is still that long. We have not changed anything from well, we changed the weird thing that broke the head fund, but we haven't changed And the other think we're and clearly things are not working, or we would not all be sitting around this table talking about this until the end of time. Yes. Representative Kent.

[Emilie Kornheiser (Chair)]: So this isn't going back to the small school grants,

[Unidentified Committee Member]: it's going for the geographic necessity schools. Yes. Can we have Julia explain the whole thing before I

[Julia Richter (Joint Fiscal Office Analyst)]: I have a question for Julia's

[Emilie Kornheiser (Chair)]: slide. I'll get

[Unidentified Committee Member]: it still.

[Rebecca Holcombe (Member)]: Don't get it.

[Mark Higley (Member)]: Oh my god.

[Rebecca Holcombe (Member)]: You just explain to me how the

[Emilie Kornheiser (Chair)]: first bullet and the last bullet aren't sure if does anything?

[Julia Richter (Joint Fiscal Office Analyst)]: Yes. And I will say, I put this together because I thought this was really interesting, an interesting thought. And it's providing context that I'll leave it at that. So how are they true? Perhaps we can just think about each bullet on their own, because each bullet is talking separately about the way sparsity weights exist within our current financing system. First bullet, not even looking at what the bullets say. First, the question is, of the weighted people counts, what is making up a larger share? Is it mostly driven by grade level weights? Is it mostly driven by EL? Is it generally spread out where each weighting category kind of makes up a similar share of weighted student counts? That was my first question. We're talking about sparsity weights, but really, how big of a share of our weighted student counts can be attributed to sparsity? That's what the first bullet is answering. It's saying, of our total weighted student count, 3% is attributed to sparsity. So when we're talking about sparsity, we're talking about 3% of the total weighted student count. The other way we could think about that is we don't want to think about the actual bodies, the actual kids that exist. We only want to talk about the weights. And if we're only talking about the weights, how much of only those weights are attributed to sparsity? And that's where we have a 7%. So 7% of all of the weights we're applying are sparsity. 93% are something else. So that's what the first bullet is answering. Yes. The second bullet is saying, how many districts are getting sparsity weights? 92 districts, 77%. It's huge. But then we have to ask, how many kids are getting sparsity weights? Because our kids are not evenly distributed across districts. So you can see 92 districts, 77% of districts, are getting some sort of sparsity weighting, which looks like a lot, and it is a lot of districts. But then if we look at the actual bodies, how many bodies have a sparsity weight attached to them? Only about 50% of Vermont students have a sparsity weight attached to them. But

[Emilie Kornheiser (Chair)]: it's only 3% of

[Rebecca Holcombe (Member)]: the whole weight

[Julia Richter (Joint Fiscal Office Analyst)]: capacity. Exactly. That's true. And I think that's quite interesting to think about because what that is telling you is that a lot of your districts that have a lot of students in them are not receiving a scarcity wage, which intuitively makes sense if we think about the landscape of Vermont.

[Emilie Kornheiser (Chair)]: Does it also indicate that of those that do receive the sparsity rate, they might be receiving the lowest sparsity rate between fifty five and one hundred students? So it's only 0.05.

[Julia Richter (Joint Fiscal Office Analyst)]: Maybe we need to go into

[Tammy Kolbe (Professor, University of Vermont)]: a Okay. Low level

[Rebecca Holcombe (Member)]: And it also could that the districts getting most of these states only have fifty one minutes. But you can weight a lot of them pretty heavily for a very small district, but there's just not a lot of big districts. It may be co

[Unidentified Committee Member]: located. For everyone.

[Rebecca Holcombe (Member)]: Which other districts that, I mean, what we know in the history of Vermont is actually many of the higher poverty districts merged first, when it makes sense you think about it.

[Emilie Kornheiser (Chair)]: Julia, oh, you're halfway through your slide deck. So we have Professor Colby on the Zoom.

[Tammy Kolbe (Professor, University of Vermont)]: I'm happy to wait to let Julia finish if that's what needs to happen.

[Emilie Kornheiser (Chair)]: Are you sure? What time do you have to leave?

[Tammy Kolbe (Professor, University of Vermont)]: How much longer do you have, Julia?

[Emilie Kornheiser (Chair)]: She's only halfway through. So what time do you to leave, Tammy?

[Tammy Kolbe (Professor, University of Vermont)]: I have a hard stop at three.

[Emilie Kornheiser (Chair)]: Okay. So we're not going to wait for Julia to finish. But thank you for your generosity.

[Tammy Kolbe (Professor, University of Vermont)]: Sorry, Julie.

[Emilie Kornheiser (Chair)]: All good. It's definitely not your fault.

[Unidentified Committee Member]: Yeah.

[Emilie Kornheiser (Chair)]: So far, yours is welcome. So glad you're here. The committee's been having varied conversations about incentives that have worked and not worked for mergers. And we've just started a conversation about what it would look like to change from a weight to a categorical grant as part of a process of adding some more policy structure around those grants. Okay. All right. And I think the question that I asked you to answer here was, if we pull a couple of the weights out and turn them into a grant, does that mess up all the other weights? Yep. But you're welcome to say whatever else you'd like.

[Tammy Kolbe (Professor, University of Vermont)]: Okay. Thanks. For the record, Tammy Colby. I wear a number of hats, but today I'm here appearing with the hat that is the person who was one of the primary authors of the work that undergirded the weight theme for the Act 127 and then also the memo that we prepared for the legislature last spring around updating the weights. I do wear other hats, so I'll try to stay in that lane. And if I, if you have questions that I feel like get out of that lane, I'll defer on those questions today. I did prepare some slides just to sort of give an overview of a few things. I think the options as I understood it, there are two options that are being considered. One is staying with the weights and the other one is thinking about going to a category grant program for the small and sparse and that relates to your question, representative Kornheiser around can we pull, things apart from the model? So maybe I could just take a couple of minutes to sort of lay the groundwork and then we can have an open discussion with your questions. Does that make sense to everyone?

[Emilie Kornheiser (Chair)]: That sounds great, thank you.

[Rebecca Holcombe (Member)]: So that means

[Emilie Kornheiser (Chair)]: we're gonna hold our questions until the end.

[Tammy Kolbe (Professor, University of Vermont)]: Well, if there's something I think just as always, I'm here for this committee if there's

[Emilie Kornheiser (Chair)]: Don't let us get out of that. We're just holding our questions till the end. Okay,

[Tammy Kolbe (Professor, University of Vermont)]: fine. Fine. I did share these slides with Sorsha just a few minutes ago. I apologize that they're coming in later in the day. It's been that kind of a day. For all of us. Few things going on. So, okay, so I just want to talk a little bit about the small and sparse school grant adjustments, and the policy design considerations. I think let's just remind ourselves of what the evidence shows, because I think that's really important as a framing here. And that is first that small and sparse schools face real measurable cost pressures. And in our work, we found that schools with less than 100 students on average, it costs about $3,100 more per student to operate those schools. And schools, it costs about, around $1,900 to operate schools in areas with less than 55 persons per square mile. If you added those two things together, it'd be about, and you had a school with less than 100 students that's also operating in a sparsely populated area, on average it would cost them about $5,000 more per student. This is to achieve, average common outcomes for students, right? Because remember that our modeling takes into account outcomes with respect to state proficiency standards. So we know that small and sparse schools face real measurable costs. We also know, that LAC is a part of Act 73. There was a lot of discussion around to whom, what is small, what is sparse and what is small and sparse by necessity. The State Board of Education, as you know, and I did chair that committee, they came up with some recommendations about how to define necessity because those criteria would be applied when thinking about the cost adjustments. The other two considerations I just want to be clear about because I know this has come up in another number of discussions and also goes back to a memo that I wrote a number of years ago. The weights or any cost adjustment with respect to small and sparse applies only to where a district operates a school, and it does not apply to district or towns that do not operate schools. Why is that? Because these cost adjustments are the cost of actually operating the school, right? Yes, they apply on average to a student, right? But these are the costs, the additional costs to operate a school that has students, less than 100 students and students and or located in an area with less than 55 persons per square mile. Why these costs exist? We know that small schools have minimum staffing regardless of enrollment, and they have limited economies of scale. Sparse areas, we have transportation challenges, we have staffing at service delivery constraints, and that we know that districts, and again, it's the districts that incur additional costs to operate these small schools in sparsely populated areas. The policy goals under Act 73 were to align funding was small and sparse by necessity. We in Vermont have had longstanding, policies that provide supplemental aid to small schools. We have small school grant program prior to Act 127 that was converted to weights under Act 127. Those weights have carried forward in Act 73. This language, when we had our small schools grant, there were some loose criteria about who qualified and who didn't qualify for those grants. Act 73 takes a different step forward on that by further putting a qualifier by necessity. And the by necessity was about targeting funding to schools that are small and sparse and must operate, and was to avoid funding schools that are small and sparse due to local preferences. And that is sort of that dichotomy is the dichotomy I testified about when I came before this committee based on our work on the State Board of Education. So if you think about it in the big picture, we know that we have these dollar adjustments, remember those average costs, sort of on average what it costs, the additional costs of operating a school on a per student basis that are located that are either small or located in a sparsely populated area. There are two ways that we can deliver these small sparse cost adjustments. We can weights in the foundation formula, that's the ACT 73 approach, and we have weights, and I know Julie has been talking to you about those weights. But even then, Act 73 has said, well, those weights would only apply to small SPARS schools operating by necessity. There is another option and that's the category grant option, and that would be schools would receive a per student grant equal to the dollar value of the cost adjustment. And again, the qualifying schools would have to meet the by necessity criteria. To representative Kornheiser's question, can we pull these out as a category grant program? Yes, you can, with some caveats. First, the dollar amounts are the cost adjustments. And so we can't go pull- we can't go messing around with those cost adjustments, right? So for the entire formula to work in the context of the models that have been run, you would need to have the cost adjustments, the dollar value of the grants equal to the cost adjustments that come out of the regression models. The most recent regression models were last spring, and you have the dollar values for those. So the difference is not necessarily in the funding amount, because remember these weights up here are generating those dollars, right? But it's in how the funds are accessed or distributed to schools. And as long as you are providing that supplemental funding through one of those two means, and that the dollar value that is generated by the weights is the same dollar value that's generated by the categorical grants. These two policy options are on par with respect to a cost adjustment. They also, however, the two policy options have different pros and cons outside the cost adjustment that are important to weigh. So if we use weights, obviously they're integrated into the existing formula, there's some simplicity with that. They're predictable and automatic. So if you change your base, the dollars go up automatically. And there's no separate program required. On the flip side, it means that it's more difficult to target funding at specific schools that operate in larger districts, right? The weights will come through, The funding comes through as part of the larger package of funding that the state that districts have, right in terms of states and state funding. And so the goal is to make sure that dollars go to specific schools and not the district generally, it's harder to do with weights. It also may be more challenging to align it with a by necessity criteria, because you don't have a one to one correspondence in that they have to, you know, when you apply to an application process or something along those lines, a school meets the by necessity criteria, there isn't a one to one correspondence with them then getting a grant check out of that. Grants also have pros and cons. On the pros, they can be precisely targeted. You can target them at a certain school. You could even put additional qualifiers on how the dollars are used. Right? That's one of the things about categorical grants. Because of that, maybe easier to align with the by necessity qualifying criteria or process, right? And they're transparent and easy to explain, right? The con, right? You're going to have to have a separate administrative process, right? Either an application process or somebody reviewing the criteria on a rolling basis and making decisions about writing those grant checks, those category grant checks. And it also operates separately from the foundation formula, which means you will have to pay attention to making sure that those grant amounts stay equal to what it is that the school would receive. If using a weight, if in fact that regression model is updated. So for example, if you put a grant amount, you know, the $3,000 for example, in statute, you would have to revise that as the models change over time. There are a couple of additional considerations for a category grant program. I think if you were to go that way, you would have to think about whether or not you would want a single versus multiple grants. Right now you have weights for small, you have a weight for sparse. Under a grant, potentially you could have a grant for small, or grant for sparse or just one lump sum that's sort of small sparse. One of the things we did find on the State Board of Education, there are very few small schools, that would probably meet the by necessity criteria that are in sparsely populated areas, so it may make sense to put them together. You would also would want to clarify that the grants are for students who attend qualifying schools, they shouldn't apply to all students in a district, and students located in towns that do not operate a school. The other thing is that you would need to develop clear criteria for grant eligibility, for example, by necessity and clear definitions of small and sparse school. Currently, Vermont does not have a definition of school, which is a challenge. And then we also, you would also need to consider whether there are expectations to target funding at specific schools versus just having the revenue as part of the larger unrestricted revenue pot. So just a few ideas. I hope that answered your initial questions and I can take your questions and comments now.

[Emilie Kornheiser (Chair)]: For example, I think you

[Rebecca Holcombe (Member)]: had a clarifying question. Think you answered on the last slide part of it is I think you're saying that if we have say, merged districts, North Country merged into that big W, if you just applied the grants, might want some policy that would distribute the grants within that to any eligible school.

[Tammy Kolbe (Professor, University of Vermont)]: I'm not suggesting that you necessarily would need that. What I'm suggesting is that if you were to move to a categorical grant program, that is additional flexibility that you would have, that you might not have under a weighted student funding formula. And

[Rebecca Holcombe (Member)]: just to follow-up, when you say that the grants are for students who attend qualifying schools, but they should not apply to all students in the district and students located in towns that do not operate a school, do you also mean in the mixed districts, they should not apply at the level at which students are tuition?

[Tammy Kolbe (Professor, University of Vermont)]: The small and sparse school weights are, right, that cost adjustment is, although I know it's on a per student basis, right, It really is the average additional cost of a student attending a small or sparse school. If in fact, right, a non operating town for example plays an average tuition amount, then that doesn't make any sense, right? I mean, there's no cost adjustment to be had to that tuition amount because that tuition amount is not specific to a smaller sparse school.

[Emilie Kornheiser (Chair)]: So we would count the students at the actual small sparse school building. And those would be

[Tammy Kolbe (Professor, University of Vermont)]: That's exactly right. That's exactly right. That's exactly right. And that's how that works with the weighted student funding formula represented on Kornheiser, right? Because, yes, I know it's a per student count, but at the same time, what we're trying to do through the per student count, right, is adjust or take into account the additional cost of operating a small

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

[Emilie Kornheiser (Chair)]: So Professor Kobbe, a fundamental level, I'm just trying to still understand the sparsity weight.

[Julia Richter (Joint Fiscal Office Analyst)]: Yeah.

[Emilie Kornheiser (Chair)]: Aside from transportation, which you outlined, then said other costs in terms of just supplying those costs to that particular location. And we already have a transportation category related grant that isn't complete, but it's 50% whatever the cost is. So I'm just trying to figure out what are those additional costs for running a school in a sparse area that's justified?

[Tammy Kolbe (Professor, University of Vermont)]: In general, in general, and this is nationally, in general schools that operate in sparsely populated areas face higher what we call input prices. And so what are input prices? Those are the additional costs that you face for having to bring goods and services into the school, because you have trained. So it's not the student transportation costs, it would be transport additional costs that are associated with bringing in supplies and materials. We also know right that schools located sparsely populated areas, oftentimes have to contract for services that or purchase services that would be available in more generally available in communities that are less, that have more population density. So for example, we know that small rural schools, oftentimes for example, they purchase washer and dryers because there's no laundromat in the community, or they have to bring in social services to the school that are not provided because they're not provided, there's no one to consult with or contract with outside the school.

[Emilie Kornheiser (Chair)]: Okay, all right thanks. It gives me a better understanding.

[Julia Richter (Joint Fiscal Office Analyst)]: Yeah.

[Tammy Kolbe (Professor, University of Vermont)]: Doctor. Kolbe I'm happy we wrote a, we did write a paper that was published in one of the top referee journals on this actually using the Vermont data. I'm happy to, it was a number of years ago, but I'm happy to share that back out if that would be helpful to everybody. I know it's been a while. Yeah, that'd great. Thank you. Okay, I can do that.

[Bridget Burkhardt (Clerk)]: Doctor. Colby,

[Rebecca Holcombe (Member)]: can you say another word? One of

[Bridget Burkhardt (Clerk)]: the pros that you said about having this be a weight is that it automatically adjusts based on what That's the base right. But I'm confused that if the regression model sort of said that this is the average amount it costs extra to educate a student in a small or sparse school, why would you want it to adjust based on whatever the base is? Shouldn't it not adjust?

[Tammy Kolbe (Professor, University of Vermont)]: I'm not sure I'm following you.

[Mark Higley (Member)]: You Right,

[Tammy Kolbe (Professor, University of Vermont)]: have a base, you have your base spent, if you have a regression model, going back to sort of representative Kornheiser's initial question, right? So if we have a regression model that says the base is 15,000, right? And we come up with the cost adjustments and then those, the weights add dollars on top of that, right? That happens automatically. What I was saying is that when you pull out a category grant program and you put a dollar amount in statute, and then over here, you have regression models, you're adjusting the base, you're adjusting the weights and this is all happening automatically. That categorical grant amount that's in statute doesn't automatically update. And we've seen this in other places. For example, in New Hampshire, their categorical grant adjustment for special education is only $1,500 And it's $1,500 because it's been in statute for twenty years that that's all it was. And so other things

[Bridget Burkhardt (Clerk)]: have been updated, but that doesn't get updated. But that's, I'm thinking that's kind of a different thing. Because that's kind of like over time. But if I go back to, for example, if I go back to see the page number because I've got it in slide show, Page two, where you say schools with less than 100 students, it costs, based on your model, 3,157 per student more in a district like that to educate a student. But you might have a school that has, say, they're spending $12,000 per student, and you might have one that's spending $15,000 I'm just trying to understand because those are two separate pieces This of your is not a percentage to them

[Tammy Kolbe (Professor, University of Vermont)]: I between the understand what you're saying. Remember that this is not spending, this is revenue. And so what we're saying here is if you are funding a base spending amount of $15,000 right, the average additional cost adjustment, the average additional dollars on that base, right, to operate a small school on a per student basis is about $3,000 I'm sorry if I'm misunderstanding the question.

[Bridget Burkhardt (Clerk)]: No, think I'm not explaining the question very well. I'm just struggling because we've got like basically the weights in here are percentages.

[Tammy Kolbe (Professor, University of Vermont)]: That's right, and they generate a dollar amount.

[Bridget Burkhardt (Clerk)]: But it's a different dollar amount for every district, right?

[Tammy Kolbe (Professor, University of Vermont)]: So No, it's not. No, it's not a different dollar amount for every district, right? Base They were under the foundation funding. I'll I'll talk about

[Bridget Burkhardt (Clerk)]: right now. I'm not talking about the foundation for you. I'm talking because we're talking today, I think, about adjusting the weights. You're using capacity weights? Yes.

[Tammy Kolbe (Professor, University of Vermont)]: Oh, I'm sorry. I thought you're talking about the foundation to me.

[Bridget Burkhardt (Clerk)]: I'm talking about, I'm talking about current state.

[Rebecca Holcombe (Member)]: Sorry,

[Tammy Kolbe (Professor, University of Vermont)]: right. Yeah, so the tax capacity weights, right. So the dollar amounts I gave you are our foundation formula weights, they are not tax capacity, right those dollars that I talked about that that additional spending amount is assuming a base is assuming a foundation formula. Right. So if we want to talk about tax capacity weights, the tax capacity weights are what tax capacity weights do is they're taking total spending and adjusting for equity. Right? And so they're looking at proportionally on average, right on average what the additional spending is in a smaller sparse district that's necessary to get to common outcomes. What I just talked about, and I'm sorry if I misunderstood, is these are the additional dollars that would go on a foundation amount of $15,000 which is what we have in Act 73 right now. And that would be the additional dollar increment. The two things are different.

[Bridget Burkhardt (Clerk)]: Okay, I understand that. I'm still just yeah.

[Emilie Kornheiser (Chair)]: We're trying to translate the tax capacity weight into a dollar

[Tammy Kolbe (Professor, University of Vermont)]: You can't, you can't because that's not how tax capacity weights work, right? And so the challenge with the tax capacity weights is that tax capacity weights are just are equalizing differences in spending, right? And it's equalizing differences in spending in proportional ways, right? That make us right? Those models make assumptions about these optimal level of spending that is necessary for students to attain common outcomes and then adjusting that proportionally for these additional cost factors. That's different than identifying a dollar amount that goes on top of a foundation formula, right on top of a foundation that you would translate into a grant.

[Emilie Kornheiser (Chair)]: Are

[Carol Ode (Member)]: economic disadvantage weights. They apply to districts to pay tuition and do not operate schools. And then what's the fix for that?

[Tammy Kolbe (Professor, University of Vermont)]: Okay, so are we, I'm gonna have to clarify. Are we talking under the tax capacity weights or the foundation formula weights?

[Emilie Kornheiser (Chair)]: Overall conversation we're having, just to reset and then I'm not trying to stop your question. Just wanna bring us back in and then have you ask your question. Is Spanish. Nope. Under our current law weights, can we remove the rural and sparsity weight and replace it with a categorical grant as part of a transition mechanism? So the answer is you can, and Representative Ode, I'll get back to your question.

[Tammy Kolbe (Professor, University of Vermont)]: The answer is you can. However, to, I think it was representative Burkhardt, I'm having a hard time seeing it.

[Bridget Burkhardt (Clerk)]: Yes, it was, yes.

[Tammy Kolbe (Professor, University of Vermont)]: I think it was your question, which is then what is the fair dollar amount with that? And so your representative Burkhardt, you are correct in recognizing that when you do that, you've got people spending different amounts, right? And so that it's not as precise of a cost adjustment in that regard because you have these different spendings and different bases and things along those lines. Can you assume based on the regression model that on average, the additional cost of operating a small school on a per student basis is about $3,000 Yes, you can. But that's an average, right? And what we know is, I think to represent Burkhardt, we've got a wide range of spending. It's the average. It's also the optimal average, right? Because when you think about it, right? So when we do the regression, right, the regression coefficient is the mean and that coefficient is statistically significantly different from zero. It doesn't mean there's an arrange around it, but it is that is the mean, right? And so to your point, representative Burkhardt, now that I'm understanding your question a little better is, no, it's never going to be the perfect adjustment, right? When we're in a tax capacity situation. And when we're in a foundation formula, right? What we're doing is we're not talking about equalizing spending, right? We're talking about this is the amount of state revenue that you get. And so that's why the two things are a little bit different. Can you do it? Yes, you can. It just means that you're doing it on the average. And it's not right versus the weight, which is a far more precise, right? Proportional adjustment, right, on spending. Now representative Ode, can you rephrase your question for me and I'll go back to that one.

[Carol Ode (Member)]: Under the current formula, the economic disadvantage weight, should they apply to districts that pay tuition, but they don't operate schools? Because we heard from someone earlier today that they're getting the weights, they don't operate in schools.

[Tammy Kolbe (Professor, University of Vermont)]: Right. So we wrote a memo on this a number of years ago, where we clarified, and this was in our report, but it was, I think it was a footnote. And so in retrospect, probably should have been in bold print, but it wasn't. So we wrote a clarifying memo and what we clarified is that the weight should not apply to places where there are no differences in cost. So if you are paying an average tuition amount, right, that's not differentiated by student needs, student economic disadvantage, special education, then there's nothing to wait.

[Carol Ode (Member)]: So the fix for that would be to write a line. In fact, says Our

[Tammy Kolbe (Professor, University of Vermont)]: analysis for the weights do not apply to places that are paying tuition payments in lieu of operating a school. We were very clear about that and so our weights do not apply to those places.

[Carol Ode (Member)]: So we could just say happy.

[Tammy Kolbe (Professor, University of Vermont)]: I'm happy to recirculate that memo if that would be helpful.

[Carol Ode (Member)]: But since we do statute the weights do not apply to schools that to districts case tuition do not operate in schools, period. That's it. That sentence.

[Tammy Kolbe (Professor, University of Vermont)]: That was that are there's no conceptual or empirical basis for doing that. No. Do you agree with my sentence or mom? Yeah. I'm saying that there's no conceptual or empirical basis for doing

[Carol Ode (Member)]: Representable. Done. It's either. I'm done. Okay.

[Rebecca Holcombe (Member)]: When states do this, a hypothetical, there's a school with 110 kids, K-eight, what's stopping that school from shedding a grade And does that matter? Should we be concerned about in the transition? How do you handle the margins? Because if you shed a grade, you're not eligible

[Bridget Burkhardt (Clerk)]: So for

[Tammy Kolbe (Professor, University of Vermont)]: funding policies, means at the end. So those kinds of incentives and disincentives for schools to obtain additional funding, are additional design considerations that have to be built around the funding formula in and of itself. So, no, the funding formula in and of itself does not prevent that kind of incentive, doesn't prevent that kind of, I guess, revenue seeking behavior on the part of schools. No, it does not. If that is a concern, then that would require additional policy. Does that answer your question, Representative Holcombe?

[Emilie Kornheiser (Chair)]: Yes, thank you. President Higley.

[Mark Higley (Member)]: On the categorical grants you've talked about, one of the cons being requiring a separate administrative process. What is the process?

[Tammy Kolbe (Professor, University of Vermont)]: Well, what it does is it means that, for example, in this instance, I believe it would be the agency of education would have to administer a separate categorical grant program in addition to the existing formula. Right? So we operated a small schools grant program for many years. It's sunsetted with 01/2027. There are just administrative costs to doing that. I will say though, is that the new policy that right going forward under Act 73, which is going to sort of put these additional qualifiers on receiving small and sparse funding regardless if it's a weight or a categorical grant program is creating a new administrative requirement for the agency of education already. And so I'm not sure that moving to a categorical grant program adds that much because there's already going to have to be an administrative process for determining on an annual basis, right, whether or not a school beats the small and sparse by necessity.

[Mark Higley (Member)]: Thank you.

[Rebecca Holcombe (Member)]: If some districts are overweighted now, how will that affect them in the transition when we transition to a statewide?

[Tammy Kolbe (Professor, University of Vermont)]: Can you define overweighted for me, please?

[Rebecca Holcombe (Member)]: If we are currently giving weights to districts that don't operate schools, will that affect their transition into a foundation plan?

[Tammy Kolbe (Professor, University of Vermont)]: Mean, would expect it would, Right? And so I think there are a lot of considerations with the transition. I mean, to the extent that you have towns that are paying tuition and not operating a school, and that tuition amount in their currently weighted, right, applying weights to their spending even though their tuition doesn't vary, if those weights go away on a per student basis then their real costs will likely go up. That said, some of that, the magnitude of that difference, Rivers and Holcombe, is going to depend on the delta between the tuition payment, tuition amount and the foundation form. Right? So if in fact the foundation, if in fact tuition equals the foundation amount, right? So if that is required that for example, independent schools or public all public schools accept the foundation formula amount, right the base and the weights, then no, they're really, then no. In those cases, it might actually go down, their cost to a local town might actually go down, because the tuition, the tuition amounts that many towns are paying are far are above the foundation formula even with the weights under the foundation plan. So I don't know that it's a clear yes or no for every single town representative Holcombe. But if they were to be paying the same tuition amount, yes. I think it all depa- I mean, the answer to that question hinges on whether it's the General Assembly's intent to have the foundation amount equal to the tuition amount that all towns pay, right? A uniform tuition amount, whether or not a child goes to a his tuition to a public school or a non public school.

[Emilie Kornheiser (Chair)]: And that is how act 73 is laid out, right?

[Tammy Kolbe (Professor, University of Vermont)]: Yeah. So in that instance, representative Kornheiser, if that tuition amount, even with the weights on it, is less on at right across the population of students in a town, if it very might it very likely is that then the town would actually be paying less on a per student basis than they would under the current arrangements because the average to it, the base spending amount, even with the weights is probably less than what many towns are paying on a on a per student basis for students to attend school to to attend, nonpublic schools.

[Emilie Kornheiser (Chair)]: Professor Colby, you have sixty seconds left with us. Is there anything else you would like to say other than us? Thank you so much for your time.

[Tammy Kolbe (Professor, University of Vermont)]: Thank you for your time. I'm happy to answer questions. I'm sorry that I didn't understand. Apologize. I didn't understand your tax capacity weights risk. Too many weights floating around.

[Emilie Kornheiser (Chair)]: There are too many weights floating around.

[Tammy Kolbe (Professor, University of Vermont)]: Happy to answer the questions and I think I have two to dos. One is to recirculate the journal article and the other one is to resend the memo I had on the tax capacity weights applying to tuition.

[Emilie Kornheiser (Chair)]: Thank you so much. Can send this both to Sorsha and she can send them

[Rebecca Holcombe (Member)]: I after a can do that. You so much.

[Tammy Kolbe (Professor, University of Vermont)]: Everyone. Nice to see you all.

[Rebecca Holcombe (Member)]: Appreciate it. Bye. Okay.

[Bridget Burkhardt (Clerk)]: Bye bye.

[Emilie Kornheiser (Chair)]: We are now going to go back to Julia or wherever you were when last we were there. Thank you so much.

[Julia Richter (Joint Fiscal Office Analyst)]: Julia Richter, JFO. Pulling the slides back up. We are going back to the world, at least in the short term, of tax capacity. And then we will move on to the support grants established in Act 73 that Doctor. Colby was referencing. So do you want me to just jump back in? Jump right back in. Okay, I think we were done with this slide. Everyone agree?

[Rebecca Holcombe (Member)]: I'll go back to it. Thank

[Emilie Kornheiser (Chair)]: you, Mark.

[Julia Richter (Joint Fiscal Office Analyst)]: Well, we've got another very similar one coming up here. So we just talked about sparsity weights.

[Emilie Kornheiser (Chair)]: Anybody any chewing gum?

[Unidentified Committee Member]: I have vents. Don't know.

[Mark Higley (Member)]: You have chewing gum, folks.

[Emilie Kornheiser (Chair)]: I got some.

[Julia Richter (Joint Fiscal Office Analyst)]: I have a piece. Thanks.

[Emilie Kornheiser (Chair)]: Yeah, it is.

[Rebecca Holcombe (Member)]: This is a tiny break in our seat belts. Clear heads. Reset. So

[Emilie Kornheiser (Chair)]: sorry. We good?

[Unidentified Committee Member]: Great question.

[Julia Richter (Joint Fiscal Office Analyst)]: As good as we're going to be. We talked about sparsity weights. Under current law, those tax capacity weights. Now we're also talking about current law tax capacity weights, but small school tax capacity weights in today's current financing scheme. So in addition to the weighting categories we've spoken about, current law also has a small school weight. This weight is The students of a school can only be eligible for a small school weight if that small school is located within a district that's considered sparse, and considered sparse by fewer than 55 persons per square mile. So going back to looking at our sparsity weights, essentially, to be eligible, perhaps, for a small school weight, the district needs to fit into one of these two sparsest tiers. So assuming that a district is considered sparse, then if that district has a school or schools that fall within the small school categories, small school parameters, then the students enrolled in that school get a weight. The small school weights are tiered, meaning that a small school in a sparse district with 100 to two fifty pupils, each student enrolled in that school would receive a weight of 0.07, in addition to their other weights. If the school is fewer than 100 pupils, each student in that school would receive a weight of 0.21. Of course, those weights would be associated with the school because it's capturing the average two year enrollment of the school. So those weights would be in addition to the other weights that the district was receiving. So that's current law of small school weights. We have the same type of slide that we just spent some time talking through. So I'm going to walk through this again, but perhaps say the questions that each one of these bullets is answering first. So we're looking at fiscal year twenty twenty six. Of the entire weighted student count, so all students plus all weights, what portion did small school weights account for? And the answer is one percent, thirteen thirty. And then of all of the weights that we add on top of that pupil count, what share does small school account for of the weights that we add? And in FY26, it was about 2%. So we're talking about a very small piece within all weights at the statewide level, but it could be a larger piece at the district level. How many districts receive a small school weight? 5546% in FY '26? And how many students receive a small school weight? And that's about 15% of students, about 12,230.

[Unidentified Committee Member]: I understood that's fine.

[Emilie Kornheiser (Chair)]: My question is, what is the Venn diagram? Or you might even Venn have diagram of those districts and

[Unidentified Committee Member]: those students that we see both smiling from?

[Julia Richter (Joint Fiscal Office Analyst)]: I don't have a Venn diagram, and that's because every student that we're looking at on this slide will fit within a sparse district Because it's that condition of So

[Mark Higley (Member)]: true, by the way.

[Julia Richter (Joint Fiscal Office Analyst)]: Yeah. Because of the condition where you can't qualify for a small school if you're not in a sparse district.

[Emilie Kornheiser (Chair)]: Care for your circle, medical rights.

[Emilie Kornheiser (Chair)]: Not even Friday.

[Julia Richter (Joint Fiscal Office Analyst)]: So that's it for current law. Moving on? I think so. Okay. So Act 73, now we're pivoting to the foundation formula. And we're pivoting to the funding changes that were made in Act 73 for funding small and

[Emilie Kornheiser (Chair)]: sparse. And we're living under current law. We are hypothetically moving towards Act 73. What we're trying to figure out this week and next week is, are there policy changes we want to make in the interim that are some combination of the two?

[Unidentified Committee Member]: What were your last sentences and what?

[Emilie Kornheiser (Chair)]: Some combination of the two, like a Venn diagram of sorts.

[Unidentified Committee Member]: I'm sorry, thanks.

[Julia Richter (Joint Fiscal Office Analyst)]: So, we're really pivoting now. First, we're thinking about Act 73. This is a reminder, Act 73 established a foundation formula, where you've got the base amount multiplied by the weighted student count, which gives you a district's education opportunity payment. That base amount is 15,033 in FY $25 It's inflated forward each year. And so that's one portion. The other portion that we've often talked about in conjunction with the EOP are the sparse and small school support grants. So that's what I'm talking about here. Act 73 no longer includes weights, albeit different types of weights, but no longer has any weights associated with small and sparsity, and moves to support grants. So how do they work? Act 73 established these support grants. They're no contingent on each other, so we'll just talk about each one. Act 73 established a sparse school grant, which has a two part test, two criteria that a school must meet. And I wanna flag, this is no longer at the district level. We're looking at a sparse school rather than a sparse district. Two criteria. One, that the school must be located in a sparse area, and the area is the city, town, or village in which the school is located, fewer than 55 people per square mile, and deemed sparse by necessity. Doctor. Holcombe was just referring to the outstanding sparse by necessity definition. And in $20.25 dollars that grant amount for a sparse school would be, per pupil, dollars $19.54. So now we've completely pivoted away from tax capacity and what tax capacity means, And now we're in the world of cost adjustment and dollars associated with that cost adjustment. Act 73 also established small by necessity school support grants, also with two criteria. One is that the average enrollment over two years is fewer than 100 pupils. And two, that that school is deemed small by necessity, also outstanding. And that FY '25 grant amount, again, also increased by inflation every year, would be 3,157 per pupil.

[Emilie Kornheiser (Chair)]: I'm thinking about a rural union school that is the catchment area for a lot of sparse communities that might meet the criteria, but the host town of the school does not?

[Julia Richter (Joint Fiscal Office Analyst)]: So per the way Act 73 was passed, if the school is not located in this sparse area, then it would not qualify. I will say that if you recall, Act 73 charged JFO with contracting for a lot of work associated with the foundation formula, which we're currently working with our contractor. One of the pieces of that scope of work is for the contractor, so AIR, to look at other measures for evaluating sparsity. And we've been having some really interesting conversations through the principal investigator and the GIS office about just different ways to measure sparsity.

[Rebecca Holcombe (Member)]: And I have follows to your question. Are you asking for Julia? Well, it goes with your question. So I'm thinking, were you thinking, well, you would not want to merge if you're gonna lose $3,000 per student because you have to go to a place that is a school that's, a merged school that's got more densely populated areas. So are you thinking that's a negative to merge?

[Emilie Kornheiser (Chair)]: I thinking about incentives to merge or not merge, was just thinking about money.

[Rebecca Holcombe (Member)]: I was thinking about money and incentives, and I'm wondering if that's kind of

[Emilie Kornheiser (Chair)]: So I think that's the by necessity part, and I think that's where that by necessity part comes in. Alright, alright, thank you. But that's a useful track to be going up.

[Rebecca Holcombe (Member)]: And maybe when they're looking at that, they can look at some of key implications or the response to revenue that I think Professor Colby was talking about, because you could make a decision about removing pre K from your program or moving eighth grade from your program and that might affect your

[Unidentified Committee Member]: eligibility.

[Emilie Kornheiser (Chair)]: Maybe that needs to be covered by the rules attached to, I wasn't trying to say the rules that are attached to a school and how we define a school, and how we define changing enrollment in the school.

[Rebecca Holcombe (Member)]: Well, the only reason I ask is because we don't know that's coming over to us from the house yet on premeditated. And

[Julia Richter (Joint Fiscal Office Analyst)]: I think the other piece I would clarify is that the contractor is charged with looking at more of what's considered in number one of the sparse school grade criteria, so how to determine sparsity, but not charged with looking at what sparse by necessity means or small by necessity means. That was that state board work that you've heard.

[Rebecca Holcombe (Member)]: Shall we go to the next? Oh, sorry, Mark.

[Mark Higley (Member)]: It's okay. Was thinking about it. I know earlier you said that all students in a sparsity district receive a sparsity rate. Is that the same for a grant? No.

[Julia Richter (Joint Fiscal Office Analyst)]: No, so the primary One of the big differences here is that under current law, the tax capacity weights, it's at the district level. So a district either is or is not sparse. And if a district is sparse, every student in that district gets a sparsity weight. That's current law tax capacity. Act 73, sparse school grants, it's no longer at the district level, it's now at the school level. So you could have an instance where there's a sparse school that's sparse by necessity, located in a district that would not have been considered sparse under current law, that would be getting a sparsity grant. And then you will also have instances where you have students that would have received a sparsity weight because they're in a sparse district, but they don't attend a sparse school who will no longer be receiving support.

[Mark Higley (Member)]: Okay, thanks. Think I can

[Julia Richter (Joint Fiscal Office Analyst)]: And I do have, actually, in I think two slides or three slides, I have a comparison table that are the prime, big picture differences between current law and three. Thanks. Wouldn't be a slide deck if I didn't include some caveats. So note about modeling and thinking about Act Act 73 modeling. As you all know, definitions and standards for sparse by necessity and small by necessity are outstanding, so we don't know who's going to qualify because it will depend on what those definitions mean. So absent those standards, we've proxied small by necessity by looking at the way it works in current law. So we've estimated it where you can only get a small school grant for schools in sparse locations based off of the way that the sparse location is determined in Act 73, so within a sparse area. And we've used FY '26 data. So this is if there were to have been sparse school support grants in FY 2026, using our best available data and all of the assumptions that we have to make because they didn't actually exist in FY '26. We estimate that about 60 districts or 50% of all districts would have had at least one school receiving a sparse school support grant. About 11,110 students would have been eligible for a grant, and that the total grants would cost approximately $22,300,000 And you'll note that these bullets are not directly comparable to the bullets on the other side, because we're talking about different financing schemes. So we can't directly compare the two. And then doing the same analysis, but for the small school support grant, also hypothetical, also using those assumptions and proxies, we estimate if these grants were to have been implemented in FY26, 42 districts, 35% of districts would have had at least one school receiving a small support grant. 4,472 students would have been eligible for a small school support grant, and this would cost approximately $14,500,000 And if anybody is trying to multiply the long term ADM by the base amount of 15,033, you'll notice it's not equaling the totals, and that's because the 15,033 is adjusted for inflation in these estimates. So the last two slides, considerations. This is the slide I was alluding to. So significant differences between the cost adjustments for sparsity and small school weights, or small schools in current law and Act 73. I think we've spoken about all of these, but just as a reminder. So both cost adjustments, so both small and sparse, have a difference in terms of the type of cost adjustment. Current law has tax and capacity weights for small and sparse and acclimation of categorical aid or grants. Both small and sparse have difference in terms of tiers of the cost adjustment. Under current law, the weights have tiers. We saw that for sparsity, dependent on how sparse a district was, its students got different weights. Same with small school, dependent on how small that school was, got different weights. Act 73 does not have tiered grants. So you either get it or you don't. The source of work. So both Act 127, so our current law pupil weights, stem from the 2019 pupil weighting factors report. The grants, and Doctor. Colby alluded to this, the grants stem from the 2025 memo that this committee looked at last year that was updating the 2019 work with better data, or more recent data, I should say. Sparsity. There's a difference in eligibility. This gets back to Rob Higley's point. Under current law, sparsity is calculated by the persons per square mile in a district. It's at the district level. Act 73 is at the school level, and it's a two pronged test we spoke about. And small schools also have difference in eligibility. Current law, it is a two prong test. So first, you have to be within a sparse district, and then you need to have average enrollment fewer than two fifty pupils. Act 73 has a two prong test of the average enrollment fewer than 100 pupils and team small by necessity. These are hot links in case you wanted to look at the sources. Lastly, we've talked about this derived from different data for calculating the cost adjustments and that we really can't directly compare between current law weights and Act 73 grants because of the different funding structures.

[Unidentified Committee Member]: Thank you, Julia.

[Emilie Kornheiser (Chair)]: That's about $37,000,000 then.

[Julia Richter (Joint Fiscal Office Analyst)]: In f y well, I if that's what those two numbers added to, then yes. In f y twenty six, 14.5 plus twenty two point three.

[Emilie Kornheiser (Chair)]: I can't sit. Will you play your side down?

[Rebecca Holcombe (Member)]: Thank you. So 37 mill, I think that's what Charlie said, that they can use to either lower their tax rate or improve their curricular offerings within the building, right? So

[Emilie Kornheiser (Chair)]: I think this is some of the difference. We A grant is first to be spent. And the weight, if we can't unfortunately approximate what the cost is of removing a weight, really.

[Rebecca Holcombe (Member)]: Grant would have to be spent in that year.

[Emilie Kornheiser (Chair)]: We don't have rules for that.

[Rebecca Holcombe (Member)]: I'm just saying that we might want to consider that. Otherwise Do you know what we spent on the weights?

[Unidentified Committee Member]: Did we? Did we?

[Rebecca Holcombe (Member)]: Can go to health?

[Julia Richter (Joint Fiscal Office Analyst)]: When you say what we spent on the weights, do you mean how much money is associated with the current law weights? We really can't. And that's because of the difference in financing. Because our current law weights our tax capacity weights, if you have They're working in the tax rate side of the equation. They're not working directly in the education spending side of the equation. I can't speak to how much school boards base their education spending off of their weighted student count, and I would imagine it varies by school district. So we don't have a way of parsing out how much current law weights cost.

[Rebecca Holcombe (Member)]: But you look at a school district spending, no, me, what they're able to raise and say, this is what you raise with the rates, here's what you would raise without the rates at that same tax rate, that would tell you what the benefit of the weight was.

[Julia Richter (Joint Fiscal Office Analyst)]: The weedy challenge is that, dependent on how high or low spending a district is, a weight is a proportion of a pupil. So we can't attribute a certain cost to a weight.

[Rebecca Holcombe (Member)]: Thank you. In the same way, I'm trying to figure out how this would play out because the assumption is that the weight is what's needed to bring that support, the level of spending needed in those areas. And it's based presumably on current data that looks at discrepancies in spending. And we know that there are strong patterns in how districts spend. So for example, districts that tuition at the high school level tend to spend more at the high school level relative to the elementary level. It used to be that districts that operate K-twelve had more balanced spending. So to what extent are we also if the tuition students weren't included in the study, and what we're seeing is that some of those districts have lower spending at the elementary level, to what extent are we compensating for different patterns of spending when we do this kind of weighting? Would that make Perhaps

[Julia Richter (Joint Fiscal Office Analyst)]: you could rephrase that.

[Rebecca Holcombe (Member)]: I mean, remember looking at patterns of spending years ago, and districts that operate K-twelve, when they tend to balance the per pupil spending much more evenly across elementary and high school, they spend closer to the same amount, those two levels, but districts that tuition often squeeze their elementary spending to pay tuition, so there's a greater disparity. But when we did the modeling to figure out the cost factor, we're only evaluating those elementary students because of the system and the study that they excluded the kids with their tuition. So now we're trying to correct disparate spending in some of those smaller schools, because there's also potentially ones in those areas of tuitioning. So to what extent is the way we're waiting also just trying to correct for that pressure on allergy schools in those regions? I don't know.

[Julia Richter (Joint Fiscal Office Analyst)]: I don't know.

[Unidentified Committee Member]: Question for Rebecca Holcombe. There's clearly a downside to what you just explained, and I'm not sure if I follow it precisely. When you say to what extent?

[Rebecca Holcombe (Member)]: Well, mean, I think what I'm struggling with is we have a system of weights, it's only based on the subset of our population, but that subset tends to be concentrated in certain regions that are smaller districts, but also districts that are more likely to pay tuition.

[Unidentified Committee Member]: Wouldn't we learn incorrectly?

[Rebecca Holcombe (Member)]: Well, don't, I mean, think it's just very hard to make sense of our data.

[Unidentified Committee Member]: I'm not arguing, I'm just trying to understand.

[Rebecca Holcombe (Member)]: I can follow-up with Professor Cohen, if she has answers well.

[Unidentified Committee Member]: You have an idea on school principals, superintendents, what their ideas are concerning weights versus grants, whether it be in a rural area?

[Emilie Kornheiser (Chair)]: Think that's part of what we were trying to get at today. I think we're gonna have more folks joining us tomorrow. I know that we had a lot of testimony in support of the foundation formula from those same staff people. And we're going to need to have a good round of conversation with them all. It seems like everyone is a little fated. Am I reading that right?

[Emilie Kornheiser (Chair)]: Yeah. Okay.

[Emilie Kornheiser (Chair)]: So I'm going to have us wrap up for the day. And thank you all for a lot of sitting in the same room and thinking together. When we missed the floor today, we had a new colleague sworn in. And so I encourage you to go find that person and introduce yourself since

[Emilie Kornheiser (Chair)]: He goes by Case. Thank you. His first name, K with K. Case. Case.

[Rebecca Holcombe (Member)]: Thank you. Which one?

[Emilie Kornheiser (Chair)]: From Milton.

[Rebecca Holcombe (Member)]: Oh, nice, nice. Representing Chris Taylor.

[Emilie Kornheiser (Chair)]: I mean, replacing Chris Taylor? Yes. Yes.

[Mark Higley (Member)]: There an opportunity for us to know how much more of these sort of changes we're going to be considering between now and whatever? I mean, guess you know from my ability to get my head around it all, you know now we're looking at 46 and how we can integrate that and now we're looking at you know, wage versus, you know, the you know, I I just wonder Yeah. What else what else we got.

[Emilie Kornheiser (Chair)]: I think we've I think we've, to some degree, reached the sort of threshold of it. So tomorrow, we'll talk more about these same merger incentives and figure out try to come up with some path together on that. And then at ten, it's the Chamber of Commerce Manufacturing Day. So we're gonna have a little forty five minute break to hear from members of the chamber about manufacturing attack policy. That will be a palate cleanser. And then we're gonna continue that work into the afternoon. During the floor or after the floor, we're gonna talk about contingencies for the foundation formula. So given that we're changing sort of what the plan was in x seventy three, or it seems like the education committee is, we need new contingencies for the foundation formula.

[Julia Richter (Joint Fiscal Office Analyst)]: And so we

[Emilie Kornheiser (Chair)]: have to figure out what those are. So that will be some brand new ideas for the brain hurting. But this is the general outline of all of doings we need to do. And I guess we've spent today over here in transformation for schools. And CSUS support and merger incentives.

[Carolyn Branagan (Member)]: Can, yep. The last goal for the end of the year, is it still to hand the voters a new school system, you know, fundraising, that whole thing. Representative Branagan, our goal for this week and year is to get a bill out of

[Emilie Kornheiser (Chair)]: the House of Representatives that takes the next step towards moving towards greater scale and better quality for all of our kids, with a tax policy that will be more stable and reliable for voters. What we're going to do by the of the time we're together is something of a mystery. Right now, Representative Branagan, it's

[Carolyn Branagan (Member)]: about guests, permission, you and I to do that together, and then the rest of the world will just accept what we come up with. Yes. Yeah. That is great.

[Unidentified Committee Member]: I would make a motion.

[Emilie Kornheiser (Chair)]: Representative Branagan. I am not a Liberal Representative Branagan, but we will do

[Rebecca Holcombe (Member)]: that at 04:30.