Vermont Legislature SmartTranscripts:

[Rep. Emilie Kornheiser (Chair)]: Ways and means. That was a delightful field trip. I feel refreshed. It is 11:05. We are hearing ways and means again. Same committee, different room, Continuing our conversation on education transformation. My understanding is that the Education Committee is voting out a bill of 11:15 that we will look at this afternoon. That's all I know, so don't ask me questions beyond that. Oh, you're going ask me a question about that?

[Rep. Rebecca Holcombe (Member)]: Oh, good analogy here. EVM was pulling in hundreds of millions of dollars over time from the federal government, and now that amount is done and then it's less possibly. And so they're having to look to collaborate outside of the state and do regional things, and so I was thinking that's a little like what we're talking about here,

[Julia Rutland (Joint Fiscal Office)]: revenue's not going to be

[Rep. Rebecca Holcombe (Member)]: able to become a company, it's not just the amount of hope that it will come in, and so how are we going to adjust, how will one state adjust, how would one state adjust and be collaborative, live its neighbors? I think it's in some ways. I love that. Thank you for listening. So

[Rep. Emilie Kornheiser (Chair)]: given agenda changes, I wonder if it makes sense to move up a conversation about foundation formula things, unless folks have more that they want to say about this morning's conversation. Okay. Seeing none. So the foundation formula, the essential contingency built into Act 73 is that all the things happen when the foundation formula happens, and the foundation formula happens when new school districts happen. And so we're in a funny place now because it seems like that is less of a moment certain. And so I wanted to talk about that. And I wondered if we could start that conversation by maybe John talking through the contingencies that are in Act 73. You.

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

[Rep. Emilie Kornheiser (Chair)]: want you to get your needs met.

[John Gray (Office of Legislative Counsel)]: I am John Gray from the Office of Letterfield Council. I am going to screen share just so you guys can see the relevant text. Just a second and I will leave the Zoom.

[Rep. Rebecca Holcombe (Member)]: Okay.

[Rep. Emilie Kornheiser (Chair)]: While John is pulling that up, I believe that the education committee put something in related to this piece, but there's a lot more related related to to contingencies that we're gonna need to explore. So we'll probably see some language from them about it when we look at the bill later this afternoon.

[Unidentified committee member]: K.

[John Gray (Office of Legislative Counsel)]: So the main contingency we're going to want to look at is 70 F and this is the rollout for the foundation formula for the homestead exemption for many of the property tax classifications pieces. This is the bid bucket and you can think of it as including multiple pieces. The following section shall take effect on 07/01/2028 of the date and then you have the conditions, the contingencies. Provided that one, the new school districts contemplated by this act have assumed responsibility for the education of all residents, students. In the first instance we're talking about there, you know, during the time of x 70 three's passage, we didn't know what those school district boundaries would be. New school districts contemplated to the act assume responsibility so they're at the point of educating students. As you know, what was contemplated at that time was that you would stand them up earlier, you'd have the board to be in the process of operationalizing, and then at some point, you've shifted over to have assumption for responsibility for educating students. So that's the first contingency. New school district's kind of part of the act, pursuing responsibility for the education of all resident students. Second, and that the expert tasked with developing a cost factor foundation formula has provided to the general assembly the report that's in section 45A, that's your big foundation formula report that Jay was contracting with AIR to work on and would be delivered at the end of this year to provide the general assembly and an opportunity to enact legislation in consideration of report. So those are the sets of contingency you have, and then you can see the sets of sections of X-seventy three that are contingent on these pieces. The section 27 callout we have is related to tuitioning as is section 28. Sections 34 through 43 are your core foundation's primary pieces. Those are your changes to title 16 that implement the foundation formula with a base amount of 15,033, changes to the people waiting, changes to the education payments that go out. Section 45B is your EOT transition piece. That's the piece that talks about identifying the gap between the district's FY '25 spend and its new educational opportunity payment and the transitions across a five year period, such as 46 through 50 are your statewide education tax. So that's the uniform tax rate plus the undecided table of statutory factors that would multiply the rate dependent on classification. We have some transitionary measures for the supplemental district spending tax cap, which started 10%, you'd have that for five years and then it would descend down to the 5% permanent statutory cap. 48 a is your tax rate transition for, that's identifying the gap between your FY '28 homestead tax rate, the new tax rate you would have under the foundation from the rollout. Property tax credit repeal and the new homestead exemption, review of foundation formula, and then your property tax qualifications. But the actual contingencies themselves are set out here in f. I did wanna note, this is kind of a poor place to focus, but there are other contingencies in the act related to the property tax classifications. You may recall the in line language in section 61 D or C that speaks to meeting certain measures that happen for rollout of the classifications. But these are the core pieces, and I think this is where you're going to see language from House Ed changing these pieces. So happy to talk any piece of this, or just this is hopefully familiar to you guys, but I know that it's always confusing what is required for this to happen.

[Unidentified committee member]: John, without new school districts becoming active on 07/01/2028, all the other aspects that you just mentioned will not become effective. That's exactly right. So if the first of these,

[John Gray (Office of Legislative Counsel)]: the new school district contemplated by the act, have not assumed responsibility, then the contingency is not met on 07/01/2028, and none of these pieces would go effective. So that would mean none of the foundation formula, none of the new statewide tax or property tax specifications. You might have some information gathering, but none of the core kind of work that was done in this committee last year would be happening. Of course, you can change the contingency, that is the discussion.

[Unidentified committee member]: It's part of what we're curious about, or we'll have to discuss, I think, with the Joint Fiscal Office is, is it possible to enact the foundation formula without their school insurance in place? So that's thanks to that question.

[John Gray (Office of Legislative Counsel)]: And just to offer my limited piece of advice on that front, from a legal perspective, you could remove the contingency, the question will be how does that map onto the districts? And then it would be an empirical question of the way that that works out, which could potentially have implications for equity and the like, but there's no inherent rate requirement.

[Rep. Rebecca Holcombe (Member)]: Haused talked about how long it takes to actually merge a distance?

[John Gray (Office of Legislative Counsel)]: Has Haused talked about?

[Rep. Rebecca Holcombe (Member)]: Yeah, you said they're putting in language as

[Rep. Rebecca Holcombe (Member)]: a part of that, but then

[Rep. Rebecca Holcombe (Member)]: it's just the actual physical mechanics of shutting down your original distance and reopening this new configured district?

[John Gray (Office of Legislative Counsel)]: I don't know. I guess we will find out this afternoon.

[Rep. Emilie Kornheiser (Chair)]: Yeah, and what I'm hoping we can do now is just remember what was in Act 73 related to contingencies, and where all those dependencies are, so that when we get the bill this afternoon, we can feel prepared to tackle the sections that we're going to need to

[John Gray (Office of Legislative Counsel)]: tackle. If it's helpful, and I don't know that I will know enough to effectively deliver this, but I could show the full of the effective dates section so you could see the pieces that have rolled out and the other kind of timeline through it, because you can see a kind of timeline in the effective dates section. Right? And maybe even just scrolling up a little bit. The December 1 letter takes effect 07/01/2027. Right? Because that's predicated on the timeline that you have here for that 07/01/2028 rollout. That's so that you could then get the recommendations that December in advance of the rollout in July of the following year. So that's a piece that depending on what happens to the timeline, you would need to be thinking about. You certainly don't wanna modify the December 1 letter on that date and then not have the foundation for our right. Subsection E, that's section 61 A, that's your tax specifications that takes effect 01/01/2027. This is for, I think, information gathering purpose 61A. This is unique to figure out what would fall into those buckets. Sure Kirby has spoken about this, but this is not the actual imposition of those classifications. It's gathering the data. And then we just talked about f. There's some additional contingencies related to the tuition fees that you may recall from, like, some of those those discussions during conference committee. They take effect in much the same way that the foundation formula does. You would have expected this maybe to just fall into f, but there is an additional contingency here, which is that the cost factor foundation from a report contain evidence that it costs more to educate students in grades nine through 12, but generally, somebody has failed to enact legislation to add a secondary student weight. So I was trying to address those concerns that secondary student weight was appropriate, and so we would kick in those particular tuition sections if there was evidence that was needed for secondary student costs, but you had no legislation backing that up. The regional assessment districts, I think, are somewhat separate from this, but you can see a 01/01/2029 date. There shouldn't be other pieces, but that your tax roll out kinda the December 1 letter date, you should pay attention to just because it's coming up relatively soon in the future and depending on what's done here you would need to accept it as well. And potentially I don't know what's happening on the property tax classification piece, but it may be that that's traveling in a separate way where that's handled through its own measures.

[Unidentified committee member]: Do you have access to the arrow graph that you so expertly developed in coordination with other? I can find that. Yes.

[John Gray (Office of Legislative Counsel)]: And I can also, depending on what happens here, put together a new depending on what happens here, I can put together a new one that would reflect those. So let me see if I can find that.

[Unidentified committee member]: Sorry to ask you to make the change, but I think it just might help us visualize that.

[Rep. Emilie Kornheiser (Chair)]: Question that I'm sitting with is if the foundation formula enactment date is going to be much further out into the future, what happens in the meantime for those districts, both for district spending that's very low, that is not creating the opportunity that's needed, but also for spending writ large across the state and what we do about that. And I know that one of the ideas that has been put on the table a few times is this idea of artificially changing the yield to make a different floor. And so maybe after we look at the timelines, we can hear from John and Julia a little bit about how that might play out.

[John Gray (Office of Legislative Counsel)]: Make sure I grab the most recent one.

[Rep. Rebecca Holcombe (Member)]: So I'll transition to the floor. Maybe I don't know.

[John Gray (Office of Legislative Counsel)]: Yeah. And I can zoom in a little bit and maybe just focus on what is shown on the screen. So I don't know. Can you guys read that or is that like, I don't think I can do much better if I That's perfect. I'm gonna skip over the pieces that already happened. Right? It may not even be especially helpful to talk about the 2026 session piece either. These were just recounting what the stated legislative intent in act 73 had been. Some of this is aspirational, I should call out, like it's reflected in the intent language and other pieces are solidified. That's actually the continued effective date. So the first of these, can obviously see in 07/01/2026, that's aspirational, that the new school district boundary is going to effect. That was not a required contingency in the act. It's just the practical timeline that

[Rep. Emilie Kornheiser (Chair)]: we Can we slow down one second? I just want to make sure even the December 2025 reports we have spent time on.

[John Gray (Office of Legislative Counsel)]: So we know the school district redistricting task force report. We know the standards for small blindness assessment and spark blindness assessment.

[Rep. Emilie Kornheiser (Chair)]: Those have not been finalized.

[John Gray (Office of Legislative Counsel)]: We received the recommended record. AOE special education report. Been

[Rep. Emilie Kornheiser (Chair)]: hearing those.

[Unidentified committee member]: That's a report. Yes. We have that.

[Rep. Emilie Kornheiser (Chair)]: Did we read did we

[Unidentified committee member]: Yes. That's section nine of back 73. So it did.

[Rep. Emilie Kornheiser (Chair)]: The statewide financial data student information systems? And did we hear from the agency of education about the same committee?

[Unidentified committee member]: That's a good question. I know we received the report and have read it. I think they did talk to us about it, but I'm not positive.

[John Gray (Office of Legislative Counsel)]: Great. Sam and

[Rep. Emilie Kornheiser (Chair)]: the school construction division. We've received a report, but it hasn't been staffed

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

[Unidentified committee member]: So I'm very zonorous talking about that. Both of those.

[Rep. Rebecca Holcombe (Member)]: Thanks, John. Go to '26 now. Thank you. Perfect.

[John Gray (Office of Legislative Counsel)]: And in the 2026 legislative session, report on regional appraisal districts, which I believe you received that

[Rep. Emilie Kornheiser (Chair)]: one. Legislation based.

[John Gray (Office of Legislative Counsel)]: That is wonderful. 07/01/2026. First of these, again, this one was just the practical timeline that was presumed. It was not a required contingency, but those new boundaries go into effect then. Class size minimums. School construction program, as you know, the advisory board was already effective, but the actual program itself has effective 07/01/2026. As we talked about at length, no funding. And just to note that what it means for the program to go effective, it's in the green book, but you'll note that the funding itself says, subject to an annual appropriation for purposes of the program, receiving a capital budget request essentially from AOE.

[Rep. Emilie Kornheiser (Chair)]: Think there's an interesting chicken and egg thing with the program getting funded, like the actual capital funding happening, and then the funding happening for the staffing of standing up the program. So just wanna Maybe that

[John Gray (Office of Legislative Counsel)]: will be resolved with the

[Unidentified committee member]: So it does say effective in the bill of 07/01/2020. Exactly. Now a particular school district that is hanging their head on that and saying, see, it's gonna be available July 1. Yes. Yes.

[John Gray (Office of Legislative Counsel)]: 07/01/2027. And I do recall when Beth walked through this, in house ad that I think the statewide graduation requirements maybe showed up twice in the timeline, so, we would need to confirm that against the natural act. But we just talked about updates in December '1 letter in anticipation of transition to the foundation formula. So as you can imagine, that's a necessary part of that rollout. Presumed for November 2027, and this is part of the intent language, the initial school board member special election that was trying to achieve that, have school districts operational by 07/01/2028 to meet the contingency. So, again, that's not stated outright in the contingencies, but it is presumed by the timeline. 01/01/2028, the statewide school calendar goes into effect, and you have those new two classifications for the education property tax. As we talked about before, you should have had information collection already happening for those two new classifications for the actual implementation would be for that tax year.

[Unidentified committee member]: I thought you showed us in bill itself that that property tax classification started 01/01/2027.

[John Gray (Office of Legislative Counsel)]: So the piece that's happening there, and I can jump to that section of F 73 if it's helpful, but just my recollection as someone who did not draft that section is that that is a information collection piece that you need to know what falls into the you need to build out what the actual classifications are. So what's happening in 2027 is purely an information collection mechanism, not the actual implementation of the classifications themselves. That's happening for the taxable years. Thanks. We have the shift from blue to green. And 07/01/2028, it's signaling the big rollout. So assuming that contingency is met with what you see in the first bullet, New school districts are operational, I. E. Responsible for the education of all resident students. You have your foundation formula like tuition changes. You have your statewide education tax along district spending tax, part of that foundation formula rollout. So that's your uniform statewide rate that would be multiplied by different statutory factors depending on the classifications. You have the homestead exemption replacing that property tax credit. The one thing I might add to this piece is you're getting, I think at the end of this year, an alternative proposal on exemption structure from the Department of Taxes. But currently, do have an act 73 subject to the same contingency, the homestead exemption as enacted by the statewide graduation requirements. Lastly, 01/01/2029, you have the school municipal reappraisal has changed to a regional system. So that's your grads.

[Rep. Emilie Kornheiser (Chair)]: Thanks for asking the question.

[John Gray (Office of Legislative Counsel)]: Wanted to stay on the screen, or should I

[Rep. Emilie Kornheiser (Chair)]: I think we're good. Thank you. Do have any other questions about the implementation dates and all the dependencies and contingencies?

[Rep. Rebecca Holcombe (Member)]: Yep. I'm just wondering if people are paying attention to the state board rulemaking timelines as well, has anyone looked at how those align? I have not. Have you? Enough to have some concerns. Yes. But, I mean, I just think this is a very tight schedule to maybe

[Rep. Emilie Kornheiser (Chair)]: for all these things, how they all align. Well, we're definitely not following this schedule anymore because, I mean, I know at least know that much about the bill that we're gonna look at this afternoon. If you wanna get more explicit about your concerns about the rulemaking timeline, that would be helpful to bring back to the committee.

[Unidentified committee member]: Madam Chair, I mentioned this before, but I believe it is an S-two 20, so that's the amount of capitals on the move.

[Rep. Rebecca Holcombe (Member)]: It's here. We're going to

[Unidentified committee member]: have to consider that as well. Really?

[Rep. Emilie Kornheiser (Chair)]: I must have done it at 09:02 every day. Wow. I'm just kidding, I'm teasing.

[Rep. Rebecca Holcombe (Member)]: Presenter Brenda, you have something. Oh, really? Okay.

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

[Rep. Rebecca Holcombe (Member)]: we have a chart of that that you just went over? Maybe I can help you and like, form a copy of that page with the dates and sections of the bill, that would be helpful. Sure. And you don't have to do it, John. I know you're sick. I can do it. I

[John Gray (Office of Legislative Counsel)]: can send the link very easily to you right now.

[Rep. Bridget Burkhardt (Clerk)]: Okay, great. Then I'll just print it off.

[John Gray (Office of Legislative Counsel)]: Thank you. I'm on our way.

[Unidentified committee member]: Page from last session, so

[John Gray (Office of Legislative Counsel)]: can I'll try to pull it copy Sorcha's.

[Unidentified committee member]: John, can you send it to everybody?

[Rep. Emilie Kornheiser (Chair)]: So I'm just gonna post it on our committee page for today since we just looked at it in committee. That's our

[Julia Rutland (Joint Fiscal Office)]: protocol is there.

[Rep. Rebecca Holcombe (Member)]: Amazing. I looked initially and I couldn't see it.

[John Gray (Office of Legislative Counsel)]: Yeah. It's because it had just come up during testimony. Didn't have it at the ready for posting before this, but yeah.

[Rep. Rebecca Holcombe (Member)]: Here it is. Gray. Time on my you guys. Excellent.

[Unidentified committee member]: Following up on Rebecca Holcombe, representative Holcombe's comments. I went to the AOE workshop last fall and the business managers were concerned with the timeline of transition. We need to check with them.

[Rep. Emilie Kornheiser (Chair)]: Yeah, I think that the Ed Committee changed the timeline in significant ways, and so we can look at that this afternoon. I think they've been hearing from them a lot about that.

[Julia Rutland (Joint Fiscal Office)]: So we

[Rep. Emilie Kornheiser (Chair)]: have like twenty minutes, twenty five minutes until lunch. One option is that folks can go think thoughts and digest. I feel like everything feels very full and brains get a little explodey. The other option is we can hear sort of a first round conversation from John and Julia about this, an idea that sort of keeps on coming up about setting the base spending at sort of a level using our existing tax system rather than the foundation formula as part of a transition plan. Does that seem like a good way to spend twenty minutes or not enough time to actually do that in? Thanks, Doctor. Okay. John, do you want to start by explaining the concept or would you

[John Gray (Office of Legislative Counsel)]: like Julia to start by explaining the concept? I can try to explain.

[Rep. Rebecca Holcombe (Member)]: Okay, great.

[John Gray (Office of Legislative Counsel)]: So, I think that the idea is to somehow change the mechanics of the yield and or the education property tax spending adjustment to enforce some kind of base spending amount. The most basic thing I would identify about this is that if that is the proposal, it is effectively an attempt to convert the current system into a foundation formula, which is what PAC-seventy three already contains. So there's sort of just a basic philosophical question about why shunt a completely different funding system into a mechanism that is not designed for it, but that's just a philosophical point, not another point. There's some operational questions about how you would actually achieve a baseline amount of spending. So suggestions that I've heard, for instance, relate to maybe it's helpful to back up and just talk about the language for the homestead tax rate. We currently say in fifty four zero one, the homestead tax rate is a dollar. Right? It's a dollar per $100 to equalize education property tax value multiplied by your education property tax spending adjustment. That adjustment is how your locally varying spending decisions are reflected. That's how you get your per pupil spend divided by your yield. And so some of the also we've heard relate to tweaking the dollar multiplied by. And I would just point out that mathematically that does not result in a change to a base spending amount. It just changes the amount by which you multiply your education property tax spending adjustment. And because it's a self leveling system, it really just changes the math to look slightly differently while raising the same amount of revenue. So I don't know that mathematically you get achieved. Now that's just one suggestion for doing it. I think there's the idea that it would impose a minimum spending amount because you would no longer have the possibility of a rate lower than a dollar rate. If it's 110 multiplied by the greater of one or your education from tax spending adjustment. But I don't know how many districts would even be hit by 110 or something else. So I don't know who it's affecting. I have some concerns about just the math of it and the philosophical shunting of foundation formula that's already built out in Act 73 into the existing system. I guess the last piece I would raise is just supposed that the map could work and it could be done in this particular way to enforce a base spending amount of a particular figure, you'll recall that you would then want to have the same discussions that happened around generating a base amount for the foundation formula, which is how we arrived at the inputs to the x 73 figures. Right? So that 15,033, you'll recall just how much discussion went into the empirics to back up that number and that there's continued discussion and revisitation, including that 45 foundation formula report that you received at the end of this year. There's many reasons that you should be thinking about these figures. But from my perspective, part of why I was such an active participant in those conversations is related to constitutional concerns about providing the educational requirements the state is obligated to provide under the constitution. So you could imagine a base spending amount that simply doesn't support education across the state. Not to say that this is a fatal flaw, it's just to say that there's a reason there were so many discussions that happened around what that base amount should be. So I'm going to pause there because that's a lot of information. And to recap, what is a philosophical point about have a foundation formula. I suppose you can do as you would please and try to that's all I'll say about that. There's a constitutional question about arriving at the particular adequate amount that you would likely want to see. And then there's just the mathematical question of operationally, does it even work to the suggestions I've heard, don't think result in a base spending amount, but it could be that there's some other suggestion out there that I just have not Is that a poll?

[Rep. Emilie Kornheiser (Chair)]: I I have more questions about the constitutional concerns, but I think it was that cut us.

[John Gray (Office of Legislative Counsel)]: We set a floor and say a district shall not spend less than x, whether we, you know, overall budget for people, etcetera. What happens when the voters say no to that school budget? Yeah, I don't know. It depends on what is done in the right. I

[Unidentified committee member]: guess the question also is how setting the floor, if the floor is higher than current districts are spending, then the ultimate outcome of that has to be an increase in the education fund to either be funded by property tax or some other source.

[John Gray (Office of Legislative Counsel)]: Assuming it's not offset in some other way, you would be the idea is to set a floor that raises the amount that particular districts spend unless others are offsetting that debt.

[Rep. Emilie Kornheiser (Chair)]: And so if we set the floor below what we decided last year was the necessary amount to educate children, Say we set it at 10,000 because we saw that as the bare minimum. And then we let other districts spend 20,000,000. Can you go a little deeper into the constitutional concerns So about

[John Gray (Office of Legislative Counsel)]: there's different things to think about with this. I will try to remind the committee of one of the points that I think I made at the end of last year related to resolving what that input number should be. The one is we're thinking in part about potential constitutional challenges that folks could make, and there's different kinds that you could make. One is just outright under the education clause. The state is obligated to provide an education to its students. There's a basic, did you meet that constitutional obligation to provide an education? That is something that could be implicated depending on what happens with that figure at base amount. The other kind of constitutional concern we more typically talk about in this committee because we are thinking so much about equalization mechanics, best ways to divvy up money is Brigham. And what we're talking about there is substantial quality of educational opportunity, which is separate from just the baseline requirement to provide education right. So some of what was talked about at the end of last year related to both of these concerns. So one is the optics. You're envisioning a particular, let's say in the future someone raises a constitutional challenge, you're thinking about the kind of evidence that they might fly to support their argument that the state is failing in particular ways. And one of these might be to point to the fact that state backed an empirical decision of a particular figure, 15033 in this case, and had studies done to support this, and that you then enact a separate figure, it's just a point where someone could easily point to a discrepancy between the empirical evidence shown for a particular figure and the decision that the legislature made. I am not saying that that's a strike down argument. Maybe people can provide education after a different figure, but it's the fact that the legislature was gonna be making a decision against the empirical evidence that it had been offered. Optically, I think that's not a great fact for the state if you have something like that. But it also presupposes that there are issues generating constitutional claims. So this is in a hypothetical world in which that is what's happening and someone has raised a challenge on that front. And that could happen under, I think, either of those particular constitutional claims. So one is failure to meet the basic demand to provide education. And the other could be to the chair's point, is there kind of a dual system in which you've set up this tax system. And I think the legislature has made great strides to create an equitable tax system for dealing with this. I mean, that's been, for instance, some of the response to Brigham rights. So it's an attempt to have statewide raising of funds so that you aren't in the situation you were pre Brigham or some school districts literally could not raise the same amount. So I think some of the questions about if it produces an inequitable outcome are similar concerns that folks might raise in the current day environment is just one point I would make. So it depends on what your comparison point is. If you're comparing against the current system and you're saying we're actually shrinking the gap because we're raising the floor, there's an argument to be made on that side. If you're comparing against the foundation formula as envisioned in Act 73, you're contemplating a continuation of quite different ed spending per district as against uniform educational opportunity payments for districts. So I can say more, but that's

[Rep. Rebecca Holcombe (Member)]: Julia, do you want to add?

[Julia Rutland (Joint Fiscal Office)]: Julia Rutland, JFO, the Beyond the equity pieces that John has raised and the other mathematical pieces he's raised. There's a few other things that I've been thinking about when I consider this idea writ large and just how it would or wouldn't or could work. One is by implementing a minimum spending level, you're essentially replacing a minimum tax rate. So in our current system, because it's a self level fund, you can only fix so many parameters at which you no longer can adjust the self leveling fund. So for John's point right now, it's a minimum equalized tax of $1.100 dollars property value. No longer can have a minimum tax if you're setting up a non steady level. Just mathematically, it wouldn't work. And then to that end, the definition of the yield would change. So when we talk about the yield right now, we're talking about the per weighted pupil spending level at which you would have an equalized tax rate of $1 If you were to move to a minimum spending level, the yield would no longer mean that. It would mean something else. So it would become even, I think, more deeply a mathematic byproduct of raising sufficient revenues. Another thought, and these are all those things I've been thinking about, is the calculation of education spending. So if you think about this is saying, this would be setting a per weighted pupil spending level. Per weighted pupil spending is calculated by taking a total education spending divided by your weighted pupil count. And education spending is the total school budget minus offsetting revenues. So right now, districts may use reserve funds for lowering their education spending in one year to lessen their tax rate, or if they have a lot of categorical aid that's subtracted from their school budget. By setting a minimum spending level that's related to an absurd education spending level, there's less flexibility as to the interaction between the total budget and the offsetting revenues and how that filters through to tax rates. I haven't totally worked through that, so I know it sounds confusing, but it's still kind of messy in my head. Can you say it one more time? Sure. Under current law, school districts have flexibility in terms of their education spending because their education spending is calculated by taking a total budget and subtracting their offsetting revenues. So if they're receiving tuition from another school district, if they have monies in reserve, they can pull from to lower their spending in one year, which we saw a couple of years ago. If they're receiving a lot of categorical aid or a little categorical aid, that's all contributing to the calculation of their education spending. So if there were to be a policy that said, okay, school district, this is the minimum education spending per weighted pupil that you have, That would be creating a situation in which the relationship of pulling from reserves or using tuition revenues or categorically to offset the total budget would change compared to what it is in current law because the education spending filters through the tax rates. Now it still would in the system, if you have But it would be differently constrained. Yes. Yes. And it's messy in my head, is why I'm not doing a good job explaining it.

[John Gray (Office of Legislative Counsel)]: Can I add something to just thinking about what Julia's thinking too? Would it be fair to say that part of what you're getting at is that someone might spend literally the same amount per pupil under a constrained base amount, they would just be pulling from different sources? Like, that would be one possible outcome because spending is just a technical term and doesn't reflect the full funds of the district. So a base amount that's imposed exclusively on the per people spend might just shift the way that money moves rather than the minimum spend.

[Rep. Emilie Kornheiser (Chair)]: It wouldn't necessarily reflect the spending on education. It would also reflect the education spending. Risk based. Thank you. And

[Julia Rutland (Joint Fiscal Office)]: then the final piece that John spoke to, but I will just say again, it's the question of what is the minimum spending level? Like where do you put it? The higher it is, all else equal, the more it's

[Rep. Emilie Kornheiser (Chair)]: going to cost you an

[Julia Rutland (Joint Fiscal Office)]: education fund and the more districts it's going to pull in to the minimum spending level. And that means all else equal property taxes go up.

[Rep. Rebecca Holcombe (Member)]: Thanks, everyone.

[Rep. Emilie Kornheiser (Chair)]: We have lots of information inside our heads now. I encourage folks in an attempt to digest it, to think about it in these lovely buckets that we have here. And if you're looking for a typed version of the buckets, the last email that came out of the speaker's office has sort of a summary of education transformation next steps and has a typed version of all of this that if anyone's lost in their email, I can forward around. And we will be back here at 01:45. At 01:45, we're going to take testimony on S-two 18, actually, which is reducing chloride contamination of state waters, a salt bill, super fun, for Ways and Means Always. And then at 02:30, we'll have Beth and the rest of the staff team, and we will start going through the language that came from house education. Cool.