Vermont Legislature SmartTranscripts:

[Emilie Kornheiser (Chair)]: Good morning to the Weight of the Immune Committee. You all already know that. And today is April 30. And it's 9PM, and we're beginning our work. H-nine 49, the yield bill, we thought it would

[Julia Richter (Director, Joint Fiscal Office)]: be done with third reading,

[Emilie Kornheiser (Chair)]: which is why this is scheduled. They're in between second and third reading in the Senate right now. But we're going to take testimony on the bill as passed second reading fairly seamlessly, all things considered at a yield bill. And if something happens on the floor today, we'll just update. Sound good? Great? It's gonna be great? Okay. And so we are hearing from John and Julia, and then Senator Cummings is coming to join us and tell her, plus the Senate's position. Then Jake from TACS is gonna come in, and then we have a series of folks from the field who are going to share their thoughts on the Senate yield bill. And then after the floor today, frankly, almost any time the floor ends, we are going to do S-three 25. And we do have a vote warrant for that. Should have a vote warrant for that, please. And that's it for the day.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: I'm sure I

[Unidentified committee member (brief interjections)]: have to leave by 03:30. Okay.

[Emilie Kornheiser (Chair)]: I think you told

[John Johnson (Office of Legislative Counsel)]: me that already. Good morning.

[Unidentified committee member (brief interjections)]: I am Pam Gray,

[John Johnson (Office of Legislative Counsel)]: with the Office of Legislative Counsel.

[Unidentified committee member (brief interjections)]: I'm still the Office of Legislative Counsel.

[John Johnson (Office of Legislative Counsel)]: That's what I'll start with you saying. I think that's a bit more Sorry. So I like ominous, so I'm going use that. We are talking about the yield pill. Less ominous or depending on your I've invited too much comment. Okay. So I think you guys recall what the house passed. Know, reserving half for following year. Buy down, you had a couple of technical measures. I can pull up what the house did if you're interested at some point just show you the difference, but I think it'll be pretty clear as we go through. So this is done as instances of amendment in part because it's preserving the technical measures from the House piece that are untouched, right, related to statewide adjustment correction, fairy tip, refund, census block grants, etcetera. But section one is, of course, changing the yields on the non homestead rate. I can read out the numbers to you, but I think it's just gonna make more sense if I say what was done. So you had the 104,900,000. You guys reserved half that for the following year to buy down at that time. The construct here takes 100,900,000, I believe, transfers to the Ed Fund and uses the 100,900,000 to fully buy down as much as possible within that, the rate. So you see a greater buy down here reflected. It is not the full 104.9 because 4,000,000 of that figure that had been proposed to be fully transferred to the Ed Fund on the House side. It's being used for measures that appear later in the yield bill, which are a temporary one year expansion of the renter credit. It's not an expansion in terms of who receives it, it's an increase in the cap and the calculation. So same pool, but the way to think about this is it's a near full usage of the 104.9 with a small sliver dedicated to the renter credit expansion. That gives you a property dollar yield of nine plus 395, income yield of 12,942, and a non homestead rate of 1.648. Again, it's helpful, I can switch tabs to let the house pass, but I think you can get the text. And you'll hear more about that from Julia. Okay. Page two, the second instance of amendment. The house contract section two was the reserve. Obviously, that reserve is removed because they are not dedicating any funds for a reserve. They're using the 100.9 fully. And so they've replaced the reserve with the measures from S two twenty. That's what you see here. You'll recall S two twenty, we've talked about this before. This is beginning FY '28, an exclusion of all voter approved bond payments from the excess spending calculation, so no cut off by 07/01/2024. But kind of more to the point, section 2A is the core of S-two 20. This is the dropping the excess spending threshold from 118 to 112% of that statewide average district for people spend in FY '25 and going forward. So reducing the excess spending threshold to 112% and including the hold harmless provisions that we've talked about before, which say, if your district's ed spending hasn't increased or if your district's per pupil spend has not increased, you would not be subjected to the excess spending penalty. And then additionally, there's a review measure for the Secretary of Education to determine, even if you didn't meet those conditions, that if your districts for people had spending that is in excess of threshold that's for good cause beyond the district's control, you too would not be subject to the excess spending penalty. Also, we've talked about before, but that's what's in here. So section one is changing the yields to reflect that $100,900,000 tie down, and sections two and 2A are replacing you guys' reserve with the measures from S 2.8. The remaining sections from you guys' from the House's bill are preserved. That's the technical metrics we talked about. But there is a third instance of amendment which adds some new sections related to that 4,000,000 that I spoke about. So the 4,000,000 of the 104.9 is not transferred from the general fund to the ed fund, and that is in the budget on the senate side. The 4,000,000 is in You mean

[Emilie Kornheiser (Chair)]: it's not transferred on the senate? Yes. Like the

[John Johnson (Office of Legislative Counsel)]: the They may fainted it. Reflected. Exactly. Exactly. The budget and this bill align in how the funds are being moved to the S Fund. The 4,000,000 is instead dedicated to this expansion. So you can see in existing law, there is a cap on the rental credit at 2,500. That cap is increased to 3,250. And then separately, aside from the cap itself, there's of course an effective cap when you just determine the calculation of the credit. The way that the renter credit works, it's based on where you fall within particular HUD defined income limits. If you are less than or equal to the extremely low income limit, which I believe is 30% of AMI, you are currently under current law entitled to a credit in the amount of 10% of fair market rent, which would be defined for each county. This is saying that would be bumped up to 12.5% instead of 10% of your market rent. So you would get a higher credit. Does not change the pool of folks who are eligible to receive the credit. At the upper end of the income limits for the renter credit is the very low income limit. And technically, believe that HUD's definition of very low income This is all existing and all that I'm describing. HUD's definition, I believe, is 50%. So Vermont has a state specific getting at a different figure than 50%. It's 1.3 times that. So you end up with 65% of AMI is I believe what you come out with. Basically, this means that if you're at or below the extremely low income limit, so that 30% AMI under current law, you can get 10% of fair market rent. And then if you're at the upper end, so all the way up to that very low income limit, which is at 65% in law here, it would be brought down to no credit. So it's basically smoothly bringing you across that. So this changes both the cap from 2,500 up to 3,250, and it increases the calculation from being 10% of fair market rent, which again would be a county specific determination. It moves that up to 12.5%. And there's a bunch of places where we have to hit it just because it appears throughout the statutes. We'll see again that in section seven, it's the same modification, but increasing that renter credit up to thirty two fifty there. Sections eight and

[Unidentified committee member (brief interjections)]: nine. This when they prepare their taxes for 2027?

[John Johnson (Office of Legislative Counsel)]: Yes. This should this yes. And that'll actually tease up Senator Cummings floor amendment, which I will flip to after this, because there's an amendment that was integrated into the yield bill yesterday on the floor, and I'll talk about that. But yes, these are for planning year 2027, reflects taxable year 2026, but it's what they're planning next year. Thank you. That's helpful. Sections eight and nine are exactly what you would expect. Because this is a one year provision, what you see the next year is returning to existing law. So it's just reversing exactly what was done in section six and seven. So returning to the 2,500 cap and the 10% of fair market rent determination. I am gonna skip over the effective dates section here because I'm gonna flip to the floor amendment, which speaks to the effective dates, which is to your question. So yesterday, the Senate voted approved this amendment to be integrated into the report, but this is on for third reading today. This is part of the third reading today. Effective dates, all the measures that you guys had and the yields themselves as you would expect take effect 07/01/2026. The pieces to really call out are that the renter credit expansion and cap increase that section six and seven, they take effect this July 1, but they apply to claim year 2027. Sections two and 2A, that's the S two twenty measures. So that's the lowering your excess spending threshold, creating that review process, the hold harmless provisions, excluding all capital indebtedness from the excess spending calculation. That takes effect 07/01/2027, meaning that it takes effect beginning FY 2028. Sections eight and nine, that's the return to current law. Turning to the current renter credit provisions, that takes effect at the same time as the S-twenty 20 measures 07/01/2027, and applies to claim years 2028 and thereafter. Happy to take questions on that. Hopefully, that all makes sense.

[Rebecca Holcombe (Member)]: Mr. Johnson, back at the beginning of the Senate's amendment, they took out the date or the debt by which it had to be approved. So is there anything in this bill or in law at this point that stops districts from going out of bogging a whole lot next year and have all of that excluded for the future from the SG-twenty provision? Can I understand that correctly?

[John Johnson (Office of Legislative Counsel)]: I think that maybe there's a gap here. The exclusion is from the excess spending. If you're just asking, could any debt, regardless of when it's approved, be excluded the excess spending calculation. That is correct. That is what's here, and that's what's in S-two 20 as well. It's not just legacy debt, it's all that.

[Rebecca Holcombe (Member)]: It's huge difference.

[John Johnson (Office of Legislative Counsel)]: Could spend time

[Rebecca Holcombe (Member)]: the next year, so they could go out for a bond, and that would be excluded from

[John Johnson (Office of Legislative Counsel)]: That's excess spending exactly right. And I think we talked about, as well, in the hold harmless provisions, if you're in x, let's say you're at an insane figure, 150%, no one's at 150%. But if you're at 150% when these come into effect, but you spent no more than the last year, you're also accepting the excessive pressure. And if you think about it, even if you didn't have the exclusion for indebtedness, let's say that you were hit with the ex If you didn't have that contract, but it's just legacy, if you were hit with the excess spending threshold penalties one year because you had bonded for a school construction project, but the next year you still have the school construction project because it's an ongoing obligation and you maintained all of your other expenses at the prior year, you also wouldn't be subject to the excess spending threshold in that instance. It's just another way of cashing out what it means for the whole harmless provisions. But you're correct, the exclusion for capital indebtedness from the excess spending penalty of no date levitation could be future.

[Emilie Kornheiser (Chair)]: I think, perhaps, I'll ask that.

[Bridget Burkhardt (Clerk)]: Thank you. On the excess spending exemptions, I feel like I asked this last time, I just can't remember. The third instance there with Secretary Rutland, which he just waive it. This might be a question for the agency, but what's the process behind that? Is Nathan going to appoint the secretary to go through when all the budgets come in? Do districts have to apply for that? You definitely asked this last time.

[John Johnson (Office of Legislative Counsel)]: I meant that I recall giving my answer to this, which was that no process I thought that this is what you're trying to tee up. There is no process spelled out here. It presumes that the secretary has this information to make the determination. So in the absence of taking any other steps, if this was enacted, it sort of leaves it to folks to get the information to the secretary. It does not spell out a specific process by which that would happen. If this comes to the conference committee and this is what's being contemplated. I think including a process or at least spelling out that that is what the intention is. Yeah.

[Bridget Burkhardt (Clerk)]: I think that's going be very important.

[Charles Kimbell (Ranking Member)]: So

[Rebecca Holcombe (Member)]: I'm going to go back to Representative Burkhardt's questions. I assume that we're thinking of the next couple of years as a transition, And here you're saying it's not subject to access spending penalty under the current funding formula, but this doesn't change. They don't say Senate has to continue exemptions for a filing in the future?

[John Johnson (Office of Legislative Counsel)]: Yeah, so this would only apply as long as you had excess spending as a concept. Maybe that's the piece that I was missing from your question. If the foundation formally comes into effect, which would repeal the measures related to excess spending, this would no longer be something would be said. So there wouldn't be any exclusion in that case.

[Rebecca Holcombe (Member)]: This may be a question actually for Joint Fiscal, but did they take any testimony around timing issues as they might affect interaction with us in the legal decision? Timing of bus contracts, timing of negotiating teacher contracts, incentives in terms of how this affects decision making from school districts related to special ed, particularly extraordinary expenditures. Was there any discussion of that?

[John Johnson (Office of Legislative Counsel)]: I do not recall that, but I was not in the room for the entirety of the duration that they discussed s two twenty. I'm almost certain that at least one of the senators raised some of these concerns, but whether they took testimony from the field as to how this would impact someone, I'm not aware of that. And I see confirmation of what I'm not aware of, yeah.

[Charles Kimbell (Ranking Member)]: John, this is effective, lowering of the excess spending threshold for FY '28 here. So that's why the excess spending, the capital expenses, exclusion of those

[John Johnson (Office of Legislative Counsel)]: debt payments is only effective 07/01/2027. Exactly, I would say there is no inherent linkage between those two. It's simply that S220 was the package that those traveled in, and you need the excess spending threshold update to occur FY '28. Another way of saying, you could separate those pieces. There's no inherent link between them, but that was the package basically.

[Bridget Burkhardt (Clerk)]: Thank you.

[John Johnson (Office of Legislative Counsel)]: I'm good.

[Emilie Kornheiser (Chair)]: Okay, you've done the whole thing. Great. Any other questions for Jean Grey? Great. Julia Richter?

[Bridget Burkhardt (Clerk)]: Morning. Good morning, Joy.

[Julia Richter (Director, Joint Fiscal Office)]: Director of Joint Fiscal Office. Nice to see you all after media week. Good morning. To Zoom

[Emilie Kornheiser (Chair)]: now.

[Julia Richter (Director, Joint Fiscal Office)]: And while I'm doing that, there's a couple of documents posted on the committee page. There's the Ed Fund Outlook and the fiscal note for September. And then we can talk in more detail about worker analysis related to F-two twenty, if that's helpful. Would you like me to start with the fiscal note or with the Ed Fund outlook?

[Rebecca Holcombe (Member)]: Thank you. So before

[Julia Richter (Director, Joint Fiscal Office)]: I pull it up, I want to just remind the committee, I know you heard yesterday from AOE about the school budget updates and so just the general process. We talked about this over the course of the winter as you worked on the Ed Fund Outlook, but as the AOE has more school budget information, they share that with us. We put that into our yield model so that you can get updated numbers. What we've always done and what we've done this year is we freeze the data in the yield model at points in time during the legislative session as committees or bodies are getting close to voting something out, so that you can compare proposals using apples to apples data. So the outlook that I'm about to share includes updated data since I was last in here and does not yet include the updated data that AOE shared with you yesterday because Senate Finance still has the yield bill on third reading today. So once the yield bill is voted out of Senate Finance, whatever comes next, then we will be updating the yield model with the budget information you heard yesterday. So with that, turn my screen. So there are four columns included here. So as I mentioned, this is using budget data as of 03/16/2026. This was the budget data that Senate Finance was working off of. Column A, this is that FY 2026 column. Column B, this is what was passed out of the committee. These are the rate and the yields that were included in the House past September. And as we just spoke about, that was based off of older budget data. So once we updated the budget data, what we found is because education spending came down a little bit and the shift of where that education spending was happening, it was no longer a uniform bill change, despite the fact that when you all voted it, it was a uniform bill change. So the House passed nine forty nine. If it were to go into law, we estimate it would be an average bill change of homestead and income of 6.4% and non homestead of 7%. So I then resolved it using the budget information of saying, let's follow the intuition of nine forty nine, which is solving for a uniform average bill change and reserving half of the 104,900,000 for buying down property taxes in FY '28. And because that budget data came down a little bit, we now see that that would result in a uniform average bill change of 6.7%. So column C is showing the nine forty nine construct using the updated budgeting. And then finally, column D, this is nine forty nine as recommended by Senate Finance. This is the construct that passed second reading in the Senate yesterday. As John just spoke to, they used 100,900,000 of one time general fund to uniformly lower property taxes in a single year in FY '27. That's that 100.9 is in addition to the 22,300,000 of estimated in fund surplus. So about 22,000,000 of one time buy down. As John mentioned, that 100.9 is not the 104.9 because the Senate budget includes that one time increase of the renter credit that is equal to 4,000,000. So they said we have a pot of 104,900,000 for one time relief. We're gonna use 100.9 for buying down property taxes in FY '27. We're going to use 4,000,000 for one time increase of the rent and credit. So we see the language associated with that increase of the rent and credit associated with 4,000,000 here in September, we don't see the actual increase of that appropriation because that is living in the Senate budget.

[James Masland (Member)]: Who we hear from you or from the senate on why they made the decision the way they did?

[Julia Richter (Director, Joint Fiscal Office)]: You won't hear from

[Unidentified committee member (brief interjections)]: me. Okay.

[Emilie Kornheiser (Chair)]: Senator Cummings will be fifteen minutes.

[Julia Richter (Director, Joint Fiscal Office)]: And I would say the same thing to the Senate if they ask why ways and means. Any other questions about the Edvard outlook? I guess I will just Because it's been a week or two since you've looked at this, I'll just remind the committee of this tax rate offset reserve that the housewaste and beans construct has.

[Emilie Kornheiser (Chair)]: I think most of my questions for you, I mean, of it, we worked through basically these scenarios. This feels clear to me. The exemptions in the yield bill and what that means, what the excess spending threshold means, what the exemptions to the excess spending threshold means, and what that means in the off years.

[Julia Richter (Director, Joint Fiscal Office)]: Sure. Do you want me to go to the fiscal note, or do you want me to go to the ever works better for you. We can start in the fiscal note and then, Sorcha, perhaps we can post the spreadsheets that I had sent a couple of days ago. The S-two 26.

[Rebecca Holcombe (Member)]: Yeah, Before you go, can

[Emilie Kornheiser (Chair)]: you go back to Yellowstone?

[Rebecca Holcombe (Member)]: Yes. Could you just talk a little bit about available funds? Because we're not just talking about the 104, we're also talking about the unreserved on alpha. Yes. And that's a pretty significant change, I believe, year

[Julia Richter (Director, Joint Fiscal Office)]: to year, '26 to '27. So I'm hoping you can talk about that because that has an impact as well. Absolutely. So what we're looking at here are lines thirty six and thirty seven. I know we don't have these headings up here, but recall this column here is referencing FY '26, and then these three columns are referencing FY '27. What we see here in line 36 is the prior year unreserved and allocated. So this is referring to the education fund surplus that's available to use to offset revenues that need to be raised. So in FY26, there was 43,000,000 of education fund surplus that could be used, put it towards something or not raised 43,000,000 from property taxes. To your point, Representative Holcombe, in FY '27, there's 22,300,000 of education fund surplus estimated for FY27, which means that this is also one time money that's being used to lower property taxes in FY '27. What we have seen over the past several five years since I've been here, that the education fund surplus amounts have been decreasing each year over time. So we saw big education fund surpluses right around the time of the pandemic, where there was all of that overperformance of forecasted sales and use tax revenues. And then as that sort of has leveled out over time, we're seeing less education fund surplus year over year. So in sum, what we are seeing in these constructs is the use of the general fund transfer, be it 52.5, the house construct to lower property taxes in FY '27, plus the 22,300,000. That is the total amount of one time money used. The Senate contracts that they're voting for reading today is the 100.9 plus the 22. That's right.

[Rebecca Holcombe (Member)]: So the one year buy down last year was the buy down plus the 43? Correct. And what is the impact on next year's tax rates of using 100 plus the 22 this year? Potentially. I realize it's a few investigating.

[Julia Richter (Director, Joint Fiscal Office)]: Don't know. It goes back to that analysis that I presented, albeit maybe, I don't know, a few weeks ago, a month ago, that was looking at, it's really hard to forecast the ad fund into the future. And regardless of what happens, we know that using one time money in one year artificially lowers the amount that needs to be raised in property taxes in that year. So then the following year, absent that one time money, we will see a natural increase to make up for that difference of the one time money use. So the more one time money that is used in one year, absent the same amount of one time money being available in the following year, will result in an average tax bill increase. And we will see that in the December one letter. And then it'll be something that these bodies will grapple with next year, if it's used.

[Charles Kimbell (Ranking Member)]: Your calculation of 40s and the full 01/2009 and the twenty two point three was 15% in the next fiscal year.

[Rebecca Holcombe (Member)]: Can you say that?

[Charles Kimbell (Ranking Member)]: I think Julie's previous analysis showed that if we use the full 104.9 plus the 22.3 in this year, next year you'd be looking

[John Johnson (Office of Legislative Counsel)]: at a 15% increase in property taxes. So now, It's the next day.

[Charles Kimbell (Ranking Member)]: Yeah, everything else being equal. So at 100.9 would be slightly less than that

[Bridget Burkhardt (Clerk)]: percentage increase. I would need

[Julia Richter (Director, Joint Fiscal Office)]: to pull up that slide deck. If that's the percentage I said, then yes. And it was based off of a number of significant assumptions. Remember, we were looking at how much is the Ed Fund going to grow? How are non property taxes going to perform? How much one time money is going to be allowable?

[Rebecca Holcombe (Member)]: And also to understand People have already voted on their budgets on a certain set of assumptions about tax rates this year. But if this full buy down goes in, they will get a tax rate that's lower than the one they voted on. I think that's what they say. I

[Julia Richter (Director, Joint Fiscal Office)]: don't know what yields school boards use to communicate to the tax reporters.

[Rebecca Holcombe (Member)]: I think they all use different ones.

[Bridget Burkhardt (Clerk)]: The school board association. Any

[Emilie Kornheiser (Chair)]: other questions about the outlook? Let's go to

[Bridget Burkhardt (Clerk)]: the wherever you're about to go. I was gonna go

[Julia Richter (Director, Joint Fiscal Office)]: to the fiscal note. I think Sourc just posted some

[Rebecca Holcombe (Member)]: Those spreadsheets.

[Julia Richter (Director, Joint Fiscal Office)]: Okay, so there's also a couple of spreadsheets that you've already looked at that are from the SQ20 work that was done in Senate Finance about impact of different excess spending thresholds. I do plan to update those spreadsheets moving forward as this continues to be discussed, and I'm waiting until the Senate votes out nine forty nine for all of the reasons that everybody cares about. So just looking at the fiscal note, I'll focus on the exclusions for now. So as John spoke about, the nine forty nine is being considered by the Senate falls in S220, which does a number of things to the excess spending adjustment. It lowers the threshold. So under current laws that averaged per pupil, FY '25 per pupil spend increased by inflation multiplied by 118%, S-two 20 lowers it. So it'll be a lower threshold. And at the same time, these pieces within September include new exclusions and hold harmless that don't exist in current law for the excess spending adjustment. So the first one that is in section two of the bill, you'll recall that under current law, we've talked about that business committee. There is that deadline condition, that temporal condition, where if bonds have been approved prior to 07/01/2024, then they are not Those bonds That debt service payment is not included in the purpose of calculating excess spending. That's current law. So there's a deadline. Before, it's exempt. After, it counts for the purpose of calculating excess funding. Nine forty nine would repeal that deadline condition. So it would say regardless of when the bond passed, all debt service payments are excluded for the purpose of calculating excess funding. So that expands the exclusion

[Rebecca Holcombe (Member)]: of calculating excess funding. It's just bond to them.

[Unidentified committee member (brief interjections)]: It's not other debt.

[Bridget Burkhardt (Clerk)]: I would defer to John. Sorry about this.

[Rebecca Holcombe (Member)]: Is it just bond debt or other debt as well? The excess.

[John Johnson (Office of Legislative Counsel)]: Yeah, it's just bond debt. You're talking about the exclusion.

[Julia Richter (Director, Joint Fiscal Office)]: Just talking about this debt service impact, there's sort of two pieces to think about. One, there is bond debt debt service that exists in the education fund that has passed since 07/01/2024 that currently would be calculated in excess spending if the school district holding that debt were to go over the excess spending threshold. After conversations with the bond bank, it sounds like there's about 11,600,000 in annual additional debt service across 11 school districts. JFO can't estimate or predict if the removal of this exclusion would encourage more bonding. If it were to encourage more bonding, then that would increase cost to the education fund. What we do know is that because of the way that the education fund works, and the way the excess spending penalty works, is that if something is included in the calculation of excess spending, then that district is going to be double taxed on it. So that district is going to be responsible for raising more of it than if it's not included in excess spending. So all else equal, if you have something in excess spending in the current calculation and you remove it, essentially what that's doing is it's saying, Okay, the district with that cost is not responsible for raising as much of it. It's not going be double taxed on it. And instead, it's going to be uniformly borne by, or more uniformly borne by its district. So it'll still be included in their per pupil spending. It just won't be included in their access.

[Emilie Kornheiser (Chair)]: Moving on. And I just wanna check that there's no approval, and maybe more question for John. There's no approval, and I think, Bridget, you asked this, there's no approval process for the exemption for future school bonding. It's just like any bonded debt would be exempt.

[John Johnson (Office of Legislative Counsel)]: Yes, yes. If you don't have the foundation formula, you just

[Unidentified committee member (brief interjections)]: improper perpetuity.

[John Johnson (Office of Legislative Counsel)]: So if the foundation formula happens, this won't be a structure that exists. But if it does not, it's in perpetuity. It's a permanent change. It's not just a two year change.

[Emilie Kornheiser (Chair)]: And it's for any debt into the future. The debt doesn't have to be approved by a school construction advisory board or anything like that.

[John Johnson (Office of Legislative Counsel)]: It doesn't need to be routed through the aid program, it's just if you have total approved bump payments.

[Charles Kimbell (Ranking Member)]: Julia, one thing about this particular piece is that of the 11,600,000 born by 11 different school districts, not every one of those 11 are currently over the excess spending threshold, correct?

[Julia Richter (Director, Joint Fiscal Office)]: Correct. When I looked into it, and I would need to, I could come back, I just don't have it in front of me. I believe that there's one or two school districts that are estimated to trip the excess spending adjustment. The others are not.

[Unidentified committee member (brief interjections)]: Sorry, Mark. Doesn't this go against what two twenty is looking to do?

[Emilie Kornheiser (Chair)]: This is two twenty. This is two twenty in here. Yes, I agree. There's a little bit of a counterintuitive thing the Senate did. It begs the question, what is two twenty trying to do? Think. Thank you.

[Rebecca Holcombe (Member)]: Question I asked earlier, did they take any testimony about, the last time we tried to do short term caps, what they ran into and they removed the caps because there were all kinds of accounting timing issues that were relatively arbitrary to total costs, but if you resolve a contract that's been delayed, may have to true up bus contracts, food contracts, often three year contracts. There are potential huge implications for external expenditures in special ed because of the incentives you can put in place or a couple of years that then could have long term fiscal impacts potentially. Were those things discussed in trying to come up with this?

[Julia Richter (Director, Joint Fiscal Office)]: Can't provide any more context on Josh. It's for Anne, actually,

[Emilie Kornheiser (Chair)]: who will be present.

[Julia Richter (Director, Joint Fiscal Office)]: Let me get to the other piece of the exclusion. So we just spoke about the exclusion, or really expansion of the exclusion of school debt from the excess spending penalty. The other piece of this is Section 2A would amend the calculation of Or would create a hold harmless provision from the excess spending adjustment for certain school districts. So under current law, there isn't a hold harmless provision for the excess spending threshold. There's the one exclusion, and that's it. What this would do is it would be three part test. And if you pass any of those parts, then you would not be subject to having a double tax on your excess spending.

[Emilie Kornheiser (Chair)]: Did you finish your sentence?

[James Masland (Member)]: Sure. I'm not trying to interrupt.

[Emilie Kornheiser (Chair)]: I know you are, but Julia's being very responsive.

[James Masland (Member)]: So this is a continuation of my other question, why did the Senate do what they did?

[Emilie Kornheiser (Chair)]: So that's a question for Anne, not for Julia.

[James Masland (Member)]: It is a question, so it would be appropriate when a senator comes in to discuss specific things like the excess spending threshold when that occurs, right?

[Emilie Kornheiser (Chair)]: So if you're asking why the Senate did it, that would be a question for Senator Cummings. If you're asking what they did, that's

[Bridget Burkhardt (Clerk)]: a question for Juliet.

[James Masland (Member)]: I'm trying to figure out when is the most opportune time to direct my question to why the Senate did what they did. So I'm just putting my name in queue that I wanted.

[Emilie Kornheiser (Chair)]: Okay. I'm glad everyone has questions for Senator Cummings. It'll be so much fun. I don't know

[Unidentified committee member (brief interjections)]: if she's ever come up here to

[Bridget Burkhardt (Clerk)]: do this before. Got it.

[Julia Richter (Director, Joint Fiscal Office)]: So what the hold harmless provision is, is it's these different tests. So one is looking at, did a school district increase its education spending year over year? So if that school district did not see an increase or saw a decrease in their total education spending compared to the prior year, they are not subject to the excess spending adjustment, regardless of what their education spending is. If they held steady at their education spending level or decreased, no excess spending penalty. Similarly, if a district did not see an increase in its per pupil education spending compared to the prior year, then it also would not be subject

[Rebecca Holcombe (Member)]: to the excess spending penalty.

[Julia Richter (Director, Joint Fiscal Office)]: You could fit into both of those, you could fit into one of those, either way, you wouldn't have the excess spending penalty. And then third, there's also this I don't know if I Anyways, there's this third piece where there's this test from the secretary. So you can go before the secretary, and if the secretary determines, and I would confirm John on the language, but essentially determines that it was okay that your education spending or per pupil spending is above that excess spending threshold, then you are also exempt from the excess spending penalty. So there's three different potential ways to be exempt from the penalty.

[Emilie Kornheiser (Chair)]: Can you explain the if you spend more and then spend less again? I remained confused by that. Oh,

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: hi. When did you get here?

[Emilie Kornheiser (Chair)]: Oh, okay.

[Julia Richter (Director, Joint Fiscal Office)]: So the test is essentially, if your education spending does not increase compared to the prior year, you are exempt from the excess spending penalty. If your per pupil spending does not increase compared to the prior year, then you are exempt from the excess spending penalty. Thanks. So, let's say you're

[Rebecca Holcombe (Member)]: Danville, and it looks like you're, if we move this down to 112, it looks like your excess spending penalty will be something like $561,000 If they maintain their current level of spending plus $1 does that mean they're liable for the whole $561,000 at 112%? Or does that mean the amount they exceed the previous year's spending is subject to the excess penalty?

[Julia Richter (Director, Joint Fiscal Office)]: I'm going to defer to John.

[John Johnson (Office of Legislative Counsel)]: Sorry, I'd like to jump back, I can ask what was my question.

[Rebecca Holcombe (Member)]: I'm just trying to figure out how this plays out in real terms. We're using weighted spending, right? So if there's an underlying error in the weights, it's going to be amplified, and you have a school like Danville, hypothetically, at 112% based on JFO modeling, they have a penalty of $561,000 if they held their spending per weighted pupil constant plus $1 which is how much they tripped it by this year,

[Julia Richter (Director, Joint Fiscal Office)]: are they liable for the

[Rebecca Holcombe (Member)]: full $561,000 or are they only liable for penalty on the amount by which they trip through?

[John Johnson (Office of Legislative Counsel)]: They are liable for the full amount. The idea is that you get a, basically it deems that your excess spending penalty is $0 if you meet one of the conditions, but if you don't meet the conditions, you're otherwise subject to the standard excess spending calculation, which is just based on how much you exceed the threshold rate. So you're kicked out of the hold harmless and then it's subject to the standard calculation. It's not a because you only went over what you did last year by $1 you paid. It could result in quite fluctuating.

[Rebecca Holcombe (Member)]: And sorry, I have a follow-up before we change topics, because the excess spending penalty is a bit of a losing target because it's based on the average weighted spending.

[John Johnson (Office of Legislative Counsel)]: FY25, uninflated.

[Rebecca Holcombe (Member)]: Inflated. But these districts are also trying to figure out how they're going to line up with that in the context of changing student numbers, also we're in the sense of things are still changing and that's affecting other people's spending. And so how to are they know that they don't trip it by a dollar? When someone trips it by a dollar, was, that something happened. They were trying to stay below it.

[John Johnson (Office of Legislative Counsel)]: Yeah, I don't know the answer to that, but to your point, one of the effects of having a full parliament provision is that a slight difference can put you fully into the penalty, but maybe no change in your behavior could result in a mild difference to the public.

[Rebecca Holcombe (Member)]: And was there, I'm just gonna ask this again, was there any testimony in the Senate about the fact that we are waiving tuition districts, even though the study author said so?

[Emilie Kornheiser (Chair)]: That's a good question for Senator Cummings, because these two were not there for all of our testimony. Is this a question for Yeah.

[Rebecca Holcombe (Member)]: So this is along the

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: same lines of the question. So then if you

[Rebecca Holcombe (Member)]: do have a district then that trips the excess funding threshold this year, all of that excess is then well, guess that's what the question is. So their ed spending is higher this year than the threshold. But then the next year, they would be held firmless, even if they didn't bring their spending down at all? As

[Julia Richter (Director, Joint Fiscal Office)]: long as they maintained their spending level, yes.

[Rebecca Holcombe (Member)]: So they would go from tripping at one year to then the next year not having excess spending, even though their spending is essentially

[Julia Richter (Director, Joint Fiscal Office)]: It's the same? Yes. Okay.

[Charles Kimbell (Ranking Member)]: And one last clarifying question on it. You said adjusted for inflation. So is it from here at $17,000 a student currently, which is over the excess spending threshold, and then next year, you're still at I just lost my line of reasoning. If you're higher than that

[Julia Richter (Director, Joint Fiscal Office)]: I think I understand where your question is going. The

[Charles Kimbell (Ranking Member)]: $17,000

[Julia Richter (Director, Joint Fiscal Office)]: The threshold, it's the threshold that is adjusted for inflation. It's not the hold harms provision.

[John Johnson (Office of Legislative Counsel)]: Okay, thank

[Charles Kimbell (Ranking Member)]: you. That's what I wanted to say.

[Rebecca Holcombe (Member)]: Yeah. And this comes back to the inflator, right, and it's NIPA again? But what's

[Julia Richter (Director, Joint Fiscal Office)]: the inflator there? Yes, NIPA.

[Rebecca Holcombe (Member)]: So we're using a products inflator for a staff driven industry, just pointing that out. And people negotiate contracts, you don't usually negotiate for a year, you often negotiate for three years, so you could get mail just because you resolved your contract in a specific calendar year, not because you're choosing to suddenly increase or make decisions, spend, and propagate debt, or have a bad debt. Thank you, Juliet. And

[Emilie Kornheiser (Chair)]: Senator Cummings, Chair Cummings, would you like to join us? Thank you so much for being here. We know that the

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: bill is still on the floor,

[Emilie Kornheiser (Chair)]: so I'm sorry to be getting further ahead than we meant to. I just didn't want

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: to reschedule everyone. It went well. I have not seen any amendments to this bill yet. I have several from miscellaneous We'll talk about that another time. But that's it. Kind of amendment bait, that other bill, yes.

[Emilie Kornheiser (Chair)]: You like to tell us your thoughts on the yield bill, then I think we have a couple questions. Okay. I've been listening.

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: I think, you'll feel what we did to your bill. First thing we did was spend all the 100 point whatever million to buy down the property taxes this year. There was a feeling that the average was seven plus or minus a percent, that that meant that some people would be getting double digit and I think we know double digit is really difficult for people. And so we took it down to using all the money, and we'll deal with next year, next year. And

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: we

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: then it was brought up that we haven't done anything for renters in years, and rents are going up and we haven't adjusted, and it was also, I think, a desire to get votes for the bill. So we did we took a portion of that 100,000,000 and gave an equivalent credit to renters for one year. So that was it. So we have that brought the average the average increase putting the full 100,000,000 in was 3.6. The average after doing the renters was 3.8. And the members of my committee that were set, and I would say it was the majority, on buying down rates this year, could live with that. So that was the financing part.

[Rebecca Holcombe (Member)]: We

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: no. It's not in the yield bill. It's in miscellaneous tax. We did both of them in the same day after several days of going into the evening. So I tend to get them Totally understood. I think we have a lot of

[Emilie Kornheiser (Chair)]: The excess spending threshold. Any questions there? Yes.

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: There was a request from leadership that go in, because the Senate is concerned, I know we're all concerned about the cliff, we keep buying down tax rates, and at some point we're going to pay the price. Taxpayers are, we're amongst them, but we're not, and we know the foundation for them is coming, and we know for some schools that's going to be a huge clip, but we also know we are not seeing a whole lot of movement on the part of schools to to start making you know, they don't need us to tell them to do CSUS. They can do those, and I think it's an effort on our part to say, look, you have got to start cutting back, and you've got, you know, by whatever form you can do that. I think there was, we did a lot of ups and downs and what ifs and we recognize that no matter what we do, something will happen that doesn't fit in. Going the dollar over your per pupil spending. So there is an appeal process in there to say, look, you know, that isn't fair to, you know, to hit us with 540,000 when it's only a dollar and this was the cost, you know, the school bus caught fire and we had to replace it, whatever. So we put an appeals process in there. Now in full well, the 02/20 is, don't know if it's in this committee or where it is, it's

[Emilie Kornheiser (Chair)]: in the House. Right there, we figured you were gonna put it

[Rebecca Holcombe (Member)]: in the yield bill, so. It's good. You have bills on your wall.

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: Oh no, there you go.

[Rebecca Holcombe (Member)]: Those are just referred bills. For one court board.

[Emilie Kornheiser (Chair)]: We figured you were putting in the yield bill, so we

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: Okay, figured everything mean, it's there, but I think when we sent it, we knew we'd buggy with it. But I think it's just to keep that discussion going. What do we do about school spending?

[Emilie Kornheiser (Chair)]: And so the exemption that you've built in so you explained the thinking behind the sort of appeals process. The exemption you built in for if you spend more and then you spend less or spend the same amount? Yes. But how do you imagine that works?

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: Spend more and then you spend

[Emilie Kornheiser (Chair)]: If you spend above the excess spending threshold, but then you maintain that spending, you're not subject to the excess spending threshold anymore Yeah. The following

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: We didn't really talk about that.

[Bridget Burkhardt (Clerk)]: Okay. Okay. Thanks. Cool.

[Emilie Kornheiser (Chair)]: Represent Masland, you had a question that you were wondering about.

[James Masland (Member)]: I did. It's partially answered. I guess I should just keep going, and if it comes up in more coaching form, I'll raise my hand.

[Emilie Kornheiser (Chair)]: Okay. Representative

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: Holcombe, think, oh, sorry, Troy.

[Rebecca Holcombe (Member)]: Go ahead.

[Charles Kimbell (Ranking Member)]: Yes. So Senator Cummings, the idea of maintaining your existing spending levels, but then accounting for inflation or other increases in health care or teacher contracts. So that may be 5%, 6% anyway on a budget. So I think what you're really saying is even with excess spending, if you're maintaining that same amount, then they're going to

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: have to cut 5% to 6%

[John Johnson (Office of Legislative Counsel)]: to 7% from their budget.

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: It depends on when your contracts come up. But, yes, I think we've been told that actual school employment is going up. Schools do control that, seem to be losing teachers and hiring other personnel. All of those personnel now get a platinum level healthcare program, and that adds to the cost. It's not just teachers, it's cafeteria workers, it's parish, and I think part of it is just trying to get schools to actively join in the discussion about what is going on and not we need to be able to talk through this. And if if there's other things that can be done, we're open to having you do it. I think there's a need, and I think it's coming out of elections and it's political to let taxpayers know that we know that something has to give here, and probably the taxpayers have given all they can give.

[Charles Kimbell (Ranking Member)]: So I was just trying to understand what that looked like, and I think that's what

[Unidentified committee member (brief interjections)]: may be the intent.

[Rebecca Holcombe (Member)]: For example, I appreciate the clarity that this is about our political need to show taxpayers we're listening. I actually feel that school district spending is now at about 3.9%. I just think we need to keep saying that. And that is despite what looks to me like very significant cost shifting from the state budget. If we are collapsing our state mental health network, that is going to fall back into schools because they're payers of less. I want to just drill down a bit because we had AIR came in and testified. The American Institute for Research people did the initial waiting. Okay, they said Professor Colby. Professor That's

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: what I know then. Finance didn't do the weighting.

[Rebecca Holcombe (Member)]: Well, we did in 01/2027. And this body chose to apply weights to tuition students, even though Professor Colby and her team said don't apply weights to tuition students. So I'm looking at two of the districts, one of which is affected and one is not by this spending penalty. Danville has poverty that is 13% higher than PGIM, which is right next door. It operates K-twelve. It is receiving about the same amount of weights as PGIM, which is weighted even though it tuitions at half of its levels. PGIM has higher spending per ABM, but because of the weighting, it's just not going to be affected according to this analysis by the excess spending penalty. So effectively, we're doing is we're penalizing rural districts that operate public schools. Is that the intent here? They're disproportionately the ones that are being hit by the No,

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: that is not the intent. And I think we knew that waiting can vary widely. And part of the concern, what we did get discussed was that if you lost two weighted students in a small school, that's gonna have a lot more impact than losing two weighted students in South Burlington or Champlain, a big school. I'm trying to remember because we did this three months ago. That was one of the reasons for the appeal, that there are things you can't control, and so we wanted to make sure that those things would be dealt with. Thank you so much, Mark Can

[Rebecca Holcombe (Member)]: I just ask what that means to control? So 60%, of the kids who go up to Danville, the poverty rate is 60%. The poverty rate in Danville is only about 46. Yes. So they are serving a very They different could just say we won't take those tuition students. Is that the intent here? Because that

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: would break down policy. Intent is to let, if not them, then other schools and this may not be the best way to do it, But I think we all know that there are possible mergers in those areas. We have we also have a couple of independent schools in play in those areas, but that schools

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: need

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: you can't just sit back and say, we don't like districts emerging and keep raising your spending, that we do need to do structural change in order to keep schools affordable. We know schools are making educationally unwise decisions to keep their budgets down, And I think this would think this is another shot across the bow. We are serious. We need to take serious steps. If these aren't the right steps, then what are? Because the foundation formula is coming. It is highly doubtful we're gonna have a $100,000,000 to buy down the tax rates next year. We are doing an awful lot in health and welfare, which I'm missing, but to bring down the cost of insurance. However, we also have three requests in there to add things No, to

[Emilie Kornheiser (Chair)]: and we need to keep

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: to the covered cost of which will add to the cost of insurance. So nobody's quite gotten the message that these are not the good times are over, and cuts cuts are gonna need to be made, Zach. You know, it's gotta give somewhere. Thank you. I think, Burkhardt,

[Emilie Kornheiser (Chair)]: you have a question, and then I'm gonna let you go back to.

[Rebecca Holcombe (Member)]: Madam Chair, what's the districts assume you took testimony from districts who are potentially going to trip the excess spending threshold this year, What even in its current did they tell you about why they are going over the excess spending threshold and how they are trying to make cuts. Because you've mentioned a couple of times that there may be unwise decisions to try to stay under the excess spending threshold. Just say another word about what those decisions are.

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: I think every school is making decisions. You know, there's because we don't have a statewide graduation standard, I think you're finding more schools don't offer probably the full range of courses that students could benefit from or need. I think we're finding that not sports, but more in the arts are being cut. I know second language below high school level is being cut because you don't you know, AP courses are being scaled back because you don't have enough students to make it financially viable to do that. But, again, these are things you could do CESAs for. You could, you know, set up and do a class over Zoom. I mean, you could and I think that's that's what we're seeing, and we haven't heard people come in. We're not the education committee, but we haven't heard of serious discussions in this area. Thank you very much. Really appreciate

[Emilie Kornheiser (Chair)]: you coming upstairs. Thank you.

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: Yes. It would be worse with miscellaneous tax.

[Unidentified committee member (brief interjections)]: No. Will.

[Bridget Burkhardt (Clerk)]: I'm sorry. Sorry. That's scary.

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: Well, I have a bill that's rewriting income tax and the finance section of the second home tax. It'll be a good time. Be a lot of luck.

[Emilie Kornheiser (Chair)]: You. We'll see you there. We'll see. We have many people scheduled. And what's your schedule like, Jake?

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: It's fine.

[Rebecca Holcombe (Member)]: You can feel flexible?

[John Johnson (Office of Legislative Counsel)]: Yeah.

[Emilie Kornheiser (Chair)]: Okay, cool. Okay. Sherry, I'm gonna jump to you next, that's okay for you.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: Absolutely. We are ready to I just need to be able to share my screen. Oh, and I can. So as an educator to me, it's always important to have visuals. So I've got a slide deck that goes with my presentation and hopefully this will help give some context to some of the hard questions you're having to address right now. Just hang on one second. I'm just moving some things around. Are you able to see this presentation?

[Charles Kimbell (Ranking Member)]: It's small.

[Emilie Kornheiser (Chair)]: And actually, Sherry, sorry, one second before you start. I think we have two people in the Zoom that are not on our witness list.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: I have Rafael Adamek, who's my director of technology and innovation, and I have James Fen who's my director of finance and operations in that and if there's a question you ask that I can't address so I thought having done my thing Okay, I'll

[Emilie Kornheiser (Chair)]: great. Thank you. I just wanted to make sure that they were known quantities. So thank you, Sherry. Back to you.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: So I'm not sure why you are not seeing the full screen. Is that Wait,

[Emilie Kornheiser (Chair)]: I think we can change that. Okay. Second.

[Bridget Burkhardt (Clerk)]: Can you share me?

[Emilie Kornheiser (Chair)]: It's the top left. I wonder if we could spotlight it.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: If not, I don't want to I can go ahead and speak my presentation if that's an obstacle.

[Charles Kimbell (Ranking Member)]: I'm sure I'm sure I am. I'm sure sure I am.

[Julia Richter (Director, Joint Fiscal Office)]: It's showing on the Zoom but it's not showing.

[Unidentified committee member (brief interjections)]: We

[Jeff Fannon (Executive Director, Vermont-NEA)]: were so close.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: Thank you so much. I just want you to see some of the faces of my students and kind of the testimony. So good morning members of the House Committee on Ways and Means. I'm Sherry Suess, superintendent of the Mountain View Supervisory Union. And I thank you for the opportunity to discuss the impact of H-nine 49 on our seven communities. My testimony today centers on correcting the misconceptions surrounding our per pupil spending by highlighting the realities of rural education, detailing the devastating programmatic cuts and abrupt threshold dropped to 112% would force upon our district and expressing our strong support for the bill's exclusion of capital debt. Ultimately, I urge the committee to consider a gradual phase reduction of the threshold and to establish a floor spending amount that ensures that all students are afforded adequate funding, is stated in the aim of the foundation formula. Hang on one second. I'm trying. There we go. There we go. Mountain View School District has been recognized for many of its attributes, including strong academic outcomes, diverse student opportunities, and engaged communities. MBSD also has the reputation of being a high spending district. When comparing the LTW ADM per pupil cost across the state, MBSD is within the top five highest spending districts. It is crucial to provide context behind these numbers. The MBSD salary grid and benefits package are within the average range and competitive with surrounding SUs and SDs. All of our classrooms meet X73's minimum class size. Currently, MVSD does not meet the recommended number of instructional coaches stated in the last APA report. In addition, some say I shouldn't say this out loud, MVSD does not meet educational quality standards for the number of nurses or librarians. The Unified Arts offerings at our elementary schools are comparable to other SU's SD's. MBSD has been recognized by the AOE for reductions made in the use of paraeducators, both in general education setting and in special education, which is the goal of ACCENT 173. Further, MVSD has been commended by the AOE for containment of special education costs. The MVSD central office team is strictly limited to a superintendent, director of finance, director of curriculum, director of technology, and the director of student support services. Our technology department, for example, consists of three and a half full time equivalents for approximately 1,300 students and staff members. I do not believe that MVSD educators are overcompensated nor our schools overstaffed. So why is MVSD so expensive? A number of factors specific to our district have resulted in per pupil spending above the established threshold. These include geographic isolation, the calculation of the LTW ADM, the MBSD articles of agreement, the offering of universal pre K, and the cost of fully funding our facility needs. While the seven towns of MBSD are located in the center of Vermont, we're functionally a rural district. We are located between the cities of Hartford, Springfield, and Rutland. MVSD receives limited support from our four designated agencies as communities with greater population density receive a higher proportion of those resources. Counseling and mental health service must be provided at each of our schools so that our students are able to access their education. Our towns also lack access to need to healthcare and public transportation requiring our schools to step in and fill those service gaps. I'm sorry, I'm seeing Are you able to see this whole? Hey Tanya, me too. Okay, I'm sorry. Okay, that's better. In a side by side comparison of Mountain View School District with another district in the Southeast Region, it is important to note that unweighted spending per pupil in attendance indicates that MBSD spends less per pupil than that district. MBSD has nine thirty six students who live in our seven towns and our LTW ADM is fifteen twenty. The number of students residing in that district is twelve thirty six, comparative. Their LTW ADM is 2,266. MVSD has an adopted budget of 30,000,000, which is a 30,990 cost per student in attendance. This district has adopted a budget of 39,000,000, resulting in a $34000.0.96 dollars cost per student in attendance. This LTW formula, ADM, puts the district below the threshold and MVSD above, even though the actual spending per pupil in attendance at MVSD is less. In July 2019, our town successfully merged under Act 46 to become one supervisory district with agency of education approved articles of agreement. The structure of those agreements now mandates how resources are allocated across the district and how campuses are maintained. These contractual requirements articulate accountability regarding costs, staff, and student outcomes, as well as the strict process for closing a school. While this document has had a significant positive impact on equity of educational experience for all of our students, there are associated costs that must be represented in our annual budget. While the closing of schools is not explicitly stated in any of the current transformational legislation, a significant lowering of the excess spending threshold will inevitably result in small schools being forced to close. The smallest school within our merged district is Reading Elementary School. There are those in our region who are inquired about the implications of closing this vibrant school community. First, the one MVSD elementary school within the state recommended allowable driving distance, whether that's twenty five minutes or an hour, is Woodstock Elementary School. It does not have the physical capacity to absorb these students. Since offering universal pre K and MBSD, the space required by statute for our youngest students has reduced the available number of classrooms. Furthermore, even if Woodstock Elementary could meet the needs of the RSD's children, cost reduction to our budget would only be $750,000 This amount alone would not bring NVSD below the current excess spending threshold. Members of the MBSD School Board have reached out to other local school districts and supervisory unions to explore how our small schools could better partner. At this time, due to the articles of agreement and neighboring districts, that's as far as we can go in making these kinds of significant, potentially cost saving changes. MVSD has maintained stable student enrollment since the end of the pandemic. Many attributes that can many attribute that consistency to offering universal pre K at all of our elementary schools. This board and community decision to provide high quality early education and line state requirements has provided the foundation for significantly improved student outcomes. However, this decision also comes with a price tag that impacts our overall budget. Finally, another source of financial strain for MVSD is our severely depleted middle and high school facility. Our communities have supported multiple bonds to address the needs of a failing building. Since the 2025 yield build, facility costs have been combined with per pupil spend, further exacerbating our bond line. While this contact with this context in mind, MBSD is now facing how a sudden reduction in threshold from 118% to 112% will impact our students and programs. Currently, our taxpayers send over 39,000,000 to the Ed Fund and keep 25,000,000. If the threshold is dropped to 112%, the communities at MVSD would be sending an additional 1,400,000. Our money is going to districts that are underfunding education. For our communities, that means for every dollar raised by local taxes, 61¢ goes to the statewide education fund and 29¢ stays in our district. Changing the threshold to 112% would increase the funds going to the state to 62¢ for every dollar raised. I hope this financial context provides a clear understanding of why NBSD lands in the category of highest spending district. Many of the decisions driving the amount of money raised annually are outside the control of our board and our taxpayers. In addition to the factors listed, we cannot ignore rising health care costs, the impacts of tariffs, negotiated annual salary increases, and skyrocketing energy expenses. MBSD has inherently high purple per pupil expenses coupled with failing infrastructure, making it one of the districts most sensitive to H nine forty nine. Cost containment and fiscal responsibility have always been at the forefront for the NBSD Board Finance Committee. Every year, the way they weigh the cost of funding public education in our rural communities against the impact on property taxes for those who choose to live in our region. They deeply feel the pressure of presenting a livable budget. The impact of moving from a threshold to 118% to 112 in a single year represents an added cost of $2,862,504 to our PATS Poops. Even if our localized spending and per pupil costs don't increase, too many of these broader expenses are completely out of our control. Last year, we froze the number of full time positions in the district. No new positions were added and some unfilled roles were eliminated entirely. Even with the strict cost containment, our budget increased by 6.7%. If age nine forty nine were to pass as is, and the board decided to level fund our FY 2829 budgets, MVSU would need to cut roughly $1,305,177 from our FY '28 budget, the equivalent of 12 teachers. The board then would then need to cut an additional 1,298,000 in FY twenty nine, representing another 12 teachers. In just two years, we will be cutting 20% of our teaching staff. The erosion of educational offerings and the resulting harm to our students would be profound, all while leaving the state's fundamental funding inequities completely unaddressed. For a district our size, this impact would significantly restrict or eliminate our public pre K program, force relocation of students to different campuses adding to family stress, and greatly reduce the vital learning pathways currently available to our secondary students. The strength of each nine forty nine is the capital debt exclusion. This expense has been artificially inflating MBSD's per pupil spend, creating a double taxation penalty. As voters have repeatedly demonstrated, this region is fully committed to providing a healthy, safe learning environment for its children. Decoupling capital expenses from the per pupil spend allows our district to finally move forward in addressing significant infrastructure needs. Overall, the intent of nine forty nine to manage education spending growth and respond to the heavy burden of increasing property taxes is commendable. I applaud the effort both the House and the Senate have made to exclude capital debt from per pupil spending. Our schools simply cannot continue on this path of decay. However, addressing the real causes of the financial situation of all our districts find themselves in is the necessary first step to containing costs. MESD did not become one of the highest spending districts because we ignored the taxpayer burden. Our seven communities highly value public education and actively support school budgets to meet those goals. Dropping the threshold from 01/2018 to 01/2012 in a single budget year fails to acknowledge realities of offering responsive education in a rural setting. Instead, implementing a gradual phase reduction that allows school boards and their communities time to adapt is a much more sensible approach. While H-nine 49 attacks educational spending by lowering the threshold, if the state truly wishes to meet the Act 73 expectation of moving education equity, improving education equity, I believe that a spending minimum must also be identified in the yield bill to adequately educate students in a rural setting. As national state testing has indicated, Vermont is currently not meeting its constitutional responsibility to educate its children. Towns should not be allowed to under resource their schools. This only further compounds the inequities in student experiences. In summary, I genuinely appreciate the dedication of the House and Senate to Vermont's children and taxpayers during the session. We all share the goal of ensuring our youngest citizens thrive while keeping Vermont an affordable place to live. The strongest merit for me is the age nine forty nine for my district is the removal of capital debt for the per pupil spend calculation. Our communities desperately need every tool available to address failing facilities. However, drastically lowering the threshold adds impossible stress to the formulation of a fiscally responsible budget. I strongly urge the Committee on Ways and Means to approach the shift from 01/2018 to 01/2012 with a phase reduction, allowing districts to adjust over time. I also ask that a minimal allowable poor people spending amount be defined so that all students have adequate resources to act 73 expectations. I hope my testimony has provided essential context as to why districts see the current threshold due to pressure outside our control and how the impending decisions of this legislature will have an irrevocable impact on the students of Vermont. The children only have access to this life changing resource for a very short period of time in their lives. A collective responsibility to ensure those few years in our classrooms meet the expectations of our families, taxpayers, and communities. Thank you.

[Emilie Kornheiser (Chair)]: Before we go to questions, I have drastically over scheduled the morning. Yes. I would like to apologize. Less to the committee and more to all the people sitting on the benches who's scheduled. I'm going try to rearrange. And so I'm wondering if it would work for the Superintendent's Association, the School Board's Association, the school business officials, and the NEA to move to tomorrow morning.

[Julia Richter (Director, Joint Fiscal Office)]: You cannot. Okay. Can you? Great.

[Emilie Kornheiser (Chair)]: Sue left, so maybe it'll work for her. She's with you. You two are together? Okay. And Elizabeth, can you move to tomorrow morning?

[Julia Richter (Director, Joint Fiscal Office)]: What time tomorrow morning would it be? Do you know?

[Emilie Kornheiser (Chair)]: Like, really, like, maybe? Yes. I can do that. Great. Thanks. Okay. Done.

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: Jim, your question.

[Julia Richter (Director, Joint Fiscal Office)]: Yeah. For Sherry.

[James Masland (Member)]: Thank you. Thank you all for your testimony. Early, Sherry, you mentioned phase reduction in the cap one way. I represent, along with Rebecca Theford, Sharon Stratford Norwich, and we're seeing a catastrophic catastrophe in our future, shall we say. And I've been interested in the debate. I'm looking at the screen, I should look at the camera, I guess. Okay. I'm very much interested in phase reduction and I can think of three different that that might be accomplished, and I'm interested in your comments. One is, as you suggested, phasing down from 118% to 112% over a couple of years. You also mentioned, get right to it, the spending floor.

[Emilie Kornheiser (Chair)]: Yes. And the other way

[James Masland (Member)]: it might be done that I was thinking of is a dollar cap in each of the next several years. Like, for $600,000 penalty one year down to $200,000 to 400,000 to 600,000. I mean, the penalty in the dollar amount still that the school district would see a real number and could adjust accordingly. Wondered if you'd think comment on each of those three, because I'm interested in some sort of amendment to this so that basically we're interested in the same goal, which is to reduce the catastrophic immediate impact on school districts so that they have time to work their way around to a viable solution. So your comments, ma'am, would be much appreciated.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: And and I'll invite James Fen, who's my director of finance, to to also speak because he's looked at the numbers, really looking at and again understanding and appreciating the pressure that the House and Senate and is feeling from our taxpayers. Absolutely, we need to figure out ways we can contain costs. As I said in my presentation, there are many things that I do not have control. Articles of agreement, I cannot work around that. Our finance committee cannot work around that. We cannot walk around our CBAs. We can look at positions elimination. When we balance the things that we can control and can't control, having more time to work those through, and I earlier representation in that we are making decisions that are fiscally responsible. It's really hard to hear because I sit in every one of those meetings. I sit with my principles. We are really trying to contain costs as seen by freezing and reducing positions last year. So I really want people to know that we are serious, our school board is serious, and there are things that we just can't fix. Jim, would you respond to the phased approach and how that would allow us as you also are members of the finance committee?

[James Fenn (Director of Finance & Operations, Mountain View SD)]: Sure. My biggest concern about the index for the threshold right now is, and this is not part of your current bill, is it's tied to what it has been tied to a NEEP index, and I know you have to you've chosen a new index this year, but the index is going up about two and a half percent while health insurance is going up over 6%, and the costs are going up two or three times the index. So our spending, our drivers of our spending are going up faster than the threshold is because the index is not reality in the world that we live in. So I would strongly encourage an index that actually reflects the consumer prices of Vermont versus one that's as conservative as is currently being used. As far as the phase in, I don't know how a I think a phase in gives us time to work on things, but without some sort of cap on some of the expenses that we can't control, any reduction in that threshold is going to hurt all of the communities, and you'll see more and more of the districts go over the threshold each year you reduce it.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: And I think another piece, if I can quickly put this in, and I alluded it to me, to my testimony,

[Julia Richter (Director, Joint Fiscal Office)]: there

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: are opportunities for small schools to combine. But if they're in different SUs and SDs, we don't have within a year's time the opportunity to make those changes. They take care time. And last week I tested, or two weeks ago around becoming a Merge District. That took five years. The kinds of things that need to happen contractually, calendars, there are so many pieces to that work that is totally being ignored. As a survivor of Act 46, for a district that already had towns working together, I just the realization that this work of merging and closing. Again, I can't close a school next year. I would have to go through a vote. I have a process. There are articles of agreement. So, there's assumptions that we can snap our fingers and reduce 750,000 even if I wanted to. And I think there's opportunities there. I can't do that because of articles of agreement. So in so many ways, our hands are tied and there's assumption of that quick reduction. Well, then just can cut that money and you can cut that school and you can move those kids. I can't because I have to operate and so does my school board under already approved articles of agreement. So there's assumptions about how quickly we can reduce our budgets that are not even close to the reality we live in. Whether you live in my region or the Northeast Kingdom or Burlington. We all operate under very strict regulations and guidance that we cannot correct for in a year's time.

[Rebecca Holcombe (Member)]: Last question and then we're gonna

[Charles Kimbell (Ranking Member)]: Sherry, it's a shameless, brazen plug. What impact on the number of tuition students that are going to Mountain Views High School has been affected by the condition of the school. Could you talk about the trend in your tuition students coming to the school?

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: Yes, and Rafael Adamek, who's my enrollment guru in the district. But to speak to, so in this school, in the school year '25 or '24, '25, we had 20 different communities sending tuition students to our high school ish, This year we lost some of those tuition students, which impacts our bottom line. So why would you choose a high school even though we offer AP and pathways and excelling academic opportunities when you have no confidence in the facility that your child will be going to. And we don't have confidence. We could end this year almost needed to close because our sewage system was working. So we are losing tuition students as a result of our failing facility. It is not because of our academic programs. It is not because of our outcomes for students. It's because, and we've spoken to parents and communities. They are concerned that if they choose our high school, that high school will not be in existence at any point in the school year, whether it's next year or the year after.

[Emilie Kornheiser (Chair)]: Thank you. Thank you so much. Thank you for joining us and for your really careful presentation. Appreciate all the details.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: Thank you for inviting me. And again, if there's any time that I can step in or questions you have, please, Charlie has my contact information as well as my team. Thank you very much.

[Rebecca Holcombe (Member)]: All

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: right. Thank you. So

[Rebecca Holcombe (Member)]: we're going to go to Ted and Cassandra next, if you're ready. And then I'm going to

[Emilie Kornheiser (Chair)]: go to Jake and then you and Chelsea.

[Bridget Burkhardt (Clerk)]: Coming the same. Yeah. There we go.

[Unidentified committee member (brief interjections)]: Good

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: morning. Say dates again. Bill, senior fiscal analyst on page 50.

[Emilie Kornheiser (Chair)]: I'm new John's joke. Just see

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: the interesting video, sorry, Ted. And Cassandra Ryan, CFO for the Agency of Education.

[Rebecca Holcombe (Member)]: Uh-oh. So

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: the AOE's comments on the yield bill, the Senate version of the yield bill, correct? So in order, section one, setting up the yield amounts, AUE has no comment.

[Emilie Kornheiser (Chair)]: Well, do you want questions for each section, or would you rather we go through the whole thing and then have questions for sections?

[Rebecca Holcombe (Member)]: I think

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: that's up to you.

[Emilie Kornheiser (Chair)]: Let's try going section by section with questions. And then if we lose time, I'll bring it back in again. Aoille has no comment on whether we put all the money towards this year's tax rates or next year's tax rates in terms of how it would impact districts budgeting next year.

[Rebecca Holcombe (Member)]: Okay. Great. Section two.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: Again, holding the reserve for fiscal year twenty eight. Don't know you can comment on that as well. Okay. Section two of the Senate version for the excess spending, specifically the inclusion of the principal and interest payments for all bonds. The AOE does not have an objection for this. Simply a reminder that the previous process included agency review of construction projects, which has not been in the bill recently.

[Emilie Kornheiser (Chair)]: So the agency is not concerned that this might result in school construction that isn't towards the long term strategy of more and fewer? So that's what

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: that's referencing. We're just pointing out, of course, that disconnect between the required process, the agency's review breakdown. It's a two step process, one being the secretaries review of the project, Google based on a set list of criteria and statute, things such as statewide initiatives, regional capacities, and sort of like maybe I would term it as the advisability of the project given the statewide initiatives. So that's part one of it. And then the second part would be about that financial test, which compared the amount of

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: the bond. So before we go to the financial So

[Emilie Kornheiser (Chair)]: I guess when I read, you have no objections. It sounds like you think that a full exemption from the excess funding threshold for all school construction without restrictions is a good idea. That's how I read no objections. I don't know that I

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: would read it that way.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: I think they're expressing that there's considerations for sure that we're assuming folks are aware of with the language. So I think we're pointing those out to you as consequences of the way it's written right now. Maybe it should be written even further.

[Charles Kimbell (Ranking Member)]: Back in the day when eligible expenses were excluded from the excess spending threshold, is that kind of the old approach, what you're referring to? They're not even in new school construction, having to meet the secretary's approval and the whole list of things in terms of strategic so if somebody built a new school, let's say, a year or two ago, and that debt was not subject to the test, which what the Agency of Education used to do before is what was eligible to exclude from excess spending threshold. Are you saying that that test should be applied?

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: Just pointing out that the way it's written right now, it would not be applied. As we're reading this, we are understanding that it would not be applied at this point. There's the Secretary Act, for lack of a better term, maybe a visability of the project, just trying to really look at it from that statewide initiative and regional capacity type, whether it's the right move at the current conditions to take this project on. Was always a very serious consideration. And then secondly, there is that fiscal test where we refer to an FDA agency as the MCSP. Maybe the terminology that you've heard is the COF, COF, not sure. But what that really did was it limited the amount of state participation. So it set a dollar value based on certain criteria things such as student enrollment projections, educational specification documents to kind of overlay and come up with what would be the maximum amount of the cost of a project the state would participate in, sort of keeping it or even not just what the owners thought, but what was really necessary to build the appropriate space. So, just pointing out that as written, those were reading that, that would no longer be required. It's uncooking that from the construction pre approval, preliminary approval.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: Okay? Yep. Yeah, so Section 2A, Senate version, excess spending shifting from 118 to 112. So I ran some numbers using the FY 'twenty seven budgets for testing these changes. The number of districts and you've seen some of this analysis from Julia the number of districts over the threshold will grow fourfold from eight to 32. And coincidentally, five of those 32 districts voted down their FY27 budgets on meeting date this year. 87 districts, therefore, would not be impacted by the statutory change. The ed spending per long term weighted AGM, ed spending per pupil, amounts over the threshold would range from $5 to $2,900 In order to avoid the excess spending penalty in the absence of any whole harmless provisions, the use district would have to reduce their ed spending per pupil by those same amounts to equate to about 0% to 18% decreases. Most districts on that list are somewhere around 5% or less. For reference, only 19 districts had 0% or less growth in spending per pupil from 26 to 27. The ALICE position on the dropping from the 118 to one twelve, we don't object to that. Do you support that? I think what we can say is that we don't object to it. I think other options have been brought up, like phasing something in. At this stance-

[Rebecca Holcombe (Member)]: Do you prefer we phase something in?

[Unidentified committee member (brief interjections)]: I don't

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: think the AOE prefers that,

[Rebecca Holcombe (Member)]: no. Okay.

[Emilie Kornheiser (Chair)]: And then what you noticed about the inflator?

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: The next bullet? Yeah. Yes. I think that's already been mentioned as well. It's the rate of inflation, which is historically less than the actual growth rates of Fed spending. So over time, it would become more and more strict and limiting.

[Emilie Kornheiser (Chair)]: Do you see that as a pro or a con?

[Rebecca Holcombe (Member)]: Would you recommend a difference later?

[Emilie Kornheiser (Chair)]: And not you personally, to agency.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: That would happen naturally. Again, in the future, we don't know if this is going be in place for two years, three years, four years, depending on how long it takes for education reform to replace this. In the short term, being one year or two years, it might be a significantly limiting factor. But if it was three or four years, depending on what inflation does, at this point, seems like inflation might be going higher, but it could go lower for some reason. In that case, then it becomes more and more strict. So it's naturally going to become more strict anyway, and then you're coupling that with a decrease from 118 to 112 in the threshold. So those two things could be a double whammy for districts in the longer term

[Jeff Fannon (Executive Director, Vermont-NEA)]: for a three year.

[Emilie Kornheiser (Chair)]: And you're looking across budgets over the last many years. Does the agency have thoughts on what impact that might have on education quality or other agency goals?

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: We do recognize that it could lead to staffing cuts. The hope would be that there would be other policies or actions taken to limit any negative impacts on education quality. It is possible to reduce spending and not reduce education quality. Thank you.

[Rebecca Holcombe (Member)]: Or else, oh, sorry, Representative Holcombe. Curious, we had a conversation yesterday, think you heard from the Superintendent Woodstock, and also considered that the spending penalty is hitting some of our higher poverty rural high schools. And if they close their schools, they'll be waited and transitioned, but they might actually spend more. Have you looked at the impact of whether this is targeted at whether Sheriff's Senate Finance suggests a shot across the bow, are we shooting across the right bows or are we arbitrarily hitting districts in ways that may actually create perversance?

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: I think that in some ways, if the AOE noticed that this is a blunt instrument. And given the way that it's written, it's going to affect all districts across the board in a similar fashion, where there could be alternatives where you find where you can customize some of the restrictions for certain districts depending on the circumstance. So that is a possibility.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: All right, we're also recommending strike to some of the language. So the same section, number 12, we're asking or suggesting, I guess, to strike that last phrase there plus any amount required to be added from capital construction reserve funds. We actually have implemented that section as an agency and we've not done that since probably the early 2000s. It seems like an opportunity to ask for that to be removed. We also would add that in the current climate over the years since the suspension, we would think it's best practice to actually engage in setting up reserve funds for some capital needs. And in that case, five years is a pretty small amount of time to expect those to actually be used. So it seems like maybe outdated language or maybe not quite the

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: right fit now.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: So we would ask that that be considered to be stricken.

[Emilie Kornheiser (Chair)]: Representative Ode, you have a question?

[Carol Ode (Member)]: Yes. The AOE, representative just said, you might see it as a blunt instrument. I'm thinking he said, but there are ways that you could make that not a blunt instrument. And he did not say what those are. So I would like to hear that, please.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: We did not appear a list of alternative options at this time.

[Carol Ode (Member)]: The whole point is, I mean, I can imagine what, well, what can you imagine they might be?

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: I mean, honestly, I think we can imagine a lot of different alternatives.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: Can you

[Carol Ode (Member)]: name some?

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: Not at this time, no.

[Carol Ode (Member)]: Because why?

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: I had some thoughts yesterday, last night and this morning, but I haven't prepared comments on that and I don't want to speak out of attorney.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: Thank you. Certainly, if that's of interest, could prepare these companies more, but we could have that.

[Emilie Kornheiser (Chair)]: I think that would be interesting. Thank

[Carol Ode (Member)]: Thank you.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: Yep, thank you. On the other piece of the three hold harmless provisions, I'll read this as a form of relief for the districts currently significantly over or near the threshold. If they were to keep their ed spending or their ed spending per pupil amount flat or less compared to the prior year, they would not be penalized for being over the threshold, as it's written. Alternatively, a panel of experts under the Secretary of Education would determine if the excess spending was for good cause. The AOE position on that is that these new provisions potentially dilute or litigate the intended goals of the excess spending mechanism and forgive to a degree those districts currently over the threshold. A8OE does not support the third provision as drafted. And I think this has also been brought up this morning. Mathematically, if a district maintains flat head spending over a longer period of time with declining enrollments, at some point their head spending for pupil will increase to significant levels again. We were concerned about that.

[Emilie Kornheiser (Chair)]: You also opposed to the good cause provision? I think there are two quite different provisions in my mind, and I'm curious about

[Unidentified committee member (brief interjections)]: your thoughts.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: So we said we don't support the third provision as drafted a good cause piece.

[Emilie Kornheiser (Chair)]: Okay, so neither. I think it's

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: just the lack of specificity to it. It be a very difficult implementation of that, and consistency and the specificity is just not there. I think that's more of

[Rebecca Holcombe (Member)]: the comments. If you had

[Emilie Kornheiser (Chair)]: recommendations on what specificity on good causes look like and you could get them to us soon, that would be very helpful.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: Yeah, we did talk about that. Talked about it in this morning, and I think the idea was that we really would recommend working with BASBO to really understand litigate more about it and to see what that was

[Emilie Kornheiser (Chair)]: about right. Did you all testify on 02/20 before it left the Senate?

[Rebecca Holcombe (Member)]: Okay, thanks.

[Charles Kimbell (Ranking Member)]: So one quick, to that point that you're saying, if education spending was maintained at

[Unidentified committee member (brief interjections)]: a certain level, concern about

[Charles Kimbell (Ranking Member)]: per pupil spending going up, understood, but

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: would you be more supportive keeping

[Charles Kimbell (Ranking Member)]: that exit on that off ramp if it was per pupil spending was the same?

[Unidentified committee member (brief interjections)]: You know what I mean? So you've got

[Charles Kimbell (Ranking Member)]: the three different exits right now. If pre pupil spending is the same, if total district spending is the same, or

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: you have a Yeah, so it depends on which direction and how deeply the enrollment numbers change. Any direction for those high spending districts in the downward direction is good, But some of the districts that are currently high spenders could bring down their spending significantly and still not get down to 0% increase over last year. In which case, would only receive a smaller portion of the reward, if you will, for lowering their costs. I think that the AOE, we didn't specifically articulate it, but I think that we don't fully support the three provisions, the off premise position.

[Rebecca Holcombe (Member)]: Yeah. What about districts like Blue Mountain and Oxbow that are expected to increase spending under the proposed foundation plan that are going to be hit by the proposed excess spending penalty? How are they supposed to understand?

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: I don't think I know enough about the future provisions, but if we switch to the foundation formula, would the excess spending penalty even still be in play at that point?

[Rebecca Holcombe (Member)]: No, but I think the point is we would be incentivizing very harmful and substantial cuts on them right now, even though our assumption is under the foundation plan, they would be better funded.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: So you're saying without the brief revisions, without the possibility of the third revision?

[Rebecca Holcombe (Member)]: Well, I'm just wondering, because in theory we're supposed to be raising their spending, but they're going to hit this.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: We haven't looked at that specific intention. And again, with a single instrument, if you will, the blunt instrument, there's going to be some winners and losers, and so that's a natural consequence. You might need to write in some extra provisions in order to address those specifically.

[Emilie Kornheiser (Chair)]: And so I think Senate was trying to write in those provisions, and I think those provisions might not be as nuanced and might incentivize some weird behaviors that are not towards our policy goals. And so any ideas you have on what those right provisions might

[Bridget Burkhardt (Clerk)]: be would be helpful. Okay, thank you.

[Emilie Kornheiser (Chair)]: Do you have anything else on the hold harmless provisions? And then your last comment about interstate districts?

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: So as far as any kind of opinion on whether or not the interstate districts are required to follow excess funding. I don't know that we're not able to give that. We would defer completely to election counsel on that legal interpretation, but we would be able to at least let you know what we've done in the past as the agency of education. So team finance at the agency of education has not ever held them to excess spending. The excess spending statute has not done that.

[Emilie Kornheiser (Chair)]: Doesn't your legal team provide statutory interpretation in order for you to carry out the laws?

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: They do.

[Emilie Kornheiser (Chair)]: So have they provided a statutory interpretation on this issue? They have not. Can they?

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: I can ask, but I do believe that-

[Emilie Kornheiser (Chair)]: Legislative council can't interpret legislation for the administration. They can only interpret legislation for the legislature as we're changing laws we're working on.

[Rebecca Holcombe (Member)]: I think

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: that's what we're referring to them on. If you wanted that legal interpretation, I wanna to them for that.

[Emilie Kornheiser (Chair)]: I think we need a legal interpretation from you in the context of how you're carrying out the law Okay, as

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: thank you.

[Emilie Kornheiser (Chair)]: Any other things you'd like to say about all of the YILPT bill? Okay, thanks. Anyone else have any questions or thoughts here?

[Rebecca Holcombe (Member)]: No, it's a lot of information. You've got a long memory. I wonder if it would be helpful for us to hear about why the yield is now in the December 1 letter, because it didn't. You remember that process?

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: I do. I'm not the best person to speak to the representative

[Rebecca Holcombe (Member)]: was just in a little

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: bit of a different role there, so I remember it more peripherally than directly, and so I would probably just hate to comment on something I wasn't 100% thoughtful about. Thank you both very much for

[Emilie Kornheiser (Chair)]: your time today. Really appreciate it.

[Rebecca Holcombe (Member)]: Thank you.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: Jake and then Sue Chelsea?

[John Johnson (Office of Legislative Counsel)]: Everybody?

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: The government tax department. I have a couple of slides that sort of posted under my name on your website, and also I remember It's Oh, can you see it now? But

[Emilie Kornheiser (Chair)]: it was pretty big. Thank you, Julia. Everything

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: spicy in there?

[Emilie Kornheiser (Chair)]: We're all going go back and

[Bridget Burkhardt (Clerk)]: watch the video and find out.

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: So actually, quickly, the yields are in the December 1 letter, starting with Act 46, when they switched to the yields. There used to be a base rate, around $1 and it would go up or down. This was not in my presentation, but I'm not answering Thank part of Holcombe's you.

[Emilie Kornheiser (Chair)]: I was like, What's happening already?

[Rebecca Holcombe (Member)]: I've a different interpretation, if you'd like to hear it. Which was, it's always bounced around. And at the time, the legislature was adding a lot of programs to the Ed Fund during the session. And we wanted people to see that it was bouncing around as the legislature made changes too. We talked about it as pulling back the curtain on the widget of us.

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: Okay. So I do have some feedback on the yield bill. The renter credit, I know that John went through it, and I can very briefly talk about that. And if you have any questions about the renter credit program, I could answer them. There were a few in the senate. And then the excess spending threshold, we have some recommendation and some feedback on that. And then there's one more thing, which is a bit odd, but I want people to know what's going on with property tax credit income limits. Cause we get a lot of questions and when the questions start coming in, it's too late to change it. So I want to flag it for you now. So it has a little red flag next to it. Okay. So, the first thing is in the bill that came over from the Senate, they made a one year change to the renter credit. And what they did, as John mentioned, is for credits that renters are going to get in the 2027, when they file their taxes that are based on their renting in calendar year '26, they're going get a 25% bump, basically. The tax department is going to calculate the credit. Instead of 10% of fair market rent paid over the year, it'll be 12.5%. And it's expected, I think JFO said at some point that it'll cost the general fund around 4,000,000. And that's why the original transfer was 104,900,000 and now it's 100,900,000 So that is what they

[Bridget Burkhardt (Clerk)]: did. Thank

[Rebecca Holcombe (Member)]: you for putting this out, because we usually ask questions about this piece. But my understanding is that when you make this trans credit, that a significant portion of it just goes to the landlord in the form of higher rents. That's what research in other states would suggest. Did anyone look at whether doing a one year bump in credit might actually just lead to longer term higher rental prices? Or do you think people won't do it because it's only a year? I'm not sure

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: if landlords know about the credits that their renters are getting, and it definitely goes straight to the renter. When we reformed the program, we actually made it so that landlords and renters don't have to talk to each other, landlords don't have to provide anything directly to renters. It all comes to the department. Then we are worked out a little harder. But then the money goes to the renter. I don't think this is going be on the Lawrence radars. So a quick example, if you had a couple of people who were renting an apartment in Rutland County in 2026, they had credit. So, the way the credit is calculated, if it's two people, they get a credit based on a two bedroom apartment. What HUD thinks is the fair market rent. Normally, a tax department would take 10% of that fair market rent amount, but now we will be doing 12.5%. So it's a really easy, administratively easy thing for us to do. It's almost inconsequential. So for this example, they would get about $400 more if they're extremely low income. And then if they're higher than extremely low income, then the bonus wouldn't be as much because there's a phase out, a long phase out on the credit. So there's no clicks in this one, which is great. But anyway, that's how it would work.

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: A quick Looking at

[Bridget Burkhardt (Clerk)]: your other slides, you have recommendations at

[John Johnson (Office of Legislative Counsel)]: the end of them, there's no recommendation

[Bridget Burkhardt (Clerk)]: on this slide. Are

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: Yeah, you we're good. Just wanted to make sure, there were some misconceptions on the Senate about what's going on with renter rebate and renter credit, and if anybody has any questions, I could answer them quickly now.

[Charles Kimbell (Ranking Member)]: What's the difference between a renter rebate and renter credit?

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: Sure, it used to be called the renter rebate. But

[John Johnson (Office of Legislative Counsel)]: it's not just the name.

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: It's over, thank you. Okay, thank you. It used to be called rental rebate. The tax department proposed a reform that the legislature approved of in maybe 2020ish. It was based on studies on how to improve it. And I think the key thing to know is that it doesn't look at the rent you actually paid and compare it to your income. It just It kind of standardizes it and it gets rid of some cliffs. So if you're two people, you get a credit based on a two bedroom apartment. If you're three people, it's a three bedroom apartment, and all the values are coming from TUD. The rent amounts, which are different by county, and the income limits also come from HUD. And it's all indexed for inflation. And if I could say one more thing, it's that when we reform the program, when we proposed this reform that the legislature mostly went for, it stopped a big decline in how much runners were getting. It had been declining precipitously. We stopped it, and it started going up because the whole thing was indexed appropriately. Then last year, the year before, we made the income limits higher, and that grew the program even more. We're spending now 11 something on it, compared to seven in 2020.

[Rebecca Holcombe (Member)]: That's a pretty basic question. So it is a refundable credit. So even folks who have no tax liability would be getting a credit back. I guess we don't need to push up people, but how do we get at folks who have such low income that they're maybe not even filing this code?

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: Right. Yeah, we encourage them to file. And we set up the form so that they can still fill in what's necessary and tell us about the income that they do have. So they're definitely eligible and we reach out as much as we can, but that is a population that's hard to reach because it's the link that affects violence. Same with Tom said. Is there something new this year with the landlord contacting the tax department and not actually working with the tenant? No, that's not new. That change happened when we went to the rental credit. So instead of landlord handing a form to renters or renters asking their landlords for this form, which can sometimes not be ideal, the landlord gives us a tax reform reform that says, Here's my property, and here are the people I rent it to. And then we, on the back end, make the match. So that's what we changed. I have a case where the constituent has come to me. Two people, two apartments in this building haven't got their rebate yet, but the others have. And the question was whether the landlord submitted the document. But he said, one document is for everybody. So it could be the case that the renters put in their claim, and when we went to check on the back end, we didn't see them. In which case the tax department would reach out to both the renter and landlord to confirm. So there could

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: be a delay on it.

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: That being said, we're doing anything faster than we used to with the renter rebate. Take that money, 7,000,000 to 11,000,000. That's something where? The general fund. Okay. And John mentioned this morning, the maximum credit is going up to by a little bit. Okay. So that's just some context. We do have context and recommendation on the excess spending threshold. So as you guys were just talking about, the language that came over from the Senate has a new, what's called an exclusion from excess spending for new bonds that were approved after 07/01/2024. So for high spending districts that are near or above excess spending threshold that have these new bonds, would they would now those bondings would be excluded. So it's good for them. But no one is thinking about is the whatever is being bonded for, is it strategic? It'll hit the statewide ed fund like everything else. All of us will pay for it. And so the question is, does it make sense? And Rebecca and I talked about this a bit a few weeks ago. So that's something to consider there. The tax department does not like the kind of odd new constructs in the excess spending threshold, where if you can keep your per people spending or overall education spending the same as the prior year, you're exempt. It's a strange loophole, which is gonna have some behavioral impacts. For example, the six or so districts who are over the threshold this year, if they can manage to keep per pupil spending or overall education spending level next year, keep those level, one of them level next year, then they're out. So it's quite unusual. It's also really different than the entirety of how things work now, and also how things would work with a foundation formula where the money goes to the kids. So, the kids are, that's where the money goes. So, it's getting away from poor people spending. We're concerned about that one. And the last one that AOE just talked about too, we're concerned with this, where you can appeal to the secretary, not secretary, but secretary. That is gonna be very early in this morning. That's gonna limit the behavioral impact of the threshold itself. And it'll make yield setting really quite complicated, because Julia will come in here in April or whatever and say, Well, I don't really know quite what the yield should be because we have these appeals out to the secretary that are going to be heard in May, June, whatever. And it also makes it so districts couldn't really tell their voters what's up. They'd say like, well, your tax rate could be this, or it could be this if we get denied on our appeal. So the excess spending threshold, which is really the only bright line for cost control in the entire system, would get quite foggy with these new provisions. If you can imagine a freshly painted line on baseball field on a Saturday morning, and this is kind of like after all the little leaguers have run through it quite a bit. So, no longer a bright line. So, about those things. I hope that those are struck. And a better idea would be to just set the excess spending threshold at an appropriate level, whatever you feel is reasonable, not have these side pathways.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: Okay. How do we make sense of

[Rebecca Holcombe (Member)]: it when tax suggests something different from the AOE? Do you make sense of it however one makes sense to say it in the OR, sure, within the book?

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: This one, I'm sorry that it's coming so late, but out of curiosity, I plugged in the yield amounts in the Senate the Senate passed to try to know what the income limit is going to be for property tax credits. And a little bit of context here. The tax department gets tons of questions about this. Possibly my battery's gonna

[Julia Richter (Director, Joint Fiscal Office)]: It's better to charge

[Bridget Burkhardt (Clerk)]: your It's work online or not? It works on the staff.

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: I can try this one time. The tax department gets And that might work.

[Bridget Burkhardt (Clerk)]: The tax department gets a lot

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: of questions about this because our household income form comes out and it says, property tax credits are available to anyone whose income is up to whatever. And that number has been going down and down and down. And we say to them, to these people who call or email, we say, It's not They don't even email us. Yes. We say it's not us, it's a mathematical thing, and people are very unsatisfied by that.

[Emilie Kornheiser (Chair)]: It is very unsatisfactory, yes. Okay,

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: yeah. And it has really been going down. It used to be that around two thirds of homesteads got an income based credit a few years ago. Now, in the most recent year of data that I have, that's complete, it's half. If the yields as passed go through, it would be less than half because the income limit would be all the way down to 109. In the yields that you guys passed or the House passed, it would be $108.05. So anyway, it's going way down, and we would recommend, and I'm sorry that this is coming so late, that we make a change now to do something about it. It will be too late next year to do anything about it, because tax will have already put out its forms that said income limit is 109.

[Emilie Kornheiser (Chair)]: So we've, at various times over the years, taken testimony of what happens when we do such things. Julia likes to call it squeezing the balloon. Julia's not here. Can you describe the balloon squeeze and what would happen?

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: Yeah. No, it's definitely in the balloon squeeze realm. So what would happen is that people who live who are over 90,000 of income, but who have houses that are worth more than $225,000 which is pretty much everybody in that zone, could potentially get a slightly bigger credit. So their benefit would be expanding. And the way the Ed Fund works, that means that the rates for homesteads and non homesteads would have to be slightly higher. I'm estimated the impact of this has $6,000,000 in FY '28. So everybody would have to pay a little bit more to do this. So the question is, why? Well, the reason is it's just not intuitive to have the income limit keep dropping on something like this over and over again. We also are hoping to eventually get to the homestead exemption. And if you remember from Julia's blue and white tables about winners and losers, there's a funny patch around 90,000, and that's hard to deal with because there's a massive cliff in our current system. That's where it goes from covering you at 400,000 on house site value, down to $225 so that's a really big cliff. If you change it to $250 it would shrink the cliff a little bit, which is helpful as we go to a staircase system, not a cliff system. So that's a reason to do it. Then, yeah, answering questions from constituents and taxpayers about it is the other reason. Julia slammed my graph this morning already, but I tried to represent it graphically to show what would be happening. We would be shrinking the cliff, and then the green is kind of like the outward credit amounts. And then the new the new household income limit, instead of going down to one zero nine, it would go up to one twenty one. So, very late in the game, but it would be a good step if it happened.

[Charles Kimbell (Ranking Member)]: I think this points out that I'm sure all of us have constituents contacting us about it, and it doesn't make sense for the income limit to keep decreasing, especially when real estate values are increasing. But the fact that it's self funding by increasing overall property taxes to fund the credit is a little off putting, because you don't want to do that, unless we use some other source of funds in order to pay for that increase in the credit.

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: Yeah, I will say though, if you think about it, property taxes, property tax rates might change a little bit, but the net amount of property tax that the state has to collect is not going to change because of this. Like, what's really going to happen, Representative Kimbell, is that right now, if you look at the EdFund outlook, property tax credits cost about $1.34, I think. Next year, when Julia and I do the December 1 letter, that's gonna come way down to, like, $1.20 ish. I don't know. But if you do this, it'll still be coming down, but not as much. So the question is, where do you want to get the property tax money from? Do you want to get it from shrinking credits or from the rates? That's choice.

[Charles Kimbell (Ranking Member)]: The difficulty is because the property tax bills keep going up, so you think the credit should actually be increasing, and it's not, it's going down. Yeah,

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: in some cases. It's hyperfabricated.

[Charles Kimbell (Ranking Member)]: Yeah, so it just doesn't make sense if you're suffering from a now higher tax bill and your credit goes down. Right.

[Emilie Kornheiser (Chair)]: Yeah. Or you're suddenly, I think it's more of like you're suddenly not eligible for it. Which would

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: be a huge dam. Yeah, yeah. Let me know when pandemic comes down.

[Emilie Kornheiser (Chair)]: It's very late in the process for us to put this in anything. I don't actually even know if it's mechanically possible. And I think in past years, we haven't done this because of how it would That sort of pressure point of people whose taxes would go up because of it. Ideally, we're on this temporary ramp of a few years. Can you just talk more about all of your thinking on that?

[Charles Kimbell (Ranking Member)]: All of

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: our thinking on that?

[Emilie Kornheiser (Chair)]: That of, that little, that mix. Yes. I agree that it's an important thing to address, if we can. Just

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: First of all, apologize for not bringing it to the committee's attention sooner. It's out of personal curiosity that I was wondering what the income limit will be.

[Bridget Burkhardt (Clerk)]: It's big red flag when you realize what it was.

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: It's kind of a big red flag. I know we're going to get a lot of questions on it. But the thing about Julia's point about squeezing the balloon is totally true. This is just a policy of trade off. Are hoping to eventually get to the homestead exemption, which is a much more kind of maneuverable So this is a step towards that, because it's shrinking the cliff. The cliff is one big problem. So it's a trade off. It's not perfect, by any means.

[Emilie Kornheiser (Chair)]: And why

[Bridget Burkhardt (Clerk)]: did you pick the point where you picked?

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: The $2.50? That's a good question. I mean, could have been higher, but maybe Some of this is dependent on where property values and incomes go, but it could be $2.50 this year, and then next year, we could come back, give it the same kind of presentation and say, let's do two seventy five. So it's just a modest increase. $6,000,000 is one third of a percentage point on the average bill change, roughly, so to give you some sense of scale.

[Julia Richter (Director, Joint Fiscal Office)]: Any other questions for Jay? Yeah, James?

[James Masland (Member)]: I got an email a

[John Johnson (Office of Legislative Counsel)]: couple of weeks ago from

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: former representative, I think. I think he wrote to many people.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: Say again? I think they

[Emilie Kornheiser (Chair)]: wrote to many people. Yes.

[James Masland (Member)]: Okay. Well, anyway, he was urging us to do something very similar to what your resident date in recommending, and if it's since as you and the chair have discussed, it may not be practical to do that this year, but if there's a way to do it, I would certainly support it.

[Rebecca Holcombe (Member)]: Have you run it by

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: Senator Cummings? We emailed the idea, but I don't know if we even testified on the yield bill in the Senate.

[Rebecca Holcombe (Member)]: I'm just

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: wondering if she has said none way. And what about the governor's

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: The governor's office is in support. Yes. They recognize the problem of the income limit keeps going down, and also hoping shrink the cliff as we go to the homestead exemption.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: And I don't understand what you're saying, Jake, about, I mean, it seems intuitive, I suppose, that the tax rate would have to go up to cover that. But then you said you thought the outflow page, the outlook page, would show something like 120,000 FY, so that's lower. Right, so

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: if the house site value was bumped up to $2.50, then the line on the Ed Fund outlook would be $6,000,000 higher than it otherwise would have been. And then I was trying to say that it's probably going to go down next year. Like, we're spending $1.34 in f y twenty seven. It's probably gonna go down to maybe one twenty inch in f y twenty eight. But instead of it going down to $1.20, this could make it go down to 126. And it's impossible to know for sure, but that is generally

[Emilie Kornheiser (Chair)]: Write down set $1.30 134, I think.

[Bridget Burkhardt (Clerk)]: Right.

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: Yeah.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: Well, it wouldn't be impossible. We have to do some quick one. Yes. Step one, but

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: Yeah.

[Bridget Burkhardt (Clerk)]: Okay.

[Sherry Suess (Superintendent, Mountain View Supervisory Union)]: Appreciate you bringing that in.

[Julia Richter (Director, Joint Fiscal Office)]: Representative Ode?

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: I guess I would need to know what makes it other than the timing, why couldn't we do this, Jake?

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: You know, I'm not I don't track closely, like, you know, what where bills are and the mechanics of everything. The administrative timing for the tax reform works. The issue is where bills are in the process right now. And if this committee wants to change the yield bill and send it back, which I defer to the chair, obviously.

[Rebecca Holcombe (Member)]: Thanks. Yeah, Richardson, ahead. Jake, you sent me a very interesting file a while ago on homesteads and break lists, which is sort of interesting. Maybe we could ask, but I know they, I know I'm so excited about the test setting, but there's some pretty interesting- That was really exciting. I didn't say we're back. I'm really excited about that too. There's some interesting patterns. Mean, I think you're right, and especially when the grand lists are growing so much faster than spending, for example, in some places, it's creating, there's just some interesting, looks like there's interesting correlations between growth in homesteads and growth in grant list.

[Emilie Kornheiser (Chair)]: Growth in homesteads values? Yes.

[Rebecca Holcombe (Member)]: No, growth in number of home sales.

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: Uh-uh, okay.

[Rebecca Holcombe (Member)]: Yes. And the studies may be growing faster in places that may not be increasing home

[Jake Feldman (Policy Analyst, Vermont Department of Taxes)]: sales. Yes.

[Rebecca Holcombe (Member)]: It will be worth understanding, and it also speaks in a minute to pick on Woodstock. Leo's used to Let's not pick on Woodstock. No, but I think there's I their problems are actually empathetic and not picking on them. Thank

[Emilie Kornheiser (Chair)]: you, Jake. Really appreciate We will figure out if and how we could do something about this. I really appreciate you bringing it. It to without I think she's fully testified. There is yours.

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: So as much as I would love for her

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: to be here with me, I am happy to do it. I might also defer because some of the stuff is more her wheelhouse for when she's available.

[Rebecca Holcombe (Member)]: No, it's okay. You don't have a presentation, so it's your No,

[Cassandra Ryan (Chief Financial Officer, Vermont Agency of Education)]: I'm just kidding. It's on the website. Thanks.

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: Chelsea Myers, executive director of the Vermont Superintendents Association. It's nice to see you all. Thank you for the opportunity to provide testimony on H949. We recognize that Vermonters are under real strain. Rising property taxes, housing costs, and health care expenses are putting pressure on families across the state. School leaders feel that same pressure and work every year to balance community impact with maintaining educational quality. I'll first start with talking about the use of one time funds to buy down the tax rate. It will come as no shock to you when we come in on this. We remain deeply concerned about the continued reliance on property tax buy downs. While this approach may provide short term relief, it does not support sustainable school district budgeting. Districts do not build budgets, and voters do not vote on budgets based on the buy down yield. Instead, it creates an ongoing structural mismatch that makes each subsequent budget cycle more difficult. This approach masks the true cost education system, perpetuates a cycle of instability for districts and voters, and contributes to the misperception about cost increases. At a broader level, this policy approach continues to avoid some of the cost pressures, including demographic shifts in an aging population, housing shortages, limiting enrollment stability, and rising health care costs. These pressures have built over time. Continuing to rely on short term buy downs does not address them and shifts the burden onto local communities. Our asks for this section is to not use all of the one time funds for property tax buy downs and redirect even a portion of these funds toward long term cost drivers, including school construction aid, to support regionalization and efficient use of facilities and incentives for locally driven research based consolidation. I can pause because that's the end of that section, or I can just keep going, whatever people would prefer?

[Emilie Kornheiser (Chair)]: Think you can keep going because no one's on

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: that section. Okay. And so next is about the excess spending penalty and the reduction to 112. We appreciate elements of the current framework in H949, including the use of excess spending threshold instead of hard caps. However, we are very concerned with the proposal to reduce the threshold from 118 to 112 in a single year. Reducing the threshold on such an accelerated timeline will have harmful consequences. Districts are currently operating from an FY 'twenty five baseline around the excess spending threshold. It's sometimes a misconception that that's where we are setting the excess spending penalty from in the field even. So I just wanted to call that out. And the projected threshold is approaching the proposed foundation formula level next year at 112%. Lowering the threshold this quickly risks forcing rapid reductions in spending that are disconnected from a thoughtful system redesign. This will result in accelerated cuts to student programming and staff, disproportionate impacts on districts with structural cost constraints, such as tuitioning, and reduced educational opportunity on a faster timeline than the broader education reform transition itself. Cost drivers and structural pressures. This policy also does not address the primary drivers of rising costs. Health care, up 35% in three years, and it's approaching approximately 15% of the total of school budgets. Inflationary pressures, the fixed obligations from collective bargaining agreements, mental health responsibilities, and construction costs, which have been largely unsupported at the state level for nearly two decades. At the same time, it is important to acknowledge that not all cost pressures sit outside of the system. Vermont's education system includes structural factors that contribute to overall spending, including the number of districts, schools, and staffing levels relative to enrollment. Vermont has one of the lowest student to staff ratios in the nation. And despite significant staffing reductions over the past several years, that ratio has remained stagnant and, in some cases, declined further. This reflects a fundamental reality. Cuts cannot outpace enrollment decline. Districts are reducing staff, but enrollment is falling at a rate that continues to drive for people costs upward. Continuing to push reductions under these conditions will not solve the problem. It will simply erode student opportunity. At a certain point, additional cuts mean fewer course offerings, reduced student supports, loss of programs, and opportunities for students. These are not theoretical risks. They are already happening. This is not a question of whether districts are willing to make difficult decisions. Those decisions have become been ongoing for several years. It is a question of whether policy recognizes the limits of those reductions and the consequences for students. The following examples and I hope you'll appease me in reading some of these real scenarios shared by superintendents. They're anonymized, but

[Emilie Kornheiser (Chair)]: Yeah. A little slower.

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: Oh, sure. Sorry. I reached out to superintendents that are going to be most impacted by the excess spending penalty. It is something I am told often, so I apologize. And I asked them to send me anecdotes and specifics about how the 112% excess spending threshold would impact their communities. One district with full high school choice would need to reduce approximately 1,500,000 to meet the threshold. While there has been discussion of requiring students to attend a single in system high school to reduce costs, this would represent a significant shift away from longstanding community expectations around choice. Another K-six district, where approximately 55% of its budget is tied tuition and special education costs for students' tuitioning primarily to an independent school would need to cut approximately 1,500,000 The district has no control over the high school tuition rates. This year, it was $25,000 per student, yet those costs are fully included in the calculation. A small rural district serving two elementary schools on already operating multi grade classrooms would need to reduce $570,000 or just under 9% of its budget. The district is already sharing specialists, such as library and counseling staff. The two towns are connected primarily by mountain roads, including dirt roads, making consolidation impractical. With nearby school closures in recent years, further consolidation would require pre K students travel thirty minutes or more, often in difficult winter conditions. In the same supervisory union, three non operating districts would experience little to no impact under the penalty as they have minimal discretionary spending. At the same time, they continue to receive small school or sparse fee weighting, creating what was described as an unfair advantage over operating districts that must make programmatic cuts. One district reported a 4% decline in weighted student count spread across grade levels. Because the decline is not concentrated, the district cannot reduce spending in a targeted way. It has reduced staff for FY '27 to meet class size minimums. Come on up, Sue. Okay. Due to some of the districts being nonoperational for some grades, it would disproportionately impact K through eight students. Under the proposed threshold, the supervisor union would need to cut approximately 4,000,000 total, 32 FTEs, all transportation, athletics, field trips, extracurriculars, enrichment and related arts programs. Another district reported that at the 112% level, the district would need to cut approximately 40 positions, athletics and performing arts, world language programs, interventionists, instructional coaches. Reductions would extend to related arts counselors, mental health clinicians, and nurses. Another district outlined likely reductions across grade bands, talking about K-eight elimination of band, chorus, visual arts, drama, technology, education, world language, and library services. And nine-twelve reduced electives in advanced placement offerings with more study hall time and less classroom instruction. I don't think that's what any of us would like. In a district with a supervisory union that allows school choice after elementary school, three towns would need to cut approximately $500,000 from their elementary school budgets alone to meet the threshold. And I want to emphasize that this is a common theme through the anecdotes is that when you're limited to K through eight operating, tuition is fixed, and it only comes from the elementary grades, those cuts. In a small district that has already closed two schools and now operates only one remaining school, approximately $320,000 in cuts would still be required. The district tuitions students for grades seven to 12 to multiple receiving schools, including out of state, limiting its ability to control costs. A neighboring district in the SU tuitions all high school students consist of one school and would need to cut approximately $285,000 despite having limited control over tuition costs. The supervisory union expanded pre K to meet community needs and state goals. However, because of how spending is calculated, this expansion, while good for the community, has artificially inflated per pupil spending, perversely pushing us closer to the penalty threshold. In addition, the district is seeing discrepancies in the state data for long term weighted ADMs. I wanted to pause on that one, too. One modified unified district, after already reducing its budget this year with stable enrollment, would need to make an additional about $05,000,000 reduction. This represents roughly a 3% cut, with reserves nearly exhausted. That was another theme. A lot of reserves being used to help offset the inflationary pressures. As described, there's no meat left to cut. So bringing all of those anecdotes together, we see structural inequities within the penalty. One is tuition dependent districts. Some districts have limited flexibility with a significant portion of spending tied to tuition. These districts have very few levers to adjust budgets and will be forced to reduce core program to their elementary grades only. I also want to point out a little bit about the inequity that you all addressed in your version of H955 that talks about the differences spent between tuition and what parents pay to independent schools, section 24 of your bill, that have been stripped from the Senate education version of the bill. So exacerbating some inequities there as well.

[Rebecca Holcombe (Member)]: I have some questions about that. So I think what you're saying is that the uncontrollable costs at the secondary level are forcing districts that choose at the secondary level to make cuts.

[Unidentified committee member (brief interjections)]: Oh, yeah.

[Rebecca Holcombe (Member)]: So maybe that's something we need to think about with the waiting study because tuition students were excluded from the waiting study. And so if the disproportionate cost in those districts is at the secondary level, it may be understated the actual cost of the patient in the state since they're allowing those districts.

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: The second piece that we want to talk about with the inequities with the excess spending is pre K expansion. The state continues to emphasize pre K as a critical investment for quality and equity, yet districts expanding pre K may be penalized for doing so. One district reported that expanding a clearly needed pre K program is the reason that the excess spending penalty would be triggered. And this is a direct misalignment of policy and priorities. Capital bonding and equity, H949, excludes voter approved bonds prior to 07/01/2024. I'm sorry, I misstated that. Current law excludes bonds from 07/01/2024 from excess spending. I'll correct that for the record. Creating inequity between districts based on timing rather than on need, including some bond payments but not others, will require some districts to make dramatic cuts that harm students, while others will be held harmless. Our ask to you all is we urge the legislature to implement a gradual phase down aligned with the foundation formula timeline, coupled with a graduated spending floor. I swear I did not consult with Sherry Souza on that. Honestly, she put it in there before I did. Address structural issues alongside any penalty, including restrictions or guardrails on tuition, excluding pre K spending from the excess spending calculation, and committing to fully funding it at one FTE, correcting known issues with waiting based on existing research. And I linked the memo from Tammy Holcombe on that. We feel like if it's a research based funding formula, we should be looking closely at things that the architect of that system has said are incorrect weighting in our current funding formula. And then ensuring equitable treatment of capital construction across districts. And then I will let Sue talk about the last one.

[Sue Ceglowski (Executive Director, Vermont School Boards Association)]: The last one is pair any spending control mechanism with action on cost drivers rather than applying it in isolation. And an example of that would be holding districts harmless for increases in health insurance premiums above an appropriate inflationary index. In closing, an agency of education twenty seven school district budget update yesterday shows that anticipated increase in education spending is now 3.9% demonstrating that school districts are doing the difficult work of balancing taxpayer impact while maintaining education quality. What is needed now is not additional short term pressure, but a coordinated approach that addresses the real cost drivers, recognizes structural realities, aligns policy with stated priorities, supports a stable transition to a new funding system. We urge you to focus on solutions that are sustainable, equitable, and centered on student opportunity. Thank you.

[Rebecca Holcombe (Member)]: Yeah, go ahead, Doctor. Iszazak.

[Emilie Kornheiser (Chair)]: The Senate's mechanisms for exceptions to the excess spending threshold.

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: At first glance, language is appealing to us. I did note some of the concerns today. So if it's okay, I'll go back to my members tomorrow and give more specifics on that. Yeah, it gives me some flashbacks to On twenty seventh? Yes. Yes, I'm happy to get more specifics on that.

[Emilie Kornheiser (Chair)]: I just am not prepared for today. And school construction doesn't seem as complex, but does seem like it could drive behaviors that are not in line with

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: policy goals. Yes, there is an approval thought process for the Agency of Education, so that seems like a bit of a stopgap. I know they were saying it doesn't necessarily or what I understand them to be saying is that there wasn't necessarily a correlation with this and the excess spending. But in order to receive state aid for construction, should it ever come, they do need to get approval. And so there is that process to try to make sure that it's within the scope of what we're looking for in long term policy goals. It just seems like an arbitrary stop to when those voter bonds are excluded and not excluded just doesn't really seem fair.

[Emilie Kornheiser (Chair)]: Professor Lamoille?

[Bridget Burkhardt (Clerk)]: Thank you. So one of the problems I have

[Unidentified committee member (brief interjections)]: with this proposal as it's in front of us, like

[Bridget Burkhardt (Clerk)]: the language that's in front of us, is that it's penalizing certain districts without doing anything to support those lower spending districts. We've talked about, I didn't want to grill sharing, but it's your

[Unidentified committee member (brief interjections)]: job to be part it.

[Emilie Kornheiser (Chair)]: So floating the idea of

[Bridget Burkhardt (Clerk)]: a floor, I think that there are some districts who are underspending by choice when they could afford to spend a little more. I don't think that's true in that district. So my concern with the floor has always been how do we pay for it? So I'm just curious what your thoughts on that observation might be.

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: Yeah, I don't know that I have an answer to how we pay for it, but inevitably, in passing Act 73 and subsequently voting at H955 out, you're leading up to doing the same exact thing, right? And so I would suggest that that's a broader global question, not just specific to this particular bill. And one of the things is the graduated approach will be much more palatable, I think, for communities than a sudden hit to either huge tax swings or extreme education spending declines. So the more we can do to smooth that is the priority for us and for, I think, Vermonters at large.

[Charles Kimbell (Ranking Member)]: Chelsea, you mentioned one of the superintendents said that they were incurring the excess spending threshold or over it because of their expansion of Pre K, which was encouraged by the state. Do you know if in that example the school is offering more than the ten hours of Pre K? So they're expanding it beyond the ten, maybe to twenty, or

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: Some full days. This particular district, I believe, is doing full day. It is not the only district I heard that from. And it's especially acute in rural district communities where there just are not other options for birth to three or four. So this particular one, I believe, is full day, but I am not positive. So I'll have to get back to you on that.

[Charles Kimbell (Ranking Member)]: Yeah, so we always talk about where the money's coming from, whether it's CCFATCH or it's coming from the Ed Fund to pay for those services, so that still highlights the issue we have there.

[Bridget Burkhardt (Clerk)]: Yeah. Do

[Emilie Kornheiser (Chair)]: you know if those districts I know that some districts have organized themselves to be able to accept CCBAP. Do you know if those districts

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: Yeah, I talked to at least one of them, and yes, they are using CCBAP. But they also reminded me that should it be weighted full time FTE, they would not need that. Thanks for passing that on.

[Emilie Kornheiser (Chair)]: They would prefer the full time FTE to the way that they're currently funding their pre K, is what they told me. In very casual conversations at the last superintendent's lunch, it sounded like districts that were billing CCVAP were able to really fully fund their pre K programs with it.

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: I have not heard that. Okay, thank you.

[Charles Kimbell (Ranking Member)]: I don't think if they use classroom space, then it limits their ability to bring in elementary students from other schools, buildings that might otherwise be closed. I mean it's a dedicated pre space, classes for pre k. I've heard that pressure is that pre k is taking over, you know, all these different classes, it used to be first grade.

[Julia Richter (Director, Joint Fiscal Office)]: Anyone else?

[Emilie Kornheiser (Chair)]: Thank you both so much. Thanks for the multiple committees' testimony in a single morning session. I

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: just want to make sure I clear up that they did not say that they were not appreciative of the CCFAP and not Yes, okay. But that a full time FTE would cover the cost of what they need to expand. Thank you. If that's clarity. Do that. I'm looking at myself in I'll have to

[Emilie Kornheiser (Chair)]: stay on that from what you just said. Okay. Thank you both. Would really appreciate, particularly, feedback on adding more nuance to those exemptions carve

[Unidentified committee member (brief interjections)]: that out to everyone describe them.

[Rebecca Holcombe (Member)]: Thank you. Thank you.

[Emilie Kornheiser (Chair)]: Beth, do you want to go since you're sitting Sure.

[Unidentified committee member (brief interjections)]: Now my brain is losing. Great.

[Charles Kimbell (Ranking Member)]: That's why I turn it back on.

[Jeff Fannon (Executive Director, Vermont-NEA)]: About what Kelsey and Sue just said. Morning, Jeff Fannon, Executive Director of Vermonter, for the record. So you for giving me the opportunity to talk with you a bit about H949 as I think this passed the Senate, or maybe it's on the floor now. I don't know. Was one in

[Bridget Burkhardt (Clerk)]: the It passed.

[Jeff Fannon (Executive Director, Vermont-NEA)]: It did. Okay. Congratulations.

[Unidentified committee member (brief interjections)]: Sorry, I

[Bridget Burkhardt (Clerk)]: should have announced it. All good.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Sue touched on this yesterday. You heard from the Agency of Education. Education spending is at I thought it was 3.9. I heard somebody say 2.9. Either way, it's a moderate, appropriate level of spending increase given inflation. So I think school boards are doing the right thing in managing to what their community schools need. They're not excess spending. They're not frivolously spending. And I think that's the right thing to do. The current spending restriction, the excess spending penalty, is set at one eighteen the statewide average per pupil spending amount. The SENSE proposal dropped to 112. The proposed spending penalty is immediate and significant. I think Chelsea testified about the immediacy of it. And that's too abrupt for schools to digest, if you will. There are significant changes going on in many places in the education world right now. The federal level, at the state level, and to change the funding model, if you will, so immediately and so significantly on top of all those other federal changes and state changes and all the changes throughout is just not going to be well received, I think, by the school communities at large. So I think that it's too much too quickly. We don't support going to 112, put it bluntly. And you heard also, and I'll echo this, the difference between operating and non operating and the incentives we currently have in the system that may be favoring non operating districts. And certainly, as Chelsea pointed out, K-eight or K-six programs, but then tuition thereafter, the only place they have to absorb the excess spending penalty additional tax, and that's what it is, a double tax, is on their elementary school. And so that's inherently unfair to the elementary school system. And there's no such corresponding restrictions on the amount that they're sending dollars to the preceding schools in that private setting. So that's inherently unfair. The system needs to be resolved and fixed in that regard. And this will make it even worse, to say that. The buy down. We don't think using it all at once is the right approach, like your approach, more moderate, measured approach. It does, as Chelsey pointed out, create an enormous hole next year that schools will have to resolve, you will have to resolve, we'll all have to resolve and deal with. We don't think that's recommended. So we don't think the all at once right now is the best approach. Think a slower or don't use it all at once right now is our recommendation. It creates a whipsaw effect for schools that they really don't deserve. As well, an interesting one to follow-up with Jake. I'm sorry I missed him. But we think the buy down, if any, should be used. There should be some bought down, I'm saying that. But it's more targeted to working Vermonters. How would we do that, James? Well, I think there are more creative minds than mine. But certainly, if you're going to buy it down, you heard from Jake about the property tax, income tax, and how we're driving it down. That just seems not good policy right now that we've gone from that I can't remember the chart in front of me. It's not

[Emilie Kornheiser (Chair)]: like policy. It's like a mathematical That's policy.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Can be changed. That's a decision that we should change right here and right now to lower those taxes for those folks. So, again, the buy down, maybe that's part of it. That's where you use something. But it should be targeted to those folks, working class Vermonters, who are struggling right now. Inflation's hurting them.

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

[Jeff Fannon (Executive Director, Vermont-NEA)]: I think that's bulk of what I have to say. We don't like the 112 immediately. We don't like to buy down all of it and using it. And we think it should be targeted more.

[Emilie Kornheiser (Chair)]: You don't have ideas to target it?

[Jeff Fannon (Executive Director, Vermont-NEA)]: Well, I said, I like to explore with Jake what they were saying. I think he said that was $6,000,000. Maybe that's part of the buy down goes towards that.

[Rebecca Holcombe (Member)]: Thanks. Do you

[Bridget Burkhardt (Clerk)]: want else? Yeah. But,

[Unidentified committee member (brief interjections)]: Jeff, you didn't mention anything about the not including bonding money and the excess spending.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Do want to go there? Certainly schools have been deprived, if you will, of state aid for school construction for almost two decades, 2007. And it's about time that changed. Because many schools or some Kimbell have struggled with that issue. Other schools have been able to do, pass bonds. And it's been in a haphazard, non I would say, fashion. So, for example, there are places where, given where we want to go in a more efficient school delivery system in the future, They may have brand new schools that may not fit geographically, if you will, or newer schools. Meanwhile, other places are struggling to pass a budget right now and can't afford to even think about a bond, and their schools are crumbling. But maybe they're the school that we should be building up and rehabbing a lot. So I think we need to be focused on our attention about school construction. We think that's the as you redistrict and have that conversation, we do believe firmly that school construction aid is the incentive to make that happen, because the need is significant. I served a couple of years ago on the school construction task force, whatever it was named back then. The need is between 6 and $9,000,000,000, and that was a couple years ago. I don't know if you've built anything lately or had somebody do something in your house. Those costs have gone up dramatically and continue to go up. So that's 6 to $9,000,000,000 from I think it was three years ago. You put the inflator on school on construction materials and salaries for people to drive nails and pour concrete, that sort of thing, I'd say it's well in excess of $10,000,000,000 at this point. And we've not done anything. So I think we think that's we've to get serious about that. I appreciate opening up the bank account last year. I joke about this. We opened up a bank account last year at school construction. We didn't put any money into it. It's sort of what my bank account looked like when I was in college. There was no money in it, but it looked great. I had a bank at the merchant bank at UPNO. So those who remember that. So school construction, we do believe, is the incentive for transforming school education. And the motto then, and I think now is still, newer and fewer. The

[Emilie Kornheiser (Chair)]: other exemptions that are built into the senate's version of the yield bill, do you have any idea on how to bring a little bit more I understand the agency being uncomfortable with being the one to litigate that. Do you

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: have ways that that process might work better?

[Jeff Fannon (Executive Director, Vermont-NEA)]: The exemptions to the

[Emilie Kornheiser (Chair)]: excess threshold? Idea that you

[Chelsea Myers (Executive Director, Vermont Superintendents Association)]: could get basically approval to be exempt from the excess spending threshold?

[Jeff Fannon (Executive Director, Vermont-NEA)]: I mean, it's rather insulting. I'm not speaking on behalf of school board association, but the whole excess spending thing, I think, is rather insulted. It's not as if I think there's any single school district, school board or school district around the state spending unnecessarily. I mean, I go into schools, meet with members. I've been in schools where they're taking videos and slideshows of all school construction needs. Kids have significantly higher needs. During the pandemic, we heard directly from the administration that the mental health system in the state, in certain parts of state, they thought it would roll through the rest of the state, had collapsed. That was their word. We've done nothing about that. And so that has shifted enormous cost to the education system. So I think anything we do to relieve a penalty, a tax penalty, a tax increase on people who are not spending frivolously, I don't think, is good. So I would suggest that you could expand those. And I would suggest that's the better approach, because I don't think anybody is spending unnecessarily. I will look and see if there's some better ways, more targeted ways. But certainly school construction, it seems arbitrary to me as to when the bonding happened.

[Emilie Kornheiser (Chair)]: School construction, I mean, the exemption, the other exemptions for the excess spending threshold that the AOE gets to approve Or just sort of un

[Jeff Fannon (Executive Director, Vermont-NEA)]: Well, the AOE and group of business managers and Seems some tenants, think it odd to me, truthfully, that they would go back and examine. I do think there has to be some release valve to allow schools to say, Hey, our boiler blew up.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: It's leaking.

[Jeff Fannon (Executive Director, Vermont-NEA)]: That's happening now. In one of the school districts, heard from teachers on my board who said the kids know where to put the buckets because the roof is leaking. And this isn't a Chittenden County school.

[Emilie Kornheiser (Chair)]: I'm just wondering if you do have suggestions on how to make that. You said it was weird. Make it a little better. Maybe add more rules to it. I don't know.

[Unidentified committee member (brief interjections)]: Yeah. Think you

[Jeff Fannon (Executive Director, Vermont-NEA)]: just want what you're talking about specifically is the secretary and the business managers and superintendents. That process seems odd to me, but I will explore that. Think about it.

[Rebecca Holcombe (Member)]: I'm just wondering if that's even appropriate. Like, this is gonna become I

[Sen. Ann Cummings (Chair, Senate Finance Committee)]: don't know if it is. Yeah.

[Rebecca Holcombe (Member)]: This is gonna become so tight. And I keep coming back to, a lot of this is accounting and timing, and they need a two year runway. It takes them three years to change anything because they're so hyperbuffular. And so we're asking them to make decisions that may be driven by timing on deals they just made. So is that okay?

[Emilie Kornheiser (Chair)]: Like if they is it okay? I don't know. That's I'm that's what I'm asking. Yeah, exactly.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: I'll echo that.

[Jeff Fannon (Executive Director, Vermont-NEA)]: And I'll just give you an example.

[Rebecca Holcombe (Member)]: I'm just telling you.

[Jeff Fannon (Executive Director, Vermont-NEA)]: We received a sizable grant. Just got it. And then we're going to pilot three schools with and their administration and their local leaders, my members and local educators. It's with the American Psychological Association and the University of Maryland School of Medicine's National Center on School Mental Health. It basically talks about we need healthy people inside the building to work with kids. You have have both healthy kids and healthy people, adults, in their lives. Trying to schedule a meeting for that has been enormously difficult, and not because anybody doesn't want to do it, but getting people to lift their head up and look down the road seems near impossible, truthfully. And they want to do this work. They need this work to be done, and getting them to look further ahead is impossible. So to representative Holcombe's point, we need to give schools time to implement these changes. And going from one eighteen to one twelve, for example, immediate change is not fair.

[Julia Richter (Director, Joint Fiscal Office)]: Thank you, Jeff.

[Bill (Senior Fiscal Analyst, Vermont Agency of Education)]: Thank you.

[Julia Richter (Director, Joint Fiscal Office)]: I appreciate your time today.

[Emilie Kornheiser (Chair)]: We are going to be done for the morning. We are back here after the floor. Benz, thank you. Elizabeth, please