Vermont Legislature SmartTranscripts:

[Ann Cummings (Chair)]: We are live. We are live. And we're all settling down. We are going this is January 14, and we are going to continue our discussion. We had a presentation the beginning of this week, end of last week on S220, which proposes to tax school spending for the next two years, not this year, there's a formula between 29%. Two to 3% for the high spending districts now, up to nine for the low spending districts. And today we have, formally known as fees. We're gonna start out with Vermont NEA and then go through principals, school boards, school business officers, and superintendents. So, get their take on what that was worth meaning to the people they represent. I think there's some agreement that doing nothing is not an option, that's as far as the agreement goes amongst everybody. So we're trying to find some consensus here. Okay. Welcome.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Thank you. Good afternoon. My name is Jeff Bennett. I'm the executive director for Bonanza. I'll quickly take a quick dive right into the way you started. We and our friends in school board association and superintendents and principal association do work together Trying we understand there are changes necessary, and I think we're gonna look at that holistically in a way that that will work for the entire public school system and and the publicly funded schools, I should say.

[Ann Cummings (Chair)]: And I think I can say I've spent the last two years on the Commission on the Future Education working with all of these people, and it has been a collaborative process. You So know, we know where the problems are. It's agreeing on solutions that gets difficult.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Alright. So with that said, thank you for giving me an opportunity to speak about us too material, which would impose on schools the artificial capitated spending limit that allowing schools' ability to spend above the set amount even if it were if there were a crisis that demanded attention. We believe this cap, like the several that have come before it, and that were later repealed just as quickly, should be rejected. The state attempted to impose caps on school spending in 2022 via act seven of act one twenty seven, following curriculum as the student waits. And that cap was repealed the next January. Prior to that, sections thirty seven and thirty eight of act 46 of 2015, I think it was, imposed spending caps for FY '17 and '18, and only and only they were later revealed in January 2016. I mentioned these previous efforts to artificially caps school spending to remind us all that arbitrary spending caps that are imposed on local schools have arbitrary consequences for schools, students, and and they do speak up, which is which motivates, later repeal, I think, in many cases. Additionally, even as s two two zero is drafted, it may have harmful effects on lower spending communities that could violate the rigor decision. I know there's a I vote three and it's a two. And and there's a window

[Ann Cummings (Chair)]: There's a

[Jeff Fannon (Executive Director, Vermont-NEA)]: the lower spenders get more and the higher spenders get less. I understand that. But what we've found, we already have a problem with the amount differential that some schools spend on students. And they cap, even if it allows for some greater spending for lower schools as did the previous attempts to impose our original caps, very likely will have will increase the divide between high and low spending schools. I think it will exacerbate that problem, not sure not tighten it up. Schools and committees are rule followers, and a number, whether it is high or lower, will become the target, with some asserting they must keep spending low to lower their taxes. In theory, that sounds rash. However, what we have learned in recent years, and even more so this year, is that school spending and taxes are no longer connected. And by example, my members report to me lately, very recently, the discussions they've had with school boards, that make clear that any spending cap will not have what I believe is the desired effect, which is lower property taxes. So for example, and I'll share this document. Ed spending growth of 3% in the White River Valley Supervisory Union, is being discussed, and looks like it'll be a property tax increase of 26%. So 3% equals 26%? I don't think so. And spending of 5% in orange east SU, leads to a property tax increase of 30%. And right here in Montpelier, I understand that they they are looking at a two percent spending growth, which will lead to a 12% property tax increase.

[Ann Cummings (Chair)]: There's a big differential between Montpelier and Roxbury. Roxbury's looking at Roxbury School District. Yes. What the taxpayers in Montpelier is significantly different in, I believe it's the CLA that's driving

[Jeff Fannon (Executive Director, Vermont-NEA)]: There's there are many factors, but as I understand it, it's impenetrable to to fully learn. And when explained, people are left more befuddled than they were previously. And I think that's part of the problem. And so what I would suggest is, know, we at Romanian have said for many years, we think you should abolish the property tax and move to an income tax to fund our schools. We think now is really the time. The property tax system is throwing at the moment. There's very little tax between spending and property taxes in anybody's mind.

[Ann Cummings (Chair)]: Have you got hard numbers? Because I've heard that. I've been and it's the public assets that has been really pushing it. And when I went to it, they were talking about 60,000,000. Everybody says that I've got a thousand million, actually. If I had to spend 7% of their income, plus they're already paying 9 something, I think, on their income. If I have them do 7%, that gives me $70,000,000. That's not that's less than the general fund has been contributing to buy down the property tax. And if we go to store income, the reason we didn't do it but we had the summer study, was that many lower income people pay on their property value. And so we went to pure income. They would pay more. And it may all I can tell you is we did hundreds of curves and graphs and it just didn't work as logically as it sounded. If we put everybody on income, then lower income people in the state would be paying more than they are.

[Jeff Fannon (Executive Director, Vermont-NEA)]: I I don't know if I'll see.

[Ann Cummings (Chair)]: Yeah. I mean, that's it it it sounds good, but I can tell you this summer study committee wanted to do it, and we couldn't find a way to move it. And just, you know, saying everybody should pay 7% doesn't make enough money. We are seriously looking at taxing the wealthy people who don't pay income tax here with a second home tax, but that's gonna take a couple years to get all the grant lists and everything invested.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Contingent on the foundation board.

[Ann Cummings (Chair)]: Go ahead with that. Yeah. But that's we are looking at that. So we are trying.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Thank you. Those examples you are those budget spending, education spending, weighted spending? My understanding is it's it's growth net spending. Education spending. Well, yeah. I mean, as opposed to what in the school district? Is there there's weighted spending. There's education spending. I think it's it's a it's the true what they believe to be their budget over budget. The increase in spending budget over budget. My Good.

[Ann Cummings (Chair)]: But it's been we've been told we are three the Yeah. The problem that I think the program put this in is trying to solve is that we are not going to have a $100,000,000 next year and we'll get that confirmed, we'll get on Friday, we've got the revenue forecast. But we're not expecting to have any surplus. So without that 100,000,000 to buy it down while we're doing whatever transformation, if any, we decide to do, that's going to really impact the property taxes. So what do we do? Do we just let it go and let you know just it is what it is and your property taxes are what they are and let the system make its own decisions or do we try and do something proactive?

[Jeff Fannon (Executive Director, Vermont-NEA)]: What I would suggest, if I were to share, is develop a plan. Say we're going to move to income tax, we're going to eliminate your property taxes, your local residential property tax. Of course you still would have a second home, or a non resident rate that may be bifurcated later on, through second home and and businesses, which we wanna make sure that business folks are not negatively impacted. There's no question about any businesses in the state. And and I think Vermonters will understand that if you set something that they believe in, look, the abolishing the property tax is is a viable way to go. Moving to the income tax, which is completely understandable for everybody to do it now, we spend $9,000,000,000 in the general fund. It works. We can we can raise a lot of revenue with an income tax, instead of using an antiquated, frankly, of eighteenth century funding model of of person's ability to pay is based on the value of their property. That may have worked in '18 something or other or 1700. It it doesn't equate today. People pay their their taxes, whether it be income tax or sales tax or any out of the the income they have in their wallet. And and so they don't pay based on, well, I'll I'll carve off a piece of my my 10 acres and and pay with a quarter acre or something like that to the town. And that's an antiquated system. We are far beyond that. We should give Vermantras the goal. Say, where you go to the income tax, eliminate the property tax, so you so incredibly don't understand at this point. It's so confusing and convoluted. Nobody understands it. And I think they would go for it, and I think that would be their approach. Mean It's taken.

[Ann Cummings (Chair)]: That we have tried that. We had some study committee, and it we couldn't find a way to make it work.

[Jeff Fannon (Executive Director, Vermont-NEA)]: I I understand. I think there are there are but but it does work. It funds 9,000,000,000, the general fund. It can work. Right.

[Thomas Chittenden (Vice Chair)]: The total fund is 9,000,000,000. General fund's, like, 2,400,000,000.0.

[Ann Cummings (Chair)]: We need to raise a $9.00 2,000,000,000 who pay for education, and that's the present cost of education. So unless you're just saying, well, just take it out of the general fund, well, then how do you pay for everything else in the general fund? We would have to raise an additional billion dollars and going up by over 10% a year lately, we would have to raise that additional money, which we already have one of the highest marginal tax rates in the country. How high can we go? Hampshire has nice ski mountains, nice lanes, and no income tax. So, they are 10 miles away. I think that's what we're trying it it is logical to say it should be on income, but we haven't found a way to do that unless we could go European and Canadian way and go to a 50% income tax and pay everything, but that's not acceptable in this country. So it's finding those numbers that work that have stopped us from this still. And the the numbers I've seen are in the 60 to $70,000,000 range, and that's a little better than decimal dust, but in the overall budget, that's two thirds of what the general fund has been moving over here, and we're not gonna have that money next year. And that's money that's not going to housing or the food shell or paving the roads, And it's all of the sales tax money. So that's that's what we're we're trying to find out. Yes. How how can what? Well, I'm gonna have people come in and talk to us about

[Jeff Fannon (Executive Director, Vermont-NEA)]: So we're already what you're saying, though, is we are we are already funding a portion of education with the income tax.

[Ann Cummings (Chair)]: Well, with surplus that has come in on forecasted surplus, Nobody expects there to do an upgrade in income next year and we're funding it to cover a portion of the increase, not the base budget, but just to buy down a portion of the increase that has been voted the last two years to the level where everybody is screaming the tax rate is too high because the education fund isn't generating revenue as fast as the cost is going up. And the only place we can raise it, we can raise the sales tax, which you know, we can raise the property tax. But income tax pays basically for everything else in state government. Yeah, except the transportation fund

[Jeff Fannon (Executive Director, Vermont-NEA)]: and

[Ann Cummings (Chair)]: anyone has driven roads lately, it has serious

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: problems.

[Jeff Fannon (Executive Director, Vermont-NEA)]: And it's gonna get worse?

[Ann Cummings (Chair)]: It's definitely gonna get there are now three inch deep potholes appearing.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Mind you saying is their expenses have gone up 43%. I don't know whether No. Year over year or what it what

[Ann Cummings (Chair)]: it was. It is it is. It's asphalt equipment. Likewise for schools.

[Jeff Fannon (Executive Director, Vermont-NEA)]: All those things are going up too, out of

[Ann Cummings (Chair)]: their Except incomes. People's incomes are not. So we're trying to find another way, but we haven't found a simple way. I don't think anyone likes what we tried to do in Acts 16, so I was trying to figure out, is we tried to maintain local control and meet brigand, And we did that, but it is a very complex system to do it.

[Jeff Fannon (Executive Director, Vermont-NEA)]: And we also had a general fund transfer back then for many, many years.

[Ann Cummings (Chair)]: Did. Well, but that got switched off to the sales tax. The sales tax used to go into the general fund, and then approximately the same amount got transferred. We rather than do the transfer, we took the sales tax revenue and put it in. So that money was going into the general fund. It's now going into the hedge fund. So it

[Jeff Fannon (Executive Director, Vermont-NEA)]: And we've added the the education fund too. So, Gabby? It's what did really well on that because Wayfair did. Yes.

[Ann Cummings (Chair)]: We did way better on that. That was before Wayfair. Yeah. And the people that are struggling across the hall know that. They do. There are other demands on the state budget. And so that's what we're trying to do. And if anyone can crunch numbers and help us figure out how to do that, that would be helpful. But I think the entire Ed budget is 2,000,000,000.

[Jeff Fannon (Executive Director, Vermont-NEA)]: It's 2.5, I think. Yeah. I'm sorry. Apologize for the general fund. Mean, that

[Ruth Hardy (Member)]: is

[Thomas Chittenden (Vice Chair)]: I I wanna jump ahead really quick on this point. We did about 1,400,000,000.0 of income tax this year. We need to go back to that property tax revenue just from the residential homes. That means another $708,100,000,000 that we'd have to raise But I think

[Jeff Fannon (Executive Director, Vermont-NEA)]: what you're right. And eliminating the property for risk. So risk is like 6 or 700,000,000. Right. I mean, it's the same problem in, in healthcare years ago. Still is. It still is. Right? I mean, it was it was believed, you know, that, going to single payer would save the same millions, but the transition was tough. It involved That was a Snelling report from early nineties.

[Ann Cummings (Chair)]: Yeah. It's come up twice. The amount that would have to be raised on the income tax has come up twice. And both times, leadership, once it was the house, once it was the senate, did not push the bill out for a vote because of what it of the tax increase it would require. And I think we know what the taxes are in countries that do provide all those services. We were born in a tax revolt. Taxes are bad, and that's very I'm old. We're not that old. I know. But that's it makes a very different attitude between here and our neighbors nine last evening. It's a lot It looks on taxation. And that

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

[Ann Cummings (Chair)]: Okay.

[Ruth Hardy (Member)]: I don't wanna engage on this debate right now because I feel like it's deja vu, but

[Ann Cummings (Chair)]: but I I'm wondering,

[Ruth Hardy (Member)]: know, one of the things that I think we need to do is address the cost drivers in education. And I know that you all and your org and the MEA has, you know, talked a lot

[Ann Cummings (Chair)]: about health care and we're one of the

[Ruth Hardy (Member)]: first organizations to really talk about the the sorry, the reference based pricing. Thank you. But I'm wondering and that's will take a little time to implement, and so we're not gonna see it directly in the next year probably. Yeah. I'm wondering if what your aside from the income tax, which I want to put it aside, what are your ideas or what this year are you thinking about in terms of cost containment and addressing the actual cost drivers in education?

[Jeff Fannon (Executive Director, Vermont-NEA)]: Right now, I mean, last year there were 400 educators who were riffed, lost their jobs. If that happened in one company in the state it would be all hands on deck, part of the labor administration, you all, everybody would be on board trying to figure out that. We believe there's going be a fair number of risks this year. So that's not what we're advocating for.

[Ruth Hardy (Member)]: Is that what you want for the thought? The reality

[Jeff Fannon (Executive Director, Vermont-NEA)]: is that school boards are doing their job to manage to their budget budgets that their communities can handle. Yep. And their schools can handle to educate their kids. And and so I think that's you know, the number of classroom teachers has actually gone down. Again, we're not advocating for this, but I think school boards are doing what we

[Ruth Hardy (Member)]: But what are you advocating for? So if you're because I'm here what besides the Well,

[Jeff Fannon (Executive Director, Vermont-NEA)]: that's a huge different side.

[Ruth Hardy (Member)]: Well, I'm talking about cost, not revenue at this point. So what

[Jeff Fannon (Executive Director, Vermont-NEA)]: we through reference based pricing, through changes that the BI Board has made, which we're party to. It's a it's a jointly administered trust. I believe the number I've seen is $40,000,000 reduction. So I I were $40,000,000 reduction in In totality. The the changes to the Green Mountain Care Board is done. Act 55, which is the infusion drug, reference based pricing, and changes that the has made will save $40,000,000. That's significant. And so we're doing, you know, that work collectively with Do you

[Ruth Hardy (Member)]: can you send me that?

[Jeff Fannon (Executive Director, Vermont-NEA)]: Yes. That The breakdown of that?

[Ann Cummings (Chair)]: Breakdown of that.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Sure. That would be helpful.

[Ruth Hardy (Member)]: So could the I mean, I think that I I I agree that arbitrary spending caps are really problematic. I've said that already. But I also know that we need to reduce the cost of education in our system, and we need to do it on the sooner side. So that's what I would love to hear from you and other students.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Sure, mean one thing we've talked about it as part of our income tax proposal, that's another portion of it is, relook at what the Ed Fund is paying for. Previously the General Fund was paying for social services and things of that nature, mental health for students. That sadly has not kept pace in the general fund, and schools have had to step into that breach. I think you have, the superintendent of month of the year in this office or this room last year saying it was $10,000,000 additional, expenditures on their part make up for that, not allowing the people or whatever. But, that is a sizable increase that schools are incurring. That was a shift intentional or not, but a shift to the property tax payer from the general fund. So we would ask that you reexamine what's coming out of the ed fund that previously was coming out of the

[Ann Cummings (Chair)]: general fund. How was

[Ruth Hardy (Member)]: that preview I I mean this Yeah. Like technically, how was that coming out of the general fund and what what switch was flipped or change was made that moved something over the Ed fund?

[Jeff Fannon (Executive Director, Vermont-NEA)]: Well, during the pandemic, that was then secretary Mike Smith, who said that the mental health had collapsed in Northeast Kingdom at the time, and it was likely to move forward. I've not seen anything in the budget that would pick that up and and reestablish that. So what happened is in the Northeast Kingdom, those schools there had to step in to the and and meet the needs of kids who were desperate for assistance. And so those people were hired by schools who work with kids because the general fund obligation of the state mental health system.

[Ruth Hardy (Member)]: Okay so it was

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: more of a

[Ann Cummings (Chair)]: change than an active change like

[Ruth Hardy (Member)]: there were needs well there were needs so schools stepped up to meet those needs there wasn't something that was done at the state level It was what was not done instead of what was done.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Well then you have the pension was added to the 2018.

[Ruth Hardy (Member)]: Okay.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Future pension. And that's a normal cost, but it's grown. Was 8,000,000 then. It's now up to 30 something million. Those, you know, those add up. Mhmm. So we're asking to take a look at what's coming out of the from the previous. So

[Ruth Hardy (Member)]: so willing to send any of the numbers that I

[Ann Cummings (Chair)]: would be interested to see. On the The 40,000,000. Sure. And any other ideas you have. Okay. Thank you.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Thank you.

[Ann Cummings (Chair)]: And I think we can agree whether it was COVID or social media or something in the water, that the increase in mental health issues is something that has appeared and also behavioral issues, Something that has appeared since the mid two tens. You know, it seemed to have started before COVID. COVID probably aggravated some of it. But when my kids went to school, there weren't the mental health kind of behavioral issues in the schools that there are now. That increase in mental health issues is relatively new.

[Jeff Fannon (Executive Director, Vermont-NEA)]: We had a conference in May 2019, you're absolutely right, Senator, where we invited educators, administrators, school board members, outside mental health experts to a conference in May 2019, it remains the number one issue for blind members.

[Ann Cummings (Chair)]: Yeah. It's national how we do that. I was just reading, and I think it's Mississippi since that's the school everyone seems to point to that's made such great progress, but that they are very strict on their behavioral standards, and if you misbehave in school, you're gone. We don't allow that or anything close because of equity concerns, but I can see where that has also increased the burden on teachers. And this isn't the committee that should look at that, but that may be something we have we tied your hands too tightly. If there's no consequences, then why not? Okay. One moment may I to ask,

[Martine Larocque Gulick (Member)]: but I'll go for it anyway. Yeah, talking about the income based funding, I think we should be throwing everything on the table at this point because we're in sort of dire straits. But it does seem as though there's no other state in the country that does it as far as I know. And we talk about it a lot, but until we have hard and fast modeling that we can feel confident about. It's just, we're just talking, right? So it's neither here nor there. Saw as a huge public education advocate, as a former teacher, I'm really sensitive to what I'm about to say, but I am also sitting on a school board and I do think that at some point it would be helpful to hear the connection between risks and loss of jobs and negotiations for salaries and benefits because

[Ann Cummings (Chair)]: I do think they're connected. And

[Martine Larocque Gulick (Member)]: I know it's, again, it's a third rail, but it's also the elephant in the room and it's something that I think we need to be able to talk about.

[Jeff Fannon (Executive Director, Vermont-NEA)]: I don't think it's a third rail. Think it's an honest assessment. I think my members who negotiate locally with their school boards understand well that salary increases might mean somebody loses their job, they're well aware. I think that the attrition is is baked into that. So people might make decisions that, okay, I don't wanna see that young new person who came just a few years ago get ripped. I'm close to it. I could retire on my decision. I've seen that play out many times. So I think there's a reality and then the breakage there. Somebody's at the end of their career is making more than somebody who just starts. So that works in school's favor. So I think that does play out and my members certainly appreciate well, I think, that there's there may be a rift and they don't like that. And I will also say they're still somewhat challenged by this because there are vagacies up on in school. So stop hiring people, we stop looking to hire people, and that's essentially the vacancy savings.

[Ann Cummings (Chair)]: I think the bulk of

[Martine Larocque Gulick (Member)]: the vacancies are in paraeducators, and don't know how many are actual teaching staff, but I just have to say it's hard on school boards, it's hard on communities. Yeah, it's just very difficult.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Well, it absolutely, and 80% of the educators are women. The average teacher salary is about, what, 68,000 a year, maybe 70 in the state. So it varies up. It's kind of maybe different there. But it's not an teacher holds a master's. And so we're not talking about people who are overpaid. Would say, I think they deserve every penny they they they receive. I also said the governor last week was advocating for higher medical teachers. So, we

[Martine Larocque Gulick (Member)]: Yeah, making judgment on that. I'm just it would just be nice to acknowledge the tension there because it is real.

[Ann Cummings (Chair)]: And I think the other thing that's been concerning is that we know our high school graduation rates dropping depending on which tester who you talk to. Our test scores are not what they used to be. And at the poorer schools, when you let teachers go, you're losing something, and that some of our kids, we're pretty sure, are not getting an adequate education or the education they deserve because their communities can't afford it, and that is also not acceptable. I was warned When we were doing act 46, one of the reasons to do it was because we could be facing another freedom type decision based on inequality, based on the wealth of the town, the ability of the town to raise that extra penny if the town's average wage was $30,000 as opposed to the town whose average wage was $300,000. We still have that dichotomy and so that's another issue that's the kids in the end are are suffering the burden. And eventually we will because we won't have the educated people and workforce we need at the state. Randy.

[Randy Brock (Member)]: There's also the issue in thinking about moving essentially to an income tax based system is that we studied this, I don't know how many times before, probably a particular deck with the Gulick Tax Commission reported in 2011. And one of the things that always concerns, that should always concerns us, is concentrating too much on one particular type of tax for what essentially is broad based tax. The strength of using property tax as a system is much more stable than income tax. If you have a recession or some other kind of economic issue, your income tax rate may fall and may fall more broadly than it would on a property tax system, which is again, one of the reasons to have a system that is based on a variety of taxes rather than solely on one tax. But but, I mean, I I'd have to disagree because the property tax has been extremely variable lately. Mhmm. Extremely variable, and the income tax has not. And and while your income and my income, they change year over year. In the in the grand scheme of things, the income tax is very stable and has been more stable, I would suggest, even for the last five years than the property tax. I don't know about the last five years. I don't question that, but it's, again, something we can go look at. Right. Right. But, I mean, certainly, we'll agree that the property tax has has been very variable. Property values have. Property values have certainly changed. Changed. And that's all, no question about it, but none of them has gone away. I'm not gonna lay off a property. True, but if the person who lives on and owns that property can't pay the tax on it But I don't know. Think if we look at property tax, I don't think we've had such tremendous variation in the ability for the property taxes we've had. I agree. I think we're saying the same thing about it, I think. Yeah. That's basically people pay basically is they're that there needs to be a diversity of tax sources to give us more comfort than in the event that we have a problem with one type tax at one particular location, it is less likely to affect the entire economy. It wouldn't have an effect, but the entire economy, whereas if you're relying on one single tax as opposed to

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: It's like we're having a bond, it's like the banks have a greater problem.

[Randy Brock (Member)]: Right, it's like investment more diversification. I couldn't agree more.

[Ann Cummings (Chair)]: Okay, me too. Thank you.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Thank you.

[Ann Cummings (Chair)]: Listen, I hope we've had this discussion so we won't have to have it, but everyone knows. That was born The Bronx. So Jay should get a free walk here.

[Jeff Fannon (Executive Director, Vermont-NEA)]: That's right.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Think that

[Thomas Chittenden (Vice Chair)]: I what he said. But they will.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Good afternoon, everybody. Jay Van, Vermont Principal Association.

[Jeff Fannon (Executive Director, Vermont-NEA)]: I'm here

[Ann Cummings (Chair)]: to talk about you cats. No kidding. I'm Thank

[Jeff Fannon (Executive Director, Vermont-NEA)]: you, Jess.

[Ann Cummings (Chair)]: No laughter at all. Wow.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: So I'm actually gonna keep my testimony pretty brief. If there's any time left over, I cede it to Vazbo, because they've got some really good testimony today that I want you to see here. So the Vermont Principles Association can oppose any type of higher capital education spending, especially given their current structure of local control authority and budget approval and more oversight of education spending within our Vermont School Units. School boards propose budgets that they believe are necessary for the effective funding of the school or schools through which they provide the schools. Then the voters, most communities, decide to approve both budgets. Boards communities are wary of the excess spending threshold and the potential local impacts of trying to stay below the law already. They make decisions as informed as they can, and the information they have when it's time to move into the budget school. However, they also have the obligation to provide the freedom of education for the students. They have boards of education, not boards of taxes. So we think to require them to cut programming, need an arbitrary number. And their current budget development and governance construct that we have in Vermont is unfair and believe would unnecessarily require cuts to programming for schools and hurt children in the environment. Education delivery as a labor intensive system. Higher spending districts that are only higher spending because they pay their teachers better, that's one of the main elements we ever talk about, then lower paying districts will be forced to pass through the program. Many of these systems, CPU move areas cut to 80 something teachers in two years, are already meeting, in many cases, exceeding class size guidance. And in some of these districts, they have already cut large numbers of staff and programming in response to the financial demands of their local communities in our current context. Higher caps ignore inflation, the current labor market reality we want. How do higher caps on education spending help with increased healthcare and other costs that local school boards have no control over? We really want to reduce education spending, because we need to fix the cost strategy and contribute to this issue. Again, with healthcare being one the most obvious, but there are plenty of others we can examine. We believe that the double taxation above the threshold amount is already sufficient enough for penalty school districts that feel it is necessary to surpass that threshold, but do not believe the state should impose an artificial higher cap. We need to split further away from global control that we do not think is appropriate at this time. Granted, we may change to a different system, or it would be schools be given their amounts, we assume they give their amounts. We believe that higher tabs, controlled numbers, but they have negative impacts to outcomes and opportunities for students. Now, our members, my members, are gonna run to schools the best of their ability, whatever research they have, and whatever they have, and the kids that they're serving. So, whatever you decide, we do think it's bad public policy. And so, with that, I'd be more than willing to respond to any questions as best I can, if you have

[Martine Larocque Gulick (Member)]: I'm just going to say a lot of unpopular things. In keeping with that, I was just thinking instead of doing a hard cap on spending, are there other avenues that we could take for a short term relief scenario, and I was wondering about, or as an example, pausing dual enrollment and early college or something like that, Moving universal meals out of the edge lines. You all thinking about other potential creative ways for a short term? I don't know if we're all thinking about short term solutions.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Some

[Martine Larocque Gulick (Member)]: of

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: the things you mentioned, I've already testified in favor of them in the past. I got all kinds of things, people tell me I didn't want kids to eat. All I was saying was take it out of your head, don't take it out of the head fund. It wasn't saying don't feed kids. Right. That's an example of that. That's a mandate that we put the head fund. And then schools go out and meet that mandate, and they feed kids, and that's great, and you should be feeding kids. But then schools get hit over the head politically by the fact that there's a pension piece, that was another example of that. When I was a superintendent, when I last was superintendent, it's only nine years ago, ten years ago, about 80% of my budget was health insurance. And that same district now is closer to 15. That superintendent there and school board is there, I mean, that's where I was. They're, like, they're cheap. Right. They don't wanna spend money. And the health insurance is killing them.

[Martine Larocque Gulick (Member)]: Yeah, we're working on fixing that, but again, like short term Short term,

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: I think the best path forward, and I can't believe I'm saying this, testified against it last year, but I think it may end up being a situation where you buy now and again, at least somewhat. Mean, the real tax impact on people have new taxes is 6% of what it ends up being. And we come for the real fixed tax 73, that over the next few years, I think we should stop thinking short term. I think we should spend more time on thinking upstream thinking and planning for the system that we want to have in the future building that system.

[Martine Larocque Gulick (Member)]: What do you think about pausing early college and dual enrollment?

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: I think we should pause early college. Absolutely. Dual enrollment, I gotta give some thought. Early college, you know, when we look at the percentages and numbers, it's kids that were already going college anyway. Dual enrollment in some places have really helped kids that were first generation families go on to college, so I'd wanna do more thinking about that. Okay. But the early college program is actually incentivizing schools that have really small classes at small high schools, what happens is the kids that are left behind are ones that might not go to college, now all of a sudden they don't have a chemistry teacher anymore because the school can't afford a doctor chemistry with them.

[Ann Cummings (Chair)]: Can I get you

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: I also mentioned the D's are all working together to try to focus on, I don't wanna say alternatives to Act 73, but some things that you can consider as part of the whole Act 73 patch? Sure. Haven't been up in the agreement yet, but we're working on that. And I have some thoughts, you may have some thoughts that we may share with legislators over the next week or so, we can't come to resolution as full proof, that we think is kind of a real world. All things that I've said in the past, in the last twenty years, things that I think actually make more sense than what I've been before. And they do help me with things like, some consolidation stuff may be necessary. Some governance changes will be necessary.

[Martine Larocque Gulick (Member)]: I'm looking forward to seeing that. I hope it works, plays nicely with the report from the task force. Your report is in there and we lean into, I lean into your report, I

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: think others would too, but not as the only answer. Questions?

[Ann Cummings (Chair)]: I think that's what we're trying to figure out is what is the answer? The general fund is underfunding, important things now.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Yeah, we're in a dilemma. We've had a housing crisis, we've health insurance crisis, We've got transportation crisis. We've got a school funding crisis all at the same time, and we don't need people.

[Ann Cummings (Chair)]: Yeah. And we can't attract new taxpayers, can't attract professionals that we need, teachers, nurses, doctors, because of the housing costs and the tax burden. Next week, I'm hoping we're gonna take a look at our tax classification system, income tax. I'm starting to wonder if that might be contributing to some of the professional high tax burden because we start our top bracket fairly lowly, you know, low if you're looking at Compared to a lot of insurance. Professionals in the family.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Three forty in patients were a little uncertain. Yeah.

[Ann Cummings (Chair)]: So, I don't know if we can do it and stay revenue neutral, but I wanna look at it.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: And we have a lot of our members that say they can't keep teachers because of housing huge problems. I never heard that for the last five or six They just can't teachers can't stay here. Nope. Nope. They can't afford it.

[Ann Cummings (Chair)]: I know they've taken jobs and they can't find housing. Right. I'm hearing that from employers. Yeah. That they hire people and they can't find housing. It's a national problem. Probably would require a national solution on the level of the GI bill without the issues in the GI bill, but something on that magnitude because it's national, and I know we're working on it.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: I think everybody has good intentions. Yeah. It's gonna take a lot of hard work together, and I think we wanna be, again, upstream thinking. Yes. Let's not just be reactionary, let's see what is the education system that we wanna have for our state ten, fifteen years to start there? Yeah. And okay, what do need to get there? We to do something about our infrastructure. We have crumbling schools. It's a huge problem. Mhmm. Maybe we need less schools, but newer and better schools, some infrastructure, and maybe that's the one we need.

[Ann Cummings (Chair)]: You don't pay for. And how do we get Yeah. Yeah. It's like our bridges. All but two, one in Montpelier, one down in the twenty seventh flood. We put them all back and then they all went bad at the same time. Surprise. I'm pretty sure all your schools went out within a five, ten year window to deal with the baby boomers. Yep. And now they're all 40, 50 years old.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Exactly right.

[Ann Cummings (Chair)]: All the roost are leaking and they need major maintenance. True. And we have some that, I've said, some people wouldn't send their dogs to some of our school conditions. They're

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: I think our employees, they're in the E10, with the systems that they have, but they're in situations and places where building this out, without major reconstruction or new construction. And when we do that, we need to think about what's the best, how are the places we can combine, you know, from my office, I can have three high schools with baseball. I question. Question. Can we have Montpelier High School, U-thirty two, West Highland High School, blah blah blah, three of them. But we can build a really high school.

[Ann Cummings (Chair)]: And the question is how do we do that?

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Find the answer to that.

[Ann Cummings (Chair)]: I don't know. Fifteen years ago, if we'd started, but right now

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Well, we gotta start sometime. We gotta We gotta it's the bond bond bank testified earlier this this week, and they were saying around a $250,000,000 add on to that 6,000,000,000 we're talking about every single year that we wait. I get to buy the whole car and it keeps breaking down. It's costing me all kinds of money to pay for the car. Actually, I gotta buy a newer car or put some real money to the car.

[Ann Cummings (Chair)]: For the new car than to keep paying for the think what

[Martine Larocque Gulick (Member)]: you're saying is we need a plan.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: We need a plan.

[Ann Cummings (Chair)]: We need a plan. Imagine that. Okay. So did you have a question, I I Oh, I can't see

[Ruth Hardy (Member)]: you, Ruth. There's I sorry. I I just had a request because it it just feels like all we're doing in here is, like, listing all the horrible things instead of talking about positive solutions, and it just gets depressing after a while. And so it would just be I I know that there are lots of big problems out there, but I'd rather be talking about solutions. In fairness, we

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: were asked to testify on 02/20.

[Ruth Hardy (Member)]: I know. I know. I thought your testimony was great.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: I've got a bunch of these I can talk I

[Ruth Hardy (Member)]: wanted your positive solutions. That's the same I asked Jeff the other Jeff. Jeff. Or is that not your Jay. Sorry.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: No. No. But there's Jeff.

[Ruth Hardy (Member)]: There's another Jeff. I know Jeff. The other Jeff is back now.

[Martine Larocque Gulick (Member)]: Yeah. Super confused.

[Thomas Chittenden (Vice Chair)]: It really is.

[Ruth Hardy (Member)]: But anyway, I I wanna hear positive solutions, and I look forward to what you guys come up with. And if you can all agree, that's great. If you can't, just tell me what you're thinking anyway.

[Martine Larocque Gulick (Member)]: Because Yeah.

[Ruth Hardy (Member)]: It just it just sitting here and listening them and saying back in the day, this was the problem too. It's just we have to focus on positive solutions.

[Ann Cummings (Chair)]: We have to find them. And if you just send us some suggestions and

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: We've got some stuff. Gonna come to agreement on some things, the four of we're actively talking about it, and we'll see. We're

[Ann Cummings (Chair)]: supposed to set up a funding system, but the funding system also gets tied to the number of schools we're funding and class size and teachers and yeah, we're laying off teachers but we've got teacher vacancies and we've got teachers without full credentials and we're hearing this across the board with all kinds of healthcare professionals, all kinds of professional jobs. Think you're right, I think we need to give people a vision as to where we're going.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: That's the one being part of that conversation.

[Ann Cummings (Chair)]: I think that's probably conversations and, again, all of you folks, if you go out, the hall would come up with some ideas. Probably be that better than what we do. But the other one, and I've asked, it doesn't have an organization of the taxpayers, the people that build the communities that are being forced out of Vermont. I'm concerned some of them, probably more renters, but as the property taxes raise rent are being forced into the homeless population and we know that one's growing. Like, I remember when Montpelier had one homeless person. We made the national news because she was sleeping in the ladies room at City Hall. We have a lot more than one homeless person in this town right now, and most of them are whole grown. They aren't migrating in, and I don't want to increase that policy. I want taxpayers to be able to retire here and not worry about it if they're gonna go feed themselves in six months.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Me too.

[Ann Cummings (Chair)]: Yeah. I think we're all reaching that age, right? Yeah. Sure. Wanna know the groceries are gonna feed there. Okay. So, yes, any thought thoughts would be helpful for us. One, I would say. Elizabeth is on. You can see a little bit better when she's got half the screen and when she's just a postage stamp size. Is it commissioned here? Okay.

[Sue Ceglowski (Executive Director, Vermont School Boards Association)]: Sue, the floor is yours. Thank you very much for having me in today to testify at S 220. I'm Sue Seglotsky, the executive director for the School Boards Association. And

[Ann Cummings (Chair)]: as you know,

[Sue Ceglowski (Executive Director, Vermont School Boards Association)]: the bill would cap school district spending in FY '28 and '29 based on prior year spending. PSVA does share the goal of cost containment. In fact, our 2026 legislative platform strongly supports stabilizing education costs and property taxes. Where we differ is in the approach. Rather than broad spending caps on school budgets, we believe Vermont will see more equitable and sustainable results by targeting the major cost drivers within the system, and specifically school employee health benefits. So specifically, the SBA recommends consideration and analysis of capping the actuarial value of public school employee health benefits. Employee health care costs are the most significant and fastest growing pressure on school budgets. Health benefits for public school employees are approaching $400,000,000 annually, and they have grown faster than inflation and state revenue. Premiums for the most commonly selected plan have increased by roughly 125% from FY '18 to FY '25, while inflation over that same period was 32%. And if current trends continue, healthcare costs will consume 20% of school district budgets within the next few years. This is not abstract at all. Every dollar absorbed by unchecked benefit growth is a dollar unavailable for classroom instruction, student supports, staffing stability, and our facilities. Local boards simply do not have the tools to manage this cost driver under the current structure. For that reason, in addition to capping the overall value of health benefits, the SBA urges the legislature to modernize the system governing public school employees' health benefits by revising the Commission on Public School Employee Health Benefits to include independent neutral members focused on solution rather than adversarial negotiation, requiring a single statewide health reimbursement arrangement administrator to reduce unnecessary variation and cost, expanding arbitration criteria to include comparability to the Vermont Health Connect plans and the impact on education spending, and importantly, blended arbitration outcomes instead of winner takes all awards. These reforms would help bend the cost curve while protecting educational resources for students, and they must be part of any serious education transformation discussion. A Hauk bill will be introduced soon that provide detailed language, and I've provided a handout with my testimony explaining why this issue matters so much to students and taxpayers. So that is posted on your website. In closing, real education transformation requires addressing the structural drivers of cost, especially health care benefits. Without addressing those drivers, reforms risk raising costs, disrupting students and communities and missing their intended outcomes. The SBA stands ready to work with this committee to advance thoughtful reforms that protect students and taxpayers and deliver a stable, equitable and sustainable education system. Thank you. Okay, and we have that. So, that, we are definitely we ever get off the information going to remote insurance in this committee this year. And

[Ann Cummings (Chair)]: I have a feeling the NEA might have some feelings about this, but it's definitely something to take more testimony on because that is a cost driver, and I know down the hall we're doing everything we can to get those numbers down, but like all of this, it's not a quick procedure. I'm really glad to hear we're

[Martine Larocque Gulick (Member)]: gonna take more testimony on this. That's great. And, to Senator Hardy's point, thank you for actually presenting some actionable steps. I looked at one of your pieces of testimony, but it looks like there are four. So looks like it's fairly thorough. I just wanted

[Ann Cummings (Chair)]: to say thank you. You're welcome. Okay, any other questions? Thank you. Elizabeth Jennings is up on Zoom. Welcome.

[Elizabeth Jennings (President, Vermont Association of School Business Officials)]: Hello, thank you everyone for inviting me to provide testimony today. I am Elizabeth Jennings. I am the current president of the Vermont Association of School Business Officials. And as Ann shared before, I was on the commission with a number of these folks earlier this year and throughout last year. VASBO's members, school business officials across Vermont are responsible for developing and administering school budgets, managing taxpayer resources, and ensuring districts can meet statutory obligations and educational needs. Each year, we as district officials and boards, we set targets for our budget and those guide our spending. They often focus on limits to expenditure growth, per pupil costs and tax impacts. These targets aim to balance the fiscal responsibility with maintaining high quality educational opportunities. However, when strict caps are imposed, the budget process will shift from exploring educational priorities to simply meeting a financial limit, which often reduces the discussion of program quality, innovation and long term goals. We do share the legislature's concern about educational cost growth and taxpayer affordability. We agree that during a transition period associated with Act 73, including the process of redistricting and the phased implementation of a foundation formula, a temporary funding mechanism may be necessary to ensure continuity and stability. The challenge in identifying an appropriate mechanism is significantly compounded by our uncertainty surrounding the law's ultimate implementation. At present, the structure and composition of the new districts remain unknown and so there is insufficient data to reliably estimate or model the fiscal impacts of the foundation formula. Given these unknowns, any interim funding approach needs to be flexible, prudent, and designed to maintain stability while the necessary details of Rx 73 are fully developed and clarified. FASBO is concerned that S-two 20 does not fundamentally address the underlying reasons that school district budgets increase and that a spending cap as proposed would likely drive decisions that harm educational quality and student outcomes. S220 proposes the spending constraint mechanism without addressing the actual factors that drive our rising costs in the Vermont education system. The principal cost pressures that we face are well known and largely structural and difficult to control. These include negotiating salary increases, health insurance inflation, which are outside of control and have experienced sustained growth well in excess of the 3% annually, rising tuition costs to independent schools and costs associated with our aging facilities. S220 would limit district per pupil spending increases in two years regardless of whether districts are absorbing those costs growth that are outside of their control. If enacted, it would risk focusing districts to cut programs simply to comply, especially in years where the actual cost of maintaining those services exceeds the cap. If we are in moderating educational cost growth and the resulting tax impacts, we urge the legislature to consider policies that directly address these costs rather than imposing a blunt cap on our total per pupil spending. Specifically, we believe a more effective and transparent approach would include consideration of a cap on the actuarial value of health insurance plans, which Sue was just very explicitly sharing and talking about. This would address one of the fastest growing and least controllable components of the school budgets. We also suggest reasonable growth parameters on salaries negotiated through collective bargaining, recognizing both fiscal sustainability and workforce stability, And a growth cap on tuition rates charged by independent schools, would ensure that tuition obligations grow in alignment with broader fiscal capacity. Targeting these cost drivers would provide system wide cost discipline without forcing districts to reduce instructional programming or student services in order to comply with a spending cap. FASB believes that cost containment policy should be aligned with the sources of the cost growth, not imposed downstream. We also looked at act 127 from 2022, which I believe Jeff brought up in his testimony where a 5% cap was on homestead property tax rate increases that was intended to smooth transition effects from pupil weighted reforms, the design and mechanics of that cap generated unintended consequences and destabilized our outcomes across the systems. Even in early projections, it looked like every district would have been capped in FY '25, regardless of whether the cap was necessary to protect taxpayers in that community. FASBO observed the presence of the cap created also a strong incentive for districts to spend up to the limit, even when doing so was not necessary to preserve programmatic needs. This occurred because districts correctly understood that once our capacity is lost, it's difficult to rebuild. Future years are gonna become more difficult, not easier. Any unused cap room might be unavailable later, and a district that stays artificially low may be disadvantaged in the future. These dynamics are documented in the public finance caps, create incentives to spend, preserve future flexibility rather than to spend only what's absolutely necessary. And in conclusion, VASBO appreciates the legislature's interest in cost containment and recognizes the urgency felt by Vermont taxpayers. However, we believe that this proposal does not address the root causes of the educational cost growth and its spending cap approach is likely to force districts to reduce programming while creating incentives to maximize their spending, repeating the same distortion that we experienced in FY '25. We urge the committee to focus on the reforms that target these actual cost drivers and provide stability and predictability, rather than imposing constraints that will ultimately reduce educational opportunity. I wanna thank you for everybody's time and I'm happy to answer any questions. And I also agree with everyone who has shared previously, we've been working, collaboratively together amongst the V's and would, welcome coming up with anything that helps you in the solutions as we move Elizabeth, through

[Ann Cummings (Chair)]: I think everyone has mentioned the cost of health insurance. We know that, and we know that when we went to the statewide plan that many teachers got a lot better health insurance than they had in the past, and other school employees also benefited because some of them weren't covered, and they are now. And I don't encourage anyone good health insurance. I think we've also heard teachers' salaries. I don't think anyone begrudges teachers either an adequate salary or decent benefits. It's a hard enough job. What we haven't talked about, because if those are well, you negotiate them, but they're pretty much set across, is what that's what it costs that's what you pay a teacher. You get reimbursed from the state on the number of pupils that you're teaching. So how many students in a class does it take to cover the cost of the teacher? Because I think that's the one issue we haven't talked about. If you're only getting $20,000 from the state and it's costing you $40,000 for that teacher to teach, you're losing $10,000 in there per class. Has anyone calculated very simply what because that I think is the other discussion that's going on. At what point can't you afford to pay a teacher to teach a class? Which means in smaller schools if you've only got five kids that want to take, you know, language in eighth grade, those five kids aren't going to get language, or if they do, it's going to be very expensive because your teacher set is cost cost is pretty much set by contract. So the one variable we can play with is class or district or school size because we know we can't impact the cost of healthcare with any rapidity. We can't solve the cost of housing which goes into teachers negotiations, cost of living, with you know, most of those factors are beyond our control. We can work at them. The one thing we can't control is the organization of our schools, and we have had various proposals from five well, think we started with one district and down to how many do we have, and, you know, and then within those districts, how many schools, and that's the one thing we can control so that we get class sizes or numbers of students that make it viable to pay a teacher a decent wage with decent benefits. And I think that that involves difficult decisions. Some of us parents didn't believe you should shield your children from the consequences of their actions. When you touch the hot stove, you get burned. We have been shielding taxpayers from the full cost of their school votes by putting money in. We're not going to have that money, so we could just let it go and let individual schools maybe finally make the decision, but we would have to go to some kind of a foundation formula where you just can't export that cost onto the education fund and basically spread it out over everyone. So that's I think there's all kinds of things going in there. Doing a lot of talk and we can take a look at Sue's and we will Sue's suggestions. I'm pretty sure other people will have other opinions about that, but it's it's the other thing that's causing the controversy. It's the school structure. It's how many kids in a class and how many kids have to be in the school, because I don't there's nothing that indicates that Vermont is improving in its educational performance. If anything, the indicators are starting to go the other way, and I don't think we want that to happen, but we also know that the cost of living here we don't control the cost of food or gasoline. We have some control over taxes, but that means we have to cut services or something. So I'm trying to get everybody engaged in this other much more painful discussion about is there, you know, does that have to wait until the pain locally is so terrible that we will make that, or is there some way for us to encourage it? I'm gonna let Sue and then or Elizabeth can then take questions.

[Elizabeth Jennings (President, Vermont Association of School Business Officials)]: I feel like there might have been about 25 questions embedded into everything you just said, so I don't know that I can target every single one and give you a really solid answer. But I would say that when we talk about these cost drivers, like for instance, the health insurance, I think it's in the governance on how those plans are derived. And I think there is change that can be made. Right now those plans are, their actuarial value is somewhere up around 97.5 or 98%. So that means out of pocket expenditures for anyone, not just teachers, but anyone in the school district, even including myself, I hardly pay a dime for anything. I pay a little bit of a premium out of my paycheck, and then I have an HRA embedded into the plan and the HRA dollars are paid first. So it's rare that I ever have to pay anything out of pocket for a prescription or for a doctor's visit or any of my medical needs. That's crazy. It's crazy the way the plans are designed. And then when you're negotiating for those plans, the way the system and structure is set up is that they are forced to pick one plan and proposal or the other. They can't pick pieces and parts of the proposals and piece together something that logically makes sense for both the employees and the employer and the cost that is driving that health insurance. So it did end up being a much more costly health insurance program to districts than what they anticipated it would be. So that's just kind of my nutshell on the health insurance. In regards to my comment about salaries and growth, I don't have like specifically on teachers, but I would say that in the district I'm currently working for, 78% of our costs in this district are personnel. So that's entire personnel, benefits and salaries, and that's a substantial portion. So, you you've got buildings and you've got other expenses, professional services to students that are special education that are all outside of your staffing. I'm talking strictly staffing, not contracted service personnel in your buildings. It's just staffing, it's 78%. That's huge. And I think that you can get at that a little bit by going for the class sizes and school sizes. You can get at how many students should be per staff member to try to drill it on how many staff members is really adequate to provide adequate services to all the students that are in their schools. And considering the needs, I appreciate the waiting system because that kind of gives a little appreciation to the needs of each students being very different from each other. But I think there still is a way when all of us are personally negotiating for salary increases, we're just ratcheting up against the other districts to try to maintain our staffing. So it's hard enough to employ anyone, but if we're competing with the district next door for teachers and paraeducators and all of those staff members, we just keep ratcheting up our salaries to make it so that they'd rather come work for us than work for them. And that just continues to increase the growth there. So if there's any way, not necessarily to, people have mentioned statewide contract for salaries, I don't know if I agree or disagree with that, but there could be something implemented where a growth range is put on districts so that they can't negotiate higher than X salary increase, but also appreciating cost of living for those staff members and wanting to give them adequate raises for what they're doing for work. I don't know if that kind of, I'm focusing on more of the cost drivers that I shared. And then we talked about the independent schools placing a growth rate on that. I think those are all just areas where we could curb the spending growth without actually placing caps. And that just begins to get at the overall cost of education.

[Ann Cummings (Chair)]: Okay, sounds good.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Hey Elizabeth, you've mentioned I think three times about independent schools tuition rate growth, that that's a problem. Could you share your math please that shows how that's

[Ann Cummings (Chair)]: evolved? Not right now,

[Jeff Fannon (Executive Director, Vermont-NEA)]: didn't you get a chance to send that over?

[Elizabeth Jennings (President, Vermont Association of School Business Officials)]: I don't have specific information. I could pull that to see what the current tuition rates are on independent schools. It's more in concern to how those rates are derived and driven that there isn't cost containment measures set upon them and that we basically, in many cases, especially school districts who live in an area or operate in an area where there are students that must be tuitioned into those independent schools, they don't have a lot of choice on where those students are gonna go and where they tuition them into, and they have no control over the amount of the increase each year in their tuition rates.

[Jeff Fannon (Executive Director, Vermont-NEA)]: So you're not saying that the increase is the problem, it's more that they don't have control over the increase?

[Elizabeth Jennings (President, Vermont Association of School Business Officials)]: Right. They don't have any control or say, or ability to choose to do something different, basically.

[Jeff Fannon (Executive Director, Vermont-NEA)]: There's no, there's no map there. It's just a perspective, I guess.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Yeah.

[Martine Larocque Gulick (Member)]: Okay. I'm

[Ann Cummings (Chair)]: we've already moved our next topic. So gonna we've got one more witness on this one. It's Jeff Francis. Familiar face.

[Jeff Francis (Interim for VSA; Former Executive Director, Vermont Superintendents Association)]: Are you ready for me?

[Ann Cummings (Chair)]: Hi. We're ready for you, Jeff. Welcome

[Jeff Francis (Interim for VSA; Former Executive Director, Vermont Superintendents Association)]: back. Thank thank you. How's the volume? Is it okay?

[Ann Cummings (Chair)]: It's great.

[Jeff Francis (Interim for VSA; Former Executive Director, Vermont Superintendents Association)]: Okay. Thanks. Well, thanks. I oh, thank you for, welcoming me back. I retired in August 2024. I haven't paid too close attention to what's transpiring, although I did take an interest in the Act 73 progressions. The only reason I'm here is because Chelsea Myers, who's the current executive director, is out on parental leave. So I'm helping out on a temporary basis. I started really in earnest at the January for the legislative session. And it seems like we've been out at a month even though it's just a couple of weeks.

[Ann Cummings (Chair)]: I think this is day seven.

[Jeff Francis (Interim for VSA; Former Executive Director, Vermont Superintendents Association)]: Yeah. I wanted to start by saying that in general, I appreciate the testimony of all four of the prior witnesses. I think Sue has got a pretty good handle on, the large scale cost drivers, And I thought Elizabeth did a nice job in terms of talking about the challenges around allowable growth or capping provisions just in terms of how they respond to local school district budgeting. I've given you some written testimony and I'm gonna speak to the points in that testimony thematically. I did not think that I was going to do this, but the opportunity presents itself. And I wanna talk about a presentation that senator Brock did to the superintendents in his 2012 campaign for governor where he came to the superintendents and he took a piece of flip chart paper and he drew two intersecting lines with an arrow pointed upward and an arrow pointing downward. And it was a very simple illustration. And he asked people if they knew what it was. Nobody knew what it was. And he said, well, it's the upward arrow is the cost of education in Vermont and the downward arrow is enrollment. He said, and I'm waiting for the day when we have the most expensive cost per pupil in the country and no pupils being educated. And that was a pretty poignant illustration. It was obviously an exaggeration, but if you look back fourteen years, it's really the trajectory that we're on. We have declines in enrollment and increasing costs. And I think, and this is based on my observation, that the general assembly and its efforts around Act 73 really has, I think, perhaps, in the most consequential, movement ever, are working to come to grips with the organization of the delivery system in an effort to get a handle on those costs. And I did a ton of work on Act 46, and it pains me when I hear people say that Act 46 didn't accomplish its goals. I think that the follow through was not what it might have been with regard to all the participants, including at the state level. But I do think that it illustrated that we were going to get a better handle on the cost structure in public education if one, we work together and two, we worked with the school district configuration so that we could get things like economies of scale. So I wanted to start with that. Sue Segolowski did a nice job with the major cost drivers as did Elizabeth. And I think that the state's got an obligation, by necessity, health care, housing, the economic development factors, the number of people that are employed, the capital construction needs of the state, all, have to be addressed. I would say as much by statewide policy than anything else, if we're gonna contribute to resolving this issue. Local school districts have to turn into the issues, and they are, I think everybody is, in order to, get a handle on the the the cost that they control at the local level. And being mildly redundant here, act 73 was intended to do that. Now shifting to the points in my testimony. When I realized that the redistricting task force report was not going to be well received, I would say in some ways on political grounds, I thought it was gonna be problematic and it did prove to be problematic. So the redistricting task force, thought did very, very good work in terms of the solutions that they were recommending. And based on what they heard, You know, we heard from the governor, at the time. I think it's fair to say that You know that he was disappointed that they hadn't emerged with maps Senator Baruth, I think it's fair to say had the same concern And then lo and behold, there was a bill to not put allowable growth on in '27 and twenty eight fiscal in '28 and twenty nine fiscal years, but in twenty seven fiscal years. And my reaction to that, because I was with the superintendent's association back in this interim capacity, was that at a time when we should all be working together, that had the potential to be disruptive. Now very quickly, it shifted to '28 and '29 because I think there was a recollection on people's parts that the allowable growth factors had not worked in their prior iterations. So there was a course correction. But to me, it was a reminder that everybody and as much of a nonpartisan basis as can be achieved cannot take their eye off the prize, which is the reorganization of the delivery system and an effort to get a handle on control of the cost, much of which is in Act 73. I thought that the approach taken by the school district redistricting task force was a learned approach. I think if you look at that report in its entirety, there is a tremendous wealth of information about what needs to be done to get a handle on the costs in the state. I also understand that there's a real sense of urgency around it. So it needs to be approached that way. Thus, my last statement and my first bullet, which this is a time when all parties need to be working together. I've not heard as many statements from superintendents as I have heard in the last couple of weeks about, yes, we know this is a problem. We're eager to work with all parties involved to get that done. I realize the devil's in the details, but there is a commitment on the part of the Superintendent's Association to do the work. It was an evidence in the joint hearing that they had with the House and Senate Education Committees yesterday. That was the first point. The second point, and this has already been covered by the prior witnesses. In general, capping mechanisms are not useful public policy. They don't do anything to address the cost drivers. They have the potential to set up conflict between local officials and state policymakers. Even though they're attention grabbing, I think what we've seen in Vermont given the disparate nature of delivery system is they don't even work. They don't work because the costs across districts in this state play out differently. You've got capital needs that are being tended to, you've got variability in the teacher salaries and contracts, you've got all different sizes and configurations in terms of school size, classes operated, tuitioning or not tuitioning. You got special sort of bonus elements that you have to contend with, like PCBs, for example. So to to cap that on a graduated scale and then expect a participatory response on the part of local school officials, you're not gonna get it. So at the very time when it, we all should be pulling together the potential for this public policy mechanism, particularly if it then applied for FY '27 was gonna get the opposite result of what you want. So I wanted to say that. The third thing that I will say, which is a notwithstanding point is as I consider the transition from the current funding system to the foundation formula, and I had a brief exchange with secretary Saunders about this, you may find that you have a need for some cost mitigation strategies in the transition years. And I don't know whether that would be allowable growth or not, and I'm not even sure how it's going to be managed. But as you move from the current configuration of school districts to the future configuration of school districts and an adjustment to the education funding system, it may be that you will have to say, we're going to impose, for lack of a better term caps, for example, in order to manage the money through the transition years. What I say in my written testimony is if that comes to pass, it has to be done extraordinarily thoughtfully. I'll stop here with this confession. I think for me to sit here and make these points, given the magnitude of the challenge, the temptation may be to say, you know, easier said than done or that's a trite response to the immense challenge that the state faces with regard to the education delivery system. But my themes are, number one, the time is now and I think everybody knows it. Number two, we should be generous with one another as we navigate these waters and it ought to be policy based, not politically based. And number three, I think that the public education system is quite precious for what it is, both currently and historically for the state of Vermont. And to the best of your ability, if you can preserve all that's good about it while you make the necessary adjustments in terms of opportunity for student and cost structure, that's the way to go. So, you know, it's it's it probably sounds like a person who's been away for a year and a half and and just came in to talk to you today, but that's the message that I wanted to convey.

[Ann Cummings (Chair)]: Actually, that's a nice perspective because you've got a little distance. I especially agree with you that, yes, we dropped the ball, everybody, after four to six, and we've waited till we've hit a crisis point, and we've lost the kind of luxury of having large amount of time. And to me, the question is how do we move this forward? We've got four committees. This committee at some point is going to have to set a tax rate for this year, and everyone's going to hate us, and they're going to hate us more next year. And how do we get this talk going, and how do we get the discussion out into the hinterlands with the people whose children are just for people, both taxes and children educationally are going to be most effective. I think we know that if this becomes a political football, that everybody but most especially the kids are gonna lose. I was disappointed that the governor pulled his my way or the highway because I don't think we're going to get Act 73 through exactly the way it was written. We don't get any major bill through exactly the way it was written. We always notwithstanding we stand sections and so any thoughts and this is to the entire system of where do we proceed? We've had a task force, we've had a commission, we've had other groups set up, and we aren't really any further ahead now than we were a year or two ago, except we have some more information. Know everybody's name, probably the names of their pets and kids, but we don't we're still dealing with the same system we were a year ago, but we are still looking at the same kind of solutions that we looked at last year or the year before, and nobody likes. So that's just the general question and anyone that wants to work with us on that, drop me a line.

[Thomas Chittenden (Vice Chair)]: Jeff, good to hear from you. I think I heard you say the last time allowable growth percentage cap was applied they did work, but just to confirm my understanding what I think I also heard from Jeff Bannon is that they never went into effect for any fiscal year, They were in law and then repealed before they had any downward pressure on spending over the last eight to ten years. Is that correct, Jeff?

[Jeff Francis (Interim for VSA; Former Executive Director, Vermont Superintendents Association)]: I think Jeff, if you're asking me, Jeff, I didn't do the research that Jeff Fanon did. He cited with specificity the prior instances. Think that the reason that they weren't implemented is because, local school officials came out of the woodwork and talked about given the variability in the delivery system, how those caps would affect the budgetary process. Another example was, and I think you saw this in the last iteration, you've got districts that, because of the culture and voting patterns in those districts, they won't utilize the capacity that they're provided. And you have others that wouldn't otherwise push right up to the limit that they're allowed, but then go to that place because they're allowed it. So I'm not well situated this minute to sort of debate the history. My point is it's really, and it's a blunt instrument that affects both the ability for school districts to fund what they need in some cases, and also provides the opportunity for school districts to fund what they otherwise would not have funded. So my point could be summarized this way. You're already not gonna do it for fiscal year twenty seven, which is a good thing because you're not gonna lose the goodwill, I think, that currently exists in terms of working together to address the challenges associated with Act 73. If in your deliberation around S-two 20, you want to look at those allowable growth provisions in the context of what I hope is a progression to the foundation fund, go ahead and do it, but don't do it lightly and do it in the context of we need to change the patterns of spending on a school district by school district basis as we move from the current funding system to the foundation system. I don't have any detail on that. If you were to say, Jeff, you're not understanding my question, we're thinking about going to allowable growth in 'twenty eight and 'twenty nine, but not doing anything else. Then I would say I don't think that's fair to the school districts in the state in large part because A, I don't think hard caps work even on an allowable growth type of a formula. And B, there's so much disparity in the way money is spent on a district by district basis in the state, then that kind of a mechanism I think is inherently, if it's if it's workable, it's I don't think it's fair.

[Thomas Chittenden (Vice Chair)]: It just I'm under the impression that these have never been in effect applying to spend on school districts. They were in law that were appealed before they had any net effect. That's my understanding.

[Jeff Francis (Interim for VSA; Former Executive Director, Vermont Superintendents Association)]: I think that's true.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Okay, thank you. Jeff Van, for the record, think in large measure, senator Chittenden, you are right. However, the act 46 caps were repealed on January 30. And then and all by then, all the budgets in large measure had been established. So while they were repealed, the effect was a downward pressure, and and the cap did have an effect. So to say it didn't have an effect is not accurate. It was just repealed too late to have much budget effects for that fiscal year that on the

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: Did that down? About three quarters of the districts, it did effect.

[Jeff Fannon (Executive Director, Vermont-NEA)]: Yes. Did. There's It did. It worked.

[Ann Cummings (Chair)]: It worked. Yeah. Yep. I agree. It worked.

[Jay Nichols (Executive Director, Vermont Principals’ Association)]: It worked for that purpose.

[Ann Cummings (Chair)]: Okay. Vinny? Alright. I'm I'm serious. I am looking for paths forward, and I think we're all gonna have to spread that path together. I think Senator Brock was prophetic. Our costs are going up and our students are going down, and unless we can fix housing and all kinds of other things, that's going to continue. So, and with that, we have moved Rick Stiegel. We're gonna go just a quick walk through of one of the bills. We've got. I'm gonna give you a five minute break. Be back here by 03:15 or you will not