Vermont Legislature SmartTranscripts:

[Sen. Ann Cummings (Chair)]: This is Senate Finance, January 22, and for those who aren't here, they will miss knowing what I'm doing for you on the floor. Love it. We have a bill on biomarkers, and apparently the Alzheimer's Association has asked health and welfare to take it up first. I know nothing I know very little about biomarkers. It it will come back to us because there is an insurance coverage in it. But

[Sen. Scott Beck]: I don't even know what a biomarker

[Ben Kinsley (Executive Director, Campaign for Vermont)]: I was just googling myself. Yeah.

[Sen. Ann Cummings (Chair)]: It has something to do with genes and chromosomes and yeah. Okay.

[Julia Victor (Joint Fiscal Office)]: Okay. It's better off down the hall.

[Sen. Ann Cummings (Chair)]: Senator? There's a thing about, like, '23 and me. Yeah. Think there's

[Ben Kinsley (Executive Director, Campaign for Vermont)]: last year.

[Sen. Ann Cummings (Chair)]: There's biomarkers now, proteins and things that they can diagnose your likelihood of to certain diseases. And so I we have a full agenda, and I told Jenny I wouldn't have any problem. I got up there today and the movement was on my desk.

[Sen. Martine Larocque Gulick]: So I thought I would I

[Sen. Ann Cummings (Chair)]: why? I may have missed once. If I move any bills, let you know what I'm doing, and if anybody objects, I won't do it. It will come back to the side.

[Sen. Martine Larocque Gulick]: Okay. So we are going to start.

[Sen. Ann Cummings (Chair)]: We are we are looking again. I am asking the Department of Education to come up with this week on to see numbers on the redistricting and what they're proposing at this point. Today we're gonna take a look at the three ideas of the school redistricting test or recommendations. And we're going to start out with Ben Kinsley, who is the Director of Campaign for Vermont. Ben, welcome. We just ask you to identify yourself for the record, and then you might just give us a little who is campaign for Vermont in case anyone doesn't know. And then I know you come out and recommended that we go to sharing your screen. So we thought we'd give you a chance to tell us what your thought or complication was in that we're looking at this point for numbers we can compare with other numbers, so the floor is yours.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: It's all about numbers. Yeah, my name is Ben Kinsley. I'm the Executive Director of Campaign for Vermont. We are a statewide nonprofit advocacy group focused on growing the middle class here in Vermont. Obviously, education and property taxes are both a big component of that in terms of affordability, but also in terms of the economic prosperity for our state. So, this is an issue we followed for quite a long time. I do have a presentation, and I can share my screen as we walk through it here. It should also be posted on your committee page.

[Sen. Ann Cummings (Chair)]: Okay.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: And, but

[Sen. Ann Cummings (Chair)]: it's because people at home can see it if you share it.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Exactly. So we'll, we'll try to do that here. I'll also apologize for not being there in person, I'm getting over a cold and did not want to expose you all to that, so I am virtual today.

[Sen. Ann Cummings (Chair)]: This building is widely known as Germ Central.

[Sen. Ruth Hardy]: We probably gave it to you. Yeah,

[Ben Kinsley (Executive Director, Campaign for Vermont)]: I wasn't gonna blame you. I had to go to New Jersey for a funeral this weekend. I'm gonna blame them.

[Sen. Ann Cummings (Chair)]: New viruses we're not used to.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Can you see my screen here?

[Sen. Ann Cummings (Chair)]: Yes, it looks fine.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: So I was asked to come speak about a report we put out in November, and it was estimating cost savings for shared services between school districts. I'd like to kind of go back a little ways to talk about how we arrived at that as a as a policy position, and also kind of what we what we mean by shared services. So, we really the genesis of this was a report that we did in 2024, looking at education, spending and educational outcomes based on the size of, school units. This is a redo of a report we did in 2014. So you can find both of those reports on our website, if you'd like. But one of the interesting findings from the, from the 2024 report is that there is a correlation, a statistical correlation between the size of the supervisory union and the cost per student. So as the size of the SU increased, we found that there was a decrease in the cost per student. We did not find that relationship when we looked at school districts. And that was consistent with our 2014 finding. In both 2014 and 2024, we did not find a statistical relationship between the size of the district and the cost per student or the educational, outcomes of the students in those districts.

[Sen. Ruth Hardy]: Ben, just a clarifying question here. Is this, PPE, is that, on a body basis or a weighted basis?

[Ben Kinsley (Executive Director, Campaign for Vermont)]: That is on a body basis.

[Sen. Ruth Hardy]: Okay, thank you.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: So it's ADM. Good question. And so yeah, you can see just for comparison purposes here, included the district distribution as well. We dive into these both of these numbers and both of these charts a lot more deeply in the full reports, but just just so you kind of get an idea. We did discover that four percent of the variation in per pupil spending could be accounted for by the size of the district, whereas 16% could be attributed to the size of the SU, which means that there's proportionally a lot stronger statistical relationship at the SU level in terms of scale than at the district level. Sure.

[Sen. Martine Larocque Gulick]: Ben, I just clicked on the education outcomes and spending link, and I don't what data are you using to come up with these numbers? I'm just curious. Was it AOE data?

[Ben Kinsley (Executive Director, Campaign for Vermont)]: It is AOE data for both of these charts, yeah.

[Sen. Ann Cummings (Chair)]: At the very bottom of the screen, the source. See it?

[Sen. Martine Larocque Gulick]: Yeah, clicked on that. It didn't really go anywhere. Not much. But okay. Thanks, Ben.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: If the link didn't work, I'll I'll get you the correct link. But, yeah, it is it is AOE data for both the the 2024 report as well as the 2014, and and that's what's behind both of these charts. So with that, we started looking at SUs based on that finding. Some of this information is probably going to be repetitive to you and others may not be, but Vermont has 52 supervisory unions and 119 school districts. That roughly means that there are two school districts for every SU, a little more than two. And most of those SUs are pretty small compared to similar structures around the country, about 1,600 students on average, as well as a relatively small geographic footprint at about 185 square miles. So you'll notice that I said, you may notice that I said, compared to other structures around the country, the National Center for Education Statistics classifies Vermont Supervisory Unions as education service agencies or ESAs. There are some differences between our supervisory unions and what ESAs look like in other places around the country. And there are, you know, all about give or take 40 states that have an ESA structure, around the around the country. Everywhere from New York, we've talked a lot, heard a lot of conversation around BOCES and what those look like. Maine calls them regional, school units, Pennsylvania calls them intermediary units. And then most other states have some variation on ESA or regional ESA. So what's what's the difference between an ESA and Vermont supervisory unions? The main one is governance. Supervisory unions in Vermont are tied to the superintendent and, you know, that chief executive functionality, along with his support staff, that's a little different than how most ESAs, are structured. The second kind of, really big difference is scope of services. In addition to that chief executive functionality, you know, the supervisory unions in Vermont consistently really only provide, special education. There are some exceptions to that, but really, it's just those two services. And when we look elsewhere in the country, there are a whole range of services, and we'll get into that a little bit, here in the, in the next slide. But that's another big difference. And the third difference is, is scale. I kind of talked a little bit about the scale of Vermont supervisory unions, and they are quite a bit smaller in the current configuration than, than ESAs in other states. So in terms of what services ESAs can provide, there's a whole range of services that we see ESAs provide across the country. I'm not going to go all the way through this list. The one I do want to call out is business and financial services. These are things like payroll, benefit administration, ARAP. Those are in the private sector. Those are like the first things that get merged when a merger and acquisition happens, because that's the low hanging fruit in many cases. And I think that's probably true here as well. I've been through two mergers and acquisitions in the private sector myself, and this is the first thing they go to, payroll and HR and all that sort of stuff. And, and that's where a lot of the cost savings are. But all of these services provide various levels of cost savings. And we'll get into that a little bit more when I get to cost savings estimate that we did.

[Sen. Martine Larocque Gulick]: Another quick question. Sorry, keep interrupting. We looked at the I was in the education committee when we looked at the bonuses bill a couple years ago, and we had talked about sharing actual staff too, not just administrative leadership, like, being able to share teachers or even paras. Is that something you don't have that on the list, so I was wondering.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Yeah. So that is not, I might, you know, I think the special education bucket is quite broad. I think there's a lot of things that could fall under there or special programming. Think I ESAs also give us the opportunity to expand programming where we may not have, you know, certain programs in certain schools. And I'll get into that a little bit more in a minute. But yeah, there's definitely stuff that we could probably leverage that is not on this list.

[Sen. Martine Larocque Gulick]: Okay. Thank you.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: And paras could certainly be one of them.

[Sen. Scott Beck]: Yep.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Alright. So that gets us into what our proposal actually is, which is essentially replacing the existing supervisory union structure with an ESA structure that's at scale. And so we arrived at 15 ESAs that are based around our career technical education centers. And that would replace the existing 52 supervisory unions. And they would continue to support, you know, probably somewhere in the neighborhood of 100 or so school districts in the future. The those ESAs allow us to get scale for critical administrative and business functions while still maintaining those community connections, that you know, Vermonters value and, you know, growing body of research, indicates are really important for the vitality of the schools as well as the vitality of the of the community. And you do that by leaving local school boards in place. So that's what we mean when we say that in terms of leaving those community connections in place.

[Sen. Scott Beck]: Ben, we have another question.

[Sen. Martine Larocque Gulick]: Thank you, Ben. So all the numbers that you're going to show us are going to be based on this governance structure that you're sharing right now.

[Sen. Scott Beck]: Yes.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Okay. That's why we wanted to lead with this, like to understand what the structure is that we're actually giving providing a cost savings estimate on.

[Sen. Ann Cummings (Chair)]: Thank you.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: So we talked a little bit a minute ago about expanded opportunities. I think there are opportunities to expand services to kids. Know, the governor talked about in his State of the State address a couple weeks ago, how in one county there was a high school that was providing 17 languages and another that was providing four. Took that. Could be wrong.

[Sen. Martine Larocque Gulick]: Misunderstood that comment. It was the classes, it wasn't the number of languages.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Oh, it was the classes, not the number. Okay, my bad. But in either event, like if you have that disparity from one school to another in terms of specialized programming, like language arts, AP, possibly even CTE programming. If that is at the, if you push that up to the ESA level, every school in that region could potentially benefit from those services. So it's actually a way to increase equity and access to specialized programming. And we've seen other states do things like that. One of the reasons that we chose 15 ESAs based around Career and Technical Education Centers is because we believe that that really strengthens the post secondary educational opportunities for students as well as strengthens our workforce training pipeline. And that's good for our economy as well as for our students. And then I'll just note that the scale of these ESAs at the model that we're proposing is much more in line with what we see in other states, much more similar to what New York and Pennsylvania have, for example, in terms of scale, and gets us north of 5,000 students per ESA on average and around six fifty square miles in geographic footprint.

[Sen. Ann Cummings (Chair)]: We have another question. So Ben, did

[Sen. Martine Larocque Gulick]: you do any modeling based on the five seesaw areas that we proposed in the redistricting committee? Seems like you're creating your own governance structure here as well as modeling savings.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Yeah, so we did not model layering the five or six CSOs or whatever it was on top of the existing SUs. There is potentially a way to mesh those two. If you move special ed up to the CSO level. But we did not model a cost savings. Alright. So I am getting into cost savings part now. I promise. We looked at cost savings in two different ways. So we had two different models that we used to evaluate potential cost savings, for this, for this proposal. The first one was based on the specific categories of services that could be pushed up to the ESA level. So, looked at savings other states had realized in each one of those categories and then applied those potential savings to, to Vermont spending in those categories. And, and that was based on 2022 expenditures, because that was the most recent fiscal year where we could get that granular of data. So that yielded $133,000,000 in savings on the consolidation of SUs, just that component of it, another $200,000,000 in savings from pushing services up from the district level to the new ESA level, which yielded three thirty three million dollars in total savings that is in $20.22 dollars So if the state were going to go forward and implement something like this and say, you know, FY '27 or '28, it would be a larger number because you'd have to account for that, the inflation that's happened since then.

[Sen. Ann Cummings (Chair)]: Then you're pushing the services up from replacing SKUs, where does governance stay? Are you guys educating the SKUs or some kind of a district at a higher level?

[Ben Kinsley (Executive Director, Campaign for Vermont)]: So the districts would remain largely the way they are today. And the theory is that the superintendent would, the role of the superintendent would likely change, but they would move up to the ESA level. There are, again, ways to potentially mesh those two. And we go in, we go into that in a fair amount of detail in our, in our proposal laying out this whole concept for March, and how we think the governance could work. But we're not necessarily tied to exactly how the governance would work. I think there's a couple different ways it could be viable. Alright, so the second way we estimated cost savings was by looking at the categories in which we saved dollars in the act 46 consolidation effort. So there is a study done, an independent study done that estimated the cost savings from looking at the year before the prior merger and then the year following merger, and where there what categories were there cost savings and in which categories were there new expenditures. So we basically took that those savings, savings categories and assumed that we would not have the categories where there was additional spending by moving to the ESA model. And I'll explain why we made that assumption here in a minute. And then we applied those to FY '26 students and FY $26 and that got us to $291,000,000 in savings based on those assumptions. The other thing that's sort of that's good to note here is both of these two models show between 1214% in total cost savings based on our I think this is FY '26. And that 12 or 14% of savings is also pretty in line with that 16% in variation in spending that could be explained by the size of the supervisory union. So in theory, going to this, model, we would be, you know, closer to two or 4% of the variation in spending could be explained by the size of the ESA. So those those all three of those numbers kind of correspond to each other. Why not district consolidation? So this is of the main, probably the big question, right, is why do this instead of consolidate districts? You know, there's a couple reasons for it. And I wanted to show this chart. There's a lot going on here. But one of the reasons is you look at the overall spending, which is probably pretty small here, but it's the purple line is Vermont's spending per student. And you can see in twenty sixteen-twenty seventeen, it started accelerating and accelerated all the way through the twenty nineteen-twenty twenty year when COVID started also impacting student spending. So cost per student overall in our education system accelerated during the Act 46 consolidations. And we started digging into that. We went back to the independent study that came out of the Yale researcher, it's the Miller report. And there hasn't been a whole lot of independent studies on Act 46, which which is a little bit of a frustration point for a lot of you right now. But that report in particular found that there was an increase in $1,500 per student tied to contract buyouts and level ups as well as additional support services. And again, that was looking at, you know, what the spending at a district level was prior the year prior to merger and then the year following merger. So one of the things and the ACT seventy three task force came to this conclusion as well is that there's, there's definitely a diseconomy of scale when you have to start touching some of those staffing contracts and have to level them up because the inclination is, say you have a group of five districts that are merging, you don't want to tell any one of those districts, the teachers in those districts, you have to take a pay cut. So the inclination is to level everyone up to the most generous compensation package out of that group of districts as merging. And that's exactly what happened in act 46. So, you know, not doing district consolidation and focusing on the SU consolidation or, you know, or an ESA concept of some sort, allows you to leave those staffing contracts untouched, and not have to do that level up. The other the second reason is natural, the national literature shows mixed results from district consolidation. Generally, it cautions against assuming that it's going to save money. You know, where, actually I get into this on the next slide, so I won't go into that. That's, you know, kind of the general consensus from the literature. Sorry, did I see a hand?

[Sen. Ruth Hardy]: Yeah, I do understand that the concept of leveling up, but that seems to contradict your third bullet point here that only 4% of the spending was attributed to districts, whereas 16% is explained by SU.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: So that was both of those studies that came from our both are that specific numbers from our 2024 study, was post act 46 mergers. So it's not looking during the mergers is looking after the mergers, if that makes sense.

[Sen. Ruth Hardy]: Yeah.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: And then the last point I would make is, know, if we leave districts and school boards for the most part alone, aside from, you know, strategic mergers where they make sense, We also reduce the risk of breaking community ties and also hurting community engagement. And there's a great report from Mass Inc. Massachusetts about some research they did around how important those community ties to schools are both for the health of the school as well as the health of the community. And so, you know, there are some intangible things there that that we risk when we start forcing districts to merge. Here's just a summary of some of the some quotes from national literature on district mergers. You know, generally, the consensus is most of the savings are found when merging districts that are 300 students or smaller. Those savings start tapering off between 303,000 students. And then we actually start seeing diseconomies of scale for districts that are larger than 3,000 students is generally the consensus of the literature. An interesting footnote to that, the average school district size in Vermont post Act 46 is around 600 students, which is twice the size of that sort of minimum threshold that we see in the literature. All right, so to recap, ESAs allow and moving to an ESA structure allows us to maintain community connections, expand opportunities for students, achieve scale in our operating structures, and also generate savings for taxpayers. And I would say that the districts around the state that are already voluntarily participating in the BOCES model, which is an ESA model, Some of them have found up to 66% cost savings on specific services, which is more than twice what we estimated on any of our any of our estimates on individual services. So there are school districts today in Vermont that are already taking advantage of this and are already seeing benefits.

[Sen. Ann Cummings (Chair)]: All right. Thank

[Sen. Scott Beck]: you, Ben. Great presentation. Was really helpful to understand your perspective. My question is how you see the ESAs in your presentation here different than a supervisory union with specific with specificity around authority. My understanding, correct me if I'm wrong, supervisory unions usually take authority away from the district regarding the superintendent, special education to some extent, financial HR management, transportation, and professional development. They give up those authorities at the district level to coordinate across those boundaries. That's been, if I'm wrong, I'm wrong. But do you see the ESA also similarly performing those same functions and taking that authority away from any of the districts or SKUs within the one of the 15 ESAs you described or is there some other distinction in those authorities that you would carve out for what you've modeled for ESA?

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Yeah, I think we would move all of those services up to the ESA level. I think the way I would talk about it is right now, today, the district is responsible for providing HR functions and business operation functions and all of these things. They're individually responsible for that in most cases. So moving it up to the ESA level allows districts to focus on educating kids and not having to deal with all these business functions. If they can, you know, achieve scale through an ESA, then realize the cost savings and focus on kids, which is, you know, really what we want them to do, I think.

[Sen. Scott Beck]: So quick follow-up. So in your mind, is an ESA anything different than just a larger state designed supervisory union imposed on districts within that arena, districts and supervisory unions? I'm not seeing a distinction between an ESA and a state mandated supervisory union.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Yeah, I think they're gonna be very similar except for those distinctions that I talked about in the beginning where like, the scope of services that SU provides today is very different in Vermont than it is in other places. So I think increasing the number of services and also increasing scale so that, you know, and a supervisory union or an ESA is providing those services to more than 2.2 school districts or whatever the number is today.

[Sen. Ann Cummings (Chair)]: Any other questions? Thank you. Have you presented this to any other legislative committee?

[Ben Kinsley (Executive Director, Campaign for Vermont)]: I believe we're going to share this with the Ways and Means Committee and Senate Education Committee.

[Sen. Ann Cummings (Chair)]: Okay.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: But you're the first one so far.

[Sen. Martine Larocque Gulick]: Okay, as

[Sen. Ann Cummings (Chair)]: long as the other ones are going to hear from you. And Housewives and Means is zooming in to our next set of witnesses. I don't know how they miss you but Martine. Thank you. Thank you,

[Sen. Martine Larocque Gulick]: Chair Cummings. Ben, thank you so much. Much appreciated and all the work that you've done on this. It would be fantastic if you could do your modeling with the five seesaws that we have in our task force report, which I know would probably be a heavy lift, but it would be great to just see what numbers you came up with as well on that.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Yeah, I would say, I think, thank you for your work on the task force. I know that was not easy. And I think, you know, really any model that we're looking at, we should be able to get these numbers, these types of numbers for, and and know what it is going into it. You know, that was not done for act 46. There was not a cost savings estimate, a target we were shooting for. And I think that was one of the challenges we ran into.

[Sen. Martine Larocque Gulick]: Great, thank you. And I do think we're going to be having some other folks in to talk about, cooperative education services in the next couple of weeks. So, yeah, stay tuned.

[Ben Kinsley (Executive Director, Campaign for Vermont)]: Excellent. Thanks so much.

[Sen. Ann Cummings (Chair)]: Okay. I'm glad they're going to the Senate yet because state will be in the least. Saves money. We need to know something. Okay. We are going to move it on to officially the school district redistricting task force report. And we've got Julia's next.

[Julia Victor (Joint Fiscal Office)]: No, I'm skipping. We're not in angles. They are dirty. These are. I knew

[Sen. Ann Cummings (Chair)]: Ed Fund was their stuff. The lower design. It'll be something Yeah. Know. Go on up this thing. Hi.

[Julia Victor (Joint Fiscal Office)]: Hi. I'm Julia Victor, Joint Fiscal Office. There are a few documents on the committee page under my name. There's two Education Fund outlooks, and there's the annotated guide

[Sen. Ann Cummings (Chair)]: to the

[Julia Victor (Joint Fiscal Office)]: Ed Fund outlook, which we've started putting out each year to help understand what each of the lines mean. There are the printed version that you have in front of you is the combined EdFine Outlook that shows f y twenty seven per the emergency board update, and then the far right column is the gov rep proposal. I know you haven't heard yet from the administration. So, madam chair, would you like me to go ahead and share my screen with outlook that you all have in front

[Sen. Ann Cummings (Chair)]: of you? I think that would be helpful. I think everyone can see it.

[Julia Victor (Joint Fiscal Office)]: So I think this is your first time this session reviewing the Edsburg Outlook. Is that

[Sen. Ann Cummings (Chair)]: am I remembering that correctly? I've done the December

[Sen. Ruth Hardy]: December 1 letter.

[Julia Victor (Joint Fiscal Office)]: We did the December one letter. Okay. Yeah. It's hard to believe it's only Five yard.

[Sen. Ann Cummings (Chair)]: So

[Julia Victor (Joint Fiscal Office)]: so this is the outlook that you have in front of you. I'm gonna start with the FY '26 VAA and then move to the right, if that works for you. Yeah. So FY '26, the preliminary BAA, what we're looking at here are the updated revenues per the forecast. And really the only other change that's included in here in the BAA is a 1,000,000 downgrade to the universal school meals appropriation because the cost is estimated to come in lower than the appropriation that's included in BAA. And what we see here is after accounting for all of those changes, there's an estimated 22,300,000.0 unreserved and unallocated at the close of fiscal year '26, if all of these estimates come to pass. Moving into fiscal year twenty seven, before talking about both of these columns, I wanna make the big caveat that we still don't have the long term weighted ADM counts underlying the model. So with an update to the long term weighted ADM, of course, we will see shifts in the outlook. We still need the updated grant list data, which we also don't have here, and we're still using the preliminary budget estimates from the December 1 letter. So we do have the revenue updated revenue forecast, but some of those other pieces that continue to be updated over the course of the session haven't yet been updated. So this is

[Sen. Ann Cummings (Chair)]: still quite preliminary. Tell meeting day could definitely change things.

[Julia Victor (Joint Fiscal Office)]: Yeah, and we'll really start to get more information and more insight into what school district budgets look like in this education spending growth, the 5.8 in row H, as school districts begin to more on their budgets and AOE starts collecting that information. So what we're looking at here for the emergency board update, the revenue forecast change really had a de minimis impact on the education fund outlook. So doing the revenue forecast update and then resolving for the yields and the non homestead property tax rate following the parameters of the December 1 letter, we still round the same average bill change as the December '1 letter an 11.9%. So really a de minimis impact,

[Sen. Ann Cummings (Chair)]: that revenue forecasting change. And

[Julia Victor (Joint Fiscal Office)]: this far shall I can shall I just keep going? I'm not taking any questions. Okay. So the the far right column, this is the gov rec reflecting the governor's recommended proposal for FY twenty seven as it relates to the education fund. So as you'll recall, as different policies begin to be considered over the legislative session, we come in with the Education Fund Outlook, and these highlighted in blue or purple rows are reflecting the policy proposals or potential policy changes. So what we're looking at for the gov rep is the 10,000,000 downgrade to the purchase of the transfer to the purchase and use tax, right? That's gonna be the proposal is for that to be transferred out of the education fund, which then means that there's less non property tax revenue sources, ongoing revenue sources to the education fund. The budget proposal includes a one time transfer to backfill the purchase and use phase down in fiscal year twenty seven. So we see that here in row nine. And the proposal also includes a 105,000,000 of one time general fund to decrease property taxes.

[Sen. Ann Cummings (Chair)]: Next year, we've been told we won't have 114,900,000.0 to transfer and so that will be about that much property tax increase. Right.

[Julia Victor (Joint Fiscal Office)]: So we'll recall that the more one time money that's used in a single year then puts a greater increase on the next year because we're artificially, we're holding those rates lower than they would have gone up absent that revenue. So we had a 77,800,000.0 last year in one time general fund money. We also use, or you also use the education fund surplus to decrease property taxes in one year. So we see with the December 1 letter and the e board update, an estimated average bill change to 11.9%, but an education spending growth of about 6%. So that difference in large part can be attributed to the use of one time money. Of course, the other underlying factors that we have there are the performance of non property tax revenue. So the less non property tax revenue going into the education fund, either from performance or from policy changes, the more that will need to be made up from property taxes, absent another policy. So is

[Sen. Ann Cummings (Chair)]: the purchase and use removed? And some rooms and meals,

[Julia Victor (Joint Fiscal Office)]: but basically sales tax. Yeah. So with purchase and use tax decreasing, right, so the so the proposal would be to transfer out 10,000,000 in FY twenty seven. That would be 10,000,000 that would need to That's affirmative. Correct.

[Sen. Ann Cummings (Chair)]: And just for the record, that is money. What we did at sixty, we raised the gas tax in order to fund back sixty and cushion some very large increases in property tax rates. At some point it was easier to administer as purchase and use and they were about the same amount, so it got switched to purchase and use, but this was not money that was supposed to go to transportation and we stole. We raised it separately just like we put an addition on rooms and meals for short term rentals last year and said all of that, just a portion, you go to education. So this was money that was raised and is now being moved out of education into what is a great need in transportation. But that means that unless sales revenue picks up an extra 10,000,000, that will probably get switched over to the property tax in this year, Unless we can buy more money somewhere. K. For savings. For savings. And we're looking at that. Okay. Any questions for Julia? Since we have time.

[Sen. Scott Beck]: Mhmm. May since we have time.

[Sen. Ann Cummings (Chair)]: Yes.

[Sen. Scott Beck]: The last can you explain to me the 30 line 35, the 22.33? What does that mean to you Prior year unreserved unallocated. Are we using that 22.33 in the numbers above?

[Julia Victor (Joint Fiscal Office)]: Yes. So the line 35, prior year unreserved unallocated, is referring to how much is coming from the prior fiscal year. You can kind of think of that as that is the education fund surplus when we're talking about it. So in this, in this construct, that 22,330,000.00 is coming from line 36 in FY '26 of the FY '26 unreserved unallocated. The region reason it changes in line 35 between the e board and the gov rec reflects that 1,000,000 decrease that I referenced to the universal school meals appropriation in the BAA. So looking at this, we see there's 110,000 on the bottom line on reserve unallocated in FY twenty seven for this construct.

[Sen. Scott Beck]: And it is standard practice for us to not to zero that out, but to apply that this year, and then we basically get an idea of what that excess is gonna be next year. We go through the process again. Is that correct?

[Julia Victor (Joint Fiscal Office)]: I don't wanna say it's standard practice. That's what's been done in the last few years. It really depends on what that surplus is. A couple of years ago, you'll recall that education fund had a really large, I think it was upwards of a 100,000,000 in surplus. I don't remember the exact figure. A lot of that was used to decrease property taxes in the next fiscal year. There was also money set aside for a PCB reserve. There was money set aside for a tax rate offset reserve. There was money set aside for a pull up adjustment reserve. All of those additional reserves Yeah. Have been spent. There's no money left in an additional reserve.

[Sen. Ann Cummings (Chair)]: And the thing is part of that was when we switched from the general fund transfer to the sales tax, they were relatively the same amount of money that was prior to the wayside. Yes. The wayside decision hit months after we made that transfer

[Julia Victor (Joint Fiscal Office)]: and a couple

[Sen. Ann Cummings (Chair)]: yeah. Before COVID hit and all kinds of federal stimulus money came in, which people did what they were supposed to do. They bought things which helped the economy, but it also gave us a big surplus. So that money's gone. The boom is gone. We did treat it as somewhat one time money, we put some aside for the PCB remediation room, not the testing, and for other buy downs because we knew when it went away they'd be paid. And we're back to the norm with the proposal that we remove 10,000,000 with a backfill this year, but probably not next year.

[Sen. Thomas Chittenden (Vice Chair)]: Thanks, Doctor. Chittenden. This is a detailed question and maybe I just misheard you, but you were saying the difference in lines thirty five and thirty six that it goes last year, line 36 is 22.33, then it goes to 2133, then 2233. You said it was because of the difference in the universal school meal budget going down. Mhmm. So but both of them say 1830 eighteen point three Mhmm. On that '27. So when when did it go down? So

[Julia Victor (Joint Fiscal Office)]: so, ideally, I would have four columns on here to make it more clear, but I tried to put it into three. So what we're seeing here is the BAA adjustment is for f y the f y twenty six appropriation, which was originally 18 and a half, but the VAA puts at 17 and a half, which we see in the FY '26 row 20. When I when I presented the Ed Fund out well, I actually didn't present it, but when I submitted the Ed Fund Outlook to the emergency board, we didn't I agreed finance and management and I agreed that it didn't make sense to include the BAA as that would was a policy proposal. So when it was solved for the emergency board, it was assuming the universal meals appropriation of eight people.

[Sen. Thomas Chittenden (Vice Chair)]: Then why does it from the e board for the GovRec go from 21.33 to 22.33? Because the

[Julia Victor (Joint Fiscal Office)]: the 22.33 Uh-huh. Is reflecting the additional million downgrade to the universal meals appropriation. So what we're seeing here in the 21.33 Mhmm. So ideally, there would be another column sitting right here that would show the FY twenty six absent BAA. And that would have a twenty one point three three left on the bottom line. Okay. Because the Universal Meals Incorporation would be 18.

[Sen. Thomas Chittenden (Vice Chair)]: Okay. So I I understand that. But from the 02/1927 Mhmm. There there there's a shift of a million dollars on the bottom line, but there's not a shift in the the budgeted cost or the

[Julia Victor (Joint Fiscal Office)]: The shift is happening in f y twenty six.

[Sen. Ann Cummings (Chair)]: Okay.

[Julia Victor (Joint Fiscal Office)]: The shift is happening where? For the emergency board?

[Sen. Thomas Chittenden (Vice Chair)]: Oh, this is just what you presented to the

[Sen. Ann Cummings (Chair)]: emergency board. I get it now. Alright. Thank you.

[Julia Victor (Joint Fiscal Office)]: Okay. Any other questions for Julie? The final piece that I'll add that I always try to reflect is that with the gov rep using the one hundred and five general fund one time and the education fund surplus, that would result in a uniform average will change at 5.5%.

[Sen. Ann Cummings (Chair)]: Okay. Thank you. Yeah. I'm sure you'll be back to go over this another time. Out of here. Basically. But that's where we are now.

[Julia Victor (Joint Fiscal Office)]: With

[Sen. Ann Cummings (Chair)]: 15,000,000 to raise next year just to replace either the removed or the general fund transfer, not including any spending increases. Okay? Right.

[Julia Victor (Joint Fiscal Office)]: And then if if next year if if in FY '28, it's a 20,000,000 purchase and use transfer out of the education fund.

[Sen. Ann Cummings (Chair)]: But that's That's right. That's another million.

[Julia Victor (Joint Fiscal Office)]: That's right. And they're able to share services and save all that money.

[Sen. Ann Cummings (Chair)]: I don't think I saw that amount of money in the. And not by next year, which is one of the the problems is how quickly can you get that going. Yeah. We forgot to ask them that question. Yeah. We can email. Well, let's go. Alright, their visitor today. Another guest. Okay. Thank you. Our committee, we have ten minutes, but our next two witnesses are here. You wanna take a ten minute break or go forward? Ten minute break.