Vermont Legislature SmartTranscripts:

[Senator Ann Cummings (Chair)]: We are live. We are live, and I will get my son naked today and out of last week looking at the testimony on

[Kirby (Office of Legislative Counsel)]: Mauve

[Senator Ann Cummings (Chair)]: To start, the day is February coming out. It's grandson's birthday. Aw. And a November coffee. And we're gonna start we're gonna do a walk through of s one sixty one. This is an act relating to the Governor's List of Scholarship Granting Organizations. We have Senator Vanguard, who's the chief sponsor, who's just gonna tell us why or what. Kirby who's gonna walk us through it. This is just our initial walkthrough, and I think this may be our last build to walkthrough. 1,000 walks through that building, so I can't. Oh, but those will when we get them, we'll walk to them. Think the ones that are here now. Yes. Welcome. The floor is yours. Thank you. So,

[Unknown Senator (Sponsor of S.161)]: the federal when the Federal Budget Act passed, which is a bill that I think is a full increase of legislation for what it's worth, and and had a provision in it, is also their court of various purposes. But within that, after reading about it, I began to collaborate and talk to the legislature council, the person Jonathan and Curti, about learning as a way to make something positive out of it and so what it is what the bill does what this bill tries to do is take a provision that allows for the creation of nonprofit organizations whose purpose is to give scholarships. The way it's intended in the federal bill it's to give scholarships frankly I think the underlying intent is had to do with using tax scholars to fund private schools, people couldn't find the kids going to private schools, the vouchers, vouchers in the voucher system, which we don't have. But anyway, putting all that aside, your question was so as I talked to the legislature counsel about it they said if the bill is out to here you're allowed you can narrow it and so we began to think about whether we could take a lemon and turn it into lemonade and so we tailored the bill very narrowly to say that the scholarship granting organization approved by the governor, has to be for the purpose of providing opportunity to low income kids for the per for after school programs, summer programs, or tutoring or similar programs. So try to make sure that the the organization has the mission of serving underprivileged kids, number one. And then number two, limit it to something there was people talked about other things as somebody who has raised a lot of money in my career, I know that the narrower the purpose and the more you can explain it in one sentence, the more likely it is that people will give to it. And so I wanted, I kept it very narrow too, after school summer tutoring. Something that people will intuitively understand especially as mothers mothers children and so the way that it works is that anybody who pays federal income taxes of $1,700 or more actually can, well anyway just leave it at that, you really have a choice, this is a tax credit as opposed to a deduction which means you get it back and so the idea is that anybody who pays $1,700 or more in federal income taxes has a choice of giving it to the federal government or giving it to a qualified organization for the purpose of helping undercover children, one of those three categories, and then you get it back because it's a tax credit. So it's actually that simple and it's something that I think the estimate is by the way that I've forgotten how many billions of dollars that the federal government estimates estimates is going to happen with this program, mostly in states for other purposes, but we're going be paying for that because it's a federal tax credit. And so the question is can we take effectively what would be our share and do something good with it? And so that's the purpose of the bill. I see it to be, I haven't talked to them. This is the kind of thing that maybe, you know, Remind the Community Foundation could hang the the organization underneath and and and run be be the place to be able to get to this program. So it has to be incidentally, it has I think it's it's in here, but has to, the governor has to qualify the organization as meeting the intent articulated in the bill.

[Senator Ann Cummings (Chair)]: I never thought about the bus to Lotus Lake has gone through Montpelier every summer, and there's we've had fresh air kids from Boston come out and spend time with my family in Massachusetts, but we don't I don't know off the top of my head about a scholarship for lower income kids. It costs several $100 a week to go to the day camp that the rest of the has. That's a lot of money.

[Unknown Senator (Sponsor of S.161)]: You know, I'll just tell a story I have. I was getting ready to run for the senate. I spent some time with Sue McGuire who's a former principal of College Guard where she started community schools in Vermont. And she said to me, one way to think about education and the challenges is going provide true middle class opportunity for underprivileged kids. Our kids, I the opportunity that my son had, like with camps and otherwise, and I want those to be available for me. So is this a mechanism to really do that, but, you know, helping undercooked kids achieve some of those stated middle class opportunities?

[Senator Ann Cummings (Chair)]: You said to Mattos, did you have a

[Senator Christopher Mattos (Clerk)]: I did. Yeah.

[Senator Ann Cummings (Chair)]: And then Senator Hardy. I'm looking to see if I missed anything.

[Senator Christopher Mattos (Clerk)]: So our local community center offers our after school program. Would that, and it's a non profit, Would that kind of settle into here? I just looked up 26

[Unknown Senator (Sponsor of S.161)]: US You have to have and Kirby can do this more specifically, but the organization has to be for the purpose of granting scholarships.

[Kirby (Office of Legislative Counsel)]: Oh, okay. So it's not the organization that provides

[Unknown Senator (Sponsor of S.161)]: separate organizations. Yeah.

[Senator Ann Cummings (Chair)]: Okay. But you could get a scholarship to go. Yeah.

[Senator Ruth Hardy]: Is the is did you make changes in the Senate Education Committee to the bill after it was introduced? Because what the bill that's posted on our website is as introduced and it doesn't trap the way you just described it.

[Senator Richard Westman]: Is it did you amend it in? No. Okay.

[Kirby (Office of Legislative Counsel)]: It is no

[Senator Christopher Mattos (Clerk)]: matter what you

[Senator Ruth Hardy]: just described doesn't sound like what the bill says, but maybe I'll just wait

[Senator Ann Cummings (Chair)]: for We'll talk for these. Kirby's gonna walk us through what she's Okay. Talking

[Kirby (Office of Legislative Counsel)]: was that technical change.

[Unknown Senator (Sponsor of S.161)]: What's

[Kirby (Office of Legislative Counsel)]: that? There was that technical change.

[Unknown Senator (Sponsor of S.161)]: Right. A a little tiny technical change. Yes.

[Senator Christopher Mattos (Clerk)]: Okay. Well

[Unknown Senator (Sponsor of S.161)]: But well well, it was what I said, right? So what I was talking about is at the top of H2, non profit organization with coordination of providing educational opportunities to unethical and underprivileged students through after school programs and the technical changes we have left out the word summer in front of programs. We've added that in tutoring and similar programs. So that was the only change, right?

[Kirby (Office of Legislative Counsel)]: I'll show you what they voted out.

[Senator Ann Cummings (Chair)]: Okay. K. Yeah. We got any questions for Sandra, then can you have Kirby walk us through it? And then we can see if we're likely to hear from anyone. It was a lot of interest when we were reducing out the money for the prevention money with cannabis and that to go to schools or other programs. So I'm assuming there will be interest in this.

[Unknown Senator (Sponsor of S.161)]: So, incidentally, I forgot to tell you. We heard from and we heard from M one seven.

[Senator Ruth Hardy]: That's it?

[Senator Ann Cummings (Chair)]: You guys heard Tailwinds? Yes. Thank you. I want you to go back and

[Senator Christopher Mattos (Clerk)]: Okay. She's up. You got it. Thanks.

[Senator Ann Cummings (Chair)]: Maybe even walk us through this.

[Senator Richard Westman]: Hey, good afternoon. Good afternoon.

[Kirby (Office of Legislative Counsel)]: Office of Washington Council.

[Senator Ann Cummings (Chair)]: We're not talking about education funding yet.

[Senator Christopher Mattos (Clerk)]: No. We're not. Well, not.

[Kirby (Office of Legislative Counsel)]: You're seeing my face instead of John or Beth or someone because what we're really talking about is federal tax credit, talking about income tax at the end of the day. So I thought I would share with you first the federal law and get an get a knowledge of that before proceeding on to what's being proposed for changes for. I was in ways and deans yesterday doing the same thing because there's a house proposal that is not a companion, quite different.

[Unknown Senator (Sponsor of S.161)]: The opposite. Oh, okay.

[Senator Ann Cummings (Chair)]: I see a committee of conference showing up at that point.

[Kirby (Office of Legislative Counsel)]: So, yeah, so let's walk through. As Senator Long North mentioned, the gist of this is there's a new federal income tax credit that was created by HR one that's accredited up to $1,700 at the federal level. So as we talk through this, to be very clear, any talk of credits is federal income tax credit. There is not a proposal for a state income tax credit. You're not talking about a state credit. What we are mostly talking about is the state's ability under this federal law to identify scholarship granting organizations within Vermont that taxpayers would be allowed to contribute to and claim federal credit. So Vermont's role here would be to indemnify the scholarship granting organizations themselves. Within that, Vermont could, through state law, put other restrictions on what kinds of organizations can be identified for purposes of this list that's given to the US Treasury Secretary for purposes of this tax credit report. So this does not affect revenues of the state? This does not affect revenues instead. Just federal.

[Senator Christopher Mattos (Clerk)]: But we

[Kirby (Office of Legislative Counsel)]: can narrow down the list of organizations, like, it would what it could Is that what I heard? That is correct. Yeah. That is correct. The role here would be for the state to decide what kind of organizations in bidding the state would like to recognize for participation in this. Another, since we're talking about the 10,000 foot view, I'll also say that, we'll probably cover this later, but the way this is structured, my reading of the federal law is that a Vermont resident can contribute to an SGO that's been recognized in a different state can still claim this credit. So the conversation is not specifically about, do we let Vermont just participate in this program? It's more like, do we let student or scholarship practical organizations become creative and exists in Vermont for Alright, this so we'll get into all the pieces up and running. We've talked about the allowance of the credit at the federal level, we've talked about the credit not being $1,700 We've talked about the covered state, which means a state that has decided to send a list under its own laws, that's the conversation we're having now, Is Vermont going to be a covered state, and what does that look like for Vermont? So the first part to understand at the federal level is getting into eligible students. This has to do with, when we get into it later, about scholarship granting organizations and all of the federal requirements here for those. A certain percentage of the scholarships have to be to eligible students. That's defined as a member of a household with an income which for the calendar year prior to the date of application for a scholarship is not greater than 300% of the area median gross income. Showing ways and means, I threw out a ballpark figure for that. This time, I'm gonna say, you can ask JFO for numbers. No. You're not. Because because the committee committee was like, that was numbers that sound right, and I'm like, I give up. That's not that's not me. So you could you could you could also, of course, just these are these are publicly available numbers. You can give them of the area, meeting for Saint Humphrey Vermont. It's it's county based. And the eligible student has to be eligible to enroll in a public elementary or secondary school. So those are the requirements under the federal law for an eligible student.

[Senator Ann Cummings (Chair)]: The qualified have to be enrolled, they just have to be eligible to be enrolled.

[Senator Christopher Mattos (Clerk)]: Yes. Okay. The

[Kirby (Office of Legislative Counsel)]: qualified contribution, so you receive, the taxpayer could receive tax credit for qualified contributions. That means a terrible contribution of cash, the no donating property of cash to a small

[Senator Ann Cummings (Chair)]: No deer meat. Last June. No deer meat. Was the deer

[Kirby (Office of Legislative Counsel)]: Deer seat, deer meat, you can't can't give up your old car if you wanna take your credit.

[Senator Ann Cummings (Chair)]: Okay. Cash only.

[Kirby (Office of Legislative Counsel)]: The cash only to

[Senator Ann Cummings (Chair)]: bill on that.

[Kirby (Office of Legislative Counsel)]: To a scholarship granting organization that uses a contribution to fund scholarships for eligible students solely within the state in which the organization is listed.

[Senator Ruth Hardy]: Is the does the organization have to give the scholar Can it be an organization that gives scholarships to students who attend someplace else, or does it have to be the entity who provides the educational service and also the scholarship?

[Kirby (Office of Legislative Counsel)]: Like the school Not that part. The organization will get into it. They have to be a five zero one for the organization, and grants scholarships, and it has all these requirements to follow. For a contribution to count, it has to be a cash contribution of large scholarships to eligible students solely within so if we're talking about a hypothetical Vermont SGO, those scholarships given out have to be through the law students only.

[Senator Ruth Hardy]: Do they have to be to Vermont entities only?

[Kirby (Office of Legislative Counsel)]: Like, if someone I know. Yeah. I understand your question. This if the the federal law focuses on the scholarships to to the student, not where they're enrolled or where they're standing at.

[Senator Ann Cummings (Chair)]: Okay. So if you live on the border, you could go to a day camp in Massachusetts or New York.

[Kirby (Office of Legislative Counsel)]: Yeah. I'm not remembering a provision that would preclude that, but we'll we'll get we'll get into all of the requirements I think

[Senator Ann Cummings (Chair)]: we're assuming most of them would be as provided. And just to be clear, this is not primarily for camps. This is not about all camps and It summer is about Well, it's camps, tutoring, at school programs. It's vouchers to private schools, madam chair.

[Kirby (Office of Legislative Counsel)]: We'll get into what are allowable conditions.

[Senator Ann Cummings (Chair)]: Okay, let's do that. That is in how I understand.

[Kirby (Office of Legislative Counsel)]: And to jump ahead a little bit, part of this program is ambiguous at this time because there's a mandate for the IRS to issue regulations, filling in some of the gaps that aren't here, and what's an allowable expense is part of that open question that we expect that the IRS will address more fully, so at the moment, I'm not in a position to tell you what every allowable expense is. There's clarity that's on the way, but it's not out of the gate.

[Senator Ann Cummings (Chair)]: But we're saying that it is our intent that it go suppose it could go to an after school program at a private school, or it could go to an after school program at a public school.

[Kirby (Office of Legislative Counsel)]: S-one Hundred 61 addresses that, and then the open question is, once the IRS regulations come out, will those two be aligned? And we don't fully know, and there's some anticipation of what of what the IRS would say through regulation.

[Senator Ann Cummings (Chair)]: If they are too onerous, can we unparticipate ourselves? Can we say no? I mean, if we pass this and then they come out and Mhmm. We find that they're onerous, if it's possible, we could say we've changed our mind and

[Kirby (Office of Legislative Counsel)]: Yes. You could you put them in, though. Like, if if you pass the law of the session relating to this, it could be amended like anything else.

[Senator Ann Cummings (Chair)]: Okay.

[Kirby (Office of Legislative Counsel)]: The participation through the federal program is a year to year participation, so a state could go in and out of that. Yeah. Okay, so we talked about the contributions, now the definition for qualified elementary or secondary education expenses. There's this Cloverdale account program that exists under federal law that's referenced. Okay, this

[Senator Ann Cummings (Chair)]: is federal law. This is not what's being proposed.

[Kirby (Office of Legislative Counsel)]: This is not what's being proposed. Just explaining the ins and outs of credit for you So you understand the context of what you're deciding for the state part of it. So these expenses include tuition, things like uniforms, things like certain, you know, technology to that's education related. There is reference to tutoring, whether that extends fully to every type of after school program or summer program, that's kind of an unknown right now. There could be a broad interpretation under the IRS regulations that does include all of that, that would allow scholarships for all of those sorts of things, but Maybe we don't

[Senator Ann Cummings (Chair)]: STEM camp? Maybe. Robotics camp?

[Kirby (Office of Legislative Counsel)]: Yeah. Maybe. So so that's that's where I'm aware that the the IRS has asked for input for its regulations so far, and I'm aware that there's been lobbying input at the federal level to have those regulations cover all those things you're talking about, but we don't actually And there's not even a proposed regulation at this point. So scholarship granting organization. A lot of the requirements for participation is about what can an SGO do, what does an SGO have to do. So an SGO is an organization which, one, is a five zero one(three) and is not a private foundation. So that's the first rule at the outset. Second, an SGO has to prevent the co mingling of qualified contributions with other amounts by maintaining one or more separate accounts exclusively for qualified contributions. Third, it has to follow a list of requirements that we're going to get to in a second. And fourth, it has to be included on the list submitted by the covered state under subsection G, that's what we're talking about right now. An SGO does not exist if Vermont chooses to not participate, chooses not to send the list, So so it would never qualify under that provision. So what are some of the other federal requirements? The organization meets the requirements of this subsection if: first, the organization provides scholarships to 10 or more students who do not all attend the same school. Second, the organization spends not less than 90% of the income of the organization on scholarships for eligible students. This is, I mentioned before, when we looked at the eligible student definition, it is 90% of the income on these scholarships, so there's some leeway for the SGO to use some of its income from other things.

[Senator Ann Cummings (Chair)]: Like

[Kirby (Office of Legislative Counsel)]: Like, possibly administrative costs.

[Senator Ann Cummings (Chair)]: And that's what I'm wondering is we're gonna set up an NCO. They're gonna do this, but if there's no administrative cost, yeah, that will cost somebody if there's nothing to be taken out. Alright?

[Kirby (Office of Legislative Counsel)]: Third, the organization does not provide scholarships for any expenses other than the qualified elementary or secondary education expenses. Again, that's why it's important for us to learn what the IRS is going to consider for that.

[Senator Ruth Hardy]: So what does that link go to? That's the qualified elementary or secondary?

[Senator Christopher Mattos (Clerk)]: That's gonna that's

[Kirby (Office of Legislative Counsel)]: supposed to go to the Cloverdale, but I've tried this before, it goes nowhere.

[Senator Ann Cummings (Chair)]: It goes nowhere. Okay. But I can I Well, I mean, that this is that the way

[Senator Ruth Hardy]: that sounds is it's just for schools? It's not for after schools and summer camps and things like that. It's for education, elementary education, secondary education. It's for, like, going to private school.

[Kirby (Office of Legislative Counsel)]: Do do you want me to do you want me to pull up those expenses? Those the federal audits that should be linked there? It's gonna be 26 USC five thirty sub b three a.

[Senator Ann Cummings (Chair)]: And I think the question is, we are saying that if Vermont is going to participate, this is what our participation will look like. If they come back whenever and say no, it has to go to tuition to eligible private schools, then we can say no.

[Senator Christopher Mattos (Clerk)]: But that's what this bill that we're looking at says, not

[Senator Ann Cummings (Chair)]: Well, a that's what I'm that's what we're working on. But what the bill in front of us says is that this is where we want to send it. If they say no, then But

[Senator Christopher Mattos (Clerk)]: the bill in front of

[Senator Ann Cummings (Chair)]: us says that private elementary school and schools That's what our are federal No,

[Senator Ruth Hardy]: that's what this bill says, Madam Chair.

[Senator Ann Cummings (Chair)]: 61. 61? Okay. One sixty one. Let's walk through this one, and then we'll let Harvey tell

[Senator Christopher Mattos (Clerk)]: us what

[Senator Ann Cummings (Chair)]: he's got.

[Kirby (Office of Legislative Counsel)]: So the the reference under the federal law brings you here. This is the, I don't know if I've been saying this right every time I say it, Coverdell Education Savings Accounts, I'm gonna call it Clover at some point.

[Senator Ruth Hardy]: You did say Cloverdell. That's a little faster.

[Kirby (Office of Legislative Counsel)]: It does pretty Cloverdell sounds

[Senator Ann Cummings (Chair)]: nice. Cloverdell.

[Kirby (Office of Legislative Counsel)]: So at any rate, we have these expenses. These savings accounts that exist under federal law allow expenses for tuition fees, academic tutoring, you go, special needs services in the case of special needs beneficiary, book supplies, other equipment. Also, expenses for room and board, uniforms, transportation as supplementary items and services, including extended day two programs, so that is some indication that you should expect some after school, and expenses for the purchases of any computer technology or equipment or internet access related services.

[Senator Ruth Hardy]: It says which are provided by a public, private, or religious school.

[Kirby (Office of Legislative Counsel)]: Yes. It

[Senator Christopher Mattos (Clerk)]: That's

[Senator Ann Cummings (Chair)]: federal, yes. I think we know what the feds were trying to do with this. Yes, it's the feds. The question is, can we remold it into something that might Move for the law. Help

[Senator Ruth Hardy]: Mhmm. Some. But we can't not follow the federal, if we opt in, can't not follow the federal laws and regulations for the program.

[Kirby (Office of Legislative Counsel)]: You can't contradict the requirements, as in you can't say, Well, we're gonna allow these extra expenses. That's not allowed. You can't do something like that. But what you could do is say, we are not going to list any SGO that feel like any exemplary right now is gonna look at policy But and advocacy. You you could limit you could limit it further to say that that for for some of the things that could be allowable at the federal level for an SGO to do, we would not, for Vermont SGOs, recognize that. And the way this credit was written is it was written seemingly to intentionally give that open room for states to have this conversation, I think,

[Senator Ann Cummings (Chair)]: might I be part of the just gotta note that we are fifteen minutes behind. The room is full of witnesses, so I think this is just our initial walkthrough. Let's let Kirby walk us through this as quickly as possible, and then when we take it up, we have time to delve into word by word dissection. Get one of those, not dissecting a sentence, See if I do. Fine. Good times. We will do that.

[Kirby (Office of Legislative Counsel)]: So I'm I'm gonna show you the senate education amendment so that you'll

[Senator Christopher Mattos (Clerk)]: see the language that they voted on.

[Kirby (Office of Legislative Counsel)]: S-one 161 here, it puts into the executive title a section on the governor's list of scholarship granting organizations. It gives the Governor or designee the ability to provide a list of organizations that satisfy the conditions of this section to The US Secretary of the Treasury for purposes of making the federal qualified elementary and secondary education scholarship tax credit available for Vermont taxpayers. There's a provision saying it shall be presumed that an organization listed in the previous year will be listed in subsequent year unless the governor finds that the organization has failed to meet the requirements of this section. That provision is meant to give some stability so that an organization from year to year can tell its donors that, hey, look, we've been listed before. We expect to be listed in the future, so if you don't need to tell us, the credit should be available for you. An organization shall not be listed. So this is where there's some narrowing down list language. An organization shall not be listed unless the organization follows criteria: one, it qualifies under federal law as a college and practice organization two, it is a nonprofit organized with the core mission of providing educational opportunities to economically underprivileged students through after school programs, summer programs, tutoring, and similar programs. That is the provision that has some wordsmithing changes, incentive committee, incentive education committee. To fulfill this, the organization would have this has to do with the organization's core mission and its part of Mission Corporation. The third requirement here is all grants and scholarships provided are to students attending a public school or an independent school that's capable of receiving public tuition, and those are the additional requirements that you have in this 161. Subsection C there is just a provision about the governor's ability to audit these organizations to make sure they comply with the federal and state requirements, and they would be effective 07/01/2026. The federal program becomes effective 01/01/2027. So that would be people making contributions in 2027, but then on tax filings after that.

[Senator Ann Cummings (Chair)]: Okay. Yeah. It'll be another year. Alright.

[Senator Christopher Mattos (Clerk)]: Okay. So

[Senator Ann Cummings (Chair)]: that is our efforts to say if we're gonna participate, we're going to narrow the federal allowable to a smaller subset Mhmm. That we think might benefit a subset of kids that don't have any kind of really organized financial support for these kinds of programs. And we'll have to see if what we want meets future federal guidelines, but we can get out. Or we could probably put something in here that said in the event that federal guidelines will not allow this now, will not take part in the program. Are we on the program? We have time for questions? I have a quick one in room. One for me, too. We've got a full room here. And maybe you can answer these at a later date, possibly. I'm curious what similar programs would be in the list of things that would be included as covered, summer tutoring and similar programs. Then I'm finding the language capable of receiving public tuition to be really interesting. That's an interesting turn of phrase. What is capable of? Is that they are receiving public tuition or they I just

[Kirby (Office of Legislative Counsel)]: don't understand. Under law laws, education laws, if they're capable.

[Senator Ann Cummings (Chair)]: Okay. Currently in post Act 'seventy three?

[Kirby (Office of Legislative Counsel)]: That's a good question. I would want to consult with Beth about that.

[Senator Christopher Mattos (Clerk)]: I mean, of schools are capable of getting the city. Not at all. That's what I'm asking.

[Kirby (Office of Legislative Counsel)]: I think they're already receiving it. Clearly, they're capable, but your question is theoretically capable. Let's see, is it broader than maybe what people might expect? Right.

[Senator Christopher Mattos (Clerk)]: My question was similar question, because I read some of the the information about the federal schools. I think it says public, private, or religious. Mhmm. And religious schools, the best of our knowledge in Lebanon right now, are not capable of receiving funds. Is that the intent to keep line to to in effect, as you look at that language, does that put us in conflict with the the federal law?

[Kirby (Office of Legislative Counsel)]: It doesn't it doesn't put us in conflict, but it certainly does narrow down.

[Senator Christopher Mattos (Clerk)]: Just just how long after we pass something like sued. It's how long after we pass something like that that when when we would be sued. I

[Kirby (Office of Legislative Counsel)]: read this as permissible under federal law, but I don't think there will be

[Senator Christopher Mattos (Clerk)]: a conflict with federal law. Would you? No.

[Kirby (Office of Legislative Counsel)]: It's it's certainly written in a way that there's safe opportunities for states to, hey. This if if it weren't, then then then the federal law would be very clear that, you know, if a state were to participate, these must be followed. There's no

[Senator Christopher Mattos (Clerk)]: framework for that.

[Senator Ann Cummings (Chair)]: Thank you. We will take this up again. Can you send the link to that website that you were on? Rubber gun?

[Senator Ruth Hardy]: Or no. The corner on website that you that you're on there.

[Senator Ann Cummings (Chair)]: Mhmm. Thank you. K. I'm gonna move us on to 02:20 because we asked Julia to do a whole lot of data research for us, and we're gonna get Well, I think, welcome back. We've had several days without it. I know. I missed you. Good morning. Good afternoon. Good morning. I'm Julie Richter with the Joint Fiscal Office. We are pivoting to S220, which is the spending cap bill that we've been talking you've all been talking about over the last days. I'm joining the Zoom link. While I'm doing that, there are a number of spreadsheets and documents that have been posted on the today page under my name. I heard the request for more data and more analysis, and so I thought I would share the WEDI analysis that usually I aggregate up to a summary chart level today. So before walking through any of the spreadsheet oh, which Charlotte has printed. Oh,

[Senator Richard Westman]: wow. Big ones.

[Senator Ann Cummings (Chair)]: That or done? That's what I heard the request from you today. Yep.

[Senator Ruth Hardy]: This is it. That's what you're getting.

[Senator Christopher Mattos (Clerk)]: It comes with aspirin.

[Senator Ann Cummings (Chair)]: What's that?

[Senator Christopher Mattos (Clerk)]: It comes with aspirin.

[Senator Ann Cummings (Chair)]: Did take one at lunch. Mine was mine.

[Kirby (Office of Legislative Counsel)]: I have offers.

[Senator Ann Cummings (Chair)]: So before diving into these spreadsheets, I wanna say high level sort of what is and isn't captured in them. And a word of caution, the underlying data used from, or all of these spreadsheets come from the University of Education units, that it is publicly available on their website or on the school district, redistricting task force website. So all of it has been downloaded online with the exception of some of the tuition. They only have PDFs. So I had to pull I had to ask for the Excel version. So you can see all of the data on their website. That said, there are some places where it seems as though there is an error in the data coding and some of the tuition reports that it doesn't so so there are there are a few places if you're looking at the data and you think that something looks really off, it is probably an underlying data error. So would you like me to decide where to begin, or do

[Senator Christopher Mattos (Clerk)]: you

[Senator Ann Cummings (Chair)]: I want to think, yeah, you Okay. Be the one that knows where to start. Okay. So sort of the spreadsheets and handouts that you have in front of you today can be sort of lumped into two categories. One is looking at changes in tuition, and the other is looking at the underlying analysis of the allowable growth percentage. Let's start on the allowable growth percentage. That's the you can see colors. It's the colored spreadsheet. So it's the

[Senator Richard Westman]: Big piece of paper?

[Senator Ann Cummings (Chair)]: The big piece of paper. I not that one. Oh,

[Senator Christopher Mattos (Clerk)]: got it.

[Senator Ann Cummings (Chair)]: It's a big piece of paper underneath. Okay. It's I'll I'll pull it up.

[Senator Christopher Mattos (Clerk)]: This one?

[Senator Ann Cummings (Chair)]: Yes. Thank you. Nope. The one behind it.

[Kirby (Office of Legislative Counsel)]: This

[Senator Ann Cummings (Chair)]: one? Nope. Did I touch it?

[Senator Christopher Mattos (Clerk)]: You absolutely senator. This one. Oh, the one with colors. The one with colors. Like you said. Yeah.

[Senator Ann Cummings (Chair)]: Yeah. Blue and green. Okay. So

[Senator Christopher Mattos (Clerk)]: Alright. This one? Yeah. One's stupid. There's two of them

[Senator Ann Cummings (Chair)]: because appears? Nope. It's the same spreadsheet, but there were too many columns to fit on one sheet of paper, and I wanted to show you all of the work, so I put it on two sheets of paper. So I'm gonna go ahead and share my screen, which is not color coded, to walk you through the underlying work here. So we're looking at the two color coded blue spreadsheets. This is the same What I'm sharing here is the spreadsheet

[Unknown Senator (Sponsor of S.161)]: Education's better.

[Senator Ann Cummings (Chair)]: With the same numbers of the color coded reasons you have there. Really, the reason I'm talking to spreadsheets is you're looking at the same spreadsheet over multiple documents. So I'm just gonna walk through it. First, we're looking at the one that's titled FY '25 and FY '26 raw data or data review of education spending, long term weighted ADM. So those are our first columns. So what we're looking at here is by school, I included counties as defined by AOE, and then by school district. First, see their FY '25 education spending. You'll recall that education spending is calculated by taking the school district's total budget, subtracting its offsetting revenues, which are those state and federal categorical aid, tuition revenues received for the district, the district's reserves. What's left over is education spending. So we've got the FY '25 education spending, the FY '26 education spending of the same district, and then the relative change in education spending from FY '25 to FY '26 for every school district in the state. Next, I So these first sets of columns are to level set in terms of what is the picture that we're looking at before we're talking about allowable growth. Next is the long term weighted average daily membership. So the long term weighted ADM, Recall, this is essentially the weighted pupil count of each district. So again, we've got FY 25 weighted pupil count, the FY 26 weighted pupil count, and then the relative change in the pupil count from FY 25 to 26 for each of those districts. So for instance, Addison Central, because it's the top line for everybody, and we've got second party in the committee, we can see the education spending increased, had a relative increase of 3% from 25 to 26, and a relative change in weighted pupils by 10%. Next, we have the weighted per pupil spending. So recall this is done by taking the total education spending of the district, dividing it by its weighted pupil count, which gives us our per pupil. This is the amount that is used for the local factor, the local adjustment on the homesick property tax rate. And I've calculated that. It's also available by AOE for FY '25 and '26. So in the case of Addison Central, because we're looking at Pop Row, we can say see here that their per weighted people spending decreased by 6%, well, it changed from '25 to '26. And intuitively, this makes sense, right, because their education spending grew by 3%, but they saw a big influx of their weighted pupil count. So it makes sense that their pupil per weighted pupil spending would decrease. So that is that first set of columns that we're looking at on that spreadsheet of the, thank you, of the data review. And now I put the next set of columns on the next spreadsheet called the draft analysis for senate finance s two twenty draft 1.1. And this is how the allowable growth percentage would have been calculated if it were to have exist in FY '25 or FY '26. We know that wasn't the case, and this is a way of looking back that if it were to have existed, how would it have shaked out, shook out Shook you're shook shook it out. Shaken out. Look like that. I'm a members person. Thank you. By district. So first, we calculate the allowable growth percentage. And this is using that formula that we looked at the chart last week, and that's included in the language, and essentially it's that relationship with the highest per recall, it's the the difference between the district's per pupil spending in FY twenty five and the highest per pupil spending in FY twenty five multiplied by the statutory factor, which s 02/20 has a 3%. Sorry, 9%, and then a minimum floor allowable growth percentage of 3%. So what does that mean? It means that everybody gets at least 3% of allowable growth percentage. They could get higher if they are a lower spending district. Next, and please interrupt me if you have questions. I think that goes without saying. I calculated what would the FY26 allowable per pupil spend have been if it were based off of the fiscal '25 per pupil spending and allowable growth percentage calculation? So that's what we're seeing here in the next column, FY26 allowable per pupil spending. And that's simply done by taking the FY '25 per pupil spending amount and multiplying it by 100 plus the allowable growth percentage. So in the case of Addison Central, it is that FY 25 per weighted people spending multiplied by 103%, which gives us the FY '26 allowable per people spending. I do wanna make a note if anyone either watching or later decides to check any of these numbers with their calculator, they're not going to add up perfectly because of rounding. So you're looking at the rounded numbers. The word of caution. We just calculated the FY26 allowable per pupil spending. Next, we needed John's point where he's saying, if we're doing a dual test, we need apples to apples. So we need to look at what would the allowable and total attention spending be in FY '26. That is done by taking the allowable per pupil spending that we just calculated, that FY26 figure, and multiplying it by their weighted pupil count. How many weighted pupils do they have in FY26? What is the allowable per pupil spending for those students? And that gets us at the total level, the aggregate level, the FY26 ed spend at the allowable level. Now, committee has been contemplating the dual test, That's what I'm calling it here, where it's a district has a cap, whichever is higher. Either that allowable ad spend that we just calculated or their prior year ed spend increased by inflation. Right, the NIFA. So that's what we see here. Here we see, okay, what is their FY twenty five education spending increased by inflation to point increase them? That's what we see. So in the case of Addison Central, this is our top row, we see that, in fact, it is Addison Central would be able to spend more with the allowable growth percentage, So that is what would be permitted. That would that's what the cap would have been for Addison Central. Addison oh, that's perfect. Addison Northwest would have received a higher cap if their FY '25 bed spend were to be increased by NIFA, so they get

[Senator Christopher Mattos (Clerk)]: the NIFA.

[Senator Ann Cummings (Chair)]: It's the greater of. And this is assuming that this law will affect this year, but it's not. It will so whatever budgets get voted this year, that will be the base.

[Senator Scott Beck]: That's a question I have.

[Senator Christopher Mattos (Clerk)]: If I can pick up on that.

[Senator Scott Beck]: This is on FY '26 last year. This is not on budgets born for FY '27 that people are voting on, which we're getting that data that's due to the agency of education.

[Senator Ann Cummings (Chair)]: I I believe the bulk of it is due on the fifteenth of of February. You'll recall that when I came in before, I had this is the not the identical spreadsheet, but all of this is the same underlying methodology that was used to make the graph that we looked at before, but I could share I can't share the FY twenty seven data because it was a confidential forecast. And we once data needs to be voted on. So what are the proposed budgets and what are the final budgets? If and when this bill goes into effect, it will be based on the voted budgets for this year. Exactly. So precisely. Right. So assuming that s 02/20, the Senate Finance Amendment draft 1.1 goes into effect, essentially, the FY '27 budgets that education spending that we're looking at now would become the FY '25 in this spreadsheet. Right. So it's what everything would be compared against. Mhmm. On

[Kirby (Office of Legislative Counsel)]: that

[Senator Scott Beck]: point, I'm my concern with using f y '26 as an overlay is that was really more starting in '24 and to then voted on in '25. That seems to me, as I recollect, the trailing end of a lot of the federal dollars, so it just seems like we're riding a blip of adjustments in the budgets that I'm very interested to see this overlay FY27 numbers, foreign budgets, which we would have within three days.

[Senator Ann Cummings (Chair)]: So that that is what I originally presented to the committee last week. Okay.

[Senator Scott Beck]: But not within district by district.

[Senator Ann Cummings (Chair)]: But not within district by district. Once those budget inform once that budget information comes in, absolutely, that can be updated.

[Senator Ruth Hardy]: But I think I mean, I think senator, back to this point is that the percentage increase for last year's budget was about the same as the estimated percentage increase in aggregate for this year's budgets. So I think your I think your point is relevant for the year before when we saw that really big increase, and that's when all the budgets went down and everything. But last year's increase was about the same as this year. Yeah. And the projected for this year overall. In fact, this year's might be lower. Yeah.

[Senator Ann Cummings (Chair)]: I think we're this is kinda this is in the ballpark and where it's been historically.

[Senator Ruth Hardy]: Yeah. And it's obviously gonna be different for every school district. Right.

[Senator Ann Cummings (Chair)]: And to that point, the point of offsetting revenues and federal funds, we have seen it's a question for the field and the agency in terms of how that has impacted their budgeting, you know, moving forward out of COVID. I will say that the dataset that has been linked on these big printouts that we're looking at thus far from the school district redistricting task force has a number of paths in which you can see the offsetting revenues, both for the state and at the district level. So and when you when you look at that, you see that that significant bubble of offsetting revenues from the federal government has passed. I'm not saying it it it it doesn't have ripple effects, but the share of federal funds is is less significant. Much earlier. We're building off this at that ace that came out of that big increase. I just wanna say thank you, Julia. This is really helpful. Oh, good. Yeah. You're welcome. So so coming back here, so we just talked about the dual test, right? The allowable growth based on that, of those steps of calculations we just made, comparing it to the prior year ad spend increased by inflation, whichever is greater becomes the cap for that district. So then this then the next and this is what we see here in the if and that is using the dual test. The the final two problems that we're looking at here are to all of your point. If this had existed in f y twenty if this had existed for f y twenty six, looking backwards, what would the change have had to be for districts? So what we're doing here is we're comparing, okay, here is what they were would have been capped at. Here is what they actually spent. What is the difference? And so what we see here for Addison Addison Central, they spent below what they would have been capped at. The first example that we get to is Arlington that would have needed to decrease their spending to fit underneath the cap their cap by 306,908. So this column here is reflected in those dollar amounts if it were to have existed for FY '26. And then the final column is the relative percentage the relative percent decrease. So this is essentially saying, you know, comparative within its district and spend. What what share of that $3.00 $6.09 $0.08, how would that have impacted our LinkedIn's overall education side? Right. 03/2008 and a $500,000,000 education spend is not gonna have the same impact as a school district with a budget of 2,000,000 because the way percentages work, which I know you all know. So that's what I put together for those level gross. Okay. So depending on where the budgets end up this year, which will ultimately depend on the voters, and some of those aren't even voted until May, But we should have a pretty good idea in March. It's but they have been back closer to the four to 6% that was normal growth before COVID. Mhmm. So this should not be a real shock. I can't comment on that. I will say solely from the technical mechanics perspective, my chair. One of the one of the pieces of this, to your point, is with the FY '27 budgets, we'll have that education spending. We'll be able to do all of this work using FY '27 education spending once this got approved. So we'll know the maximum amount of education spending for FY '28 before school districts start building their buckets because there is this hard cap being created. So as as we know, during the current ed finance process, school districts started building their budgets in August, September. And then that that budgeting process is ramping up. The December 1 letter comes where we have these forecasts that are so preliminary, they're confidential, which is why I can't share them with the committee. And then and then those final amounts start coming forward with a cap that that that uncertainty would not exist in the same way because we would know the maximum amount every school district would be permitted to spend up

[Senator Christopher Mattos (Clerk)]: to. Okay.

[Senator Ann Cummings (Chair)]: Senator Hardy. Thank you, madam chair. I'm just trying

[Senator Ruth Hardy]: to go through and see some of the outliers, mostly the outliers at the upper end. There are a lot of zeros, which is kind of heartening to see. See, school districts are doing their hard work. But there are some that I'm not sure what is driving it, like cleaning. Is it just because it's a tiny little school district? But because that's the one that gets hit the hardest, I think, in terms of a percentage amount. But then there's also Ludlow Mount Holly, which gets hit pretty hard from a percentage amount and Green Mountains School District. So I'm just trying to see, are those the same kinds of school district given that we have so many different types of school districts? Like, is there a kind that's getting that's trying to find trends?

[Senator Ann Cummings (Chair)]: Yeah. It's a really good question. I don't know. Okay. I will say looking at Caledonia, I would encourage you to I kept going back and forth. Should I fit all the columns onto one spreadsheet and make it so tiny, couldn't read it or break it up? But I would encourage you to look at both spreadsheets together. So for instance, when we're looking at Keenen here, which I've got pulled up on screen, we see that Kanan had a ed spend ed spend increase of 22% from FY '25 to FY '26. And they also had a relative decrease in their weighted student count of six percent. Relative change. So, putting those together, their per pupil spend increased relatively from '25 to '26 by 29%. That's why. No. I understand from a

[Senator Ruth Hardy]: math perspective why, but I'm wondering if there's some factor. Like, are these operating districts or all tuition districts? Are they, you know, only elementary school? Are they in a particular part of the state? Are they, you know, are there factors like this? Small, medium, large. Small, medium, large. Are they the the dual state district? How is that? Interstate district. How is that being impacted? I So, mean, I understand from a math perspective, it's just from an operational perspective. Is this causing a problem for a particular type of district or not? That's what I'm trying to figure out.

[Senator Ann Cummings (Chair)]: It's a great question. It's one that I don't know the answer to. I will say that the AOE does also publish on its website, and I think I sent this link to Charlotte last week. We'll find it. The per pupil spends by year, and included in that, they sort all of these school districts into small, medium, and large, and operating structure. Mhmm. So, one of the ways to look at the underlying characteristics of these districts would be to crosswalk it with that breakdown. Mhmm. Mhmm. But I don't know. Mhmm.

[Senator Richard Westman]: I think the general thing I see is that if you lost long term,

[Senator Ruth Hardy]: And and that could mean you're losing actual students, but it could also mean your your weights are changing.

[Senator Ann Cummings (Chair)]: Like Could be either both or both. Yeah.

[Senator Ruth Hardy]: And so that's the that's the thing that is sort of beyond the district's control.

[Senator Ann Cummings (Chair)]: But that's why there's an appeal.

[Senator Richard Westman]: Could have sort of second test.

[Senator Ruth Hardy]: Yeah. The second test does you can see the second test helping some

[Senator Ann Cummings (Chair)]: districts that are losing. And And if you've lost a heavily family of heavily weighted students moved out

[Senator Christopher Mattos (Clerk)]: In a small group. You've got an appeal process.

[Senator Ann Cummings (Chair)]: Thank you, madam chair. So one trend that I see in my Chittenden County District is that, and I brought this up before, Burlington, Fulchester, Winooski that all have outstanding debt due to school construction, they are all seeing a decrease, 3%, 7%, and 2%. That's one, and I would reiterate that that spending is, at this point, it's not programmatic, and there's not much we can do about debt spending. It's there, and it's not going anywhere until we take it down. But I also noticed that these schools have high percentages and populations of English language learners and students of color, Burlington, Winooski, South Burlington, just, again, I'm just observing that they're all seeing a decrease.

[Senator Thomas Chittenden (Vice Chair)]: But this spend, if you're doing debt service, that's figured in to the base budget. And if you've got a lot of weighted students, that's figuring in to the base budget. What so unless you've got a huge change in those weightings or you have a debt service that's scheduled to increase, usually they go down, but that shouldn't impact your percentage increase, right? So, your percentage increase prior to the caps,

[Kirby (Office of Legislative Counsel)]: yes.

[Senator Ann Cummings (Chair)]: Other piece that perhaps I should have led with in my answer to Senator Hardy's question about identifying trends in those districts that would be need would have needed

[Senator Christopher Mattos (Clerk)]: to be cut.

[Senator Ann Cummings (Chair)]: You know, you all know this. Correlation is not causation. And so naturally, higher spending districts are going to likely need to cut more because of the structure of the formula. Right? It's not and when looking at spending changes and weighted and and the per weighted pupil spending change, to all of your point, we don't know unless every single school district is interviewed what how they created their budgeting process and what went into all of their ed spending decisions. We don't know what drove up ad spend or drove down ad spend. Right? We don't we really don't know. So

[Senator Christopher Mattos (Clerk)]: I don't know. So

[Kirby (Office of Legislative Counsel)]: So this is really helpful.

[Senator Scott Beck]: Thank you, Julia. It's I would echo what I said previously as I'd love to see this with f y 27 board budgets if that's possible. I just wanna also echo what senator Hardy said the last time this came up is you don't wanna vote in the dark. I mean, deal with the implication because there are some major assumptions in this, which is both the maximum people amount, which you change that. This is based on the debt for people, the higher per people spend last year. We don't know what that's gonna settle at this year. We don't even know where that ballpark is gonna be in the three to 9% too. That's somewhat arbitrary. So I still think this is worth more discussion. I don't know what our time pressures are on this. It seems like crossover is a couple weeks out, but I'd certainly like to see some numbers of f y ten seven. Then I'd also love if this goes forward to hear from the secretary of education or their or delegate on the overlay of this and the districts that if this were related to FY '27, what it means to them, because we do need to know how this impacts those on the graph, what this would translate to if it was overlaid in this context. So I really appreciate it. You know,

[Kirby (Office of Legislative Counsel)]: we need to see some data,

[Senator Scott Beck]: and that's what we're seeing now.

[Senator Ruth Hardy]: Yay. Thank you. And to the if we see next this this year's budgets after we get the data that you can actually use. This provision won't apply to these budgets. It would be the following year. So it still wouldn't be the actual budgets that are applied to her.

[Senator Ann Cummings (Chair)]: Yeah. Okay. Okay. And and to that that point, these final columns, we won't be able to calculate these last final columns Yeah. Because we don't know what districts would have budgeted in FY '28. Right. Right. So we can estimate the cap once we know all school district budgets because it's based against the highest per pupil spend amount and not all school districts vote until May. May. It'd be June at this point.

[Senator Ruth Hardy]: Yeah. Well, when you get the data for the district this year or the estimated the budgets that they're gonna mourn essentially, you can use those budgets versus last year's budget. Just move this analysis up one year. On the work budget numbers.

[Senator Ann Cummings (Chair)]: Yes. We won't know their FY '28. Right. But so, like like, all of this the total amount of school districts would have had to decrease spending. We don't know because we don't know what they would have spent if there weren't a cap. Right. Remember the purpose of this bill is to try and give some relief to taxpayers until the foundation formula goes in. The foundation formula is forecasted to be less than some of these spends, And I think we heard that there is a platinum health care plan, which is fine, but a lot of those taxpayers are struggling to see if they can afford any health insurance this year. And I'm trying to get some testimony on that. But there is another side to this that has a phase two that we're not seeing, that somebody is paying that additional amount. And it's it's hurting. We still can't get tax delinquencies, but there's some scuttlebutt that it is going off. But that was the purpose. So, Julia, we've got we got another question for Julia, and then I'm gonna go over some. Okay. Okay, so I appreciate if the committee is out of time. Are maybe four more spreadsheets on the committee page. I'm going to because you said you wanted to see data, but are going through the spreadsheets. We are not out of time. So these ones will be quicker because they're not as extensive. So I guess the first the first piece is I was asked to come back with information about tuition. The challenge is About this? Yeah. I think so. The challenge is that there the allowable portion is not yet calculated for FY '26. Right? It won't it won't be coming out until December. So we've got so the so you have set of allowable tuition printouts in front of you that are comparing FY twenty four to FY twenty five because that is the most recent two years available. And then we also have the FY twenty five, FY twenty six announced tuition. So let's start with FY twenty five, FY twenty six announced tuition because those are the more similar years. And I will I will say right up front, I am not as I do not know as much about tuition and the calculations of announced tuition and allowable tuition as I do about some other ed finance topics. So I compiled this data for you all to review, and I'm gonna be able to speak to it with the same level of nuance. So we're looking at here is announced tuition for fiscal year twenty five and fiscal year twenty six. This is that other truly big spreadsheet that you have. This information, this data is available on the AOE's website, so you could access it. Really what I did is I took the data, I aggregated it to one spreadsheet by putting the FY25 and FY26 for each grade level together, and then calculated a relative change. Here you have the grade range, and then what we're looking at here are the different grades with the announced tuition. So the kindergarten part time, kindergarten full time. These are the public schools. Right? From the non the tuition in public schools. And independent and And independent. Everybody who I'm here, this is your announced tuition. You'll recall that the announced tuition is different than the calculation of the allowable tuition. We've got that. Okay.

[Senator Richard Westman]: Yeah. It's only the independent schools that don't accept the announced tuition. So the ones that, working on the academy takes, it just takes the announced tuition, the average announced tuition of the public schools. So they don't show

[Senator Christopher Mattos (Clerk)]: up on there. They just take whatever that I've been mentioning. Okay. Yeah. So they

[Senator Richard Westman]: don't show up on here. But the ones that don't, Burton Burton, St. John's, they have the limited institute, they don't take the average now, so they show up on the chest.

[Senator Ann Cummings (Chair)]: Okay. So and then we've got it for elementary, secondary, and vocational. So that's what we're seeing here on this spreadsheet. Okay.

[Senator Richard Westman]: You have time, Jeremy. Do I have to ask questions?

[Senator Ann Cummings (Chair)]: No. We can ask questions. I wanna get to Jake, and I thought I'd give you ten minute break. But

[Senator Scott Beck]: This is a naive question. I'm gonna reveal my naivete, but for the sending districts, the districts that tuition. Okay. I would like to know how do they choose that budget amount? So do they do do they calculate how many kids they need to send or how much they're gonna need the tuition?

[Kirby (Office of Legislative Counsel)]: And then

[Senator Scott Beck]: the amount what the announced tuition is in the independent schools, and then they ask the voters to approve that amount? What does that process look like?

[Senator Richard Westman]: So it's actually pretty simple. The the sending that's drug up, they say that they they have a 100 kids that go to, London Institute, and then say they have 25 kids that go to Blue Mountain Union. In this well, no later than January 15, both Linen Institute and Blue Mountain Union have to announce their to what tuition they're going to charge for the next year. They multiply the Linden tuition by a 100. They multiply the Blue Mountain Union tuition by 25, and we budget for that.

[Senator Scott Beck]: And that's what goes on the ballot. And then the same calculation. No?

[Senator Richard Westman]: No. They that's a that's a that's a budget expense. And then from there, they add up all their under budget expenses. They subtract all their offsetting revenues, they determine an education spending amount and that's what the voters, well the voters approve the budget spending. The education spending is just for tax purposes. So the cap still applies to what they would approve to the voters

[Senator Scott Beck]: independent of what that amounts of allowable tuition was. They increase it so much, but there's still a growth cap. That growth cap would still prevent them from being able

[Unknown Senator (Sponsor of S.161)]: to pay those tuitions.

[Senator Scott Beck]: Is that correct? If there was a major tuition increase?

[Senator Richard Westman]: If the tuition increases were greater than what their allowable increases, then it would put pressure on the rest of their budget. Okay. Yeah. Yes. Which is why we had, you know, do we want to have a parallel system to control those tuition raises?

[Senator Scott Beck]: Yeah, that's what I thought I understood, but then I'm not seeing a reason to cap the tuition if we're really capping the spending, which effectively caps the amount, but it does put pressure on their other Pressure on their other. Yes. Which what about Yeah.

[Senator Ruth Hardy]: And this the spending caps that we just discussed are only on public schools. So the private school tuition isn't capped unless we put

[Senator Ann Cummings (Chair)]: a cap Yeah. I thought we were adding a 6% cap. Why is 6%? Because I thought it was being added The less That may be the Yeah. Percent or different Well, yeah.

[Senator Richard Westman]: The last time we had we looked at 02/20, there was I don't know who put was it, yeah, I think it was Senator Gulick. Yeah. That there, there was a calculation to determine what the maximum tuition increase for a receiving school. It's important to understand that a receiving school is Changed it. Oh, I don't well Yeah. But it's just important to understand that a receiving school is well, let me put it to you this way. For just there's there's about five schools that set their independent schools that set their own tuition, kinda put them off on the side. Okay? And then there are, I don't know, 13 remaining schools. They take the average announced tuition. So whatever the, when the public schools, when they set their tuition, there's an average, okay? That's what those 13 schools take, okay? The public schools, they can set their tuition, current law, they can set their tuition at whatever they want, as can those five independent schools, okay? So what we're talking about here, I think, is how do we can you know, do we put a restraint on how much on the increase that all of those public schools and those five independent schools can increase.

[Senator Ann Cummings (Chair)]: We'd have to look at what the language is because I thought we made a distinction between independent schools and public schools received. Yeah, we did.

[Senator Richard Westman]: Yeah, they really are the same. I mean, if, if, you know, like for example, the items, they send all their kids, you know, out to public schools in Chittenden County, if those public schools in Chittenden County all increase their announced tuition by 20%, I'll say they would, but if they did, Grand Island is gonna get killed. Right?

[Senator Ann Cummings (Chair)]: Yeah. Okay. Break time? And now we're gonna do Jake if we're finished with questions for Julia. Thank you. That was a lot that. Yeah.

[Senator Richard Westman]: Thank here we go.

[Senator Christopher Mattos (Clerk)]: Thanks, Julia.

[Senator Ann Cummings (Chair)]: Jake. Then I'm gonna be Alright. Good. I

[Senator Christopher Mattos (Clerk)]: have no spreadsheets for you at all.

[Senator Ann Cummings (Chair)]: We're spread sheeted out. Julia is a hero.

[Senator Christopher Mattos (Clerk)]: That was the main thing.

[Senator Ann Cummings (Chair)]: Yeah. That was awesome. Thank you. So

[Senator Christopher Mattos (Clerk)]: Jake Feldman, tax department. And let's see, I have a handout, very short, handout under my name. It's on the committee page. Gotcha.

[Kirby (Office of Legislative Counsel)]: Yeah, they're gonna be long.

[Senator Ruth Hardy]: After this, that's what I'll write down.

[Jake Feldman (Vermont Department of Taxes)]: Yeah. So Julia covered the how of this, I think my goal is to cover the why Okay. Of it. So I was asked by my commissioner to try to think a little bit more long term. People are very focused on FY '27 and what the buy down, or what the one time money buy down, whatever the call it needs to be. And he was asking me, well what are the future years gonna look like, and how do we bend the curve and get on a more sustainable track, once we all bump the curves, many of us hope this would be the foundation formula. So I did take a look at it. This is very high level, and it is, there's details in here that I, you know, are not perfect, but directionally it is correct. So it looks like that property taxes will continue to increase by about 7% per year, and the reason that's the case is because education fund costs in this decade have been going up by about 6% per year, total education fund uses. And then the other the non profit resources to that fund, sales tax and part of meals and rooms, part of purchasing use, are forecast by the economists to go up by about 3% per year. So you put those things together, and it looks like property taxes would naturally wanna rise about 7% per year. And so that, you know, that makes it compelling to put policies in place like S220, because if they weren't in place, it looks like an increasing amount of one time money would need to be applied to that fund from somewhere, presumably the general fund, to try to keep property taxes going up around 5% a year or so.

[Senator Ann Cummings (Chair)]: Everything told, they don't have it across the whole of interest. I've heard of that. Yes. They don't have it. Thank you, Madam Chair. So you're assuming in that calculation that the inflation rate would stay what it is today and that there would be no changing in healthcare spending and no houses built. So you're, if you're sort of like assuming that it's a static or current day scenario as you're making those project projections of 7% per year?

[Jake Feldman (Vermont Department of Taxes)]: Yeah, pretty much so. If there's new grand rents, like new houses built, so that would be helpful, you're right. But what I'm looking at is total property taxes, like how much does the state collect? So yes, there would be a new base, which is good, but the amount the state needs to collect would be the same. As far as inflation goes, I didn't have a number to plug in about a different direction. So it's what it really does is it just kind of looks at what what has been happening since 2020, and then projects it forward. Think Julia's gonna prepare something for ways and means that it's like this, but much better next week. But, you know, it'll be similar her story.

[Senator Ann Cummings (Chair)]: Really? Any questions for Jake?

[Senator Richard Westman]: The alligator mouth. Alligator, okay, you got some. Alligator, all the alligator mouth.

[Senator Ann Cummings (Chair)]: Yeah, we are back to the

[Kirby (Office of Legislative Counsel)]: alligator. Okay.

[Senator Ann Cummings (Chair)]: Committee, I'm gonna be really versed upon, give you a fifteen minute break, and then we