Vermont Legislature SmartTranscripts:

[Senator Ann Cummings (Chair)]: We are live. We are live. This is Senate Finance. This is March 10 already. And this how did you miss senator Brock?

[Senator Thomas Chittenden (Vice Chair)]: I didn't see him.

[Senator Ann Cummings (Chair)]: Yeah. He said there was no sign of you in the hall two minutes ago.

[Kirby (Office of Legislative Counsel)]: He was hiding. I can't leave it all.

[Senator Ann Cummings (Chair)]: Made it enough?

[Senator Randy Brock]: Made it enough.

[Senator Ann Cummings (Chair)]: Okay. This is I don't know what week, next week could be worse, but this is our last week to get bills that originated in this committee out. So this is Fisher Cut bait week. We have s two zero six, which were not regular yeah. Originate here, but we're gonna try and get it out. This has a simple thief. So Katie is here just to walk us through 20,000 to what this does and then zero in on the the fees. Yeah.

[Annie McLennan (Office of Legislative Counsel)]: Annie McLennan, Office of Legislative Counsel. Welcome back. Chelsea had her last week last week. Hope you did too. Thank you.

[Senator Ann Cummings (Chair)]: This is worse for you, I think, than it is for us this week. It tends to be a painful week. We have one more. We have two painful weeks.

[Senator Ruth Hardy]: Oh, that's true.

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

[Annie McLennan (Office of Legislative Counsel)]: So I have the fill, the lip on the screen. This is S206, the licensure of early childhood educators by the office of professional regulation. I won't do a deep dive. What I will do is just maybe start by telling you a little bit about what this does without looking at words on the page. So right now, childcare programs, it's the program itself that gets the license from the Department for Children and Families Child Development Division, and individual child care providers working in a child care program are not the individuals who are being licensed. So this bill proposes to license the individual child care provider through OPR. So this sets up a new chapter within Title 26 that governs professional regulations. It creates a board for overseeing the profession. It creates different licensure types for childcare providers depending on the amount of experience and education that the childcare provider has. It establishes some variance paths for individuals who don't meet the standards for the licensure, particular level of licensure right away. And it establishes fees for these, each level of childcare provider grade. So that is why I believe you are looking at this. Should I skip right there or

[Senator Ann Cummings (Chair)]: do you wanna? No, just really.

[Annie McLennan (Office of Legislative Counsel)]: Okay. Can I

[Senator Ann Cummings (Chair)]: ask a quick question?

[Senator Ruth Hardy]: We have this bill a different version of this bill last year. How is this radically different? No.

[Annie McLennan (Office of Legislative Counsel)]: This is fairly similar. I wouldn't say it's quite similar. There is a second variance path that's created, but it still has the same tiers of licensure for different

[Senator Ruth Hardy]: educational standards. Trying to think what else is different. What's their variance path? Or are you gonna go the two various paths, yeah. Thanks.

[Annie McLennan (Office of Legislative Counsel)]: Okay. So in section one, we're just listing that early childhood educators are a profession that will be overseen by OPR. It's being added to the list of the other professions they oversee. Section two creates the new chapter in Title 26 about early childhood educators that are working in CDD regulated programs. This is happening sort of on a tiered timeline. First, the board is included to regulate the profession, and then the program or the regulation of the profession itself comes on board. So, section two is just creating the chapter and setting up the board. Section three puts the actual regulatory structure in place. So, you have the creation of the board and who has to be on the board, the procedures that the board will follow, the duties of the board. That brings me to page four. This, we're amending the chapter that was previously created to put the actual structure of the licensure in place. So, we have a definition section. I might go through these definitions of what the licensure types are, just to slow down here a bit. So on page five, we have definitions of early childhood educator one, ECE one, just to be a little bit faster. There's an ECE two and an ECE three. And then there's a fourth licensure type for family childcare home providers. So those are the four licensure types that you'll see here. So the ECE one is somebody who practices early childhood education as an assistant educator in a program under the supervision of an ECE two or three or a teacher who's exempt from this chapter, who is licensed by AOE and who has endorsements in early childhood education, special education, or elementary education. The ECE two is a person who practices around childhood education as the leader primary educator. They supervise the practice of the ECE-one and they receive guidance from the ECE-three. The ECE-three is somebody who practices early childhood education as a leader primary educator, and they provide, they supervise the ECE one and provide guidance to the ECE two. And then we have the family childcare provider that an individual provides developmentally appropriate care education protection and supervision of children from birth to eight years of age, and is authorized by CDD to operate a family child care home. So this is the person, so this one is a little bit interesting because a family child care home could possibly just be operated by one person. So that person already has a license from the child development division. And this is licensing the person themselves or the other person who could be working in the family child care.

[Senator Ruth Hardy]: Can I ask the question? The ECE one or two versus three, it's just that two receives guidance and three provides guidance. There are educational differences.

[Annie McLennan (Office of Legislative Counsel)]: Yeah, it does have a gap in there.

[Senator Ruth Hardy]: I'm assuming the morning committee talked about this, about the difference between supervision and guidance. Have fine terms. Oh, awesome. So,

[Annie McLennan (Office of Legislative Counsel)]: that's on page six. Guidance means direct indirect. Oh,

[Senator Ann Cummings (Chair)]: I'm sorry. Oh, we want, yeah, we can. You're all set?

[Senator Christopher Mattos (Clerk)]: Well, was just in the last iteration of this bill, family provider, wasn't there only a certain

[Ted Barnett (Joint Fiscal Office)]: time period you could apply

[Senator Christopher Mattos (Clerk)]: for that?

[Annie McLennan (Office of Legislative Counsel)]: That's bill grace, yeah.

[Senator Christopher Mattos (Clerk)]: Really?

[Senator Ruth Hardy]: I want to turn around to that.

[Annie McLennan (Office of Legislative Counsel)]: I will sign it when we get there.

[Senator Ruth Hardy]: Nope, sounds great. Okay. And then we have a list of provisions that Wait, guidance and supervision.

[Annie McLennan (Office of Legislative Counsel)]: I'm sorry. Yeah. Okay. So I'm on page six. Top of the page, guidance means direct or indirect consultative support in which an ECE three provides feedback to a DCE two.

[Senator Ann Cummings (Chair)]: Okay.

[Annie McLennan (Office of Legislative Counsel)]: And then supervision means on-site direct oversight in which ECE two or three observes the practice of an ECE ECE one one. Provides feedback, support, and direction.

[Senator Ruth Hardy]: Okay. So guidance doesn't necessarily mean they're in the same room, but supervision would imply that there's Yes. Okay. You can't

[Senator Christopher Mattos (Clerk)]: guide the one?

[Senator Ruth Hardy]: The ECE one is supervised. So direct, this is on-site direct oversight. They're right there.

[Annie McLennan (Office of Legislative Counsel)]: Potentially in the room with

[Senator Ruth Hardy]: the person overseeing versus guidance is direct or indirect support. So you have somebody who's consulted. You should provide some feedback and guidance.

[Senator Ann Cummings (Chair)]: Caution,

[Senator Scott Beck]: Can an EC one be alone within a room with a child?

[Annie McLennan (Office of Legislative Counsel)]: This person is an assistant teacher. And I don't know the exact answer to that, if they would be. They're an assistant educator and I don't know if that means they'd be alone in the room. It means that they're not solely responsible for

[Senator Ann Cummings (Chair)]: that group of children. I do see the answer over here. Imagine ratios. Jennifer, introduce yourself for the record.

[Jennifer Polin (Director, Office of Professional Regulation)]: Jennifer Polin, director of the Office of Professional Regulation, and yes, the NACE one would count towards ratios.

[Senator Thomas Chittenden (Vice Chair)]: Which means they could be an

[Senator Randy Brock]: older version.

[Senator Ann Cummings (Chair)]: Yes, sir. You don't need supervision changing diapers.

[Annie McLennan (Office of Legislative Counsel)]: Okay, keep moving.

[Senator Randy Brock]: Maybe I missed it, but in the definition, was there a definition of early education?

[Annie McLennan (Office of Legislative Counsel)]: Yes. Early childhood educator, not education. Individual providing care and education, instruction to children from birth through eight years of age in a program regulated by CDD, including planning and implementing intentional developmentally appropriate learning experiences that promote the physical health and social, emotional, linguistic, and cognitive growth of children. Establishing and maintaining a safe, caring, inclusive, and healthy learning environment. Observing, documenting, and assessing children's learning and development. Developing reciprocal culturally responsive relationships with families and communities, engaging in reflective practice and continuous learning.

[Senator Randy Brock]: Thank you.

[Senator Ruth Hardy]: Okay.

[Annie McLennan (Office of Legislative Counsel)]: So I'll move through these definitions. There are prohibitions on holding yourself out as an early childhood educator if you don't have a license under this chapter. I'll skip over that. The exemptions I think may be of interest. This chapter does not apply to the following persons acting within the scope of their respective professional practices. A teacher who's licensed under Title 16 by AOE with endorsements in early childhood education, early childhood special education, or elementary education. This does not apply to. An individual who provides care in an after school childcare program that is regulated by a CD or any other childcare program that is exempt from regulation by a CDD. This chapter does not apply to. And an individual who works exclusively in a public school, this section does not apply to, or this chapter does not apply

[Senator Ann Cummings (Chair)]: to. So,

[Senator Ruth Hardy]: could somebody be licensed under Title 16 and work in an early childhood program that's not in a public school? Yeah. Okay. So, We go

[Senator Ann Cummings (Chair)]: one way but not the other way.

[Annie McLennan (Office of Legislative Counsel)]: So, for example, the pre K statute requires that there is the availability of a title 16 licensed teacher and that this wouldn't touch that. So this title

[Senator Ruth Hardy]: 16 teacher whose license would still be operating in a Pre K public private program. But outside of Pre K. Oh. If somebody is licensed as an early childhood educator under Title 16, do they work in a childcare program that's not? That's regulated by CB? That's regulated by CB. I believe so. I don't think that's touches on that.

[Annie McLennan (Office of Legislative Counsel)]: Let's see. Subsection B, this isn't altering the pre care requirements under 16 BSA eight twenty nine. The chapter is not construed to limit or restrict in any manner the right of the practitioner of another profession or occupation from carrying on in the usual manner any of the functions incidental to that professional occupation. We have a placeholder here for the board because that was created a year earlier. So this is just amending that existing chapter. And here's where we have the eligibility qualification. So I think this may answer some of the questions that you've had. And subsection A, to be eligible for licensure under any of the categories, the applicant has to have attained the age of majority, achieved a high school diploma or a GED or an approved equivalent credential, and completed field experience in early childhood education as required by rule. So no matter which category the person is applying for a license, they have to have met those. In terms of the actual license types, they're laid out here in subsection B. So ECE shall have a certificate from an approved credential program in early childhood education requiring a minimum of one hundred and twenty hours of training and instruction. ECE two is to have received an associate's degree in early childhood education or a related field requiring a minimum of 60 college credits or in any unrelated field, a minimum of 21 of the college credits in the core early childhood education competency areas that will be identified and enrolled. The ECE three is to have received a bachelor's degree and an approved program.

[Senator Ruth Hardy]: Make sure I'm getting

[Annie McLennan (Office of Legislative Counsel)]: from an approved program and early childhood education or a related field for a minimum of 120 college credits or any unrelated field and a minimum of 21 approved college credits in the core early childhood competency areas that will be identified and rule. And then the family childcare provider is to be qualified for licensure if authorized by CDD to operate a family childcare home and is in good standing with the division as of 01/01/2029. The board shall not accept the family child care provider applications after 01/01/2029. So that's the language that you were asking about earlier. Does that mean they shall not do any new applications or that all family childcare providers have to cease? No, it's the first. That means that if you're actively practicing as a family childcare provider on 01/01/2029, you hold on to that license for as long as you continue practicing. Okay.

[Senator Ann Cummings (Chair)]: So we aren't putting anyone out of business and we aren't if my infant starts with the lady down the street, they are going to be forced to change child care providers at the age of three.

[Annie McLennan (Office of Legislative Counsel)]: Correct. So the exception would be if the person who has the family child care provider license leaves practice for a certain number of years, they wouldn't be able to come back in as a family childcare provider. They'd have to come fee re licensed as AT and T1. So

[Senator Ruth Hardy]: why does why does this this cease?

[Annie McLennan (Office of Legislative Counsel)]: I don't know if I'm

[Senator Ruth Hardy]: the right person to answer why. Are we getting other yeah.

[Senator Ann Cummings (Chair)]: We're not being announced. Okay. That's okay.

[Senator Randy Brock]: Okay.

[Senator Ann Cummings (Chair)]: Every two years, we've been getting a fee bill. Yeah.

[Annie McLennan (Office of Legislative Counsel)]: So, renewal, this says that the license is renewed every two years upon application and payment of that required fee, which I know is what you're most interested in.

[Senator Ann Cummings (Chair)]: I did not. I'm not sure it's what we're most interested in.

[Senator Ruth Hardy]: Oh yeah, exactly. I'm glad you said that.

[Annie McLennan (Office of Legislative Counsel)]: Failure to comply with the provisions of the section results suspension of privileges granted by the license beginning on the expiration date of the license. A license that has lapsed shall be reinstated upon a payment of the biannual renewal fee and the late renewal penalty that's in statute, except a family childcare provider license shall not be renewed after a lapse of two years. That's what I couldn't remember how many years, it's two years. Subsection B says that the board can adopt rules necessary for the protection of the public to assure the board that an applicant whose license has last for more than five years is qualified before they are reinstated. They can create conditions under the rule. In subsection C, in addition to the provisions of A, an applicant for renewal shall have satisfactorily completed continuing education as required by the board. For the purposes of this subsection, the board may require by rule not more than twenty four hours of approved continuing education as a condition of renewal.

[Senator Ann Cummings (Chair)]: Here's our exciting part.

[Annie McLennan (Office of Legislative Counsel)]: Yes, fees. So, you will see that this is broken down by the categories, the licensure categories, and that there is an initial fee for each of those categories and a biennial renewal. So ECE one initial is 125, renewal is $2.25. ECE two initial is 175, renewal is $2.50. ECE three initial is $2.25, renewal is $2.75. Family child care provider, initial is 175, renewal is $2.50. And

[Senator Ann Cummings (Chair)]: we will have professional regulation come up and tell us if those are at.

[Senator Ruth Hardy]: Can I ask the question? So, does the pro do programs continue to be licensed or is it just teachers that continue be? Programs continue be Okay. So, can a licensed program hire an unlicensed teacher or is that no longer

[Senator Ann Cummings (Chair)]: possible once goes to the federal?

[Annie McLennan (Office of Legislative Counsel)]: I think that would no longer be possible after this.

[Senator Ruth Hardy]: So any any program that receives CCGAP or any state money would have to only hire licensed. Regulated CDD program. Yeah. And they're the ones that get CCAP. Okay. Alright. Okay.

[Annie McLennan (Office of Legislative Counsel)]: We have a section on unprofessional conduct. Conduct that's otherwise prohibited elsewhere in statute for other professions, conduct that results in a licensee applicant or individual who later becomes an applicant being placed on the Child Protection Registry, conduct that's not in accordance with professional standards of early childhood mediators published by the ACH. And then we have the variances, and I know this was of interest too. So, to pass A and B, under A, the board can issue a transitional ECE two or three license to a teacher or director of a program who does not meet the educational experiential licensure required in this chapter. Transitional licenses are valid for two years and can be renewed by the board for an otherwise qualified applicant for an additional two year period with supporting documentation that the individual is working to obtain those qualifications. At the conclusion of three two year transitional periods, so at the conclusion of six years, the board at its discretion may issue one final two year transitional license for an otherwise qualified applicant if the licensee can demonstrate extenuating circumstances for not having attained

[Senator Ruth Hardy]: the requirements. So that's up

[Annie McLennan (Office of Legislative Counsel)]: to eight years for a DCE to agree to come into compliance with the chapter.

[Senator Ann Cummings (Chair)]: And this was, there was child care. I had a person who was excellent, who had worked there for years, but didn't have the qualifications and might not have the ability to do it's one of those transitional not putting people out on the street, I think, bills, and there was a specific example given to the committee.

[Senator Ruth Hardy]: But there's not a true I don't like this word. Don't know what that grandfather clause.

[Annie McLennan (Office of Legislative Counsel)]: Yeah. I mean, for the family child care provider, there is that sort of grand I

[Senator Ann Cummings (Chair)]: don't yeah.

[Annie McLennan (Office of Legislative Counsel)]: What is the right one? We

[Senator Ruth Hardy]: say legacy.

[Senator Ann Cummings (Chair)]: Legacy. Legacy. Oh, thank you. I like that too. Okay.

[Senator Ruth Hardy]: So there's not a true legacy clause that makes them- Because all of them are limited by time. They're all limited by time.

[Annie McLennan (Office of Legislative Counsel)]: Except for family child care providers. So if the family child care provider who's practicing January wants to continue on for another thirty years in the profession, long as they don't leave for two years, they can continue to keep that.

[Senator Ruth Hardy]: So that's a legacy, but nobody knew could come into that without me. And nobody knew after 01/01/2029 could be licensed as a family childcare provider. They'd have

[Annie McLennan (Office of Legislative Counsel)]: to come in as an EC once you're

[Senator Ann Cummings (Chair)]: in grade. I see. Okay. And this is kind of your legacy person. Yeah. Allowance. Yeah. What's the

[Senator Christopher Mattos (Clerk)]: point of the family provider one that if it's gonna be shut off, I have no fears and no

[Ted Barnett (Joint Fiscal Office)]: one else can get it, why even have one?

[Annie McLennan (Office of Legislative Counsel)]: Yeah,

[Senator Randy Brock]: yeah, absolutely.

[Senator Ruth Hardy]: I'm gonna talk about the second path.

[Annie McLennan (Office of Legislative Counsel)]: So, addition to what's available up above, the board shall also issue license for individuals who have completed the eligibility requirements in A or D. So that was the age of majority, GED, continuing education. So somebody who has done all of those, if they have 21 college credits in the core early childhood education competency areas identified by the board and rule, or prior experiential learning that we've assessed by an appropriately accredited institution of higher learning, the equivalent for those twenty one hours of college credits and the core competency areas. And as you've identified, this section does not stay in statute indefinitely. These paths go away. And we'll look at where it sunsets because I can't remember the exact year off the top of my head. About ten years. Top of page 13, disclosure by licensees. This section recognizes that there are different entities that are regulating individuals or programs that are part, that are the makeup of childcare programs. We have CDD responsible for the program, AOE responsible for a teacher who might be there, and now OPR responsible for the licensure of licensees under this chapter. So this section is requiring that somebody licensed under this chapter is providing to current and prospective families sort of a framework of who is responsible for regulating different entities of the childcare center or practice. So, the information that families have to get, all available license types right before So they buy the families have to know what that means or have to at least have the opportunity to have that information about what the different license type means. A description of OPR's regulatory authority for licensees and the programs regulated by CDD and how to make complaints. A description of OED's regulatory authority over teachers and how to make complaints, and a description of CDD's regulatory authority over regulated childcare programs and how

[Senator Ruth Hardy]: to make complaints. Section four,

[Annie McLennan (Office of Legislative Counsel)]: this is where our variances go away, those two paths. 2036, it is ten years. Section five is a report. This is almost a status report. How is this licensure program going? So a report in 2031 on the number of licensees by license type, state resources necessary to implement a chapter, the number and nature of any complaints or enforcement actions against a licensee, qualifications required for each license type and any other issues the office deems appropriate. So that would be in the report. And that's a one time report. That's a one time report. Yeah, one time. And then section six, we have appropriations and positions created. So in section A, the establishment of the following new permanent position is authorized in OPR in fiscal year twenty seven. So one full time classified executive officer of the Vermont Board of Early Childhood Educators and one full time exempt staff attorney. And the appropriation for that is 262,000 from the general fund. And this takes effect, this appropriation happens and these positions are hired before the regulatory structure itself goes into effect because that gives time to set up the profession before the licenses are required. And you'll see that reflected in our effective date section. The effective date section one, which is just the list of what professions are regulated. Section two, setting up the board. Section five, the reporting requirement. Section six, the appropriation That of all takes effect this year, July '26. But then sort of the heart of the program, creating that chapter takes effect 07/01/2028, and those are sections three and

[Senator Ann Cummings (Chair)]: four. Okay.

[Senator Christopher Mattos (Clerk)]: Did I miss it? I mean, like continuing education for renewal?

[Annie McLennan (Office of Legislative Counsel)]: Yeah, there are, it says that there could be continuing education required by rule, but not more than twenty four hours for renewal period.

[Senator Ann Cummings (Chair)]: Okay, any questions?

[Senator Thomas Chittenden (Vice Chair)]: Twenty four hours of total class time training, would you?

[Annie McLennan (Office of Legislative Counsel)]: Continuing education. So, if the board wants to require continuing education, they may do so. The renewal cycle is every two years and it would be up to twenty four hours of continuing education every two years.

[Senator Thomas Chittenden (Vice Chair)]: Not credit hours, actual hours. So like twenty four, one hour ingredients. Yeah. Credit hours is a whole other animal.

[Annie McLennan (Office of Legislative Counsel)]: Yes. Is college credits. Yes, that's your question.

[Senator Ann Cummings (Chair)]: This is an out of mind. Yeah. Seriously. Pushing.

[Senator Ruth Hardy]: Ruth, the regulate I mean, this might be a question for OPR, so I'll stop. Okay.

[Senator Randy Brock]: I'm looking just for clarity to make sure I understand this. If someone wanted to operate a childcare center in their home, would they have

[Senator Ann Cummings (Chair)]: to comply with these regulations? Yes.

[Annie McLennan (Office of Legislative Counsel)]: They would be a family childcare provider. So they would have a license through CDD to operate the program. And then the individual would still need to get a family child care provider license. If we're talking ten years from now and that option has expired, then they would come in, they would need a license as an ECE one, two, or three.

[Senator Randy Brock]: Know five years ago, was a lot of talk about early childhood education and its value. I gather that there were a lot of conflicting stories. Do you know whether or not testimony was taken as to, does this work? Is it cost effective?

[Annie McLennan (Office of Legislative Counsel)]: I'm not always in the room when a committee takes testimony. I know that health and welfare took a substantial amount of testimony on that. So I think

[Senator Ann Cummings (Chair)]: probably that might be a better question for professional regulation. What

[Senator Ruth Hardy]: do you mean this? Early childhood education? Early childhood education?

[Senator Randy Brock]: Early childhood education and the use of licensed professionals to operate home child care centers.

[Senator Ruth Hardy]: Oh, that's a more specific question.

[Senator Randy Brock]: Yeah, it is a more specific but that's why I asked the preliminary question. Do people, for example, operate a family childcare center, three or four or five kids in a home? Do they have to meet all these requirements? And then my next question from that, and again, it may not be Katie to answer that. The question is, does it work? Is it cost effective? And does it make all the sense?

[Senator Ruth Hardy]: Well, think

[Senator Randy Brock]: Which is not presented in scientific background.

[Senator Ruth Hardy]: Right. I mean, not the specific question, but I mean, overall high quality early childhood education, includes high quality educators, and part of being a high quality educator is to be a licensed educator, is absolutely cost effective and works. I'm

[Senator Randy Brock]: sure that there's some evidence that somewhere along the line, considering this bill was looked at, presumably the results of that high quality early education would be reflected in kids' test scores over time.

[Senator Ruth Hardy]: Well, I think there's more to

[Senator Ann Cummings (Chair)]: hoping that they show up in school able to sit in chairs. The

[Senator Christopher Mattos (Clerk)]: ECE 120, does that have to be done prior to starting or getting a tracheal that had it?

[Annie McLennan (Office of Legislative Counsel)]: Oh, I would assume yes. That also, yeah. I mean, the way it's written, it sounds like that person used to have completed that education prior to obtaining.

[Senator Ann Cummings (Chair)]: Maybe we can have professional regulation and talk to us about that because there's transitional things in here. If you've been working someplace for two years and you're still two classes short, there's workarounds. So, any other questions for Jen? If not, Lauren, I don't know if you guys which I've got an agenda which says that Jen Collin is going first. It's okay for you. Can we sit next to

[Annie McLennan (Office of Legislative Counsel)]: each other? To take her. He doesn't really And

[Senator Ann Cummings (Chair)]: say this is your Ted, I'm gonna put him on first if you can you got time to Mhmm. Swing. Okay. Yeah. Yep. Want us to

[Annie McLennan (Office of Legislative Counsel)]: go first? Yep.

[Senator Ruth Hardy]: Okay. Great.

[Senator Ann Cummings (Chair)]: I think that's where the train of thought is going. And then we can go from there to

[Senator Thomas Chittenden (Vice Chair)]: Is it ice cold?

[Senator Ruth Hardy]: Yeah. It's it was just a bunch of ice fell off. So it's

[Senator Ann Cummings (Chair)]: it's a

[Annie McLennan (Office of Legislative Counsel)]: it almost It, like, came down.

[Senator Ann Cummings (Chair)]: I was, like, dizzy.

[Annie McLennan (Office of Legislative Counsel)]: I know. That's hard.

[Senator Ann Cummings (Chair)]: I'm getting nervous. It's come off my roof, and it's been hard to get either out. Yeah. Yes. No good. And there was somebody killed two years ago sitting on their deck. Oh, nice. Wow.

[Annie McLennan (Office of Legislative Counsel)]: They're big figures. Yeah. Your files. Yeah. I'll just. Okay.

[Senator Ann Cummings (Chair)]: Oh, this definitely has a superior inferior. I was just stating. I can't I can't figure out how to make it shorter. It is what I did. Know, I brought in I'm a I'm a big woman. And That's why I my chairs up.

[Annie McLennan (Office of Legislative Counsel)]: Okay. I'm glad that I was

[Lauren Hibbert (Deputy Secretary of State)]: on the record talking about my self consciousness about height, but it's true, am a tall woman and now I look incredibly tall.

[Senator Ruth Hardy]: Thank you so much for having us.

[Lauren Hibbert (Deputy Secretary of State)]: My name is Lauren Hibbert, I'm the Deputy Secretary of State, and

[Annie McLennan (Office of Legislative Counsel)]: I have with me

[Jennifer Polin (Director, Office of Professional Regulation)]: Jennifer director of the office of professional regulation.

[Lauren Hibbert (Deputy Secretary of State)]: Hello. You folks raised some really great policy questions, so I think maybe we could just try and address those as we heard them and then talk specifically about the money or not

[Senator Ann Cummings (Chair)]: to share with you like that takes place out, that would be fine.

[Lauren Hibbert (Deputy Secretary of State)]: Okay. So I think probably the most critical question, not that one question is more important than any of the others, I'm not implying that, is the why. Why are we seeking licensure of early childhood education? And I believe, Senator, your question really is at the crux of this. And why are we doing this and where is the research? And I feel very fortunate to have with me in a shorter chair, Director Collin, who wrote the Sunrise Report for this profession, the Office of Professional Regulation. We only seek to regulate professions if there is a risk of public harm that cannot be resolved without some sort of government interference. So that's the first question. And then if we answer that in the affirmative, then we look at what type of regulation should we put on this profession, and we look to do the minimum necessary. And you folks have heard about all different types of programs, and we have the registration, which is our lowest burden, then certification, and then licensure, which is our highest burden. The Sunrise Report, which I encourage all of you to read, excellent document, really outlines that there is harm in this profession that can happen, And without remediation, it has long term effects on children and teenagers and young adults and people in their floors. So the evidence really shows that people, children turn up to school better prepared if they have quality early childhood education. More ready to sit in a chair, but also better results on their test scores, better interpersonal skills with their peers, better emotional regulation within themselves. That continues and builds all the way through high school, where children who receive better early childhood education attend school, are less tardy or less absent from school, graduate at a higher rate, then go into a profession or trade or college track at a higher rate. Not specifically one of those over the other, but leave high school with a path. And then if, hopefully, nobody becomes criminally involved, but children who have high quality early childhood education have been shown to have less criminal involvement even in young adult and adulthood. So the evidence is pretty clear that quality is essential. Licensure to ensure quality is a relatively new, I mean, it's been a national push for a long time. There is not a state in this nation that has had an established pattern of licensure. We don't have a way to say to you empirically, licensure ensures quality and that will mean better outcomes. However, licensure does ensure quality in every space because there's some standardization of what is minimally required, and creates an expectation and standard. So that it's not the only way to ensure quality, of course, but it is historically time after time after time, professional profession, the way that we ensure that we have qualified professionals that are able to do the thing that they are licensed to do and can do so without hurting people. So that's fundamentally why we're here. And this bill, this committee saw it in a different- this concept, this bill saw it in a different iteration, in a different bill last year. And what we have done this year really is try and ensure that nobody's left behind. I would say that is the goal of the modifications that Senator Health and Walker did. We really heard a lot of testimony about challenges of going back to school, concerns about the ECE one and that 120 right out of the gate. That's why there's so many pathways, and that's also why there's such a significant on ramp to even it being implemented. So that we can really work on outreach and education. So, to your question, the ECE one, yes, it would be required on day one of the program being live, but that is

[Senator Ann Cummings (Chair)]: July So, of 2020

[Lauren Hibbert (Deputy Secretary of State)]: we will be out in the world providing education outreach. This is not going to be a surprise to anybody on July 2028. And we have been working really well with CBD. Everybody who's currently employed at an early childhood center, whether it's home based or facility based, is connected with CBD. So we know who is the universe. We will be connecting with them. We'll be providing education. We'll get people into the right track so that ECE one July 2028 will be prepared and will know what's required of him or her, and will be hopefully able to apply having completed those one hundred and twenty hours. And a lot of them do. So that's the other piece is, these requirements are not, they are elevated from CDD, but they are not new. Everybody who works in a registered facility by CDD has requirements on them right now. They just don't have the benefit of licensure. And the public doesn't have the benefit of individual accountability, which is what this bill is introducing. So, right now, CDD does investigations and restricts changes, has their rule enforcement process of only the facility, but not the individual who may have created the harm. So that individual can go to another facility or could go into private care or could open up their own home based care if they are serving only their family and two other families. That's an important piece too of this puzzle, is CDD is not involved, OPR will not be involved. If, let's say, I wanted to open a small home based care just for my children and two other families, the state is not involved in that in a significant fight.

[Senator Ann Cummings (Chair)]: We have a lot of testimony what community college and experience based credit towards all of that. All of their effort. It's really meant to help people wait for. Okay, I had Senator Mattos. Yep. Senator Hardy.

[Senator Christopher Mattos (Clerk)]: So that makes an interesting dynamic about a licensure for the employee. It almost, what you just said, it kind of makes it sound like takes away the protection for the employee if something happens. Somebody can go directly after the employee versus going after the employer.

[Lauren Hibbert (Deputy Secretary of State)]: Both can happen, and that is a pretty common model in every other regulated environment, like a hospital. There's individual accountability for the LMAs, the LPNs, the RNs, the physicians, all the PTs, the OTs, the Rad Techs, everybody in the hospital system is regulated for the most part, with very rare exception, and the individual has independent responsibility over his or her actions, responsibility the to exercise appropriate clinical judgment, independent judgment, and the facility is also live for what is And the facility's regulated and licensed as well. So it is a very common model in a lot of workplaces where there is professionals

[Senator Ruth Hardy]: working there.

[Senator Christopher Mattos (Clerk)]: I'm thinking like childcare centers are very heavily regulated currently based on all the site visits and things that they have to go through. I think, you know, as probably the only person at this table that has children in one of those settings, you know, I feel confident about the center and the rules that are there and adding another layer of that because I also see I'm also on the board of that center and know how hiring goes and how we're competing with schools. So if we're gonna put somebody on a track that is like level with a school, and if we can match that salary, benefits, everything that goes along with that That's a real struggle. We already have a hard enough time getting folks that don't have the credentials that are outlined here, I'd be worried about setting up a model where we can't ever agree with

[Senator Ann Cummings (Chair)]: that.

[Senator Christopher Mattos (Clerk)]: Yeah. And that raises childhood rape.

[Lauren Hibbert (Deputy Secretary of State)]: So there are two things on Jen. I don't mean to delve duck into Jen. Okay. Are two things that come right to mind, what you said. One, the struggle and burden that's already on facilities that are regulated by CDP. Yes. And this is going to take some of that off of the director of that child care facility. Because right now, he or she has to go through the individual qualifications, make sure that each person has taken all of the required steps, all of the classes. If there are requirements right now, that the director has to do that. What he or she will be able to do is say, are you licensed by OPR? The person will say, here's my license. And then the label will say, okay, we're interested in interviewing. So it will really dramatically change that burden in the hiring process, but also in the CVD registration and oversight process. There is work that is going to come off of CVD as a result of OPR taking on licensure. The other piece about attracting people and keeping people, again, there are requirements now, but what is happening now is that's not a professional pathway and becoming an educator, it's through AOP. This is not gonna solve the health insurance and the benefits and, you know, vacation time and all of those things that make working in the school system appealing, and why someone may leave. But it does provide a professional track for someone to go towards. And, you know, you should talk to the folks at Let's Grow Kids and Vermont Early Childhood Alliance, you know, there is a very, very strong push from the profession to become professionalized. There are people who don't want to. I don't want to say that those voices don't exist, but the vast majority really are asking for this, have been asking for this for a period of years, and this is the culmination of that ask. So, and it gives someone something to work to, you know, our CTE programs, we have early childhood training in our CTE programs. This will mean that they will be able to graduate high school and be able to be a DCE one. And that is an amazing thing for our kids in high school. This will mean that people probably will be more motivated than they already are. I'm probably the person who knows the least, but I believe that our state college system, we have waiting lists for early childhood educators right now to get into that program. This will mean that people will be able to take that education and put it right towards the license, which shows that people are very, very interested.

[Senator Ann Cummings (Chair)]: I will be back with Doctor.

[Senator Ruth Hardy]: You. You said a lot of the things that comments I was gonna make too. I mean, a lot of times, like, professions want to be regulated because they want to professionalize and and sort of get more, you know, respect for their profession and more oversight. But I quite couple questions is that in terms of the sort of I don't think it's spelled out in the bill, but I think it's something that our OPRE does is if there is a complaint, if there is a process for how that complaint gets handled and and the sort of consequences if if harm is found, correct?

[Jennifer Polin (Director, Office of Professional Regulation)]: That's right. Yeah. Okay. Great. We do have an enforcement unit. Yeah. An in house process.

[Annie McLennan (Office of Legislative Counsel)]: Love it. For all of

[Jennifer Polin (Director, Office of Professional Regulation)]: our licensed professions, or regulated professions, I should say. And we have in house investigators, we have in house prosecutors, we have case managers, we have administrative law officers who help adjudicate those cases, and boards a board process where the board kind of acts as the jury in a case to determine whether unprofessional conduct has happened. Our complaint system is very easily accessible through our website online, so anybody we get complaints from the public, from consumers, from anybody. And you can file a complaint online. There's a portal that you go into, and that kicks off a process of screening, investigation, if it's accepted for investigation. In other words, our kind of threshold question is, if the allegations are true, would it be unprofessional conduct? And if the answer to that question is yes, we screen it in and then assign an investigator who goes and gathers evidence, meets with witnesses, reviews videotape, whatever the evidence is. And then once the investigation is complete, in our board professions, we have one person from the board who is recused from further hearings in the case, because they're gonna help the prosecution team figure out if this is a case that should be prosecuted for unprofessional conduct. And essentially, if the case is prosecuted, there's gonna be a hearing. The licensee has a right to decurve and to bring evidence and witnesses. And then, ultimately, if the board finds unprofessional conduct does occur, yes, there are standard sanctions that we have, warnings, reprimands. We can condition licensees to take additional coursework to remediate the issue. We can do administrative penalties. We can suspend someone's license, and that's a really important point here in in in this setting in particular. So CDD does regulate the facilities, and they go out and they do inspections and they note violations, and they may close a facility, but we have the ability to immediately suspend someone's license to engage in the profession. So from a level of individual accountability or unprofessional conduct, that's a critical that's a critical piece.

[Senator Ruth Hardy]: And to that point, there was just an audit that happened, early childhood education sort of oversight. Yeah. Or some concerns that were raised through the audit. Would this process help address some

[Jennifer Polin (Director, Office of Professional Regulation)]: of the concerns the auditor's office had? I haven't reviewed that audit report in detail, although we've seen some of the, you know, kind

[Senator Ruth Hardy]: of skimmed the article that So, we saw

[Jennifer Polin (Director, Office of Professional Regulation)]: individual accountability and individual licensure helps to close some of those gaps because when and we've worked a lot with the community already talking, you know, envisioning how this process would work because we're gonna be doing joint investigations. And if an individual has engaged in egregious conduct, we will have a process where we can immediately have a hearing in front of the board and saying, and and bring in witnesses and saying, this is the conduct that's occurred. And the board can say, because there's an imminent threat to the public, that this individual may engage in this conduct again, we're gonna take away that license. So, yes, we can address some of those gaps in the system right now. Because in the system right now, when you look up, for example, a facility in the Bright Futures database, you see the facility violations, but you don't know who did that conduct. And that person may still be out there working, and and the public has no information about who did that. And OPRs, orders, once a board has made a decision in the case, those go on our website. So even if someone has worked in a facility and they've engaged in unprofessional conduct, currently they could open up their own childcare home and serve two families, and they'd be able to do that. In the scenario where OPR is regulating, that family could look up this person's name and find where they have been disciplined and make a more informed choice about who's taking care of their children.

[Senator Thomas Chittenden (Vice Chair)]: Hypothetically, you just mentioned, are you have you actually seen that?

[Jennifer Polin (Director, Office of Professional Regulation)]: We actually seen

[Senator Christopher Mattos (Clerk)]: So where

[Senator Thomas Chittenden (Vice Chair)]: they lose their license and then they go open the family center?

[Lauren Hibbert (Deputy Secretary of State)]: Yeah. That that can happen.

[Senator Thomas Chittenden (Vice Chair)]: Have have you observed that

[Kirby (Office of Legislative Counsel)]: to happen?

[Lauren Hibbert (Deputy Secretary of State)]: That's what that's what we've heard has happened from CBD. We we have not we have not been in that debate. We observed it, though, but we haven't heard that it happened

[Senator Thomas Chittenden (Vice Chair)]: either. Interesting out there.

[Jennifer Polin (Director, Office of Professional Regulation)]: Right. Yeah, where people have been involved in childcare settings for decades and engaged in bad conduct. There doesn't seem to be, at present, a really effective way of removing them from the system and making it known to the public.

[Senator Thomas Chittenden (Vice Chair)]: So it can happen and you have reason to believe it is happening?

[Senator Ruth Hardy]: Yes.

[Senator Ann Cummings (Chair)]: I mean, it would still require that the public make the effort to go to demography. Yeah,

[Lauren Hibbert (Deputy Secretary of State)]: and another piece here is the criminal justice system doesn't fill this hole either, because someone, if it's truly egregious conduct, sometimes someone is prosecuted criminally, and there can be restrictions put on that person that they can't be in contact with children as a condition of release or for a period of time as part of their sentence, but it doesn't last in perpetuity. And the criminal justice system is very hard for the public to navigate, to understand where the couple to know which county, you you want to know the name. There's a lot that you have to know in order to figure out what were the criminal implications, whether or not someone should be taking care of you. The other piece that I just wanna say about individual accountability and conduct that person in the facility, we see this frequently in a lot of our professions, and we anticipate and have heard anecdotally that it will be true in child If you are subordinate and you are witnessing something or you're being told by your supervisor to do something that is not in alignment with the standards, the the commonly accepted standards. If you don't have individual accountability, really your only option is to walk away from the job. You could make a complaint at CDD right now, but if there's individual accountability, you are able to say and rely on, I have independent responsibility, I have my own license. I'm not doing that. And you can make a report to OPR, and that happens in all of our professions all of the time. And it is really helpful for people who are being instructed to do something that is not appropriate. I keep saying clinically, but not appropriate care.

[Senator Ann Cummings (Chair)]: We have three minutes left. We still have Ted to tell us what this is gonna cost or raise. So the question that's relevant to us, are these fees adequate to cover your costs? Yeah, we believe so.

[Jennifer Polin (Director, Office of Professional Regulation)]: There you go, two minutes saved.

[Annie McLennan (Office of Legislative Counsel)]: Two minutes left. Okay.

[Senator Ann Cummings (Chair)]: So, I'm sure you'll talk to anybody else. Yeah. You know, offline. Absolutely happy to answer any. Haven't gotten all the answers out

[Jennifer Polin (Director, Office of Professional Regulation)]: of Yes, ma'am. Absolutely happy to answer any questions. One of the tricky things about this profession is we don't know exactly how many practitioners are in the profession because they don't currently have licenses, but we know there are five to 6,000 people who are gonna need licenses from OPR, and that's what we base these estimates on. And we do believe that the licensure fees as as put forth in s two zero six will be adequate to cover the cost. Okay.

[Senator Ann Cummings (Chair)]: Questions? Thank you.

[Annie McLennan (Office of Legislative Counsel)]: Thank you so much. Kent,

[Senator Ann Cummings (Chair)]: last but throughout the most important.

[Senator Randy Brock]: Alright.

[Ted Barnett (Joint Fiscal Office)]: Have Barnett joined fiscal office? I will try and do a excision drawing of the fiscal note. It's not that involved, so I'm optimistic.

[Senator Ann Cummings (Chair)]: Now this is probably one of the shift load ones.

[Ted Barnett (Joint Fiscal Office)]: And I will say, OPR was very helpful on this front, so yes, we a pretty good Oh, I opened this in the wrong one. The whole This is the one that y'all are gonna see. I'm cutting into my speed run here.

[Senator Ann Cummings (Chair)]: We've got one minute left, Kirby, and we're gonna make it.

[Greg Hughes (Friends of Vermont Public Education)]: We're close.

[Senator Randy Brock]: I'm gonna have to

[Ted Barnett (Joint Fiscal Office)]: flick a few more buttons than we should. Here we are.

[Senator Ann Cummings (Chair)]: Okay.

[Ted Barnett (Joint Fiscal Office)]: Much better. Okay. Second time's turn. So starting straight at the fiscal impact sections, according to information provided by PR thank you, OPR. The licensure provisions of the bill would generate approximately $800,000 in fiscal year twenty twenty nine. This is when all of our professionals are getting their initial license, which has a lower amount than when they renew. So and then in two years after they've done their initial licensure, we would expect approximately $1,200,000 biannually. It's a two year license after 2029. We'll also note that within any licensed profession, there's some sort amount of churn. You have people who are entering professions in even years, and so you'll have on odd fiscal years, you'll have big slugs of revenue when the core of your profession is renewing their license, and then in the evening years, it's folks who are entering the evening, they don't have their insurance. And that churn in the evening years would generate about $100,000 in the evening fiscal years. Those license fees would be deposited in the OPR Professional Regulatory Fee Fund. So that's the revenue side. On the expenditure side, the bill contains an appropriation of $262,000. There we are. For two new positions, full time executive office, sir, at the Vermont Board of Early Childhood Educators and full time staff attorney. Would note since you're not gonna see fee revenue, you would not see fee revenue until just the year '29. These provisions would be covered in '27. There would need

[Senator Randy Brock]: to be additional appropriations to support these positions

[Senator Ann Cummings (Chair)]: transitional, in '20 not ongoing. Exactly.

[Ted Barnett (Joint Fiscal Office)]: These would cover this. Once they come online, I will also note that in addition to these positions, the OPR Sunrise report noted there would be additional positions that would be required to support the position. So might you be wondering why it's generating $1,000,000 if you're 262,000. There won't be more positions coming online. And so that would bring expenses to regulate the profession more in line with the fee revenue you're generating. But based on our look, you have enough revenue to cover decision making.

[Senator Randy Brock]: Okay. And when

[Senator Ann Cummings (Chair)]: it comes back with fee bill, three years we will look at that and adjust. Okay. Questions for Chittenden. And the appropriation is not our problem. It's going across the hall. We had this on for later today. What he yep. So if there's any emergency questions. We'll get it now. Okay. Thank you.

[Senator Randy Brock]: So I do have a question. I don't know if it's tentative position to answer it. We can look at the fees in terms of what the fees will raise. But the question is, what will happen to prices? Will this cause an increase in prices to the ultimate customer? What will that do? Has there been any work or studies done on that issue?

[Ted Barnett (Joint Fiscal Office)]: There have not been studies done on that consideration. I will note that the amount of collective so for EC two, for example, the license amount is $250 within the broader scope of a child care center's financing, depending on the size of the center. Right? It's a relatively smaller part of their overall budget, but some centers may decide to pass on those costs to families, but I think per family what they're seeing as part of their tuition would be relatively small given the context in fee amount.

[Senator Randy Brock]: And then any studies done anywhere else in terms of the economics on this system?

[Ted Barnett (Joint Fiscal Office)]: Not to my knowledge. I could do a look and see if

[Senator Randy Brock]: there's anything that comes up,

[Ted Barnett (Joint Fiscal Office)]: but maybe OPR or CDD knows of anything, but I don't

[Kirby (Office of Legislative Counsel)]: know of anything off the top

[Senator Randy Brock]: of my head.

[Senator Christopher Mattos (Clerk)]: I just had sorry, Ted. One for Lauren. Did you say no other state

[Senator Ruth Hardy]: has a licensure program? So This is

[Senator Christopher Mattos (Clerk)]: what I heard.

[Senator Ann Cummings (Chair)]: What I the way that

[Lauren Hibbert (Deputy Secretary of State)]: that is is, yes, this would be the Vermont would be the first state to do individual licensing. Every state has regulations and requirements of the people who work in childcare. It's a little bit you know, when sometimes we regulate the profession from a completely green space. Like, there's been no government oversight. That is not this profession. This profession has to have a lot of government oversight and requirements and and hurdles or or obligations depending on your perspective. That's so it's not I I will say we're the first to have individual licensing because that's true, but there have been requirements on individuals in every state for the duration.

[Senator Randy Brock]: Well, we've certainly seen that last time that we dealt with this subject, we've dealt with several years ago when the first kinds of regulation were applying to childcare. And I know there were a variety of studies that I saw, some of which said in other places, have been great results. Other places said there haven't been any results at all. In any case, the performance of kids associating these programs have in fact declined. I'm just curious as to, is there, you know, what is a study in the quote education industry or people looking at education industry actually shown us?

[Senator Ann Cummings (Chair)]: I think you are about to get a whole lot of information and you'd like to give certain people your email. There is a lot. And I think we started many years ago with the STARS program and started having requirements that people get education. What we didn't do is make any provision that when you've got education, you've got paid more. And so Like free person. Since then, we have put in the state payroll tax that has generated money that subsidizes so that because before, in order to cover costs, centers had to charge an amount that most families couldn't pay. And so we have we made the New York Times recently, and we're setting up a payment system that allows centers to be able to charge enough so that they can pay a living wage to their people and at the same time allow parents to afford it. So I saw this as kind of the next logical step as to how you break out those employees and pay levels and what's required. It's been a long process. Twenty years? Yeah.

[Senator Ruth Hardy]: And I think it's safe to say that there are dozens of studies that show the value of high quality early childhood education both in in a whole different realm, A whole many different realms. And this, as Senator Cummings said, is the next step, but there have been regulations on early childhood education for

[Senator Ann Cummings (Chair)]: a very long time. And

[Senator Ruth Hardy]: this isn't this is just the newest part of that. But I would say that early childhood education is potentially the biggest bag for your buck of anything that we might invest money in.

[Senator Randy Brock]: No. That's that's something I

[Senator Ann Cummings (Chair)]: would I would like

[Senator Randy Brock]: to hear. I would like to hear. Because if if education has

[Senator Ruth Hardy]: There was a whole study that we should

[Senator Randy Brock]: be doing.

[Senator Ruth Hardy]: You could.

[Senator Christopher Mattos (Clerk)]: I've looked

[Senator Randy Brock]: at those that were previous, but I haven't seen anything new.

[Senator Ann Cummings (Chair)]: Will get my studies, and I can see people over there.

[Senator Randy Brock]: I can tell that people are waiting to have

[Senator Ann Cummings (Chair)]: to wait. But we are this is one of the easier bills we have to deal with this week. So I'm gonna move us on because our only jurisdiction with dollars has to go across the hall service that I get. Thank you. Three twelve. Okay. Curvy. This is our our business that got an incentive to get a reduction in their income tax only since we've changed the income tax structure, corporate income tax, they don't owe enough to take advantage of the grant that we gave them. And so we sent senator Beck out to see if we could find something because, essentially, now they would get back the money they paid in. It was the original grant. They owe

[Senator Randy Brock]: They get credit.

[Senator Ann Cummings (Chair)]: They owe yeah. They get credit. This but because they don't pay anything in, if they get a refundable credit, that's gonna come out of the state revenues.

[Senator Scott Beck]: Comes out as a corporate income statement.

[Senator Ann Cummings (Chair)]: Yeah. Yeah. But that's going into the general fund. So the question was, is there anything we can do?

[Senator Scott Beck]: Yeah. That the question or the problem is just, okay, we get something for the benefits of the economy and state to just give it out and say, you know, make them do more than just make it a simple refundable credit and instead tie some economic and or point of the rules to that credit.

[Senator Ann Cummings (Chair)]: Okay. Because we did have testimony. They provide several 100, more than that good paying job.

[Senator Scott Beck]: Yeah. There's actually a visit on this last during town meeting week with the governor Rogers. But, yeah, I think they're they're up to 370 employees. They're growing they're growing very fast.

[Senator Thomas Chittenden (Vice Chair)]: Yeah.

[Senator Ann Cummings (Chair)]: And they were the beneficiary. The original motivation of doing this was an international competition which would either secure them to that location for foreseeable future or probably see them grabbing, you know, going down or making

[Senator Scott Beck]: it They had a decision to make, it's to invest in a new round of technology and hold on to the plant for thirty, forty years or get out of here. So

[Senator Ann Cummings (Chair)]: we've got the new technology, they're here. We have the benefited job, but we also rewrote the corporate tax structure because they do some kind of boards that apparently they don't sell a lot of into Vermont and our corporate income tax is based on sales in Vermont. So but they do provide jobs and property taxes and their employees all pay taxes and buy things. So

[Senator Ruth Hardy]: we are here. What is this amendment to? This is three twelve. No. I know. I'm just trying to

[Senator Ann Cummings (Chair)]: The straight call. Is Kirby gonna walk through? Yeah. Oh, yes. I'm not gonna ask you about yourself. We haven't seen it.

[Kirby (Office of Legislative Counsel)]: Okay, with that, I'll take it as my cue to walk you through the changes. So we have a strike all amendment to S-three 12. As Senator Beck was mentioning, it adds some additional requirements to the refundable aspect of this credit. One other change here is, you know, is that

[Patrick Kremen (Education Law Center)]: the

[Kirby (Office of Legislative Counsel)]: sunset currently it's in 2017. The original version of S three twelve had extended that sunset to 2034. This amendment further exempts it to 2037. So that's that is one change in this amendment from the Addison to News first three twelve. And the other substantive change is what we're just talking about. So there's this new subdivision which makes the credit refundable in some situations up to $500,000 in excess credit amount. We have previously talked about how there's existing carry forwards that could be used for this as well. But you see subject to requirements subdivision E3. So E3 is new and we'll look at that. As a refresher, S-three 12 originally had struck out one of the provisions within the limitations that it was the provision that prevented this credit from reducing the taxpayers tax liability below zero so it couldn't be refundable. So that's gone. Still no change there from three twelve. But the new stuff. So we have

[Senator Thomas Chittenden (Vice Chair)]: this new subdivision that says a

[Kirby (Office of Legislative Counsel)]: refund election made under the subdivision we were just looking at shall be subject to the following limitations. A, if the taxpayer in which the refund is requested, if in the taxable year, the qualified taxpayer is in an approved and active Veggie program award period. In addition to the refund limitations under E-2B, which is mostly that 500,000 per year limitation, The refund amount shall be further limited to 25,000 per full time equivalent position created in the taxable year that exceeds the taxpayers target for new qualified employees in that taxable year. So under the VEGI program there's different

[Annie McLennan (Office of Legislative Counsel)]: are under the

[Senator Ann Cummings (Chair)]: VEGI program now?

[Kirby (Office of Legislative Counsel)]: Yes, I understand it.

[Senator Ann Cummings (Chair)]: Okay.

[Senator Scott Beck]: It's not tied to what they did back in 2012.

[Senator Ann Cummings (Chair)]: Okay, it's a new

[Senator Scott Beck]: It's a new just did another expansion.

[Senator Ann Cummings (Chair)]: Okay.

[Senator Thomas Chittenden (Vice Chair)]: Yeah.

[Kirby (Office of Legislative Counsel)]: So under Veggie there's yearly targets that those businesses have to meet for their Veggie incentives. One of the targets is positions created. This is saying that there's a further limitation that you can receive the credit for $25,000 per position created, but it has to go above and beyond your Veggie target for the hearing.

[Senator Ann Cummings (Chair)]: That's what So if Veggie says that you're getting credit for a 100 employees, you would have to get credit for a 101 in

[Kirby (Office of Legislative Counsel)]: It order to would be like a veggie says, say you're in a five year period.

[Senator Ann Cummings (Chair)]: Yeah.

[Kirby (Office of Legislative Counsel)]: And in the current year they're saying you need to create 12 new positions to get your veggie incentive. So what this language is saying is to get this refundable credit, you'll get 25,000 for each position you create that's above and beyond that 12.

[Senator Randy Brock]: Right, so you'd

[Senator Ann Cummings (Chair)]: get 25 per, so if you did 14, you'd get 50,000.

[Kirby (Office of Legislative Counsel)]: Yeah, as long as you have that much Is there a

[Senator Ann Cummings (Chair)]: cap on it?

[Senator Thomas Chittenden (Vice Chair)]: The cap is 500,000. In one year.

[Senator Ann Cummings (Chair)]: One year. So it

[Kirby (Office of Legislative Counsel)]: was at 20, you'd go 20 positions above and beyond Veggie and and get $25,000

[Senator Ruth Hardy]: And this would go until 2037? Yes. So they could they could get it every year until for until 02/1937, dollars 25,000 for every position they quote unquote agree.

[Kirby (Office of Legislative Counsel)]: Beyond Veggie till 2037.

[Senator Scott Beck]: They they only have the probability. They have

[Senator Thomas Chittenden (Vice Chair)]: a they have a defined credit. It's not an undermaid credit.

[Annie McLennan (Office of Legislative Counsel)]: We're good at this. The defined credit? Is it 500,000

[Senator Ruth Hardy]: or is it?

[Senator Scott Beck]: No, I think it's total at 63.1.

[Senator Thomas Chittenden (Vice Chair)]: Nobody else.

[Senator Ruth Hardy]: So this is above and beyond the veggie incentives that they already get. Yes. And this would be only for this company. There are other companies that are in veggie wouldn't get the same treatment.

[Kirby (Office of Legislative Counsel)]: There's, the statute has criteria that you know to be eligible for this credit you have to apply and go through BEPSI and you have to meet all the criteria. The criteria are very limited.

[Senator Ann Cummings (Chair)]: It

[Kirby (Office of Legislative Counsel)]: has to be a business that was existing on 01/01/2010 with no fewer than 200 full time employees. It has to be a c corp, and it has to be located in a rural economic area of partnership.

[Senator Ruth Hardy]: To be invention.

[Kirby (Office of Legislative Counsel)]: To give this credit. To get

[Ted Barnett (Joint Fiscal Office)]: to be eligible for this credit.

[Kirby (Office of Legislative Counsel)]: So to apply for BEPC and be part of this.

[Senator Ruth Hardy]: Okay. That's what so they did that. They got into this program, but the reason they haven't been able to claim the credit is because we did major corporate tax reform and they're they don't have a tax liability. So we already gave them a benefit. We we changed the corporate tax structure so they don't owe anything. So this is just giving them something above and beyond that other companies don't qualify for. And it's just I'm not gonna ask you this, Curti. It's but this is just a carve out for one company to get a big chunk of money from the state.

[Senator Ann Cummings (Chair)]: That's like and we've done this for another large company. It's done things where there's a definition that only one large company might meet certain furniture manufacturing. I'm wondering if that company might meet these definitions. We've done several things for Ethan Allen.

[Senator Ruth Hardy]: Oh, well. That works. Because we've

[Senator Ann Cummings (Chair)]: done you know, it doesn't it it's it's the definition of where they're located and their size that pretty much limits it to one company, which is what this does. Right. Which is there might be one more that fits in.

[Senator Scott Beck]: I know. Know, trying to give them a way to unlock their credit that is benefits the state, too.

[Senator Ann Cummings (Chair)]: Right now we don't

[Senator Ruth Hardy]: have enough general fund to pay for people to get food and health care. Why are we giving a corporate tax credit to a corporation that already benefited through us changing the corporate tax code forty years ago? That's why they can't get the credit. They don't owe corporate taxes because we changed it, so they don't hold corporate taxes. We gave them a benefit two years ago. That was the or four years ago. That was the whole point. I mean, you and I were sitting here while we did that, and that

[Senator Ann Cummings (Chair)]: was the whole point. Wasn't talk about what that bill got named. Yeah.

[Senator Ruth Hardy]: That was the tampon tax bill. That I mean, that's what one of the arguments we made was that that, you know, that these are we're gonna change the corporate tax structure so that it's based on not based on property and payroll in the state. It's now based on revenue that they Out

[Annie McLennan (Office of Legislative Counsel)]: of state. And so,

[Senator Ruth Hardy]: we've already given them a benefit. They didn't qualify for this tax credit because they got a benefit, and this is not the time to be giving out corporate handouts. Okay.

[Kirby (Office of Legislative Counsel)]: Do you want me to zoom in

[Senator Ann Cummings (Chair)]: a go up your I've I've got it. Alright. Okay.

[Kirby (Office of Legislative Counsel)]: It's all good. We

[Senator Ann Cummings (Chair)]: we are going to have to hear from veggie at least. Pepsi. Yeah. Pepsi. Pepsi.

[Kirby (Office of Legislative Counsel)]: I haven't been in a clock like this, I've seen.

[Senator Ann Cummings (Chair)]: Yes. So we will hear from them, and I don't know if we'll get this out or not. I'm getting notes that our next people are on Zoom, and we're only five minutes behind them. This is this is crap. Minutes is nothing. Five minutes is nothing. Wait till we get five hours behind. Okay. Do we have questions for curfew about how

[Kirby (Office of Legislative Counsel)]: Do you want me to open the rest to That would be good, let's

[Senator Ann Cummings (Chair)]: go through the rest.

[Kirby (Office of Legislative Counsel)]: It's not a whole lot. There's this big B subdivision which is for businesses that are not in Veggie. It's simply 25,000 for full time equivalents that you created. There's a provision saying that no double dipping either way. We already covered where

[Senator Thomas Chittenden (Vice Chair)]: it says

[Kirby (Office of Legislative Counsel)]: these have to go above and beyond to get the credit and if you did claim the credit for a position you created, sub C says you can't count that for extension. And then D says basically the Commissioner of Taxes can reach out to VEPSI and ask for verification of any of this stuff, and the application runs through VEPSI. Question though is, I presume that VEPSI would be able to verify all of this, but, you know, probably okay to engineer from them. Yep. But that is the idea. The VEPSI will be doing the verification.

[Senator Randy Brock]: I've got a question regarding the full time equivalent employees maintained after this particular year in which the benefit, is there any requirement that that position be kept filled?

[Kirby (Office of Legislative Counsel)]: Not at all. Just that the positions were created above and beyond. Veggie if it's something. Veggie.

[Senator Randy Brock]: Let's say, could an employee gain the system by creating a position on December 30, get credit for that year and then the position goes away or it's not filled the following year or it's filled again the following year on December 30?

[Kirby (Office of Legislative Counsel)]: That's probably best for BEPC because they'll be verified with these things and it'll be up to them to police that kind of thing.

[Senator Randy Brock]: Well, guess the question is in terms of what we're expectation is for verification though. Yeah. We can ask them, but I would prefer to ask someone independent that questions. What we can find if you could find

[Senator Ann Cummings (Chair)]: who you'd like to hear from.

[Kirby (Office of Legislative Counsel)]: So

[Senator Ann Cummings (Chair)]: we'll have the tax department and Pepsi come in, it looks like Friday.

[Senator Randy Brock]: Or Pepsi in terms of what they, their intent is in doing this because otherwise it looked like that's the potential for a large loophole.

[Senator Scott Beck]: I mean, if there is a loop, I mean, this is not a unique way of counting. This is the same way they count for all veggie programs.

[Senator Randy Brock]: So, the loop ball is. That's what worries me.

[Senator Scott Beck]: It's across the, it's across the whole board. I know. In the context of this bill. But under Pepsi can speak for a Okay.

[Senator Ann Cummings (Chair)]: They still haven't canceled chairs meeting. I know. 30. Email at the Pro Temp's office as well. This is not a good week to be calling us out. Okay. So we will get those on. Anybody has anybody else you want us to hear from? We'll let me know, let Charlotte know, and we'll get them on. And hopefully we can move some more things around. Okay, you're next, right?

[Senator Randy Brock]: Well

[Senator Ann Cummings (Chair)]: Well, no, Emily Simmons is next.

[Kirby (Office of Legislative Counsel)]: Yeah, so about that though, S-one 161 is the U. Scholarship granting organization's bill sponsored by center vongards. I've already walked through it.

[Senator Ann Cummings (Chair)]: I don't know if you

[Kirby (Office of Legislative Counsel)]: need anything from me today. It seems like you have a lot of testimony.

[Senator Ann Cummings (Chair)]: We may have questions if you have.

[Kirby (Office of Legislative Counsel)]: Yeah. Yeah. No. I plan I plan to hang out and be helpful, but I don't think I have anything to go through.

[Greg Hughes (Friends of Vermont Public Education)]: So

[Senator Thomas Chittenden (Vice Chair)]: on the floor, I'm holding out to ask questions I know the answers to. I've already asked this question to Kirby, and I would like to

[Senator Ann Cummings (Chair)]: Well, if we don't know the answer to it, it would be helpful.

[Kirby (Office of Legislative Counsel)]: Kirby, I

[Senator Thomas Chittenden (Vice Chair)]: asked you this via email, and I just think it's really important because it's it's shined the light on this topic. My understanding, only if this is incorrect, that if we do nothing on this, we don't pass anything that in 2027, when this is new federal tax code because of HR one, Vermonters. So you, me, can still write a check for $1,700 to any other state that has a receiving school or eligible program approved by their governor Mhmm. And get that tax credit on their federal tax form. Yes. And so if we do nothing, we are we just this If you only

[Kirby (Office of Legislative Counsel)]: if you do nothing, then the governor

[Senator Thomas Chittenden (Vice Chair)]: could choose to participate. We don't even need that. The governor can just accuse that. The governor Yep. Okay.

[Kirby (Office of Legislative Counsel)]: I'm not saying if you do nothing, like, look what you're saying looks two different things. Even if you do do something, you can do the first thing you said, but or a taxpayer can. A taxpayer could it I'm gonna I'm from Tennessee. I'm not gonna assume Tennessee is gonna go along with this, and they could they could make a donation to an SGO in Tennessee and get that federal credit,

[Senator Thomas Chittenden (Vice Chair)]: that Vermont because we have no control over the federal tax law, and so Vermonters take advantage of this.

[Kirby (Office of Legislative Counsel)]: Vermonters can take advantage of it.

[Senator Thomas Chittenden (Vice Chair)]: And absent action by us, we're just excluding Vermont opportunity.

[Kirby (Office of Legislative Counsel)]: But absent action, because I don't know that nuance logs, that federal law is written in a way where the governor or whatever other entity is responsible can choose, can create a list of SGOs in the state to be recognized to participate. So if you do nothing, Vermont, it's up to the governor whether Vermont participates.

[Senator Ann Cummings (Chair)]: But if we do something, then

[Kirby (Office of Legislative Counsel)]: If you do something to limit the governor's ability or to try to narrow the scope of it, then the governor would have to follow it. Could also create a Vermont entity that has that authority over the governor because you're the lawmakers.

[Senator Thomas Chittenden (Vice Chair)]: To close out my point, if I may, so I definitely support taking this on because I don't want Vermont to be left out of the coal and to exclude those tax benefits that people will be able to take advantage from Vermont programs. So I think this is well worth the debate to understand it

[Senator Randy Brock]: and that's why I support it.

[Senator Ann Cummings (Chair)]: I think that's what Senator Bodyguard has said is that Vermont you know, it's the set off of programs or system that we would like to see those tax credits go to. And we what this bill proposes is low income education, after school, summer recreation things, but that's just our first walk.

[Senator Ruth Hardy]: So Kirby, my understanding is that the federal law the federal regs regulations for this program are not finalized yet. Yes. And that a lot of what the details about what is going to be allowed by the federal government is in will will be in those regulations. And that it's entirely possible, even probable, that the federal government is gonna define it in such a way that it would it would overrule whatever that state law happens anyway. And so that if we want to control it in a way that makes does what we collectively wanna do, it may be you don't have to answer this part. But because there is no the regs aren't out there, it may be more prudent to wait until they are out there and then we'll know how to define it.

[Kirby (Office of Legislative Counsel)]: I think, I mean, I think it is I can't speak to it because as far as legal advice for the general assembly, The more I've been trying to monitor this and the more I see the lobbying pressures from the IRS right now and developing those treasury regulations, the more I'm becoming concerned that it's possible that the IRS regulations will include some provisions that limit what things can do in tailoring the program. I think that that is possible. Going even beyond that, at the federal level, you know, the US Supreme Court has actually done a lot to stop agencies' authority. You know, the Chevron deference, if you're familiar with that, was overturned. So could someone challenge if IRS does do that we're actually way out into the future. If IRS does do that and say, well, we're gonna limit what states can do, maybe an organization comes along and challenge that and says there's nothing in the statutes that you can't believe medical states can do. And so then maybe, you know, years from now, these regulations could be partially overturned or something. So there's a lot of them is is what I'm trying to say. And so Senator Hardy was correct that without knowing what these IRS regulations say, there's unknowns that you're operating But if we do nothing? If you do nothing, then the governor will be able to participate. If you want to do something and want to safest as far as what the IRS might do, it would be to say to create a law saying Vermont will not participate. It's very clear in statute that this is voluntary.

[Senator Ann Cummings (Chair)]: Okay, so we can say Vermont will not participate, which just means that no private I assume you can't you

[Kirby (Office of Legislative Counsel)]: If there's no Vermont SGOs, but it but but as senator Chittenden was saying before, Vermont would still be able to donate to SGOs in other states that

[Senator Ann Cummings (Chair)]: are No Vermont state would do it, and no no organization in Vermont would benefit from these donations. We Vermont taxpayers could still benefit, but the money would have to go to a participating state. If we do something similar to this bill which says this is how we if this is what we decide, this is what we want to have had. And then the IRS comes in and says, Nope, it's gotta go to an accredited school, then our bill would be moved, right? It would be over

[Senator Thomas Chittenden (Vice Chair)]: Federally preempted?

[Senator Ann Cummings (Chair)]: It would be federally preempted, it wouldn't go anywhere.

[Kirby (Office of Legislative Counsel)]: Like, if you take S-one 161 as it's introduced, which says that Vermont will participate, but then puts additional limits on what that participation means, you could end up in a scenario where the IRS says you can't make those limitations. You still have a law in the books that Vermont will participate, So it's not going to automatically change it so that Vermont's not participating. It just means that you can't add those additional.

[Senator Ann Cummings (Chair)]: You can't

[Kirby (Office of Legislative Counsel)]: add those. If you try to enforce it, it'd be a matter of it's basically unenforceable. You still have a law on the books but under federal law being enforced.

[Senator Ann Cummings (Chair)]: So that would open up the possibility that private schools in Vermont could receive donations. Private schools in Vermont, if we don't participate, could not receive donations from out of state.

[Kirby (Office of Legislative Counsel)]: Be specific though, these scholarships are directly to students, not to the schools. But it would be to students attending these But

[Senator Ruth Hardy]: they're not direct, they're to what is an s g o or something like that. So there's a scholarship granting organization that gets created, and that has to meet certain requirements.

[Lauren Hibbert (Deputy Secretary of State)]: And then the governor has to

[Senator Ruth Hardy]: say, okay, or whoever. We're going to give these scholarship granting organizations the money and then they give them to the kids. Ultimately it's up to them to give them to another.

[Kirby (Office of Legislative Counsel)]: To be extra clear, let me run through like the quick version of the framework. The governor will be responsible for identifying the legitimate SGOs that meet the requirements in the state. Those would be the ones where a donor giving to those specific organizations will be able to claim the credit. Those organizations under federal law can have a bunch of requirements that they have to meet. So they'll have to operate a certain way. That's why these SGOs probably do not, almost certainly do not exist now because of all those different requirements. What kind of organization exists that already meets that, right? So they be in uniforms then. Those SGOs would give scholarships to individual students and then those scholarships could be for a particular purpose such as attending a certain school or for school uniforms or whatever. So and there's limitations on how that works, but it goes donations to organization, organization gives scholarships to students, students go to school districts. There's no money going directly to the school because it's, you know, through that. System.

[Senator Ruth Hardy]: Right, but if we say we're going to participate and we put guidelines or requirements in there and that IRS comes back and says no, states can't do it, only we can. We're on the books saying we are participating, but then the IRS will define how it works, and we've lost control over creating those guidelines. And they may put some guidelines on saying, you know, only a specific type of school and it might be a type that we wouldn't want to get those. I don't know. I'm it it it is there's not unless we say no, we're not going to participate until we see those rules, we don't have the kind of control over the program that we might want to have.

[Senator Thomas Chittenden (Vice Chair)]: Even in that scenario, Vermonters will still be able to get this tax credit by sending the money to other states.

[Senator Ruth Hardy]: People who can afford a $1,600 donation to an organization would still be able to get a tax credit by giving it to another state. But Yeah. But we wouldn't we if if we don't control in the state who gets the money, we could be undermining our education system in a way that we don't want to, certainly that I don't want to. That

[Annie McLennan (Office of Legislative Counsel)]: that some of us may not

[Senator Ruth Hardy]: want to and would have lost control over being able to do anything about it.

[Senator Ann Cummings (Chair)]: We are now about twenty minutes behind, and we are into committee discussion. And before we discuss, we're going to hear from our witnesses. And Emily Simmons, who's been sitting on Zoom patiently. So, Emily, you've heard the discussion so far. Have you got any enlightenment for us?

[Emily Simmons (General Counsel, Agency of Education)]: Emily Simmons, General Counsel, Agency of Education. You know, as an attorney, I love a hot bench, so I'm so tickled to hear that the conversation has warmed up before I'm joining in. I don't know that I have a lot to add that you haven't parsed out with ledge counsel just now about the facts of the situation as we find them. I think what I owe you is the agency's point of view on the situation. And as I testified in the education committee, what the AOE really appreciates about this bill is the focus on economically disadvantaged students and the use of these funds for expanded learning opportunities such as after school summer learning and additional tutoring. So we really see value in that. From our perspective, it is difficult to imagine dollars on the table for students for those purposes and leaving them there, Realizing that there are external issues that are uncomfortably outside of our control, totally get that you have a weighty policy decision to make, and we are further hamstrung by not having the details of those final regulations and somewhat by timing of the program starting. So that's what I can offer to you, and of course I'd love to answer any questions you have about that.

[Senator Ann Cummings (Chair)]: Okay. Can we back out of the program at any time? And you if we go in, can we change our mind next January?

[Emily Simmons (General Counsel, Agency of Education)]: Seems so. It seems that by default, the governor would have the authority to opt in and the same authority to later opt out.

[Senator Ann Cummings (Chair)]: How about the legislature?

[Emily Simmons (General Counsel, Agency of Education)]: I think that would be a result of any legislation that you would pass to amend to the governor's default authority.

[Senator Ann Cummings (Chair)]: Okay. So

[Senator Thomas Chittenden (Vice Chair)]: on that point, you're understanding this, is it consistent that if we go forward and pass this into law with some specific restrictions and that's in place, and then the IRS does some things, and whoever the governor is at that time wants to opt out, would our legislative action prevent the governor at that time from being able to, in fact, opt out? I know we could probably have Kirby draft some really cool language that would allow that governor to opt out, but understanding that just by default, they would they would have the authority to opt out regardless of what this legislative body does.

[Emily Simmons (General Counsel, Agency of Education)]: Can I double check the lead in language because I'm remembering a May?

[Senator Thomas Chittenden (Vice Chair)]: He or she.

[Emily Simmons (General Counsel, Agency of Education)]: So this particular bill says that the governor designee may elect to list, which is the stand in for opt out. So I I think no. I think this bill would not prevent the governor from refusing to provide a list of organizations.

[Senator Thomas Chittenden (Vice Chair)]: And similarly, the legislature to the chair's point could just as easily go through at that time and say we're we're opting out and that the governor he or she would have to of course prove and sign that law or we have to override their.

[Senator Ann Cummings (Chair)]: We would get one year of donations. Right. To private schools. Alright.

[Senator Thomas Chittenden (Vice Chair)]: It's not just private schools too.

[Ted Barnett (Joint Fiscal Office)]: This goes to the end. I don't think

[Greg Hughes (Friends of Vermont Public Education)]: it is just a private.

[Senator Ann Cummings (Chair)]: No. It can go to public schools.

[Senator Scott Beck]: Not just school from there.

[Senator Ann Cummings (Chair)]: Okay. So they can go to public.

[Senator Scott Beck]: One sixty one is dropped and it's only public schools are approved in the past, I think, as we're at that's introduced.

[Senator Ruth Hardy]: But Okay. Yeah. But for for public schools, people don't pay tuition. So it was I mean, I think

[Senator Scott Beck]: it's limited to after school and summer program, which pay.

[Senator Randy Brock]: Oh, yeah. Not tuition for. Okay. Yeah.

[Senator Ann Cummings (Chair)]: You would pay for it.

[Senator Randy Brock]: Yeah. In some cases,

[Senator Ann Cummings (Chair)]: in some cases, not all. Well, you might find more schools what you pay for if there was scholarships.

[Senator Ruth Hardy]: Emily, do you have any questions?

[Emily Simmons (General Counsel, Agency of Education)]: I think I clarified just now that there was crosstalk. Yes, many school districts do accept private pay tuition students, and actually I'm hearing more and more about that. That's not even what I would characterize as uncommon anymore for a non resident student to be admitted to a public school district for tuition payment.

[Senator Ann Cummings (Chair)]: Yes, we had a lot of discussion about school tuition payments a week ago. So it does That's a good point. Yeah. Especially schools near employment centers. Average. And after school programs.

[Senator Thomas Chittenden (Vice Chair)]: After school programs are necessary these days. I mean I have kids every day after school. It's $2,000.

[Senator Ann Cummings (Chair)]: And that can be expensive.

[Senator Ruth Hardy]: Actually, this question for Kirby. Is that okay? Yeah. There's a house bill on this topic too and are you you must be the drafting attorney for that as well. There's What is the approach?

[Kirby (Office of Legislative Counsel)]: So, Kirby, he wants to do counsel. There there is language in the miscellaneous tax bill on the house right now, that is drafted to preclude for a model to participate.

[Senator Ruth Hardy]: It's in the miscellaneous tax bill?

[Kirby (Office of Legislative Counsel)]: So the miscellaneous tax bill at the moment.

[Senator Ann Cummings (Chair)]: Apparently, everybody has learned to decorate.

[Kirby (Office of Legislative Counsel)]: Still still in committee,

[Ted Barnett (Joint Fiscal Office)]: the miscellaneous tax bill is pretty sizable at

[Kirby (Office of Legislative Counsel)]: the moment. There's most good news.

[Senator Ruth Hardy]: Hang on, we're gonna have a fun.

[Senator Ann Cummings (Chair)]: We are going to decorate lunch for

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

[Senator Ann Cummings (Chair)]: know there is a lot coming over on miscellaneous tax.

[Kirby (Office of Legislative Counsel)]: A lot of that's conforming change, by the way.

[Senator Randy Brock]: Don't want you to freak out my nose.

[Senator Ann Cummings (Chair)]: Boring. Come on. Some of it. Yeah. This I'm not sure which pill it's coming on, but a lot of flushing out of things that were in '73 that we didn't have time to flush out last year. So we've got some interesting bills coming over. The nice thing about taxes, it's a very broad subject, which makes it germane to do a large variety of things.

[Senator Thomas Chittenden (Vice Chair)]: So I just want to say, when I raised this awareness from the conversation with Kirby pre town meeting week break, advocates caught me and they questioned the accuracy of these statements. So I stand by what Kirby has said in my understanding of this, is that Vermont state tax code can't impact the federal ability to take this credit. So that's just what I wanna make clear. If anybody's watching this on YouTube and wants to contradict that impression, but that to me motivates me to continue this conversation because I don't wanna just shoot ourselves with what we can't only go to out of state opportunities.

[Senator Ann Cummings (Chair)]: You can't say you can't.

[Senator Ruth Hardy]: And they still could. I mean, contractor can still give regardless of what we do. So it's not like we're saying to our taxpayers they can't, The people who ask $1,600 to get to an organization, but still do it either way. It's just a question of how does it impact our educational system. There could be unintended consequences if the federal regulations are not

[Senator Thomas Chittenden (Vice Chair)]: I'm spending a lot of money every day for after school programs and I would hate to look at my constituents and say you can't give that $1,700 for your kid but you can for somebody in Tennessee.

[Senator Ruth Hardy]: But they might not be able to anyway even though we act that rates that might come up with, and if there's an SGO that's We

[Senator Ann Cummings (Chair)]: are getting into committee discussions, but try and get us through the witnesses first, then we can argue. Secretary Chittenden has joined us. Martine, you're muted. We've got you muted. Thank

[Senator Martine Larocque Gulick]: you. There's someone else I think who wants to testify from the Education Law Center. Can we hear from him as well?

[Senator Ann Cummings (Chair)]: We can hear from anyone.

[Senator Ruth Hardy]: He's the agenda.

[Senator Ann Cummings (Chair)]: Oh, he's last on the agenda. Okay. Okay? He is on. He just popped on the screen. Okay? Did you have something you wanted to contribute or question at least?

[Senator Martine Larocque Gulick]: I do, but maybe I'll wait till after

[Senator Ann Cummings (Chair)]: the loss of the time.

[Jennifer Polin (Director, Office of Professional Regulation)]: Thank you. Okay.

[Senator Ann Cummings (Chair)]: Yeah. I've got two I might bone out. Okay. I'm gonna move us down. Got Ken and Greg Hughes, friends of Vermont Public Education. Lana, I'm just gonna ask you, yeah, come

[Ken (Friends of Vermont Public Education)]: up together so you know. And

[Senator Ann Cummings (Chair)]: it's a familiar figure that you visit while the Commission of the Future Trust and Education is. So Thank you, madam. Better Finance. Sorry.

[Ken (Friends of Vermont Public Education)]: Thank you. I agree with you and senator Hardy that five minutes is nothing in a situation like this. Oh, yeah. Good afternoon, everybody. I'm Ken from Wallingford. This is my friend, Greg Hughes from Bethel. We are both on the board of Friends of Vermont Public Education, and you can learn more about our personal backgrounds at savebtpubliced.org. But for now, let it suffice to say we were both longtime school board members. We appreciate the opportunity to share some thoughts with you today. Let me begin by clarifying that we are not against private or independent schools, as you may have heard once in a while from people who are familiar with our mission. In fact, I learned just before coming here today that has invited us down to speak to some sort of government civics class that they hold there, and I'm looking forward to doing that later this week. But, anyways, we appreciate the important role that private independence has played in the educational landscape of Vermont, not only historically, some for nearly two hundred years like Per and Burton, but also carrying forward to present day, providing quality education opportunities for students in areas that don't have a public school. But we currently support two distinct education systems, and the playing field this is Friend's position. The playing field must be leveled before we can really have any productive conversations about transforming education. And we see this federal voucher program as moving in the wrong direction, tilting that field even further away from supporting our public education system. And Greg's gonna explain what we we see there, why we say that. Good afternoon, Madam Chair, members of the committee. As Kent said, my

[Greg Hughes (Friends of Vermont Public Education)]: name is Greg Hughes. I live in Bethel, where I was a Long County School Board member, and I'm also a friend of Vermont Public Education. This afternoon, I would like to review the background of S-one 161 and scholarship granting organizations, identify concerns we have with the federal voucher program, and make some recommendations regarding S-one 161. Part of the One Week Beautiful bill that passed Congress last summer was the Education Choice for Children Act, which establishes a federal tax credit program designed to incentivize donations to scholarship branding organizations or simply SGOs. Under this framework, individuals receive a dollar for dollar federal tax credit for contributions to SGOs, which after retaining a 10% administrative fee, distribute the funds to families as school vouchers. Proponents argue that opting into this federal program provides free money for education without depleting state or local budgets. However, closer look at fiscal and social analysis suggests that until federal IRS guidelines are issued, participation in this program may not be in the best interest of Vermont students and could result in hidden costs to the taxpayers. I'd like to review a few of the concerns we have regarding program implementation, and the first one is, where is the benefit for public schools? S-one61 does not offer any incremental benefits for public school students. S-one 161 is intended to provide, quote, educational opportunities to economically underprivileged students through after school, summer tutoring, and similar programs. When I showed this to the superintendent of the White River Valley Supervisory Union, he confirmed that S-one 161 offers nothing new to students in the White River Valley Supervisory Union. We are already doing this. There is also the lack of IRS guidelines. The US Treasury Department has already sought public comment and are scheduled to issue proposed regulations and guidance in 2026. Final regulations will be issued in the 2026. The extent to which states can regulate this program will depend on these federal regulations. Until these regulations are released, it is not possible to determine what constraints may be placed on the states. There's also the issue about fiscal impact and revenue losses. The premise that these vouchers constitute free money is economically flawed. By offering dollar for dollar tax credits, the federal government deliberately reduced its tax revenue. These are funds that would otherwise support public infrastructure, including Title I school funding, healthcare, and social safety nets. There's also the total cost of the federal voucher program. Estimates for the cost of the federal voucher program vary significantly due to the lack of a budgetary ceiling and uncertainty regarding how many taxpayers will claim the tax credits. While the Joint Committee on Taxation projects a ten year cost of $26,000,000,000 or $2,600,000,000 per year, the Institute on Taxation and Economic Policy warns the annual cost could reach $51,000,000,000 if backers successfully mobilized large numbers of contributors. At this higher estimate, the program would dwarf the government's two largest current K-twelve investments. Title I grants are about $18,000,000,000 and special ed grants are about $15,000,000,000 There's also the status of civil rights protections. Will the IRS affirm that these scholarships are federal dollars and that non discrimination requirements apply to any entity that receives them? Schools that take these scholarship dollars should be required to comply with all federal non discrimination laws. In Vermont, you must ensure that students of color, students with disabilities, and LGBTQ plus students will continue to be protected. There's a lack of educational accountability. Unlike public schools, the federal program lacks mandates for curriculum, standardized testing, or teacher certification. Without these quality benchmarks, taxpayers may be diverted to institutions that are not held accountable for student outcomes or academic proficiency. There's also the issue of economic inequity. The program's eligibility thresholds, for example, in Vermont, a family of four that has family income up to $389,400 would be eligible for these scholarships. This suggests that these vouchers will subsidize tuition for wealthy families rather than expanding access for the underserved. There is also risk of federal grant funding. Current federal budget priorities suggest a shift away from direct K-twelve public education funding in favor of private tax credits. This transition threatens the stability of essential government programs such as special ed, Pell Grants, and Medicaid upon which the most vulnerable students in Vermont rely. In conclusion, we see significant regulatory questions remaining regarding our state's sovereignty and oversight. It is currently unclear whether the Internal Revenue Service will grant states the authority to regulate SGOs, mandate inclusive admission policies, or prioritize low income advocates. Until there is a clear legal determination that Vermont can enforce its own standards of equity and accountability within this program, the states should decline participation. Yes?

[Ken (Friends of Vermont Public Education)]: Thank you, Greg. Which brings us to what we see as a major problem, even considering opting into this program, that there are so many unknowns. Further, it's clear in the language of 161, it mirrors the language at the federal level, that it would confer even more unilateral authority to the governor over education policy than is already in place here in Vermont. And please be clear, I will not refer to Phil Scott with that concern, but rather to the system that allows the education shift to be steered by political winds, which can vary widely from administration to administration. Please consider this hypothetical, but entirely possible scenario. Phil Scott either decides not to run for a sixth term or decides who does not prevail in November. In either case, taking this hypothetical one step further, what if his successor retains Zoe Saunders as secretary of education but has a considerably different view on how we can best ensure a free and appropriate education for all students in Vermont than Governor Scott's viewpoint. This would mean Secretary Saunders would have to either opt to redirect her passions for student achievement into a different direction from what she is currently advocating, as is required of her due to current statutes, or resign because she doesn't agree with the philosophies of her new direct supervisor. And I would be remiss not to point out that this is exactly what happened when Mr. Scott was elected governor. Point being, education policy must be left to educators, not politicians. On that, if it pleases committee, I would like to provide just a very brief review of events from the past couple of centuries. Just

[Kirby (Office of Legislative Counsel)]: about

[Ken (Friends of Vermont Public Education)]: a minute mark. That's just a very brief overview. It seems we often overlook that school board members are duly elected officials in their own right and should be respected as such. In the seventeen hundreds, school board members were merely subcommittees of select boards and hence were appointed by, and vacancies were filled by, town leaders. When the former was no longer true, the latter was not corrected in Vermont until 2005, when the authority to fill vacancies on school boards rightly went to school boards. This recognized the fact that voters entrusted these people to oversee education, hiring dedicated career education professionals to apply their depth and breadth of knowledge to drive solid outcomes, and crafting budgets taxpayers can support. Yet some other duly elected officials, select Morristown clerks, members of the administration and others still seem to think that education falls under their purview. I implore the committee to please consider the obvious merits of age 70, age seven seventy, unequivocally opt out of the federal voucher program at this point when we don't even know who we're saying yes to, beyond the fact that there will most assuredly siphon potentially billions of dollars from federal coffers that might support Vermonters and all Americans in other ways. But perhaps more importantly, do not afford the call to opt in or out of the program every year as is required to any one person, but rather to the bodies that were elected to thoughtfully deliberate such huge important matters. Thank you.

[Greg Hughes (Friends of Vermont Public Education)]: Well, based on what we've heard this afternoon, it does appear that Excess 161 is putting the cart before the horse. We are attempting to pass legislation prior to the IRS issuing the relevant guidelines. The prudent thing to do would be to wait and see what the guidelines say and then determine if we wish to opt in. This decision of whether to opt in should be made by the General Assembly. Accordingly, it does appear that the state would be far better off enacting age seven seventy rather than -one hundred 61. Thank you for the opportunity to be heard and we'd be happy to answer any questions that you may have.

[Senator Ann Cummings (Chair)]: Okay, thank you. Thank you,

[Senator Thomas Chittenden (Vice Chair)]: great presentation. White River Junction, this is my concern. If we don't act allowing for these SGOs to be stood up and created over the next year or so because this would be eligible for fiscal year '27, then there will be parents. So the school district, you're absolutely right. They're not gonna see new programs. But those after school programs and those summer programs, parents that have to pay out of pocket of whatever it We provide that, sir. The school district provides. Great. Well, okay. South Burlington. I'll use South Burlington. Alright? So in South Burlington, we don't have they I don't get free after school. I pay for after school programs. Okay? So I don't know about waiver junction, but I'm assuming at 3PM when the kids are done, you gotta and you work full time. You gotta keep an after school. Anybody else have that? Okay. So those programs right now, those parents that are writing that chat, and it's a big check. Okay? They if we don't do anything, they will not be able to write that check to an SGO that supports their schools out program. To get that $1,700 credit off their tax rate, they can send it to Tennessee, but they can't send it to that SCO in Vermont that can then get that money to that Schools Out program, which honestly, they need the money. They certainly do. So that's why I think this is a worthwhile conversation because I don't want in fiscal year twenty seven to not have these entities created for public education, public education programs, wraparound services, and public schools in those summer programs. So I I just feel like we're we're shooting ourselves in the foot. We're missing them both to be able to allow for these dollars to stay in Vermont if

[Greg Hughes (Friends of Vermont Public Education)]: we don't do something. May I respond?

[Senator Ann Cummings (Chair)]: Yes.

[Greg Hughes (Friends of Vermont Public Education)]: I don't know your frown, I'm sorry.

[Senator Ruth Hardy]: We still think

[Ted Barnett (Joint Fiscal Office)]: that's why it

[Greg Hughes (Friends of Vermont Public Education)]: would be better to follow H-seven 70, sir. Because of that, we'll see what the IRS guidelines actually are, and it puts the power in the general assembly, and we support that because we're not saying no to this, we're saying let's see what the IRS guidelines say before we opt into anything, and then give this power to the general assembly to opt in.

[Senator Randy Brock]: And and you bring up a very fine point about not doing anything. Not doing anything is not a good option here because then that just leads it to the Feds to do whatever they want. That's why and appreciate your wanting to have these conversations, sir. It's it's hugely important. But the federal voucher program, we have a bunch of references attached to our written testimony that we sent in Charlotte. And the it's clear there's a lot of evidence that these this federal program was generated from the White House and is geared toward private schools.

[Senator Ann Cummings (Chair)]: Oh, I think we know that.

[Senator Randy Brock]: Yes. Okay. So the point being, if if you pass one sixty one and give the governor authority, I'm not saying anything about the governor, but he sets up SGOs. And then the SGOs have according to the language in the federal bill now, or the part of the big beautiful bill, SGOs can hold 10% of any money they get for advertising and things like that. And then they have the sole authority of what student gets how much money. There is no currently, as Greg points out, there's no control for us. So that's why we favor H seven seventy. Not to be dissing the Senate, but we we like it better to have the general assembly. And also, let's wait and see what the Treasury Department read that as the IRS comes out with for regulations, because senator Baumgart's language about making sure it goes to underprivileged children doesn't have any meaning at this point in time. The Fed's gonna say, No, that's not what we said. Right.

[Senator Ann Cummings (Chair)]: But you understand, there is an age bill coming. We can wait and play with the age bill or we can send out our own bill. Yes. In which case, in both cases, there will be a committee of conference and things will be changed, but we can only do what's in a bill. So there is some benefit to the Senate having thought through its position. I appreciate that. Generally see to the House. And said, oh, Gulick has a question, but she did, her hands down now.

[Senator Martine Larocque Gulick]: I keep putting it up and down. I guess to Senator Chittenden's question, because I think it's a good one.

[Senator Ann Cummings (Chair)]: Yeah, have we got a question for the witnesses and then we'll

[Senator Martine Larocque Gulick]: Yeah, I can wait because mine is like conversation, so I

[Senator Ann Cummings (Chair)]: don't have questions. One more witness and then we're going to have committee discussion. Discussion. Okay. Any questions for the witnesses? Okay. Thank you very much.

[Senator Randy Brock]: Thank you all very much.

[Senator Ann Cummings (Chair)]: See you, Jeremy.

[Senator Thomas Chittenden (Vice Chair)]: And thank you for letting us

[Senator Randy Brock]: for letting us stay for a moment.

[Senator Ann Cummings (Chair)]: Thanks. Okay. I have one last witness that he has been hanging in there since the beginning, which is Patrick Cremen from the Education Law Center. And Patrick, welcome. We just need you to introduce yourself for the record, and then the floor is yours.

[Patrick Kremen (Education Law Center)]: Thank you very much. Good afternoon, everyone. My name is Patrick Kremen. I'm a staff attorney at Education Law Center, which is a nonprofit organization pursuing justice and equity for public school students, in New Jersey and across the nation. I also work on our public funds, public schools campaign, a national campaign to ensure that public funds for education are used to support and strengthen public schools, which are the cornerstone of our democracy. And I'll be pointing to some evidence to provide some context for this federal program from state voucher programs, that have grown throughout the country for the past couple of decades. So it's our contention and that of the great majority of public education supporters, you just heard, that states will not benefit from opting into this federal voucher program as it's clear that voucher programs throughout the state have numerous devastating impacts. The best course of action to protect students, schools, communities, and taxpayers writ large is for states to decline participation at this time in the harmful federal voucher program and concentrate on ensuring their public schools provide the high quality educational opportunities that all students deserve and are guaranteed them by law. So let me start by saying that the program of tax credits for scholarships to SGOs that we're discussing, which was enacted as part of the federal budget bill last year, is in our view, certainly a school voucher program. Indeed, approximately 20 states use this tax credit method to fund existing state voucher programs. And the fact that public schools and public school students theoretically can receive some of the funding does not change the fact that the vast majority of the funding can and almost certainly will go to private education providers. There's a myth around this program that it would not be a burden on taxpayers because this is free money for states, but vast empirical evidence demonstrates that voucher program costs increase over time and the burden on taxpayers rises. A report examining voucher programs in seven states found that from 2008 through 2019, each state dramatically increased expenditures of public funds on vouchers. For example, growth of spending on this program in Georgia over ten years increased by 883%. Florida's now universal voucher program cost almost $4,000,000,000 in 2024, 2025, and created budget crises that set off school closures and mass layoffs in districts across that state. The federal voucher program is predicted to cost the US Treasury many billions of dollars each year with the Institute on Taxation and Economic Policy estimating that it could very well reach over $50,000,000,000 annually. And again, this is not free money, but rather money owed to the federal government that should be supporting the essential public goods that the vast majority of Americans rely on, including public education. As voucher programs cause funding losses for public schools, taxpayers also feel the effects as cuts to their school programs or increased state and local taxes to fill district budget shortfalls or both. In addition, the federal government has indicated that the voucher program will likely require the states themselves to take on the administrative and financial burdens of verifying information about scholarship granting organizations, which can also keep 10% of the contributions themselves. And moreover, the federal voucher program includes no meaningful accountability standards. And like state voucher programs, it'll invite potential waste, fraud, and abuse of public funds and will come at a great cost to public schools, students and families, and taxpayers. Like everyone interested in the future of education in the state and across the country, we're awaiting regulations from the federal government that may flesh out further details about this program. All indications I'm sorry. Oops, sorry.

[Senator Ann Cummings (Chair)]: No, I don't know where that came from.

[Senator Scott Beck]: It was my phone.

[Senator Ann Cummings (Chair)]: No, it was a phone. There's a phone talking to us. I apologize and keep

[Patrick Kremen (Education Law Center)]: No problem. The indication so far from documents issued by the federal government when requesting their initial public comments on the program point to the fact that individual states will likely not be able to tailor the program to ensure meaningful support for public school students or high need subgroups to focus the voucher funds on public education or to safeguard students' rights around this program. So in our view, the recourse for protecting public schools and their students is to choose to not opt into this program. And because so many states have been operating similar voucher programs for years, we know the range of devastating effects on students, public schools and states. There's no reason to think this federal program will be any less harmful. There's a large and mounting body of evidence and research showing that vouchers divert public funds away from the public schools that welcome all students to private entities that do not, in fact, produce better educational outcomes, have very little accountability to the public, and often blatantly discriminate against students and families.

[Senator Ann Cummings (Chair)]: Mr. Kermit, what the bill we're looking at does is not allow money in Vermont to go to private schools. It would set up a system where the vouchers would go for after school programs, summer programs, tutorial programs for lower income, more challenged students. It would not go to schools for regular tuition. Now we're told that the IRS may say we can't do that, and we're told also if we can do nothing, Vermonters can still claim the credit and send the money out of state, and if we opt out, it means no money can be sent into the state. And so we're kind of looking at something that isn't standard, and do you have any knowledge of legal elements that would stop us or cautions? Because we aren't just looking at opting in or opting out. We're looking at opting in with some very specific guidelines, which is not a voucher for tuition to essentially a private school.

[Patrick Kremen (Education Law Center)]: Yes, thank you. And I'm getting that in my somewhat lengthy statement, but I can jump to that portion now. And first of all, my understanding of this bill as well is that independent schools that are eligible for public town tuitioning would also be, because SGOs would also be able to get to those schools. So there is concern that some of these dollars could be funded away from public schools. So I have several

[Senator Ann Cummings (Chair)]: don't operate schools, so we're a little different than New Jersey.

[Patrick Kremen (Education Law Center)]: Right, and I have several pieces to your question. So first, as I mentioned, we share the doubts raised in prior testimony and by some members that the regulations developed by the Treasury Department will not allow states to narrow their eligible scholarship granting organizations in this way. And the request for comments released by the IRS and the Treasury Department in November indicate that states will likely not have this type of discretion. And I understand you're working through that concern and we are awaiting proposed regulations at this time, but we're ultimately concerned that the services for public school students ostensibly covered by these vouchers are services that states should be paying for as part of their constitutional obligation to provide an adequate education and not funded through these contributions to unaccountable SGOs. And any vouchers going to public school students may be counteracted by the money that will flow out of districts, incentivize students to leave public schools and reduce funding for public school districts that will still have fixed costs to pay for to support their students. So those are some of our concerns around even efforts to get this funding to public school students. At the end of the day, it's the state that's obligated to provide this adequate education to students and funneling these resources away from the districts into these unaccountable SGOs will further reduce districts and public schools' ability to adequately fund and resource their students.

[Senator Ann Cummings (Chair)]: Okay, we have a question.

[Senator Thomas Chittenden (Vice Chair)]: Thank you for this testimony, very helpful, I appreciate it. I agree with everything you said. I don't support voucher programs, I want to see public schools stronger, I'm a product of public education, all my kids are, but what I want to overlay that with is please tell me if you would contradict any of the answers I got from our very talented legislative council, which is if we do nothing, my understanding is that still Vermonters, absent any action, if we if we vote to not participate, still Vermonters can get this tax credit by sending this money out of state. If if that is in fact true, that we cannot, as a state of Vermont, overrule that federal tax credit, I see us opting out of this or clearly stating we don't do this as just not allowing any of those $1,700 from individuals to stay in Vermont to help public school after school programs and public summer school programs. Is that correct in your mind that regard even if we said we don't want this at all, Vermonters still in 2027 in this bill will be able to get this 1,700 credit, but only if that money goes to a school outside of Vermont and Tennessee or somewhere else. Is that correct in your mind?

[Patrick Kremen (Education Law Center)]: Yes. I would agree with that interpretation that Vermont taxpayers, regardless of the state's opting in or opting out, receive the federal tax credit for contributions to an eligible scholarship granting organization, regardless of whether the state itself opts in. But not a contribution to an SGO does not guarantee that the student from the family that makes that contribution would get those funds. It would go to SGOs that then pick and choose whom they give out these vouchers to. And the concern is that

[Senator Thomas Chittenden (Vice Chair)]: Sorry, couldn't hear you.

[Senator Ruth Hardy]: I've got it. Let me deal with

[Senator Ann Cummings (Chair)]: and then standard your bag.

[Senator Martine Larocque Gulick]: Thank you, madam chair. Sorry, I'm not there in person, guys. I am really concerned that there are going to be a lot of strings attached to this program. I am worried that Senator Chittenden, to your point, you know, sending this money to public school after school programs. But our public schools are often very inclusionary. And we have a federal administration that has been not, I'll use the term not supportive terms, not supportive, which is being very generous, but has been not supportive of LGBTQ kids, trans kids, kids of color, immigrant kids. And I just cannot imagine a universe where there's not strings attached to this program. So we have to feel comfortable that we could be potentially part of a program that is very, that we're really gonna discriminate against our children. And to Patrick's point, we also have that organization, the SGO potentially choosing which kids get the money is my understanding. So just the level of potential abuse here as well as discrimination is making me very uncomfortable. I'll just leave it at that. Thank you.

[Senator Ann Cummings (Chair)]: I'm gonna leave questions for the witness right now.

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

[Senator Ann Cummings (Chair)]: Okay. Can

[Senator Scott Beck]: you speak to the timeline for the IRS's rule making? Yes.

[Patrick Kremen (Education Law Center)]: And I I'd I certainly don't you know, I can't predict the future or what they will do, but here's what's happened so far. You know, the bill was signed into law on 07/04/2025. In November 2025, the IRS and Treasury Department released a request for public comments around essentially questions they had about the program and they wanted to solicit feedback on. This was not part of the notice and comment period, but it was just a thirty day window to solicit public comments in basically the month of December 2025. And so presumably they've received those comments and they are likely now working on the proposed regulations, which the statute does require the Treasury Department to regulate this program. So we're expecting the proposed regulations to be released sometime this spring or summer, presumably before the effective date, which is 01/01/2027. And then there will be a notice and comment period of sixty days for folks to submit their comments in response to the proposed federal regulations. And then they take those comments and we'll finalize the regulations after that notice and comment window. Again, we are anticipating perhaps this summer, but I cannot make that prediction.

[Senator Scott Beck]: Okay. Just so I'm clear. Thank you for that. Vermonters, everybody can take the credit in tax year 2026. Is that do I have that right?

[Patrick Kremen (Education Law Center)]: '27.

[Senator Scott Beck]: Tax year '27. Okay.

[Senator Ruth Hardy]: Madam Chair, if I might. Okay.

[Senator Ann Cummings (Chair)]: I'm trying to keep it to questions. Well,

[Senator Ruth Hardy]: do have a question based on what Senator Beck was just asking and either for Patrick or Kirby.

[Kirby (Office of Legislative Counsel)]: Based

[Senator Ruth Hardy]: on that, if we were to hold off until next year, we can draft it so that it applies to taxes filed for 2027 next year. Correct? So even if we wait and say, no, we're not going to participate now until, you know, the rules, we would catch all the potential tax benefits by drafting it next year. I mean, that's how you often draft tax bills. Correct?

[Senator Thomas Chittenden (Vice Chair)]: So are you

[Kirby (Office of Legislative Counsel)]: asking me?

[Senator Ruth Hardy]: I guess so because you're the director. Yeah. So yeah.

[Kirby (Office of Legislative Counsel)]: Council. The the wrinkle there is that there are deadlines in December beforehand for the governor to recognize the SGNS. People can vote if they did kind of stand up. Decorum. And and there are it is a federal there's a federal deadline for it.

[Senator Ann Cummings (Chair)]: I see that. But we can always if it goes south, you can always come back and write another bill that says Vermont is not going to participate in this.

[Ted Barnett (Joint Fiscal Office)]: You can always come back

[Kirby (Office of Legislative Counsel)]: later and change it, but you would not be able to in some cases you would be able to change the past.

[Senator Ann Cummings (Chair)]: Right. Were essentially risking one year in which we might find that we can fund after school or summer programs for disadvantaged kids and we can set rules around how scholarships are done. We that can all go through administrative rules. We don't Just send them out there and say do what you want, we can name who's on, you know, whatever it is, commission. We can put a lot of structure. If the feds come back and say, no, you can't do it, then we can come back a year from now and say, okay, we're out, we're not participating. So we may have had one year where a couple of kids got a scholarship to a private school, but to a private school, but then the next year it's gone unless their grandmother in Tennessee wants to do it.

[Kirby (Office of Legislative Counsel)]: I think there's some question about whether SGOs will exist at all if they don't know if they can receive donations from here to here.

[Senator Thomas Chittenden (Vice Chair)]: I I

[Kirby (Office of Legislative Counsel)]: I don't mean to

[Senator Ann Cummings (Chair)]: say that it up. We may we may end our ability to set it up after this year.

[Kirby (Office of Legislative Counsel)]: I'm just I'm just saying if there's a lot of turbulence in what's allowed from year to year that just logic, like, organizations may not bother to try.

[Senator Ann Cummings (Chair)]: I'm doing a risk assessment here as to exactly what benefit some kids might see and what risk we're taking. I don't think we're risking putting the public schools under if we're doing this for a year and we and if we do nothing, we could be risking doing some good things for some kids that need it. I think we all know that kids that go home and hang out with screens at 03:00 in the afternoon can have issues. But but I think that if we if can we oh, we lost Patrick. Oh, he's there. Can we finish with Patrick? And then we'll go back. Do we have any more questions? You have one.

[Senator Thomas Chittenden (Vice Chair)]: I'll go again if I could, Patrick. So I also heard probably heard from I don't know if you were tuned in for miss Simmons when she spoke. I'm wondering if you concur with the response there that the governor ultimately has a lot of say in this, whoever the governor is. So if the legislative body chooses in this the dynamics of Vermont, if we choose to not participate in this and the governor vetoes that, the governor still can opt in and choose some SGOs. Is that your interpretation of the bill? Or else I think that be signed into law and if this governor doesn't support that, he would still ultimately have the say of identifying the SGOs.

[Patrick Kremen (Education Law Center)]: Well, think each state is different. I mean, in the text of the statute is that the decision to participate is made by the governor or any such sorry, let me find this. The governor of the state or by any other individual agency or entity has designated under state law to make such elections on behalf of the state with respect to federal tax benefits. So my reading of that is that there is the ability of the state legislature to make determinations about who opts into this program. I think in some states that becomes an issue where a governor may or may not veto the state legislature's ability to make state law. So it is state dependent, but my reading of the statute is that the state or any individual agency or entity that's designated under state law can make the decision related to the opt in. And then about this bill 161, my reading of that bill is that it gives the governor the ability to audit SGOs. I don't think that necessarily is required. I think the state necessarily has to give that type of authority to a governor. The federal statute language is more about who has the ability to make the decision to participate in the program. It doesn't speak to who has the power to regulate the program if at all.

[Senator Ruth Hardy]: That's an important distinction.

[Senator Thomas Chittenden (Vice Chair)]: Who has the power to regulate the SGO?

[Senator Ruth Hardy]: Yeah, because the governor is ill

[Senator Thomas Chittenden (Vice Chair)]: The SGA was a free market entity that could position themselves as if you give to us, we will only give to public school programs. That's a fair statement?

[Senator Ruth Hardy]: But not if the federal not if the federal regs say you have to give to Everybody. Everybody or you can only give to this kind of organization or this kind of kid. I think that the federal regs are gonna really control much more about what the SGOs can do.

[Senator Ann Cummings (Chair)]: Kirby, can you look at our opt in, opt out? Just if you haven't I mean, if we go forward with some version of this And then the Fed's regulations come out and say, nope. It goes to everybody and you can't you just set up the SGO. You can't put any strings on it. Can we opt out the next year, or can we put

[Kirby (Office of Legislative Counsel)]: conditions? Yes. I'm pretty close to certain to say that the IRS is not going to try to take the ability for states to opt out of the way.

[Senator Ann Cummings (Chair)]: Okay.

[Kirby (Office of Legislative Counsel)]: Because the the federal statute is pretty clear about being able to opt in and out of way.

[Senator Thomas Chittenden (Vice Chair)]: So, I mean, that would that would

[Kirby (Office of Legislative Counsel)]: be in the IRS's point so far as basically contradicting.

[Senator Ann Cummings (Chair)]: But if we opt in this year, we can opt out next year?

[Kirby (Office of Legislative Counsel)]: Yes. Okay. So there's a point about the VCOB, though. It's still there.

[Senator Ann Cummings (Chair)]: So Oh, it's always there. I mean, if if we can try and exercise what might be our desires, but the governor can veto. There's always the possibility of a veto override, but it's not easy and it wouldn't be easy.

[Senator Thomas Chittenden (Vice Chair)]: And as much as we might not be able to regulate if the IRS passed these rules restrictions, there still could be, in my understanding, SGOs that choose to position themselves as only public entity funding scholarship granting organizations. Was the point

[Senator Ann Cummings (Chair)]: I I'm was trying to gonna let Patrick go and say thank you.

[Senator Scott Beck]: Of course. Yeah. Thanks.

[Senator Ann Cummings (Chair)]: Because we now have four minutes to argue and then we have another bill to get testimony on and two bills to vote out, and some of us have a chairs meeting at 04:30. Why they haven't canceled it, I don't know.

[Senator Randy Brock]: Madam Chair?

[Senator Ann Cummings (Chair)]: Yes. Thank you

[Senator Randy Brock]: very much. I'm going to skip out because I have a grandson up in Middlesex that needs to read some books with me. No. I'll I'll I'll catch the arguments on the light show tonight.

[Senator Ruth Hardy]: It's an after school program. It doesn't have to be funded through a voucher program.

[Senator Randy Brock]: It's a preschool.

[Senator Ann Cummings (Chair)]: We actually have that program. Thank you. Okay. Things we need to know, is it worth going forward with this discussion at all? Anyone that would like to continue the discussion? Can I see a hand up? Okay.

[Senator Randy Brock]: Do you have a discussion or make a decision? I don't

[Senator Scott Beck]: know where to end.

[Senator Ann Cummings (Chair)]: Well, are we ready to make a decision, or do we need?

[Senator Randy Brock]: Is there anything we haven't heard?

[Senator Ann Cummings (Chair)]: I think I've I'm still trying to weigh the cost benefit here when

[Senator Thomas Chittenden (Vice Chair)]: Logistically, we had till next Friday on this one. Right? Is this is this Yeah. It was for you.

[Senator Ann Cummings (Chair)]: So we don't have to do that. So tell us that maybe we could talk to the governor's office and get a sense as to what his thinking is on this.

[Senator Thomas Chittenden (Vice Chair)]: I do have some follow-up questions, so you can put

[Senator Ann Cummings (Chair)]: this so would you just let me know questions, witnesses who we need to talk to. I think there's enough interest to move us forward to continue to discuss this, and we will see where it goes. We are one minute ahead, and I'm gonna keep going. Ted isn't here. It's Okay. Walk in. We do I can't give you break. You wanna take

[Ted Barnett (Joint Fiscal Office)]: Oh, I gotta

[Senator Ann Cummings (Chair)]: take one. Alright.

[Kirby (Office of Legislative Counsel)]: Now You're right. That's a minute. Once you get