 A couple more minutes, please. Oh, okay. Look at this. Look at the angle. Looks like maybe not. That would probably be seven to nine. Yeah, I guess it is seven to nine. I have a chocolate flyer. Seven. All right, folks, we are going to hit the go button for real. Thank you all very much for coming out this evening and make a commitment to learn some more about this difficult subject. I really want to, first thing I would like to do this evening, though, is a couple of thank yous. First of all, I'd like to thank channel 17 for making a commitment to be our media host this evening. And I'd like to thank the Miller Center for hosting us free of charge this evening for this public meeting. Take our speakers. We have Emily Byrne, who's on the agenda from the Agency of Education. Jake Feldman from the tax department who's there. And then a little bit later on this evening, our other two presenters are Senator Tim Ash and Senator Phil Baruth who will be rolling in here for their part of the agenda from other assignments. And I also want to thank Commissioner Mark Barlow for being, for his contribution to our planning team, so which included Chris Trowley from MPA, Nancy Cobbstock, and myself, Jeff Cobbstock. So we're the planning team for this event. And the snacks and refreshments in the back are courtesy of Dave Hartman who provided us with this meeting. So Dave, the goals for this event really was, first and foremost, was to create opportunity for dialogue as a starting point about lack of education understanding of the education funding formula and to create a more informed and engaged group of voters and taxpayers. Because from our perspective when we talk about stakeholders related to education funding, very often it seems as if taxpayers get left off the list as a clearly identified stakeholder. So this is all about voter engagement, voter participation, and taxpayer engagement by being well informed. And let's see. Chris, any thoughts? No, I think really the whole objective is, we're going to show you a quick 11 minute video. We're going to have a lot of information packed into it. I have some experts here to help you kind of unpack some of the information and really the idea is that we have a real solid question to answer form so that you can ask those kind of basic questions. And the whole objective is, when we were having these conversations over at the Comstocks, there was this recognition that we really need to increase the baseline of understanding how this all works. So when we want to advocate for a change or we want to keep it the same or impact on our school budgets, it's helpful to know how the system works. So we're really encouraged that this grew up such a great crowd and so let's jump right into it. Okay, yeah, so I just wanted to touch again on the background for this project is we have a series of neighborhood meetings back in the spring and one of the major topics that emerged from that was the confusion and lack of understanding related to how the statewide funding system works. And so that led us to this educational effort and the real goal here is not being about advocacy or partisanship but so that everybody really understands the funding mechanism to promote participation. And many of you picked up a little, so as far as preparation for the open forum session, we provided you with these little slips of papers for writing questions and we're hoping that as you watch the video and listen to the presentations that if you have questions along the way, something is curious, write the question down and then we have an open forum and discussion session at the end where we'll go back and actually focus on dialogue. So I guess the other before we launch into the video, I would make a note that some of the data from the School Board Association video is based on 2017 data and that some of the data that I think Emily and Jake will present now in terms of the funding configuration for the Education Fund is now based on current legislation and 2019 data so some of those data elements have changed over the last couple of years. So with that, I think we should go ahead and get going and start with the video. Thank you. We're going to make sense out of Vermont's Education Funding System. To understand the rationale and purpose of Vermont's current Education Funding System, you need to step back 20 years to 1997. At that time, communities with the same spending per pupil will subject to dramatically different tax rates. Some Vermonters filed a lawsuit and the State Supreme Court ruled in Brigham v. State of Vermont that why disparities in tax firms due to large differences in property wealth resulted in unequal education opportunity for students based on their residence, a violation of the Vermont State Constitution. In response, Vermont's lawmakers enacted the Equal Education Opportunity Act of 1997, commonly known as Act 60. While Act 60 created school quality standards and performance requirements, the biggest change was the shift in responsibility for funding education. The State of Vermont now funds all public school district budgets approved by voters across the state. Features of Act 60 attempted to equalize many factors, student population or school size, local market value of property, student demographics, and student spending. Six years later, lawmakers passed Act 68, which modified the funding formula in hopes of simplifying the process without affecting the intent of the legislation. Equal education opportunity for all of Vermont's students. Vermont pays for education through the State's Education Fund. There are four primary sources of money that comprise the fund. Revenue transferred from the State's General Funds, a portion of General Purpose Taxes, like sales and use, purchasing use, and state lottery. The non-residential Education Property Tax, non-residential properties, any property that is not a homestead, businesses, psychonomic camps, etc. and the homestead property tax, paid by Vermont homeowners, which has two components, payments based either on property value or household income or voter. In fiscal year 2018, the expenses paid by the Education Fund totaled $1.58 billion. Now let's focus on understanding how property taxes are calculated as a fiscal year 2018. The first thing that happens is each district's school board begins preparing a budget in the fall for consideration by the voters at annual school district meetings, which usually happen on or around town meeting day and March. Once a budget is approved, the State is obligated to fund the district's education spending from the Education Fund. Education spending is the amount of budgeted expenses minus local revenue and state and federal grants, including things like special education reimbursement, transportation aid, and small school grants. Local revenue may include tuition collected, interest on investments, and surplus carryovers. The amount of education spending for each district begins its homestead tax rate calculation. Next, the district's education spending is divided by the number of equalized pupils attending the district's schools. What's an equalized pupil, you may ask? The state adjusts the number of students in a district by factors that reflect costs associated with certain demographics. High school students, for example, generally cost more to educate than elementary students, who in turn cost more than preschool students. English language learners and students from economically deprived backgrounds are weighted more heavily since their education costs are often higher. Like many of the calculations, this adjustment is made as a way to equalize the impact of dollars in each district. It's important to understand that the homestead tax rate doesn't reflect the total budget presented by the school board and approved by the voters. Homestead tax rates reflect education spending for equalized pupils. In fact, per law requires that school boards present information that specifically correlates the proposed budget to education spending for equalized pupils. Education spending for equalized pupils for each district is then compared to the property-dollar equivalent yield. We'll just call that the yield. It's determined by a mathematical calculation of the amount for pupils spending supported each year by a fixed homestead tax rate of $1 per $100 a value. By way of example, if $1 tax rate would yield spending per equalized student of $10,000 and a district presents a budget that it has spending per equalized pupil at $15,000, then that district tax rate would be $1.50. But wait, there's more! The final step in determining the homestead tax rate is the state's method of equalizing property value by comparing actual sales data to assessed values in each town. The result is the common level of appraisal, or CLA, a ratio applied to the tax rate to normalize home values. Those are the components of the basic formula for calculating homestead property tax. Education spending divided by the equal number of pupils divided by the yield equals the tax rate. The tax liability is calculated by dividing the homestead tax rate by the common level of appraisal and then multiplying by the assessed value divided by $100. Let's make some sense of this, okay? She lives in St. Albansi, which is a part of the newly unified Mabel Run Unified School District. She's voted in support of the school board's proposed budget, as did the majority of the voters in the district. Mabel Run's fiscal year 2018 education spending was $37,952,236 for 2,527.3 equalized pupils. So education spending per pupil was $15,016.91. Jane and her friends approved that fiscal year 2018 budget that was 47.8% higher than the yield of $10,160 set by the legislature. As a result, their homestead property tax rate increased by that amount to $1 and 47.8 cents per $100 of assessed property value. So what did that mean for Jane? Her house in St. Albansi was assessed for $251,300, where the Vermont tax department established the CLA at 94.99%, meaning that the average assessed value of properties in the city that sold over the past three years was 94.99% of the actual selling prices. To figure out Jane's education portion of her property tax bill, the tax rate of $1.47.8 is divided by the CLA of 94.99% and multiplied by the assessed value of the house divided by $100 because the tax rate is applied per $100 of value. So, her education tax for the year was $3,910.11. Jane knows that's a pretty good deal for the education her kids get at BFA. But what she can figure out is why her brother, Dick, who lives a couple miles away on Lake Road also go to BFA, paid less in education taxes even though their house is assessed at a higher value than hers. It's assessed at $258,400. The answer is that Dick lives in St. Albansi town, which had a different CLA. So after dividing the $1.47.8 district tax rate by the town CLA of 103.86% and multiplying by his $258,400 assessment divided by $100, his tax bill was $3,677.21. Dick and Jane know that some people pay education taxes based on income and not property value. Like their parents, Barbara and Harold, who recently retired and still live in the home where they raise their kids at Fairfield. Unlike Jane or Dick and their partners, Barbara and Harold are on a fixed income that falls below the household income professional established by law. So their tax calculation works differently. Their total household income, pensions and social security was $82,275 below the state's household income threshold of $141,000. So they qualified for a homestead tax adjustment. The base tax rate for the income sensitivity program is 2% of income. Like the property value of the yield we talked about for Jane, there's also an income yield. And the tax rate still depends on what the district spends for equalized people. In fiscal year 2018, the income yield was $11,099. So the Maple Run Unified School District per pupil spending of $15,016.91 was 25.24% above the yield. Thus, the base rate of 2% of income was increased by the same percentage and resulted in a rate of 2.505% of income. So Barbara and Harold's tax liability is $2,060.99. With their assessed value of $325,600 in Fairfield CLA of 94.81%, Barbara and Harold's tax calculation based on property value was $5,075.80. Their annual tax bill was adjusted by $3,014.81 to reflect their income-based tax obligation of $2,060.99. When looking at how these formulas get applied in your district, remember that roughly 65% of home-set property owners pay state education taxes based on their household income rather than their property value. You might want to check out whether your own household qualifies. Finally, let's look at the impact on the second homeowners and businesses who are taxed at the non-residential rate. Barbara and Harold's friends, Sally and Tim, moved south when they retired. But they bought a camp right on St. Albans Bay so they would still have their connection to Vermont, their family, and their old friends. Their foray for camp is right on the lake. This property is assessed at $432,800. Their tax rate, however, isn't dependent on the school district budget or spending for students. The legislature sets a uniform tax rate for all non-residential properties each year. For fiscal year 2018, the adjusted rate was $1.53.5 or $100 of assessed value. The only adjustment for Sally and Tim reflected the town's CLA, which in the case of St. Albans Bay, was 103.86%. So their effective tax rate was $1.47.8, making their education tax liability $6,396.78. If you still have questions about Vermont's education funding for me, you can review the FAQs and education tax calculation tables on the Vermont Department of Taxes website, tax.vermont.gov, or get in touch with Susan Paul's Director of Board Education Services at the VSBA. There's no question this is a complicated way to do things, and we've only scratched the surface here. But there are three main elements within this system. The first is that the state is obligated to fund all education spending approved by voters. So while the tax bills are distributed by the towns, all tax revenue is sent to the state's education fund. School districts receive their money from the education fund. Second, in response to concerns about rising property tax rates, the state has added cost-containing features into the formula over time, such as an excess spending threshold. These features add even more complexity to the system, affecting communities that are losing students and seeing an increase in their spending per pupil. Finally, it's important to remember that although the mathematical manipulations, like equalized pupils and common levels of appraisal may seem convoluted and theoretical, they are designed to ensure that every public school student in Vermont has access to equal education resources, a promise enshrined in Vermont's constitution. Okay. So I've watched that video, numerous kinds, and yes, it's confusing and still makes me scratch my head in certain regards. I know it introduces a lot of terms like income yield and property yield and per pupil spending and homestead tax rates and CLA, that's a common level of appraisal. So granted, the video does go through those concepts fairly quickly. So to help unfold those in a much more understandable pace, Emily and Jake are going to go through some of these terms and a little more detailed explanation of how the state education fund is set up. So this I would gladly turn over to Emily and Jake. Summer camp counselor, lifeguard voice. If I need to speak up, let me know. Jake was a math teacher, so he should also be able to project. If not, just raise your hand. So I'm Emily Byrne. I'm the chief financial officer at the agency of education. Jake Feldman, research statistician at the tax department. And we're going to try to more slowly go through the education funding formula and how education... Hopefully, if I start talking too fast, let me know, I can try to slow down and hopefully in 40 minutes we can get through the whole thing and hopefully maybe not in 40 minutes. Actually, we're ahead of schedule. We're ahead of schedule, great. So maybe we'll take 42 minutes to go through it. So Jake's going to jump in if there's any places where he wants to add to what I want to say vice versa when he jumps in and takes more of the tax part. So at a high level, I manage the staff and work on sort of the spending side of things. So working with school districts, in terms of aggregating all of the spending that's happening across the state, special ed spending, all that sort of stuff. So that's where the AOE sort of operates and then the tax department is more on the revenue side. Obviously. Cool. So at a high level, we'll go through the Education Fund, which is where all the money that is raised for education in the state goes. So what are the sources to that fund? What money goes into that fund? And what do we use those funds for explicitly? So at a high level, go through that. Then we'll dive into how we calculate local tax rates, the homestead property tax rate in particular. Go through the sort of property valuation piece. So how does the common level of appraisal impact the property tax rates? Go through equalized pupils. So how we count kids and how we reflect that in the tax rates. And then kind of go through a couple of scenarios, which I think are the most helpful in terms of why budgets may not go up, but tax rates do. So that is that. So the first thing I always like to point out is that Vermont does not have a per pupil funding system. So when a lot of states what happens is the state government passes, okay we're going to fund $1,000 per kid in the state, we send $1,000 to each local school district, and then the balance is sort of on the school district. Vermont doesn't do it that way. So Vermont funds on a per pupil basis what's passed by each local district. And that's sort of an important nuance about Vermont's funding formula. So at a high level, the Education Fund, it's about $1.6, $1.7 billion fund. The general fund is also about $1.6, $1.7 billion. The major sources to the Education Fund are the homestead property tax rates. So that's the one that gets all the attention and people talk a lot about because it's the sort of bill that everyone gets. The non-residential property tax rate, also for people who own second homes or commercial properties, apartment buildings, all sorts of things, that's the tax rate applied to those pieces of property. This is actually a change from the video. So before 2019, only a third of the sales tax went into the Education Fund. That was changed this past year. So now 100% of the sales and use tax goes into the Education Fund. And there used to be about a $300 million general fund transfer that went into the Education Fund. That went away. So instead of that general fund transfer, there's now 100% of the sales and use tax goes into the Education Fund. Additionally, when that change was made to make sure that there was enough revenue in the Education Fund, 25% of the meals and rooms tax was added to the Education Fund. So that's what's paid at hotels or when you go to restaurants. And then a third of the purchase and use tax goes to the Education Fund. So that's on like your cars and those sorts of things, right, Jay? Boats, snowmobiles. Goes to pay for Education Fund. The sort of the lottery funds net of prizes and operations of the lottery. So to the extent the lottery makes money, the balance goes into the Education Fund. There are a couple other sort of random sources that aren't sort of a ton of money. So a transfer from a Medicaid special fund, some solar taxes, some wind taxes go into the Ed Fund. Then the final piece is any transfers from prior year balances. So to the extent the Education Fund makes money on the bottom line at the end of the year, the legislature can opt to spend those funds in the next year if they're available. So I like this picture of the Ed Fund because it sort of demonstrates each of those components as it compares to sort of the whole piece of the pie. So the biggest piece of the Education Fund is the non-homestead property tax. So that's where we raise the most amount of money followed by the homestead tax and then the sales and use tax. So this is sort of the big three in the Education Fund. That's where most of the revenue comes from. And then these other pieces are much sort of smaller additions to the Ed Fund. And people can jump in with questions whenever. I know that's probably... So the non-homestead includes commercial buildings? Yes. And now the state residents? The state residents or if you have a camp. So that goes through on the homestead declaration that you do when you're hearing income taxes over a year. So then what do we use the Education Fund for? So there's lots of things that we use the Ed Fund for. The biggest one is that sort of local education spending. So that's the budgets that are passed by each school district in the state for sort of a general provision of education for kids. The second biggest use of the Education Fund is special education costs. So it's about $200 million out of the Education Fund for special education in the state. And then followed by a lot of other sort of smaller aid that's given to school districts. So the state picks up 50% of transportation costs incurred by school districts. The state picks up all of the special education costs for state-placed students. Technical education aid, so that's money that goes to the 14, I think 14 tech centers in the state to help with career technical education. There are small schools grants which go to help schools that are small and rural. To offset their costs. Essential early education aid, that's money that goes for special education for pre-K students specifically. We fund the flexible pathways programs which are early college and do enrollment. And some of those other programs to help high school students transition into college and post-secondary either education or vocational work. The normal cost of teachers pension, so this is sort of a nuance thing, but the normal cost of the pension is the costs associated with funding the pensions for the teachers that are in the system today. So there is a rather large unfunded liability that gets talked about in teachers pension that's currently picked up by the general fund, not by the education fund. And then there's some administrative costs that come out of the education fund. So we have to audit the fund annually. We have to do the accounting and the management piece so that there's a little million dollars that goes off the top for that. So the lighting's not great, but so this piece is local education spending. So this is the piece of the Ed fund that gets transferred to schools based on budgets passed locally. And then these are the categorical grants that we call them, so special education, transportation, small schools grants, central early ed that come off the top. So just in summary, those categorical grants make up about $250 million that come off we call it off the top of the education fund. These are given directly to local schools and they're sort of that off their additional revenue, if you will, for local schools. So that big one is special education aid. So the state picks up 60% of special education costs for local schools. So that's about, it'll probably be over $200 million this year. What is a state play student? A kid that is in DCF custody, so the state figures out where they should go to school. So if the kids are on IEPs and have special education costs, the state picks up 100% of those costs on behalf of those school teachers. On the special education aid, my daughter is a speech language pathologist and what she found she worked in a different state. What she found is that because there is, you know, an emphasis on that, quite a few teachers are replacing kids in those programs even though they should not be placed in those programs. And the main one was being able to speak English that well. Even with special, special need kids and forcing them in that program. So there is no incentive in the state to get those kids out of that program. Which really bothers me. I'm going to be talking about exactly that when I do my part of this. Good. So we overhaul the special ed. Partially. But is there monitoring that goes in? I'm going to go into that. That was a big part of this past year's legislative session what it's trying to address. So the 40% that's not covered is picked up by the schools? Yes, because of the local education. Yep. Through a category of grants. Part of it is paid for through a category of grants in Korea because there is some recognition that it is a little bit more expensive to run technical ed programs. But yeah, for the most part it is run through the tuition and the local school districts. Questions on these? There's a lot to cover. So the education fund owes school districts about 1.6 million 1.6 billion, sorry. 1.6 billion dollars. About 250 of that just to summarize it again is the category of grants. So that's to pay for very specific things at school districts. The other thing that comes off the top is those pensions and the flexible pathways off a little bit because that money doesn't go to schools. That goes to the post-secondary institutions where the kids are taking dual enrollment courses or enrolled in early college. And then this balance, this 1.3, goes down to the schools for local education spending. There was this funky thing that happened last year around healthcare spending and recapturing some costs back from schools associated with savings from healthcare and that sort of totals are 1.6 billion dollars of education spending on an annual basis. So what is education spending? So I know I just said education spending. Education spending is a very specific term when us AOE policy finance nerds talk about it. Local school districts have a budget that is their budgeted expenditure. So it's what's adopted locally. When we think about education spending that's less any other revenue that's coming into those schools. So all the schools in the state get federal dollars. So federal grants from titles, IDEA, lots of other places. And also this categorical grant. So to the extent the state owes 60% of special education costs to local school district, that's in effect revenue at the local level. So when we think about education spending, which will come into play when we start talking about tax rates, it's what the budget adopted locally is less any of those sort of revenues that are coming from other sources. The federal government, state government, fundraising, those are sort of the big ones are the federal revenues and the categorical grants. So to the extent these other monies are coming in that reduces the amount of education spending at the local level. So in FY 2019 that's how we had 1.3 billion of education spending in Vermont. So quick question, it sounds like we have a bake sale, that's part of the fund rate because that comes out of your money that comes from the state. Is that correct? If you're welcome. So what's the point of having a bake sale then? If it just means you get it from the people buying the cookies versus getting it from the state. True. It will impact your property tax rate, right? So you will have less revenue increase your education spending to increase your spending for people. Well isn't there a distinction between direct and the state money that would pay for certain things like direct education spending. So you can always raise money for other non or things that are not eligible for, you know local money will pay for certain things and that's when you do your big sales. You would do your big sales for direct education. I can't hear you. So what we're going to do is we'll pet the mic, so if you have a question pop your hand up, I'll put it all over the mic so everyone can hear and we can get it on that video. Do you want to repeat some of that? Sure, so the question was probably not, why not just do a bake sale and get money for the state. And there are some restrictions in terms of how you can use the dollars that come from the state particularly the categorical grants are very specific on what they can be used for. Could raise money other ways to offset how much revenue you need from the state? Is that equitable when that's just my question. Is that equitable, you know if some places can raise more money than others? That is a great legislative question. But is it true that the federal and local spending is less than 10% of the amount of spending that districts do of any way? We're talking about money in the margins when we're talking about federal and local. I don't know the person that's on the top of her head and he said, 10% is on the district. So certain districts get more federal dollars because it's allocated based on poverty or some other indicators and similarly the amount of special education reimbursement you get is dependent on how many special education students you have in your district. So that varies a lot depending on the district itself. I'm going to interject and I will. Yes. Because what Emily and Jake need to get to next is really critical information and I'd like to come back to this kind of a conversation during the open forum at the end. I don't want to cut you short on this important stuff. That sounds good. I'll just keep booking. So as an example of this sort of education spending term I grabbed some of Burlington's numbers from last year. So last year the budget that was passed by this district was $86.6 million but there's an anticipated revenue of nearly $25 million. So that reduces that education spending number which becomes the numerator in the calculation of her pupil spending. So at another sort of high level just sort of a snapshot of what it's coming from. Again, non-residential property taxes play a pretty big component of ed spending. This is to sort of demonstrate that general fund transfer goes away in 2019 and then is replaced by the sales and use tax and the meals and rooms tax coming into the fund. The purchase and use tax is the same as it was last year and just sort of demonstration and we'll go back real quick Jake. What you see at the bottom is that all of these revenues which doesn't include the homestead property tax only raise about $1.2 billion and I sort of think of this as they're not fixed revenues but they're sort of predictable revenues. So to the extent the rate of the sales tax is adopted by the legislature and is in law and we get an estimate in terms of what we think that is going to raise the remaining of the year. These are sort of thought of as fixed sources into the education fund. Now when the legislature is debating the yield and coming up with what that number should be that's sort of the balancing piece of the education fund. So once we, town meeting day happens and we're able to aggregate all of the budgets across all of the school districts in the state that homestead property tax rate is what balances what these revenues are with what those projected expenses are. So I think that's why it gets a lot of attention is that's sort of where the balancing in the education fund happens. I will caveat that with the legislature has the ability to change any of these rates or any of these numbers at any point during the legislative session that's their prerogative but generally we talk about the homestead property tax as that sort of balancing factor in the education fund. That was about $1.2 billion dollars that the sort of fixed revenues raised but we owe everybody about $1.6 billion dollars. So that's where that sort of balancing effect of the homestead property tax rate comes in. So at a high level before we kind of dive into what though how the homestead property taxes are calculated generally how the money flows from the state to the districts is the districts adopt the budget so the supervisory unions they submit all of those voter approved budgets to AOE and to the state. We determine what that local education spending is going to be based on what we know is coming in and other revenues and then we pay the districts out based on that calculation plus all the category. So do you want to jump in Jake? Why don't you go on? Sure, let's start here. So the actual design of the tax rates is what I do and I also do the FAQs which are on the tax department's website. I defend the common level of appraisal when it's challenged in court cases and I do mathematical explanation for that. So Emily's got a great handle on the AOE funding stuff, the tax rate stuff and how Burlington or any town's tax rate ends up being what it is in stuff that I do. So in FY19 which is the fiscal year that we're in right now the homestead property tax raised $429 million it actually looks like more than that on the outlook but a lot of the people who pay based on income get an adjustment and the total of those adjustments was 168.7 so the net is the 429.1 The homestead taxes are based on per pupil spending and you saw that in the video we're going to talk about that a little bit more but the rate definitely comes from what you just vote to spend per pupil and then the tax rate that you see on your bill is based on the per pupil spending you vote but also something else called the CLA common level of appraisal I think that's what's meant here by a percentage of homestead market value or I see what you're saying I didn't really look at this much before Jake is a stand-in he was a late call So the people who pay based on property are just paying straight based on their property value and then some people pay on their income so they see an amount based on their property value but then at the bottom of their bill they see a line called state payments and that's where the adjustment is so they pay the net and then of course muni taxes come into play too Burlington has pretty high municipal taxes so those get combined and then you have the state payments line which is your adjustment and then you have the net at the bottom and actually another neat change that happened during the legislative session is that they decided to sort of split the bill so that there's going to be education down one column and municipal down another column and it's still going to be complicated but at least you'll be able to see if you're getting an adjustment applied to your education or muni or both and that's going to be kind of helpful for helping people figure it out Will you show the CLA adjustment on the municipal side? You know that's come up many times so on muni rates there's no CLA adjustment No I don't People don't think they're voting for an eight or nine percent school tax increase and they're only voting for a three or four percent school tax increase that the CLA adjustment makes it look twice or more as big Can you put the CLA gap that is the city's fault on their side of the equation? So there's nothing in law that has to be on the bill it's a great idea they would add a little bit more math but it would be an improvement So why do homestead tax rates vary and they do vary a lot they vary less than they varied before Act 60 Before Act 60 you could go from a low of 13 cents to a high of $2.40 so there was a huge variation across Vermont and there was also a variation a lot of variation in the quality of the education that's being delivered because some towns had a lot of property tax and some towns didn't have much so they do vary now but it's not nearly as much as they did they vary with per people spending towns get to vote on the amount that they want to spend per people and actually a change from Act 46 is that now when you go to vote it should say ballot do you approve a per people spending amount of blah which is an increase or decrease from last year and that's an incredibly profound improvement because for a really long time people thought that it was their total budget that determined the tax rate and that is the most dangerous misconception it is not the total budget it is what's spent per people so if you are spending the same total from year to year but your number of pupils goes down your per pupil spending is going up and then a lot of towns, maybe not Burlington but a lot of rural towns the number of students is going down and so they were thinking to themselves why the heck does our rate keep going up when our budget is the same from year to year and the answer is because they are losing kids so that improvement from Act 46 was just a little piece of information and it was free to do but it really improved what's available to typical voters so your rates vary with per pupil spending the per pupil spending is the education spending amount that Emily talked about divided by the district's equalized pupil count so if you spend 4.3 million and your equalized pupil count is 300 you divide one by the other and you get 14.3 million I think the underscore with Jake was saying it's important that it's the relationship between the two that really dictates what that number is and how the numerator and the denominator change is what's going to impact the tax rate so yields are actually something that I'm working on right now the word yield is not a good name for it because yield makes you think you can apply a dollar by all the property in the state and you divide by the number of kids and that's how much a dollar yields like the verb yield but that's not how it works at all so the tax department along with the joint fiscal office which is the legislature's analysis team we set the yields there's a homestead property yield and an income yield and we're not the way we're setting them is to make sure that the education fund is filled up it has to as Emily was showing you before there's all this revenue which is known and then there are pieces which are not known which are the property tax pieces so we have to make sure the education fund is filled up and then there's also we have to try to ensure that the average bill increase for those who pay on property those who pay on income those non-residential payers the average bill increases the same so it's a difficult balancing act but that's how we come up with these yields so the property yield in the current fiscal year is 10,220 and the base rate in statute forever more is a dollar it used to change from year to year like some years it would be 98 cents then it would be a buck 0.2 and buck 0.5 and everybody who had grown that with act 46 it's always a dollar but the yield amount changes from year to year currently it's 10,220 and the income yield is 12,380 the base non-residential property tax rate is a buck 58 and that is the same statewide every town you're in except that it's adjusted by the town's CLA and then that income yield is tied to a 2% of household income base one way to think about the yields is that for every 2,020 spent per equalized pupil the homestead tax rate would be a buck so if you were somehow in a district that spent 10,220 your rate would be a dollar and then you'd have to be listed by the CLA same thinking for the income yield it's a little bit different but the math works out that we're growing or decreasing or changing people's bills at the same average amount for all the different pairs so I have a question take a microphone microphone so you calculate the property yield and the income yield so they both have the same percentage increase year to year or for a given year and do you do that prior to everybody approving their budgets it's a great question it's kind of a wild feedback but here's how it works so right now we're in November what I'm doing is putting the projections together for the tax commissioners December 1st tax rate letter and we're going to recommend I think the word is in statute we're going to recommend some yields but then the legislative session starts in January I should jump in that calculation that they're doing is based on our best estimate of what we think education spending is going to be for everybody this year so the yield that Jake's working on calculating is based on some estimates that AOE and the Joint Fiscal Office have kind of come try to figure out like okay salaries might increase and health care is going to increase this much so we think education spending in the state will go up by whatever the number is and then they calculate a yield based on what we assume maybe the E will be passed at town meeting day so what I'm working on right now is not FY19 which is already in the books it's FY20 which starts in July of 2019 and there's a lot that's unknown what education spending is going to be what property values are going to be and we're trying to project that so we come up with these yields on a non-residential rate that come out in the commissioners letter then the legislative session starts the numbers change and then most importantly around town meeting day actual budgets are passed so then the numbers start to get really real so these aren't finalized before town meeting day they are not so you don't really know what you're voting for at town meeting day and how do you know which way to vote well you can there's a lot that you can know I mean if your per people spending is going up you are likely to see a tax decrease there are lots of other factors but that's generally true if your per people spending is going down you may see a tax decrease versus millions of other things but that's really important information and the yields they do publish some yields before town meeting day and those ones are generally close to the final yields at the end of the session so it's not perfect but you can get a strong sense of what is going to happen with the tax rate the other thing you can do is ask the district how much budget represents 1% of the tax increase which they can give you by the time we pass the budget so like last year a 1% tax increase was about a $400,000 budget increase or something like that okay so what's happening in this table is just an example of there's the yield for FY19 and for some different spending per people amounts that's the almost the tax rates you come up with before the CLA and similarly for these spending amounts income yield and there's the income percentage so we're going to talk about the impact of the CLA so suppose your rate is $1.40 before CLA they call this the equalized rate because you can compare it to different towns and it's just based on per people spending those CLA's involved it gets adjusted for each town by dividing by the CLA the actual rate that you see on your bill so if CLA is 93% which means that property in your town is generally listed for 93% of its fair market value the $1.40 rate would become $1.40 divided by 93% is 1.5054 which would show up on your bill so here is a whole bunch of math so if you're an employee can I just meet your Jack and tell people that this is sort of the really important piece because it's the sequence of the calculation here that's really most meaningful I think I like this one just because it kind of lays it out so we take the district expenditures which we think are going to be $4.5 million less whatever offsetting revenue going to come in from the state and the federal government which gets you the education spending number of about $4.3 then we divide by the number of equalized pupils of $300 to get the per pupil spending for this district then we divide by the property yield as set by the state to get the equalized homestead tax rate so it's that relationship between the per pupil spending and the yield that is the tax rate it's that ratio we take the CLA and we divide the equalized tax rate by the CLA and we come up with the homestead rate that shows up on the bill so that's the sort of nine step process to get to the tax rate that shows up on the bill I have a question on the spending yes for Burlington just Burlington just set up a $70 million capital expenditure for a high school some people have told me that the state now does not fund those kind of things anymore so everything falls on us taxpayers in Burlington wonderful it'll be in this number in the spending number yeah but we'll show on that right you exclude that right because there won't be offsetting revenue for it the annual debt service payment will be part of this sort of kind of begs the question of which type of expenditures are on budget or off budget under the education spending definition they should all be on budget so and then just at a high level in terms of what those sort of tax rates mean so if we take an average we use a $200,000 house site value a lot and then times the sort of we tax on 1% of the house site value so if there's a $2,000 that's the taxable value times the tax rate of $1.50 means your tax bill would be $3,000 and so in this very hypothetical situation if this was to go by a penny it would mean that there would be a $20 increase on the tax bill in this situation we'll keep going you want to talk about the income sure so there's also the income rate which comes from the income yield this says it's for household income less than $90,000 that's not quite how it works so it actually goes up to $138,000 this year that $138,000 is not a statutory amount it's another tax department calculation we just see the point at which property tax adjustments disappear like they fizzle out and so we say hey you can go apply for it if you're up to that amount because you might get a little something but really that's just a phase out point and it changes from year to year so it's for household with income less than about $138,000 for for households with income over $90,000 it only covers up to $225,000 of property value that's all you'll be sensitized for if you're under $90,000 it covers up to $400,000 of property value each current year tax bill this is another complicated thing but the line I told you about before the state payments line is your property tax adjustment that's based on the prior property tax year because we know your income from that you fill out an application for it we know your income from that year we know you paid in property taxes that year so we can do the math we can calculate your adjustment and then it gets applied to your current year bill so there's a lag in the system so if something happens in your town where your tax rate spike your adjustment is not going to be sensitive to that until the next year or if you lose your job or retire or something your husband goes back to school and your income drops yes then you're going to have to wait a year to get the adjustment that corrects for that so basically what I just said it's based on the prior year property taxes the prior calendar years of income and that's how you construct the tax credit the property tax adjustment so here is basically the same except the income yield is here so this town this district from districts where Lincoln happens to be a town that is a district spending $14,308 the income yield is $12,380 there are 115% of the income yield it's tied to a 2% rate so 2% times 1.156 is 2.32% so the people who pay based on income are going to pay 2.32% of their household income so that's all the members of the household who make for making income this is the last piece of the calculation that comes in is the equalized pupil calculation the idea behind equalized pupils is the attempt by the state to recognize the fact that certain kids cost more or less than others to educate on average so the idea is that we try to normalize if you will how many pupils pupils cost so there's several categories I'll kind of walk through all those that are weighted and how they're weighted and we group those those weights are I should say so pre-K students elementary which is K through 8 secondary 9 through 12 pupils living in poverty and then pupils who are English language learners there are sort of two key terms when we talk about equalized pupils it's the average daily membership so that's a sort of census that the state does annually to count kids so from the 11th to 30th day we count all the kids and figure out how many students are in that district and that's the sort of baseline for one ADM when we talk about equalized pupils it's actually an average of two years of ADM so we've all long-term membership but it's the average of the average average of the average daily membership two averages in there to kind of mitigate for the fact that there may be spikes or drops in one year period especially in smaller schools so when we weight the students for the equalized people calculation we assume that one elementary school student is one and that a pre-K student is less expensive to educate so they're 0.46 ADM we weight the high school students 7 through 12 I think I said K8, I meant K6 the secondary pupils we weight a little bit higher assuming that high school kids are a little bit more expensive to educate a little bit more specialized services and then we add additional weight for all the students living in poverty in a district a little bit more for the students that are secondary students living in poverty and then add a little bit for English language learners in each district so sort of at a high level to kind of demonstrate how this might work in a district this is the long-term membership if we counted all those kids there's 794 students and then of those students this is the sort of spread in terms of elementary and secondary poverty students and English language learners when we apply those weights it's a little funky the way is to try to reflect we count all the pupils, we weight all of them and then the number of equalized pupils is more than the number of actual pupils so then we have to scale it back so that the number of equalized pupils equals the actual number of pupils so that we don't have extra pupils so then once we do that sort of scaled calculation and apply it to the number of students in each category in a district we come up with a new weight so based on what those pupils needs are and what they look like we have a higher equalized pupil amount in that district can you share your scenarios? yes, I believe that's next so this sort of last piece and this is I think what drives everything home and why there sometimes can be a lot of questions around this so why does my tax rate go up even though my school district's budget is flat so one possibility is that there's fewer students so the equalized the spending per pupil calculation puts pupils in the denominator if that number goes down then the per pupil spending goes up per pupil spending goes up compared to the yield that increases your tax rate even though total spending hasn't changed that's one scenario another scenario is that the revenue sources may have changed the education spending number the amount of offsetting revenue either money from the federal government money for special education from the state may change and then that increases education spending which shakes into a higher tax rate if you go through the calculation another revenue source I didn't really touch on this but sometimes there are districts that have money left over from prior years and there may be a decision to spend that money in the next year to reduce tax rates going forward so that would reduce your education spending and the district would decide to use those extra revenues another possibility is that the CLA is different so if the CLA drops then that property tax rate may increase even though spending hasn't changed so this is where it gets complicated with the statewide funding formula so if everybody else in the state has decided to spend a lot more money and your district hasn't it's possible that your tax rate will go up because we need to raise enough money across the state to make sure that we can fund all of the schools in the state so there is a sort of local impact based on decisions that are made outside of each school district so in the last possibility and this is what was talked about a lot last year it all depends on how much money is available in the education fund to begin with so if the education fund doesn't have sufficient needs that sort of balancing act that the homestead property tax has played historically to the extent more money needs to be raised it's possible that local budgets haven't changed but because the state has less revenue from one of those sources either the sales tax or if there was one time money that was used in a prior year that may mean that the local property tax has to go up to make sure that there's enough revenue coming into the education fund to fund all of the budgets in the state I think those are all my scenarios which I ran through quickly but there are a lot of sort of factors that can impact whether or not your spending doesn't change but your budget goes up cool can you go back to that slide and talk about the weight of the equalized people can you give us an example of the actual revenue for the weight population so in other words as soon as in poverty practically how much more on the money is the distribution okay I'm going to exercise my moderator to give you a chance to catch your breath so please save that question okay because I'd like to keep us disciplined for time and move on to our next presenter so I'd like to ask if Senator Baruth and Senator Ash join us up here and talk about we gave them quite a list of potential discussion topics for the legislative perspective and I'll be talking about special ed almost so Phil do you and Tim work a tag team or have you Tim you're going to be doing an act on that so I believe that Senator Baruth is going to talk about the weighting study for equalized people rankings and calculations that was proposed in the last legislative session so in a way it does relate directly to the future question it was just asked about equalized students so we're getting prepared here yeah I'm Phil Baruth I'm one of your Senators for Chitton County I'm also a New North Ender and I was a school commissioner out here for four years long ago I'm now chair of senate education thanks in large part to Matt who is senate president pro tem and picked me for that spot so first out on the school board you know that you have big big drivers of the budget one of which is special education and so what we've just been talking about is how the system is funded but I think at least probably some people who are here tonight are wondering what are we doing to contain costs for the system so special education as we do it right now in terms of health care so what we do now is if you spend money for special ed students to fulfill their individualized education plans or 504 plans which are somewhat different if you spend money on those you can get reimbursed for those expenses you can get reimbursed up to $50,000 and then you can get an excess spending that's perfect perfect well this is actual expenditures for actual individuals yes so some states began to do something called a census based grant model so in other words instead of paying for each individual service under which there's no real incentive to find efficiencies in services there's no real incentives to look at ways to say use one special ed teacher to teach across a spectrum of students and under that model if you think about the the excess spending reimbursement you get 90% of expenses over $50,000 so let's say you're spending $50,000 on a student there's a perverse incentive to spend more because you're going to get almost all of it reimbursed so we commissioned a couple of studies I won't go into the nature of those studies but one was on funding and one was on special education practices UVM did the funding study and a group called DMG did the other study and what they came up with UVM recommended that we go to a census-based model and they argued that we would provide better services to more kids for less money now I was a skeptic when they first presented that I always am when people tell me that I can have my cake eat it too and then have it tomorrow in addition but that's kind of what we were presented with the second report we had had something similar which is under the census-based model you give people greater flexibility over how they spend their money and you give them essentially a block grant to spend now for me, block grant is a red flag because in terms of national politics I think block grants are sometimes used as code for we're going to cut the rate of social security we're going to cut the rate of Medicaid by block granting to the states giving them more flexibility and somehow loan to hold poor people wind up with less support so I was a skeptic but in the case of education spending for special needs kids there are federal mandates that say you have to maintain the same level of support otherwise the federal government steps in and makes an IEP you can't under any circumstances not fund that IEP and you can't even say we're going to cut our spending from last year by a dollar you can't do it it's against federal law the ADA and other acts insist that you maintain spending so what the census grant model does is it over a number of years between now and 2021 with a census grant amount and then that will remain even as we go out in in soon years and will allow districts to under certain circumstances certain you know, exorbitant circumstances they'll be able to ask for more money but basically we're going to institute practices that will make expenses go down and then districts will be able to live within that block so if you would just take a look at this spreadsheet this is the simplest way to think about this it's a five year law that we pass so I would ask you to look down at the bottom first there's a couple of parts of this that have gone into effect on so on passage the agency of education is now out there in the supervisory unions working with them to communicate best practices to try to bring costs down on special day that's happening as we stand those little advisory units and task forces are going out into the SU underneath that we hired some staff at AOE to take us through this transition to the new funding but the most important one is the arrow at the bottom starting next year we changed special ed law and I would call it the biggest civil rights advance of anything that we passed last year because prior to this act if you were in a town that had choice school choice and there was an independent school in that town or an Burton Academy or actually they take all the students of special needs that applied to that but let's say you were you were in Manchester and you wanted to go to the Maple Street School you didn't want to go to your public school and your parents didn't want you to go to the public school you wanted to go to this nice independent school Maple Street School and all the other independents as it stood last year they could decide not to take you because you had a disability they might not say that's what it was they might say it was fit they might say it was they don't think they could be a service to you any number of ways they could not allow you to go there what this law did was to say you can go if you have school choice to any independent school they have to take you as long as you're a local education authority which has the right placements for IPs if the LEA says the best fit is an independent school you now have the right to go there so that was a major change nothing to do with funding that's civil rights but look up to the top line for 2018-2019 2019-2020 that is last year the coming year and into the next year we're going to have the same reimbursement model but we will be beginning the process of redoing a change in practice at SUs around the state then for 2020-2021 school that's the first year of the census grant and that's where we begin the process of instituting this census grant as opposed to the system of paying for individual expenses so in essence we estimate what a district is going to need based on past years and we block grant to that district that amount now here's the big change in 2020 this would be July 1st, 2020 as it stands now you can only use special ed money for kids on IEPs for 504s so a 504 is more kids with disabilities and the accommodations they need to go to school they might not need special instruction they might need a ramp or something like that so a 504 plan guarantees them their accommodations and IEP guarantees you special instruction so you have a severe learning disability something like that you are guaranteed by the ADA special instruction what this does is it creates a broader category that includes those but now also includes other things and for Burlington here's the key under this you will be able to use that larger block grant for students who struggle which includes English language learners now the reason this is huge for Burlington and Winooski I took my committee into the Burlington schools the very first month of the session and Superintendent Yol-Beng all the people who do cultural work with the students the translators we met with that whole apparatus and they all said the same thing we need more resources but as everyone knows Burlington and Winooski pay a great deal already to fund those services and we get very little from the state and federal government what this change will do is mean that we can use that money for English language learners being below learning level grade level so if we need to hire teaching tutors suddenly this fund can pay for that and if we need to hire English language specialists that can come out of this as well now here's the thing immediately when you hear that or when I heard it the first time I thought if we're going to expand money we're going to have less money for special needs kids but remember that's protected by federal statute so the state cannot spend less than what it takes to fund the IEP with a 504 so in essence what we're doing is giving greater flexibility to communities that have concentrations it can also be kids with behavioral issues so when you talk about the opiate epidemic a lot of times you wind up with children with severe behavioral issues so if you're a community that has a very high impact on the opiate epidemic this may wind up freeing up money for use of that now the main philosophical point here is that by opening up that flexibility you allow the school district to get money to kids and their needs show themselves at first so you prevent kids from going on IEPs if you don't have the funds to deal with their behavioral issues their reading issues some of those kids will wind up getting diagnosed as special needs kids so the idea is greater flexibility will allow fewer people to be diagnosed and by the way Vermont is one of the two top diagnosing states so we will diagnose fewer kids greater flexibility and there's a guarantee from the state and the federal government that kids on IEPs and 504s will not be impacted so my bottom line is I think as this goes forward you see it go out to 2024-2025 that's when the calculations are complete we know exactly what the census grant will be in place an excess spending kind of I'm trying to think of it in mechanical terms yeah some sort of regulator? not a regulator but if your spending goes over that line I'll think of it in a minute anyways circuit right there circuit right there can you just explain your excess spending because you have it here in fiscal year 2020 yeah so the way this is called extraordinary reimbursement oh I'm sorry extraordinary reimbursement so it's a different thing so extraordinary reimbursement is let's say you have a kid who moves in who requires $150,000 of spending a year that can have special ed services are very expensive the law guarantees that that person receives those instructional services so over now it's going to be $60,000 over $60,000 we raised it $10,000 because it hasn't been adjusted for a long time for inflation so going forward over $60,000 you'll be able to get 95% reimbursement that will remain so communities are not going to have one kid move in and see their tax rates spike so that will stay is when we get these reports back we're going to put in place an additional amount of money that you'll be able to apply for so if under extraordinary circumstances you spent your census grant you're not going to be high and dry you'll be able to tap the state for more money but the point is everybody won't be receiving that money all of these calculations together we believe will bring education spending down for special needs kids while servicing everybody's guaranteed mandated needs and allowing more flexibility in the district and I don't want to take too much of Tim's time but do you want to do questions now? we can fit one in yes so if I understood your right is the benefit long term is if I understand your right the benefit long term is kids designated as special ed kids and additionally the way the people from UVM put it was current practice yields current price so if you don't change the practices in the SUs it's going to cost what it costs now because we're federally mandated to pay those each expense under a certain rate so what you have to do is change the practice we've got additional people hired at AOE who are going out into the SUs now to communicate these practices from the DMG management group which should help reform the way special ed is delivered so between what you're talking about which is diagnosing fewer kids and then changing the way we deliver the services and getting rid of the perverse incentives sometimes to spend a little more having the grant model we hope all those things together will it decrease special ed spending? no because you have to maintain uniform effort under federal law but we hope bring down the rate of increase in ways that you'll be able to feel make sense? if I maybe I can ask you to save it because I'll cut into Tim's time but I'm happy to answer questions the whole point to my the stickler here is so that we reserve our question and answer dialogue time at the end which would be a perfect forum for your questions Tim, thank you good evening everybody Tim Ash one of your state senators before I get started I just want to say one of the things I've been very concerned with as I've served in the senate is observing in Vermont and elsewhere with the denigration of people who work for government at all levels and I think you saw tonight two of the finest representations of state employees we have both Jake and Emily are this is just one very technical and complicated area that they had to come expert in so I hope you come away feeling like we are very well served by people in state government I will point out though that Emily on the final slide she said okay this is where it gets complicated so I'm going to touch on just a few more topical items that I think might be of interest and one of them that came up in it it's lost in some of the presentation which was the common level of appraisal and this is really a message partially for people like the department and city council members but also our school board members we are long past due for the next reappraisal citywide and I think school board members city councilors citizens have to understand what might happen because you can't get away with holding that offer eventually the state by law might be obligated to step in and require it I think we know that Chittenden county has been growing property values are growing higher relative to other parts of the state which means that has implications for property tax bills here so politicians especially chief executives rarely like to have reappraisals done on their watch and yet at one point it's got to happen so the sticker shock could be bad if we don't manage it properly so I just say that as a cautionary tale a couple other items that happened this past year to try and get at this mix and I guess I would say one overarching thing increasingly people in the legislature say oh well when we passed act 60 and we have this statewide system and yet the public has kind of moved on from those days the public has largely forgotten that time in the late 90s where the discussions about a complete statewide plan where we all view the education system as a we're all in a together system people have really drifted from those memories of that discussion and so almost all the complexity we see up here is a result of one primary objective which is the state and by the state I mean the legislature, governors and all the people who elect those people have said we do not want a kid in a small rural poor town have a terrible education just because they grew up in a particular area so all this complexity in my opinion that is the explanation and there are some who would say well those people should move to another place with better resources but of course life isn't so easy I say that not as an excuse of the status quo because there are changes we should make but life would be easier if we were all in it for ourselves as discreet communities but we've chosen a different path as a state one of the great challenges of trying to work on cost containment statewide I'm about to turn into a stand up routine now let's see these are but one of the things that we struggle to do as a state in terms of trying to better manage costs and have school districts work with each other to learn from each other is that school budgets across the state are not all created equally and by that I mean if someone were to ask how many paraprofessionals doing this kind of work are there in every single elementary school in the state no one can tell you that answer if people ask for lots of expenses at a school district by school district level the short answer is we can't tell you what that is because the accounting systems that have been used have been just like the uniqueness of all of our schools they use different accounting systems so one of the most dorky things I can tell you that we are trying to move forward with is something called a uniform chart of accounts so uniform chart of accounts operates on a basic premise that it would be a lot easier to view this total system if people were accounting for their expenses the same way accounting for FTEs the same way and I will tell you a brief horror story I was sitting in the appropriations we were finalizing the budget we were saying we have to get this done we have to get to the place where everyone is using the same system some state employees said well it's going to take four more years and I said four years to get 200 school districts on the same accounting system and I said so let me put it in perspective in 1941 the United States entered World War II mobilized an agricultural economy into a wartime economy took on fascism on several fronts in one World War II and we could do that faster than we could get 200 school districts on the same accounting system then someone noted that the effort to do this had actually started four years earlier I said alright well throwing World War I and a couple others so the good news is we are actually on track to start accomplishing that and it's not I'm making light of it but it does take time we now have school districts that are the sort of pilot rollout and that will continue to accelerate that will be good news for policymakers and the public so you can evaluate how your particular school district handles these expenses relative to others two things we did last year one we're moving towards a statewide health benefit for teachers this is hopefully going to help both parties in collective bargaining negotiations focus on education and core activities while still enjoying a broad public health benefit we also set in motion a task course to look at the question of ratios of staff to students this is something that some have cited as like an easy thing so the governor this past year I'm not being critical or partisan put out a statistic that said if we moved from four and a half or so students per faculty and we made it up to five we could save 70 million just like that but the problem is in order to achieve those numbers you would have to go to you'd have to go to Barnes elementary sorry sustainability academy and remove 0.03 of a teacher then you'd have to go to Rutland elementary and take out 0.11 it doesn't work so easily to just pull out one FTE at a time so the question we're trying to do is say how can we look at the districts all through the state figure out who's best managing their personnel to deliver a high quality education not do it in an arbitrary way that has a really negative impact on the education that's delivered one question that has frequently come up and I think Jeff has put it on a list of topics is the prospects for moving to a system based on income only I can't really tell you what the prospects are I do not suspect that even if it had the legislative will power to get it to the finish line I cannot suspect that our current governor would sign that into law but I will say just in the simplest terms what the challenge that would be presented by an income only system is and to me this is the this is one of those core questions that enthusiasts for it have to ask right now 70% of homeowners pay their school tax based on their income 70% of homeowners already the 30% who do not are the 30% of the highest income households so if you were going to move to an income based system theoretically the point would be to relieve pressure on middle income payers in particular in order to do that you have to bring in more money from somebody else so it's that 30% theoretically from where you would draw additional resources I'm oversimplifying a little bit but that kind of holds true you have to balance the possible income gains the income payments of those higher 30% income 30% households with the potential changes in behavior of those same households especially people at the very highest end those who have multiple homes can change their primary residents easier than those who only have one residence and if someone goes from a Vermont resident paying on income and says oh my god now I'm getting really soaked I'm going to become a second homeowner and move my primary residence to wherever else you don't have that revenue coming in so that's the risk assessment that the strongest enthusiasts have to make will people change their behaviors in a way that will actually not allow for predictable revenues that we need to pay for our school so I say that not as a deal killer but just as a reality check about what the tension is there and then the last thing I'll finish with a personal interest of mine and it really touches in part on what Phil was just discussing as it relates to special debt one of the things that we are increasingly seeing from some is pretty steady attacks on teachers it's that teachers make too much money their health care is too sweet it's all about how teachers are over compensated and there are too many of them and just a couple quick reactions first of all most teachers that we all know they are making a good salary for a hard job some of us might think they should get paid more some think they're getting paid just right most people wouldn't say they're lavishly overpaid the number of actual teachers has not been rising in some huge fashion some people think that we've got lots of additional classroom teachers people who are teaching math, science, history and that our problem is we have too many electives all over the state teaching Chinese and Latin and all sorts of other stuff but those numbers have kind of flat line even in some cases gone down as we've seen the student defines what has really driven the pressure in my opinion is over the last 20 to 30 years a change in what schools are doing schools 30 years ago were paying teachers they were buying lab equipment, books you know all the kind of basic stuff that everybody in this room I think imagines from when we went to school today walk into any school in Burlington or anywhere else in the state most of them are really doing much more than that they are not only providing that core education they are also providing a great number of human service supports to kids who are coming in with a whole set of different problems than they used to that is not a free and it's not just the special education cost that Phil described it comes in the form of paraprofessionals who are actually not there specifically for an IEP student to really manage difficult classroom dynamics it's coming in the form of additional psychologists social workers in a bunch of positions which have really proliferated over the last 10 to 15 years and so now when people go to pay their property tax bill in their minds they think oh gosh I'm paying a lot more because there's too many gosh darn teachers and they make too much money but really what's happened is that that bill, that tax payment you're making is really for education plus and I wish we could go back in time many years as those individual decisions were being made and be perhaps a little bit more deliberate about how we were going to pay for some of those things because what we've done is really created a lot of animus towards public schools in many cases when in fact the public school is not just doing a very hard and good job on public education delivery but it's also picking up slack in all the other parts of our society where we've probably fallen short so to me the chart of accounts that's why it's so appealing to me even as I say it's a very dorky thing to get up here and talk to you about but it will enable us to start better understanding why we're paying really for education and human services and what we might be able to do about that so those are some themes that I thought I'd touch on Phil touched on one of the hardest things that we've done this was a multi-year effort and Special Ed as you saw is one of the primary what they're called category categorical expenses it really is the dominant one so trying to get a handle on that Phil played a huge role in so that I will leave it so that the question session can continue. Thank you. Thank you very much. Phil so a couple of you did turn in your homework ahead of time so we'll kick off with that and then so quickly the first question really for Jake and Emily is about related to school bonding votes and how are the results of school bonding votes reflected in taxes and is that subject to income sensitivity? Sure I'll start so on a school what's the issue bonds for funding the school what happens is there's a payment on the bonds that goes on for many years the life of the bond and that becomes part of education spending so it goes into that calculation we've been talking about so it affects everyone who pays based on property and everyone who pays based on income too because remember the income rate is for people spending divided by the income yield so there is a myth out there actually last summer they were thinking about doing a bond in Fairfax and a constituent email in our department and I was talking to him and he said that he had been told that those who were income sensitized would not have to pay so don't worry about the bond because if you're income sensitized you don't have to pay and that's not true if you're income sensitized you still have to pay your tax rates will go up if you're under $47,000 of income you may have enough relief through the circuit breaker that you don't feel it as much but generally everyone will pay for a bond thank you James I guess we're both senators here I just had a quick question this is really confusing I'm still confused but I really think 20 years ago when Act 61 was so effective they instituted the income sensitivity it was driven us 20 years ago the state of Vermont per pupil spending on a nationwide basis was 12% higher than the national average now it's 85% the city of Groningen school budget in 2002 was $26,000 $26 million it's now $86 million so I'm wondering why the income sensitivity was in there in the first place some people that high property values will drive them out of their homes but they're either the taxes are too high or people are living above their means when I moved to Groningen 20 years ago I could afford my property taxes I'm having trouble now thank you I can't really speak to the thinking of people in the 1990s because I was not in the legislature but I get your larger point one thing I will say is if embedded in part is the notion that people who are paying based on income are more willing to vote because they feel like they don't have to pay much if their school budget goes up it's actually towns that have the most money that vote to increase their school spending the most and districts who have if you look in communities like Milton and other areas which have had more modest income levels by Chittenden County standards they actually are often the ones with the most highest percentage of people who are income sensitized but actually are willing to spend the least on their public schools so statewide there's been a mythology that people who are more income sensitized are more likely to spend a lot more on schools because they feel no pain the other thing is some of the comparisons I'm not going to tell you that Vermont's average spending for people is not much higher than the national average it is what you've said is a true statement although states are probably adding up all the expenses the same that's probably also a true statement we also have a state if you compare us to somewhere like Wyoming which has a roughly similar population they are unlike us in that most of their population is in a few small places whereas we have our people spread out and we have a history of letting people operate their schools so I am I believe we're in a transition point that your question gets at the heart of when we've had clashes with the governor over the last two years around some of these issues in part it was based on a surprise factor the surprise factor was an expectation that the governor who had always talked about local control of school budgets still believed in that basic principle and so when we entered into the normal end of session mixed between the administration and the legislature we operated under a presumption that local control was still a principle held by the administration instead what the proposals have been have been things to say you know what enough's enough let's have statewide control and that's a important moment because if there's statewide control we could put the clamps on lots of things I'm not sure if the public wants it in stories we did not but anyways I don't mean to ramble to your answer I don't think income sensitivity itself is the primary culprit for why we have the numbers there are a number of factors that might be one but it's not the only one as I see it I have a question here and I'll paraphrase a little bit is there a mechanism and I'm going to ask the question and then we can see who needs to respond is there a mechanism for towns to pay or contribute to maintenance of buildings and construction of school facilities instead of having that all embedded in school budgets so if not why not so that sort of goes to the heart of defining you know what constitutes education and schools expenditures I just if I can I just want to speak to this a little bit so at a certain point Ramon used to provide assistance in building schools and going you know going back historically and so you know Flynn or Hunt or schools that probably had state assistance in ways that we no longer do and the word moratorium is used to describe something that I don't believe is in statute the so called moratorium on school bonding is not in statute it was more that state for a period of time on an annual basis was making a matching amount available and then discontinued it because the obligation to actually give the districts the money we promised had built up to more than $110 million and so we wanted to pay the districts back a lot of districts went ahead and did it but we never gave them their match and so I think in all the years Bill and I have been there we've actually been in the business of giving districts the taxpayers locally their money back but not adding new so it would take affirmative legislation to recreate it right so in essence in that way it's an understanding in the institutions committees of the House and the Senate that we're not going to be in the business of assisting with those capital expenditures I love the opinion that we need to revisit the moratorium and we need to think about targeted circumstances in which we can lift it somebody mentioned Act 46 a while back under Governor Schumann's administration I was talking with them about if you were six communities that came together to form a new district a unified district we should provide an incentive to create if you needed one a new high school that served that entire area we never got to the point of pulling the trigger on that for exactly the reason Tim says there are still debts being paid that were incurred long ago and also people don't want to return to those days of the state racking up big on-debt in terms of local spending since we've gotten out of the business of that but if you think about the really dollars that Burlington is going to bond for if we were back in a time when the state might pick up a portion of that it would be really helpful to us so not just for Burlington's sake but for everybody's sake I want to get a discussion going on that we had an event at Truex Commons a few months back where we were talking about that they do design work for building new schools and we were going to testify in my committee assuming that I'm chairing that committee so we'll see where we go since you have the microphone I'd like to go back to the special ed question was that back there Chris? I can give you a minute because there's something I wanted to make sure I mentioned I don't know if you guys remember but Carol Odie will remember there was great interest in getting AOE to do a waiting study to go back to the calculations for equalized pupils because many people in the Burlington district school board members, the superintendent believe that the waiting formula is not accurate to our needs and needs to be updated to include things like the expenditures we do in real dollars on English language learners new Americans as well as special ed and other extended services so I had pushed for a waiting study got it passed two years ago secretary of education Rebecca Holcomb refused to perform the study she said she didn't have enough money and she had not wanted us to pass it so she wasn't going to do it it was a mini constitutional crisis and so we went back and forth back and forth finally her bottom line was give us $300,000 and we'll do the waiting study so we didn't do it then but in this special ed legislation you'll see on your sheet we did put in a waiting study and they are now undertaking that so we did get it it took a little while but there we are I would start out with what Tim mentioned earlier about our state employees I think personally about our legislative contingent here I look for the work and the energy folks put in to advocate for all of the work we have my question here looking at this new paper you gave us with regards to the census grant my question is if we have a second grade and it's 22 kids in the class and we have seven kids that are special ed IEP 504 five English language monitors what calculations are factors of going into determining the associated cost to make up this grant so what analysis has been done maybe by schools that have good outcomes with that percentage of population how is that being calculated and in real dollars what does it mean for this waiting so we had the slide on the wait we said okay these students are waiting at such a point how does that translate into revenue so do I get another $1,000 a kid $500 a kid $1,500 a kid but more importantly how is that determined so as I said under this new model you have greater flexibility different categories of kids you can spend that money on that and by now I mean after July 1st 2020 so if you look on the sheet that I gave you you'll see something called the advisory group and there are three advisory group reports so what they're going to do is consider things exactly like your question so if we've got the traditional spending on special ed now we've got these other groups they're going to do some of that work to figure out how do we estimate that larger so they're going to deliver a report on January 15th this coming January then they're going to give us another one on the following year and another one on the following January and so that question is one that they're going to do essentially what they're going to be doing is refining and refining and refining the estimate for the census grant so it's not just going to be your historical spending on special ed it's going to be also estimates of these other kinds of spending and they'll come up with a census grant the thinking is that it will still wind up saving us money and increasing flexibility but only if we have that's why it's out five years we want to make very very sure that that census grant amount is not way too little and not way too much but that we're sort of in the ballpark with some circuit breakers if your spending is excess in an extreme amount it does like I said I appreciate your okay we ended up with another question but before we get to the last couple I did want to take an opportunity to say that we will have access to your slide presentation and what I think the plan for that is that we will end up posting that on the MPA website I think that seems like a good place for us to make that accessible to the new north end so we'll work on that in terms of posting that material on the MPA website so folks can get it and certainly if anybody if I have your email in the back there and you request it I'll send it to you directly as well okay so related to the weighted per pupils does this still show that 7-12 students can cost more than elementary students could districts be given choice based on their own student body in terms of shifting the weightings around or is that I'm sorry whose question is this when you say could districts be given choice mean choice of life if first that's real true I don't know why high school students cost more than elementary school in the interest of prevention in the case of Burlington it would seem that we would want to invest more resources and restructure especially because of Act 77 you know could we look at that option to restructure and put the money where we need it I mean we need it for high school students if you're asking can we can an individual district adjust the future well I know we can't, I'm just asking you guys to think about that especially because we have a district that has higher enrollment and elementary and we lose kids by high school so there's just all these little differences to go back to the beginning the other thing we request to do high schoolers really cost more than elementary schoolers and the statute now that AOE and the secretary have to periodically redo those calculations with new data so when I put in for this waiting study I dropped it into that piece in statute that already required the secretary to redo the calculations so we were just expanding a responsibility that was already there so this waiting study will answer that question to what extent in other words should the number go up again in terms of whether a district has more younger kids or older kids or preschoolers it's the luck of the draw really and the same with special ed so you care for the children you have at the ages and the costs that they are all we can do is try to make sure that those are true if I could just add one element to that going back to the presentation that you saw earlier and I feel weird pointing at this because every other time it would be a sultry young woman now one of the things with the waiting of English language learners and kids in poverty has been a discussion point here but one important thing back to the presentation from earlier is that because it's like a closed system let's say that all of the populations for which Burlington school district gets that waiting and bump and equalize pupils if that needs more money coming to Burlington as a result it means everyone else's taxes go up while Burlington enjoys that benefit of dollars coming in now that might be fine it just makes it a different conversation with our peers in Montpelier to not have that same population base so one of the other things that should be alongside the discussion about changing the waiting of students is whether it is appropriate to be able to use other sources of funds for particular uses so in the old days people were concerned that a community that had a commercial base would get extra money and then pay for much better schools than other communities could but when it comes to helping refugee students into the classrooms which we know comes with an expense I don't think that's quite what was envisioned when Act 60 was created in terms of equal education those are supports just so kids can be ready to be in the school so that's something that might be something we all work together on to figure out how we slice that one districts across the state will try to gain whatever system we create but if there are other opportunities to provide support to districts that have specific positions specific challenges I think we need to think about that because otherwise we're just pitting one district versus the other if I could follow up on that Tim are you alluding to the use of pilot funds or is pilot has been a Burlington issue in part because it got taken away but the thing is but what I'm saying is that under the main premise of Act 60 was that some communities have money from pilot sources and others can't what I'm saying is flip it on its head the issue is really about are there expenses which some districts have that others don't which are sort of extra ordinary to education and that might justify being able to use other sources of revenue so pilot could theoretically be one of those sources but probably something at the state level would be more equitable in a sense the pilot money yes that's my answer Dave I'm going to squeeze in one more question if you have this would be a good time so I'm Dave Hardin at City Council in the North District and how we got here tonight just want to tell you how we got here tonight we got here tonight because Jeff and his wife Nancy put many groups together and this is kind of like the end of it like we've met many times at Jeff's house we've met several teachers Senator Ash has been there at the house this just didn't say oh we're going to meet one night and discuss this this was a lot of work behind this there were many meetings before this and we have school board members who to me it's just I mean of all the jobs right senators house representatives city councilors school board members I mean just taken on the chin right it's 100% volunteer they put in tremendous hours and you know we're so fortunate to have great school board members in this community they're willing to put in the time they're willing to put these together these meetings together at the Comstock's home with Jeff and Nancy and make this all happen this wouldn't this doesn't really happen in a lot of places and we're very fortunate so Jeff I want to thank you I want to thank your wife for putting this all together and I still want to thank the school board members because you've really played a very important role in this and so I appreciate it very much thank you for wanting to be so special thank you okay we we made it we're going to be disciplined it's nine o'clock time to go home thank you so much for showing up and making this attempt a success