 Hello there and welcome to Under the Dome from TownMeetingTV. My name is Bobby Lucier. Under the Dome is our coverage of the Vermont Legislature connecting you with the decision makers that represent you down in Montpelier. And today we have a special episode of Under the Dome focused on education funding as TownMeeting Day comes up and we are looking at school budgets here across the state that are much higher than they were in previous years and there's a lot of different factors that are playing into the education funding picture this year and we are very lucky to be joined by Representative Carol Odie as well as Senator Martine Laroculic who are going to share with us a little of this very confusing and massive landscape of education funding so thank you both for joining us. Thank you so much for having us. Awesome so I'm going to start with a really big picture just if I can ask you all to just sort of explain at the highest level how does Vermont fund its schools? Okay well I'll start with that one and before I even start with that one I want to say that Martine and I fully support the work of the school board and the superintendent and fully support the school budget for Burlington and so well back in the back way a long time ago in 1997 the Supreme Court in Vermont said you are not adequately and fairly funding education in this state so things had to change and Act 60 came out of that and later Act 68 and what we do is we collect all the property taxes and then we give them out and this has to do with what's happening now in Montpelier give them out equally for every child you would give it out to children based on their needs and so that would be waiting the children waiting the students and so a high school student everybody knows costs more to educate than an elementary school student we have sports and clubs and extracurriculars all kinds of things at the high school that we don't have to pay for elementary schools so they were waited at the beginning at 1.25 so a little bit more than one and but back then the superintendent in Winooski George Cross and I I was at the school board at that time in Burlington we knew that we also needed a wait for EL students, English language learning students and we were only able to get a very tiny wait for them so what happened over the years is we never had the correct waits in the original formula and then I knew that and when I got to Montpelier as a legislator in 1990 and 2016-17 was my first January there I worked with others and we got a study so we would exactly study how students should be waited and that is what we have before us in Act 127 I was just going to add I think it's important to know that before Act 60 and 68 which really tried to equalize and add equity to the funding landscape in Vermont we had gold towns and non-gold towns and these gold towns that were quite wealthy were able to contribute more and have a more robust and well-resourced school district and schools and that was you know when these two acts came around as Vermont as a state we decided to say you know what this isn't equitable you shouldn't get an education based on where you live or the quality of your education should not be based primarily on where you live so that's why you know these acts came around to try to you know make a more equitable escape and which I would say was achieved and as much as we have a complex maybe a little bit of a Byzantine funding formula and way to pay for education it is very equitable and so we can really be proud of that in the work that we're doing that's complex but equitable so then Act I haven't fixed those weights but that meant that we in Burlington all of the things being equal at the same tax rate would then get more money back to run our schools than before but that also meant that at the same tax rate the schools who had been over-weighted were going to really suffer so what would we do to help them and what we tried and the House the Senate and the governor all signed off on this method was to cap the put a cap in a five percent cap in to protect the schools that were most impacted as it turns out this happened in a year where instead of single digit increases in budgets which is what we had been seeing it was a year when there were huge increases 18 to 20 percent increases in budgets just generally and that's of reasons which I think Martin will go into in a moment but anyway we saw that this was playing out and we said we have to get rid of the caps so you'll see Act I mean H850 gets rid of the cap and it also allows the Secretary of State to go in and allow budgets to be re-warned if people school boards want to go back and re-warn them now a lot of school districts are spending up to the cap who didn't absolutely need to like they didn't have to put in a new roof but they decided well there's a cap we're going to do it they will then I think we think will bring that spending down from a $250 million increase statewide to much less maybe 200 or less million statewide. Can I give a little bit of background to 127 because you gave a good explanation of the weights I think it's important for folks to know that Act 127 from last year right? was correcting weights that had been determined about 20, 25 years ago so they were long overdue for an update and Act 127 was really looking at EL students, students living in poverty and students living in rural areas of the state so marginalized communities that really needed a little bit more of a boost in terms of their weighting so I wanted to give a little bit of a historic update on that. Act 127 is a relatively new piece of legislation totally new and totally needed for Burlington that was something that was very hard to achieve this change and we did it with many people working together for that change. Okay so we have this great formula for everyone because if it's not fair for one it's not fair for anybody. We have the H850 fixing a cap that all of us thought might work and didn't now we have school spending. Why did it go up so much? Martina I know you have things to say about this. Yes I do so I could talk really broadly about some frustrations that I see in the landscape but maybe I'll get to that a little bit later. Up close and personal what we've seen this year are health care costs that have been up what did we say 16.8% which is... But that's going up for people who are buying health care everywhere. Which is not a local decision this is a statewide contract that is negotiated so that was something that was out of our control obviously. Out of school boards out of the Burlington school board's control exactly it was state level ESSER and ARPA funds that were incredibly helpful during the pandemic have been have dried up are going away. They helped put in place mental health supports. ARPA was really geared towards some building updates like HVAC systems so that we could have ventilation care in schools but there were just these really needed supports that that money came in and really helped with so the fact that it's going away has been difficult especially around the counseling mental health bringing in health care providers into school as well as you know just all kinds of supports that were greatly needed that came from you know internally in the school district but also Howard mental health and other folks who came in and were able to help counselors so that was a biggie. Also learning needs learning needs as well. Learning loss. Absolutely learning loss so we have that we also have as Carol and I were talking about in the car inflation which is something that is out of our control we have an administration in Washington that's doing their best but we've got these you know basically a war in Ukraine we've got issues with supply chain in and out of China so that's been difficult and problematic to say the least so that's another issue. And that is inflation is coming under control and is coming down still in our school budgets that has to be accounted for. Yeah we also had you know we had to negotiate contracts and it was a tough year to negotiate contracts because coming out of the pandemic there was this thinking and it was real that we were going to be losing teachers and administrators it was so hard to be a teacher and an administrator during the pandemic and I think a lot of folks are deciding to leave the profession we see it all across the country so that negotiation piece was much more competitive as it needed to be so we did see wages and as I said earlier benefits go up as well so that was another stressor. What else am I missing well the sales tax the property taxes aren't the only thing that go into the education fund also sales and use taxes 100% of sales and use taxes go into the education fund to help pay for education and in fact 100% of lottery proceeds go there 33% of the vehicle purchase in use and 25% of the rooms and meals and alcohol taxes go there so that's not just property taxes paying for our schools so the sales and use tax way up during the pandemic by millions tens of millions of dollars people were buying they were buying things and renovating the kitchen or renovating their homes and doing all kinds of things and then when with that extra revenue we use the extra revenue to buy down what otherwise would have been increasing property taxes so we use some of it to buy that down because we thought well we shouldn't just sit on the money when we could give property tax relief and then some of it we use millions and millions we put into reserve and into funds that would help us going forward however now sales and use tax revenue has gone more down to where it was and so now there isn't anything to use to buy down tax rates on property and so now that has been another reason that property taxes are growing up because the education fund is a closed fund what goes into it goes into it and then local school boards make their decisions about what to spend and then we at the state level set a yield and then we send out the money to cover those school board the school budget costs and to your earlier question about how does the education fund work you know it all goes into this big pot and then it gets distributed out I have to talk about school construction costs because even though Burlington you know we're building a new high school and we're going to bear the brunt of the cost of that new high school it is it will be born by everyone in Vermont same thing if they're doing a project at Woodstock Elementary School you know eventually it everyone in the state has a share in the work being done on that school because of the way we draw funds out of the ed fund so and in fact I want to say that when I first got to Montpelier I thought oh we need to put back in construction aid where we would get one third construction aid or one half construction aid but the way the formula works at 68 works we're better off without that construction aid we get more help to do our buildings in Burlington under the formula than we would with a straight percentage however going forward going forward there is a construction task force that met and now our education committee that Martin's on and then the education committee in the house and I know our houseways and means committee will be looking at how we go forward with school construction aid because we know that many school buildings are contaminated or just aging have second oldest school building stock in the country it is pathetic some of them are dangerous we have to take bold action part of what came out of the school construction aid task force that was also we are going to have to think very seriously about do we can we sustain all of these school buildings we have some schools that have 40-45 children in them we have a school I won't necessarily bring up towns with 100-200 empty seats we really are going to have to take a close look at how we move forward where do we invest our money we can't necessarily invest in every single structure that we have well we can't we won't just to take for example the Burlington High School do we know how much of that is actually being paid by Burlington taxpayers versus paid by the state or is that so far we know that we were able to get $3.5 million for Burlington to renovate the space at Macy's but no money toward the payment of the lease then we know that we were able to get $16.3 million I think toward which we haven't gotten yet by the way toward the costs of removing the PCBs and disposing of them so that much so far we have then within the formula itself there's help for us but that is a good question and I don't know if we can determine we could I'd have to work it out but we will through the formula everyone will be paying a part of our high school costs in Burlington there are so many factors going on in the education funding right now there's the high school bond, there's Act 127 and then there's also the CLA and the CLA was I remember when Superintendent Flanagan came in and talked about you know that they worked really hard to make sure that their increase even if that 5% cap from Act 127 was removed would only be a little bit over 5% and then they were hit with this huge CLA number so is the CLA the common level appraisal process working properly? Well it is just the way the weights work properly we get taken into account I mean we could change that but as it exists now in the formula just as the weights take into account equity for our school children and our property taxpayers the common level appraisal takes into account equity from town to town so towns aren't sending in too little or too much depending on the value of the real estate in the town it could be changed but right now this is another pandemic issue many people sought refuge here in Vermont when the pandemic was happening some people stayed and they're working remotely they bought site unseen property driving up the cost and they don't even stay here they just want to have it as an insurance policy because we're such a great state and then there are some investors who've come in and bought up housing and are making money on renting it rather than having it available for people to buy and live in that exacerbates our housing crisis but these things have driven up grand lists so we could expand the tax base which is great and that lowers property taxes overall however it depends on where the fair market value is highest to see who's going to be most impacted when the shifts happen so that everybody is basically paying on 100% of their assessed value just sort of capture what's going on with the Burlington budget folks are voting on a budget that represents 15.6% increase in their education property taxes and that's the school tried their best to balance out the programmatic increases with programmatic cuts and then had to service the bond for the Burlington high school and had to deal with an increase related to basically property market value for property in Burlington skyrocketing during the pandemic both of those things are up against a school district that has tried to not spending way out of their pocket in terms of what's actually in this budget there's not a lot of new spending in this budget I think everyone I know everyone did their utmost to try to keep this level we have invested in things like literacy just because there's been an outcry well deserved outcry across the state that our literacy scores are low and that we need to get kids reading again and reading up to the level where they should be so Burlington has invested in that and if you wanted to pull up the yeah I think we have it here and we can ask Kevin if you could pull up the graphic here you can see there's the ballot language that is on the ballots that all of us should have at home now line came last week and there yep so you've got your total budget there of oh was this last year's oh shoot you know what yeah you do have last that is last year's well while you got 25 20 okay there we go sorry there we go we are I was going to say that seems slow but yeah so we are up this year to 104.1 million so yeah wages health insurance and debt service and utilities that was all up you know close to $6 million and those are things that again I explained why the wages are up and then the health insurance was beyond our control same with the debt service and utilities then you do see that the borrowing is coming up for the new high school we did up to bond for that $165 million and then you do have some strategic plan investments like I was talking about literacy leadership recruitment and mental health we worked on the strategic plan a few years back and it was a really robust community project and we are staying true to the plan that we put forth and so it really does behoove us to invest in those four priority areas then you can see that we also have reductions in central office staff and for FTE teaching positions so those reductions do offset the investments that we've made in the strategic plan so you still end up with that 14.84 increase because of the things that we talked about earlier I wanted to go quickly back to the CLA we do have in process now a way to separate property tax types so that the burden of property taxes can be shifted somewhat to second home owners or to whatever we decide to shift it to away from primary households is that something that's in effect now or something that you're working on it will be nothing it's in process now we don't have as many levers to help this year but going forward we will be working both on financing levers and on education how we structure education in this state to bring down the cost of property tax payers and I just want to be sure that you know that the current statewide situation truly is untenable we cannot increase spending like this property tax we cannot bear this burden and the state can't bear this burden so sometimes it takes what's happening now statewide such an increase in education spending to make the hard changes and choices that have to be made and this is something that happened back before when the Brigham decision came into effect it was untenable what was happening then untenable now so we got great change coming out of that and we'll have to make these changes now going forward it's not going to be easy but it has to be done no I agree and feel free to chime in but as vice chair of senate education you know I'm calling for and I know I'm not the only one doing this but I'm calling for really a moment where we can bring all stakeholders to the table so I think we need educators we need business folks we need folks who are really invested in our approved independent schools or private schools we need economists you know everyone coming to the table to talk about where we are and where we're going to go I don't feel as someone who is working on an education committee that we have a strategic plan if it's there I haven't seen it and I'm certainly not living under it so we need a plan we need some guardrails for the next 20-25 years we know that Dan French the secretary left almost a year ago I think the governor announced that March 17th of 2023 it's been almost a year we've had an interim secretary so the leadership is not there and so that would be that would be a start and things that we need to look at I've already talked about our school building stock which is incredibly old and decrepit so looking at where we're going to invest and what schools might need to close we love local control in Vermont we love to make budget decisions at a very localized level but that is expensive and it's often inefficient so we're going to have to look at how do we shore up our efficiency and on a statewide level and I really think with efficiency will come a better handle on economics and on increases and we did work on Act 127 and the weights there was a summer study committee and they understood they were told by Tammy Colby if you are fixing the weights you must also look at some kind of a foundation formula where you decide an amount of money that would be adequate for education spending at any amount above that and it would be weighted for the students but in any amount above that has to be very expensive dollar for you to raise right now it's too easy to raise your spending for many places it hasn't been easy for Burlington but it's been easy for some others and so it has to be hard for all of us to make the decision to spend more than what an adequate amount would be and in fact we just took testimony last week regarding how to begin that work and I think that that's one of the next steps is whether that will work for us we touched on it a little bit but just when push comes to shove here this year I mean before the cap was repealed it sounded like the education fund was looking at like a serious deficit and so what will the actual impacts be in schools between the proposed funding that is being requested of the education fund and what the education fund can actually bear what does that mean in schools or should we expect to see a reduction in sort of teachers or increased class sizes or what will it look like for this education for at least for this school yeah I think in some communities that might be losing some taxing capacity these were these are schools that have been sort of over weighted potentially in the last 20-25 years those areas if they're losing some taxing capacity they are going to have to make some decisions as to whether to increase their spending or make some cuts and create some efficiencies in what they're doing and that you know we've sort of said that all along as we were looking at 127 was at some point you know there has to be a balancing out of of the funding and of the resources well we still have now in H850 we took away the cap but we did provide a penny per percent of harm that you that you would incur so those districts most impacted by the new funding formula will have a lot of help then there'll be places that many many places that saw the way act 127 was working out and decided there's room for us to put more in spending into our budgets without feeling a negative impact without the cap they will feel the negative impact I expect that those budgets will certainly either fail or they'll go back to the voters with a different first budget that will be less so the education spending will go from a $250 million issue down maybe by $50 million we think possibly but it will still be $200 million with a problem and because of all the things that we just talked about it is important though can I just bust in for one second to not conflate act 127 with education spending right act 127 has no bearing on education spending or the amount of money that's in the ed fund it's a redistribution of monies right and I think I heard a lot of people conflating that in the senate in the house over the last couple weeks but as my as senator brood the pro tem said at one point you know like I said earlier we've made these local spending decisions right and that is what ultimately puts the pressure on the act 127 so it's important for people to keep those separate yeah well this brings up a question for me also I mean this is maybe a little bit more forward looking but so we've relied on property taxes for a long time to fund our education system do we know for sure that that's the best way to fund education or is there an alternative that we should be considering well there was an income tax study to see should income taxes be used more or instead to fund education and that study can be found online at the joint fiscal office web page and the upshot of that was that's a that's it's very it may not be able to be workable at all but then taking a step back act in 1968 our income protection acts they protect 70% of property tax payers from paying property tax they do not pay property tax they pay a tax based on their income to their protected 30% of remaners are paying on their property so there is a kind of a there's already income tax and the right okay so there is already an income element for folks who are under a certain level of income they're not paying a percentage of their property tax a certain amount that their property is worth and then I'll ask one other follow up which is sort of mechanics so there's the homestead tax rate and then the non homestead can you explain the difference between those two well a homestead is your home two acres that surround it and anything beyond that is taxed at a different rate and also that's for principal dwellings that's a homestead is principal dwelling where people actually live then there's the non homestead if it's not your principal resident if you are business if you are a landlord who rents out property or manufacturing everything that isn't all home is non homestead and those two things are taxed at different rates but over the years those things have been somewhat well many years ago those things were different pretty different from year to year now they're always within a certain ratio of each other in the past number of years that is a lever that we have we could increase the burden on the non homestead in favor of the homestead your primary residence we could do that do we have a sense of like how what proportion of the education funds revenues coming from homestead tax versus non homestead don't have that number right here but like is it roughly similar or is it one like a much larger source than the other one okay that's okay it's not that I haven't seen it before I just don't have it in my mind totally I know that you guys are also balancing a million other bills in your head right now so I appreciate you guys coming and talking about this with all of your expertise on it so one thing that I read recently the governor signed 850 and also kind of seemed to take a little jab at mentioned you know I had an approach for cost containment and cost control that nobody listened to me what was the governor's approach to controlling costs and how might that differ from the legislative leadership's approach if you can speak to that well the first thing I'd like to say backing up is we all signed on including him to act 127 he signed it both houses passed it and now we started act age 850 in the house went to the senate he signed it so we're in accord with that for what we do moving forward probably our goals are similar to have better schools producing where kids do better and where the burden on property taxpayers and the burden on taxpayers of all kinds is as low as it can be while still having a good great education great schools so how exactly we're going to move forward well we're all struggling a little bit right now to figure that out and as I said we're working on how we can separate out the non homestead into different sections of how things will be taxed working on that something that the governor was very much in favor of which was to have the health care negotiated at the statewide level and that turns out to be possibly costing a little more than if it weren't done at the statewide level but we have an idea for how to fix that which is to make sure that when talks break down and people go to and the sides go to arbitration that it cost containment is something considered by the arbitrator moving forward and how things are settled for that. But from my point of view to your question the governor didn't give us a clear path on how to achieve his goal of keeping costs down other than cutting from my perspective other than cutting salaries and benefits I'm not aware of a again strategic plan I have to bring it up for the state it just wasn't clear to me and cutting benefits and salaries would mean a departure of more teachers so a limited workforce how are we going to educate our kids to me that's not a clear path and it's not a sustainable plan so you know we're doing what we can with a less than perfect situation for sure so anyway I do I bristle a little bit sometimes at some of what's said in terms of our education system in the state. I like to think that if we're both the governor and the legislature on the same page in terms of quality of education and the least amount of burden on taxpayers possible which I can't imagine that anybody isn't on board with that then we just have to figure out a path forward and that's tough and there'll be disagreements here and there but and I got a little into the weeds when I said about a couple of the things that we could be looking at but basically you know we have work to do to accomplish this that's not easy. And I want to jump back we only have a few minutes maybe a little more than five minutes left here but I want to jump back to the construction because that's something that I've always been kind of curious about so what's the I've heard the phrase that there's like a moratorium on state funding school construction costs and I don't know is that accurate what is the what is the state's role in funding school construction right now and how is that limiting places that really need school construction right now? Years ago when I was on the school board we had a percentage of your building project was paid for by the state. We don't have that anymore on the other hand the formula helped us to for what we were spending on education our education spending that's in the formula that is impacted by the debt that we take on to pay for construction and that is we're helped in the formula to the extent that we're all helped by well we're helped a little bit more because we we have a lot of need in our city. But I did there are smaller districts and rural areas in the state where they used to get 30% from the state for construction aid and that dried up in 2007 or it went away and I did hear from a lot of superintendents who said you know it's really hard when you live in a small community with you know a lot of poverty to go to your voters and ask to approve a budget that has a new roof on it when you actually need three more teachers to meet the needs of the kids and so in these small towns and these smaller districts over and over and over again budgets would go down and something had to get cut and often instead of the teachers you know it would be the roof project. So over time as you keep deferring that maintenance because you want to put it into programs that directly impact kids you see your building stock just decline and decline and decline over years and that's where we're at right now. Sad situation. But what we can do is strategically fund new building and repair of buildings and that's where tough decisions can be made that will in the end bring down the cost of education in the state because we can't possibly fix every school building in the state. It would cost $300 million a year for 30 years and that is not sustainable. Do we have time for a few more minutes? Yeah well I was going to wrap up with a question do you have something to add on that point or do you have something else? Something just really brief and maybe we can have a show some other time some sort of real structural inequities that we have in our system. We have a sort of a voucher system that is would be compared to a system that exists in some more Republican and red states and I think we should start as we're putting everything on the table to look at moving forward we need to start unpacking if this is the system that we want to have. We have these we call them independent approved independent schools but they're basically private schools that accept public dollars and those schools don't have to live by the same rules as our public schools so we have these two we have this bifurcated system where we have some schools that live by this 2200 series rule series and then other schools that are governed by law Title 16 and very stringent federal guidelines as well. So about $100 million a year flow from public pockets to private schools that aren't governed by the same rules and so it's important to understand I mean if that's the system that we love in Vermont and we want to keep it then that's what it will be but I think it's something that we need to talk about because it is public dollars that are going to private institutions and for some folks I think that's problematic. Is there any legislative effort to change that? There have been some really great efforts mainly coming out of the house but they haven't really moved beyond that unfortunately. They come over to the Senate and they tend to get stalled so we'll see. We'll see what happens in the future but like I said I think everything should be on the table because we are at a sort of a tipping point and some folks would say in sort of a crisis mode right now. Okay well I have we have to wrap it up here and I want to ask just if you in the last 60 seconds here as voters go to the ballot box this town meeting day and they're considering this is going to have a big impact on my tax bill but I want to support education in the state. How do you suggest voters think about education funding this year and in years to come? I would just say support it this year and look forward to making big structural changes across the state that will make our system more sustainable. I would say the same. And to know that we're in Montpelier working very hard to make the changes that need to be made moving forward. Awesome. Representative Carlodi, Senator Martina Rokulik, thank you both so much for coming in and talking about this tricky topic. I appreciate you both making some time to chat about it. And thank you so much for tuning into Under the Dome from Town Meeting TV. You can find this and many other programs on cctv.org slash 2024 our coverage of the Town Meeting Day local elections. Thanks so much and so long.