 Welcome back. It's still Ways and Means and it's Thursday, the 20th something. Thanks. I think we are going to now hear from Jim and Abby. Jim and Abby, I don't know which order you two want to go in to talk through these findings. Look how you appeared. It's so exciting. Welcome. We have the Supreme Court decision. And we have the Supreme Court decision. And we have the Supreme Court decision. And we have the Supreme Court decision. And we have the Supreme Court decision. Posted and, but I don't think any of us have read it yet. And we are trusting you to take us through it in whatever way it works for you. Great. I can start us off. Can the committee hear me? Okay. I know I had some issues with my headphone yesterday. That's good. Okay. Perfectly. And we actually, we only have 21 minutes with you. Okay. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Great. Solid overview of this case. So for the record, Abby shepherd office of legislative council, I'm going to go through the claims, the facts, and the judicial history of the case. I will talk so that we're not jumping back and forth between Jim and myself too much. I will talk about the two major tax constitutional issues. And then Jim will talk about equal education opportunity and that. The two main issues of the case would apply to the people waiting discussion. So the, there were three main claims made in this case. There were three plaintiffs. There was a student a homestead property taxpayer and the town of Weddingham. The students claim was that the education property tax system was unconstitutional because it deprived the student of an equal education opportunity. And that's the piece that Jim will walk you through. said property taxpayer claimed that the system is unconstitutional because it required that taxpayer to contribute disproportionately to education funding. And then the town claimed that because of those prior two claims, the town was being compelled to collect an unconstitutional tax and therefore was being and what's additionally being deprived of its own taxing capacity for its local taxes because all taxing capacity is being used up by the education tax and deterring voters from approving higher local taxes. The case was brought in October of 2017 before the Civil Division and the Wyndham Superior Court, which granted the state's motion for summary judgment and claimed or decided that the plaintiffs failed to demonstrate any of the alleged inequities that those were caused by the statutes by the education property tax system and the Supreme Court affirmed that decision, which was given by Justice Carroll. So I will go into more detail about what what the legal and constitutional principles are, but first I wanted to walk you through the facts of the case. The procedural history is pretty straightforward. The case was brought in the Superior Court and then it was appealed by the plaintiffs to the Supreme Court. So the school district in question is Twin Valley, which has a joint. So I've summarized the facts based on the case. If you do want to read the case, it's fairly straightforward and well written plain language, especially for the facts. So the Twin Valley School District had a joint contract is a joint contract district created by Wydingham and the Wilmington School Districts. In 2019, Twin Valley became a unified union school district and Wydingham and Wilmington ceased to exist as school districts. Twin Valley has operated all schools within the district and its school board proposes its budgets, which is, you know, are rejected or approved by voters. The town of Wydingham did not operate or fund any schools. In fiscal years 2016 through 2019, the twin valley district had between 400 and 500 equalized pupils. Its education spending per equalized people did exceed the statewide average by between 19 to 30 percent over those three fiscal years. Its average district spending was about $3,600 more per equalized pupil than the overall statewide average. Again, still in that same three year period, other districts similar to Twin Valley's with that number of students between 300 and 550 pupils that operated schools for all grades did spend less than the statewide average per pupil. Twin Valley spent an average of about $4,000 more per pupil than those similarly sized districts. In general, a few notes that the court made in its facts, listing of the facts is that Twin Valley had a socio-economic makeup that is generally in the lower portion of the districts, but its home values were near or slightly above average for home values across the state. And according to one of the plaintiff's experts, the spending in Twin Valley was not driven by demographics and that Twin Valley was spending more per student than other districts with similar demographics. Compared to Vermont's statewide education spending on a whole, Vermont spends more of its, and I'm reading directly from the case, Vermont spends more of its total economic output as measured by GDP on public education than any other state. It has some of the highest overall levels of per pupil spending in the country, and education spending in Vermont is not highly associated with student achievement. These are direct quotes from the case. The plaintiff's expert opined that education spending in Vermont and at Twin Valley specifically is above the threshold at which increases in spending are associated with increases in student performance, and the expert agreed that at the current level of spending in Vermont, more education spending did not create higher levels of educational opportunity. In the 2017 to 2018 school year, this is looking at what was offered at Twin Valley. The school district offered fewer than 100 high school level courses compared to the largest high school in Vermont, which is Champlain Valley Union High School, CVU's population has over 1200 students. That school offered more than 150 courses. Twin Valley students did and do have access to other courses both online in person and through dual enrollment and early college class options. The plaintiff that was the student was at the middle school when the case was filed, and she testified that she would have preferred to have more options for courses, especially in person and different sport options. Overall, Twin Valley students achievement is in terms of taking college preparatory tests was lower than average for Vermont high schools, and they received lower than average scores on college tests. The high school dropout rate at Twin Valley is also somewhat higher than the statewide average. A school board member and the designated representative from the town testified that the district's relatively high per people spending was attributable to student needs, demographic, special education costs, facility bond payments, and transportation costs, and claimed that there was a need for additional opportunities, additional opportunity for Twin Valley students, and testified that the districts of similar size to Twin Valley did not have the benefit of the economies of scale, such as in schools and school districts like CVU, because of the cost of maintaining staff spread over fewer students. This individual from the school board asserted that Twin Valley incurred higher costs for transportation than many schools due to geography and other factors. I don't know if you want to go into the detail. I'm going to skip over the exact data that AOE, the AOE data that was provided in the case, but I can point you to where that is. It talks about the equalized tax rate and equalized peoples, but I'll skip over that. It's relevant, but not directly. It's a hard discussion. The final... Abby, what page is that on it? What page is it on for if we want to look at it later? It's actually by, I've taken my notes by paragraph number, so it's paragraph 16 in the case. Thank you. Absolutely. So that was fiscal year 2018. With regards to the Homestead Property Taxpayer, that plaintiff owns a home and 41 acres of land in Whitingham. The property's assessed value did increase over $100,000 from around $240,000 to almost $380,000 between 2010 and 2015, then decreased slightly in 2016 and 2017. The property tax ranged from the assessed property tax ranged from $3,500 to $5,300. However, this individual was eligible for the property tax credit, which reduced the actual tax liability to an approximate end bill of about $3,000 and up to $4,200 per year, and the plaintiff testified that she struggled each year to pay her taxes. So that summarizes the facts. I hope I'm moving quickly enough, but not speaking too quickly. The Civil Division did grant the state's motion for summary judgment, including that the plaintiffs had failed to demonstrate any of their claims. They did not provide enough evidence to show that the education property tax system created these inequalities and that it lacked rational basis. The Supreme Court affirmed that decision. So if there aren't any questions about the facts, I will move on to the tax constitutional challenges, and then Jim will address the Equal Educational Opportunity challenges. Thanks, Abby. Go ahead. Great. Starting with the Proportional Contribution Clause, Jim will address the plaintiff's claim. I will address the town and the property taxpayers' claims. So the Proportional Contribution Clause is what the taxpayer based their claim on. The Proportional Contribution Clause is in the Vermont Constitution, and it provides that every member of society has a right to be protected in the enjoyment of life, liberty, and property, and therefore is bound to contribute the member's proportion toward the expense of that protection. And that's in Chapter 1, Article 9 of Vermont Constitution. The clause establishes fundamental requirements for the valid imposition of taxes in Vermont. One is that a legislative classification of taxpayers must bear a reasonable relation to the purpose for which it is established, and that the classification scheme must be fairly and equitably applied among like classes of taxpayers. And the Supreme Court has recognized that reasonable schemes of taxation must have flexibility and some difference of treatment between citizens is virtually inevitable. In assessing the validity of a tax scheme under this clause, the standard review is a rational basis. So it's not the most stringent standard. It means that only a scheme that's shown to be arbitrary will be overturned as invalid. So the court, both the lower court and the Supreme Court, dismissed this claim under the Proportional Contribution Clause because the plaintiffs did not show unequal treatment compared to similarly situated taxpayers. Quoting directly from the case, the fact that a town has a high tax rate does not necessarily mean that a particular resident pays more taxes and dollar terms than similarly situated residents in other towns. The amount of education tax paid depends on the value of the property, the income level of the owner, the local poor people spending amount, and other factors. The court found that the plaintiffs did not meet the burden to show that the state tax was imposed arbitrarily or that every conceivable basis for the legislative classification is invalid. On the contrary, the court stated that the taxation schemes of education property tax was enacted based on legitimate governmental interests that support the disparate treatment of residents in high spending districts. So in slightly more plain language... Sorry, what paragraph are you on? In the decision, those citations are between paragraph 30 and paragraph 32. Thank you. Absolutely. That's where a lot of them meet for the tax issues. It is laid out very well. What the court did was really restate these constitutional principles and then explain how they apply to this particular case. I don't really see any particularly newer groundbreaking precedent being set here. It's really applying existing principles. So the court did find that the education property tax system has legitimate governmental interests in mind. Again, the court really emphasized the lack of evidence and stated that it was left to speculate about how the plaintiff's property tax burden compared to similarly situated individuals. Given the complexity of the property tax system, they concluded it would not be reasonable to simply infer from the evidence that the plaintiff was treated differently than others like her. Due to that lack of evidence, the Supreme Court found in favor of the state on the proportional contribution clause claim. So I will pause there and then I will go into the town's claims and the law on that, on those issues. I think we're good. Okay. So the town claimed that it was being compelled to collect an unconstitutional tax, unconstitutional because it violated the proportional contribution clause and equal educational opportunity. And it further stated it was being harmed by being deprived of revenue by the state tax because Whitingham taxpayers are unwilling to pay more for town services on top of their existing education tax burden. And that's in paragraph 34 of the case. The trial court included that the town's claims failed because again the plaintiff's failed to establish sufficient evidence that the property tax statutes were unconstitutional. And they found that the town otherwise lacked capacity to sue the state. Again, the Supreme Court agreed because those other two claims had failed, the town's claims necessarily failed as well. The court did get into discussion of capacity, which isn't really as much of a tax issue as more of a town's right to sue the state. Capacity is defined as the party's personal right to come into court and is usually conceived of as a procedural issue dealing with the personal qualifications of a party to litigate. But traditionally the general rule throughout the U.S. is that municipalities and other local governmental entities lack capacity to mount constitutional challenges against the state and state legislation. That said the Vermont Supreme Court has recognized an exception to that general rule where municipalities assert that compliance with the state statute will force them to violate the Constitution. So it was under that exception to the general rule that the town of Whitingham was bringing its claim. Both the civil and the civil division, the Superior Court and the Supreme Court found that the plaintiff's failure to make their claims that the taxes unconstitutional meant the town also did not succeed in its claims. The town claimed that it would be subject to liability for allegedly imposing an unconstitutional or collecting an unconstitutional tax. Interestingly enough the plaintiffs did make the tax capacity argument that the town was being harmed because the state education tax was deterring local taxpayers from spending more to pay for town services on top of their education tax burden. The court did not really get to that issue because the the town's claim had already failed under the constitutional claims. And that I hope I went quickly enough to give Jim enough time. I don't know if there are any questions about everything I just said. That was really helpful, Abby. Thank you. Okay, thank you. You're welcome. Okay, sure. Shall I go? Yes, please. Thank you. Okay, so for the right time, Jim, Dan, we're at the council. I'll cut to the trace initially and then go through some background. I don't think that this case has any application to your conversation about people weighing. It did not break new ground. The part that I'll talk about is the challenge by a student that she was being denied equal educational opportunity under Brigham. And just to remind the committee that under Brigham, the state must ensure substantial equality of educational opportunity throughout Vermont. But the court also said that in so holding, we emphasized absolute quality of funding as neither a necessary or a practical requirement to satisfy the constitutional command of equal educational opportunity. This is the Brigham case. As plaintiffs rightly concede, differences amongst school districts in terms of size, especially education needs, transportation costs, and other factors will invariably create unavoidable differences in poor people or expenditures. Equal opportunities if they're not necessarily required precisely equal per capita expenditures, nor does it necessarily prohibit season times from spending more on education if they choose, but it does not allow a system in which education opportunity is necessarily a function of district wealth. So that quote was in this case, it's on paragraph four from Brigham. As Abby went through the facts that were omitted were that there were sex course offerings, there are lower overall results for the school than for other schools. It's spent more for people than the statewide average in schools of its size. And going to the course analysis, the court said that the plaintiffs to the student failed to provide evidence sufficient to show that the existing statewide education funding and taxation scheme is to blame for the number of courses and sports offered at Twin Valley for its students relatively poor performance in testing in attendance. That's in paragraph 22. Court wanted to say that plaintiff's own expert testified that education spending at Twin Valley is above the threshold at which increases in spending are associated with increases in student performance. He agreed that at the current level of spending, more spending would not create higher levels of educational opportunity. And therefore the court found there's no care of it. He's doing the way the state currently funds public education in Twin Valley of other circumstances. So in conclusion, this claim was dismissed to the absence of a causal link between the state education funding system and the alleged unequal educational opportunities and did not sustainably further or change the program analysis or hold. Thank you. And with that, I appreciate you both jumping in and speeding through that really important decision. And I appreciate your work on it. And I believe we are now all going to head to a joint session for judicial retention.