 Good morning. This is a joint meeting of House Ways and Means and House Education Committee on September 10th on Thursday. And Kate and I talked about meeting jointly on what we've entitled here is planning for next year. Really this is a response to the concerns that been expressed, particularly from school board members, but I think also school administrators and a number of legislators about sort of the issues involved in setting budgets for fiscal 22. Understanding that school boards are going to start engaging in that relatively soon. And have a number of questions about how various issues around enrollment, but also around budgets and so on are still sort of unsettled so we talked about pulling a meeting together. I think the only witnesses that we have identified are Brad James, we're happy to have you here, Brad and Mark, but we do have representatives from school boards, the superintendents, I believe, probably principals, but I'm not sure about that and AOE here in case we have questions as we go along. So, Kate, do you have anything you want to start with before we get going. I think that's that's pretty clear we have heard that there is a great deal of anxiety that school boards are facing. And they are, we do understand that they are looking for some signal that as as they move toward their budgeting in a time where we really still aren't clear. But we'll be happening in terms of enrollment they're looking for some signal from the legislature and at this point in time we're looking at what it is we might be able to do to provide a signal. Mark, I'm looking to mark and Brad and sort of. There have been some, some discussions Kate and I've had some discussion with staff I know some other committee members have as well. And so part of what we want to do here is have everybody in both committees sort of up to date on what we've been thinking about doing, and then have some input into the process and the content. Maybe I'll maybe mark I'd ask you to start and sort of lay out the two tracks that we've been talking about so that people have a sense of what the, what, what a possible path forward might look like. Okay, so you're referring to a letter that might address some of these issues to in the letter. So there were two, two things. I don't want to get ahead of, particularly okay, but the way we've talked about changes that we might need to make to the December 1 letter, and also about the possibility of the two committees that would basically be K to me, writing a letter to the agency requesting information data that we will be able to use next year and so that we can respond quickly so I would start, I think let's start with the December first letter because that's already current on that may require change. Right. So, when the legislature adjourns at the end of this month, there's going to be a projected deficit in the Education Fund for FY 21 under current law, and you won't be back until January to address that issue. In Act 122, the legislature indicated its intent to address that deficit, that projected deficit in FY 21 by using federal money or a number of other options that you laid out in Act 122. The problem is, is that under current law, the commissioner is going to be issuing a letter that recommends education tax rates for FY 22 on December 1. So, you won't be here at the time that letter comes out. And if we follow current law, when the commissioner makes that recommendation, he would have to set tax rate education property tax rates high enough to cover that projected deficit. So the tax rates are going to be from the legislature's perspective that recommendation would produce an artificially high education property tax rate because it would assume that taxpayers are going to remedy that situation by having higher property taxes. So one possibility would be to make a session law change to the way that the commissioner calculates that tax rate such that he did not include any projected FY 21 deficit in that number. So is everybody with me so far. So that would require you to pass some session law. Abby Shepherd has been working on a draft on that. And it would do two things. Why don't we, it would preclude the commissioner from issuing a tax rate letter that has an artificially high property tax rate in it. And it would also provide some assurance to school districts that they can proceed without having to worry about the impact of this deficit on property taxes. So, I guess I'll stop there that if that makes sense. That was takes a minute for people to. Yeah, it's tricky. Scott back has one. Hey, Mark, maybe I'm getting ahead of myself but if the deficit isn't the responsibility of property taxpayers, whose responsibility is it. Okay, in Act 122, I can pop up that language I think for you. I think it indicated that if a deficit remained in the Education Fund, a projected deficit rep 121 remained, you would address it through one of I think six or seven different options I don't have them right in front of me right now but the first one was to use federal money to the extent possible use reversions and then there was a whole list of ways of addressing this. So, what we're really doing here is if the tax rate letter was done per normal under car. It would be ignoring the legislature's explicit intent to not use the property tax money to cover that deficit. Now, if everybody's clear on that so far there's one other wrinkle in here I just wanted to point out. I, the Education Fund outlook is not it's not a fun statement although it looks a lot like one. So, what we've shown on there at the request of the legislature is a full stabilization reserve or close to a full stabilization reserve in FY 21, and then a $66 million deficit. Under accounting rules, that's not the way it would be shown under accounting rules it would show that you have a $66 million shortball but you have $38 million to address that. So, the deficit would only be 28 or whatever that comes out to $28 million. So, in the draft I was concerned that if the administration chose to interpret that the law that way and claim that the deficit wasn't 66 million but only smaller or something, then they would be able to you wouldn't you would still see a bump in the tax rate because going from FY 21 to FY 22, the stabilization reserve would be empty. And under the current law the stabilization reserve would have to be filled up I can I can see confusion on this but maybe you've got a little bit ahead of us. Let me like I'm back up again so maybe so sure is it possible to pop up the education fund outlook. Let me just follow up on my question mark I mean I I had assumed when you said if there's a deficit that we had used or attempted to use the smorgasbord of options that we laid out in Act 122. I had assumed that those all of those options had been exhausted, and that there was still a deficit left over. Right. That's what I mean that was my assumption. Okay, I interpreted it to mean that when you come back in January if there is deficit remaining you'll have the opportunity when you come back in January to address any remaining problems through one of those options that are available. But also at this point we don't know how much how what the deficit will look like by then because like you know Brad's going to talk this morning I think as well about the amount of reimbursement requests that have come in from districts and some amount of that money is going to be available to offset that that deficit. I think it'll be a moving target. I'm not a moving target but if you look I don't have the language right in front of me but we can pop up the language and act 120 and act 122 and it pretty clearly states that the legislature's intent is to not use the property tax to address this problem. And it will carry forward. I guess. Peter's got a question. Thank you. I, it seems to me just to focus on the issue that Marcus laid in our lap about the mandate as it currently stands without a change via session law that it seems to me is fairly straightforwardly addressed in the sense that we've pretty consistently said what we want to do in respect to superintendencies districts principles is give them some sense of stability etc steady as you go so it seems to me eager to hear from Brad but and the ADM is a separate issue from my point of to get them to be able to plan and budget. We simply need to set a signal whether or not we are or aren't going to allow the deficit essentially to influence and my answer is no we shouldn't question is do you want to build in any kind of inflation factor when I tell everybody, here's the, here's the property tax that you can expect for the next fiscal year, whether it does have an inflator or doesn't is something we ought to debate, and just turn it into session law. And then we move on and worry about student count and all the flux and enrollment which is for me, a tougher nut to crack. Thank you. Well, I would just say to that that what I'm what I'm describing would just preclude the calculation or the other recommendation of the tax rates reply 22 to include the deficit. If any increase in school spending would have to be reflected in the in the tax rate recommendations for the next year so very similar to what you did this year you said that we'll have fun schools. We're not going to increase the property tax dramatically to cover any remaining deficits and you set the tax rate accordingly. This is similar in a way but the tax rate recommendation of December is only a recommendation. It would include any estimated growth in education spending. And that would need to be covered and all the other changes that come in through the non property tax revenues and all the other estimates that go into it. And I would just say that if you have a $66 million deficit sitting on the bottom line for FY 21, you would not have to raise the tax rate by 8 cents to cover that deficit and build that into the recommendation of reply 22. George. So, I mean, if we really, if we're really committed to the idea that we're not going to use the property tax rates to offset any deficit. It seems to me that we could go all the way. We could reassure the school boards and actually set the 2021 tax for 2022 tax rate now. You know, this year, we set it up 3 cents last year went up 2 cents. You know, after we talked to Brad a bit. We could actually just set it now. And that would be helpful to the school boards and completely relieve their anxiety if we told them, well, but about the taxing part. You know, we could we could tell them this is what the tax rates going to be that you're going to have to work with as you build your budgets. But if that if the tax rate is set now, wouldn't there be there wouldn't be any incentive for districts to try to hold down their spending. I don't think I mean if they knew their tax rate, for example, is going to only go up by 3 cents, we're going to set the yields of the average rate on when only we're only went up by 3 cents. So we have the problem of individual districts behaving in their own best interest without worrying about the total picture and what would happen to the deficit. Does that make sense. George, you're muted. You're still muted, George. George. You're muted still. Thank you. Individual districts as they're building their budgets don't worry about what other people are building their budgets and their own individual tax rate is going to depend on their individual spending. So I don't, I disagree that it takes away the incentive for them to be to be cautious it just says with the statewide rate will be, and then they can know what will happen with, you know, with their amount of spending before hand. They can be absolutely certain and not just work off a letter which might be very inaccurate. Come, you know, session. So it's an interesting idea and I, you know, so we started this discussion because it's clear that the December 1st letter which is really a sort of lynchpin in terms of timing on school budgets is going to misrepresent the world. And so that's how that's how we got into this discussion. I don't want to foreclose this idea which is interesting and thought about it before. But I do want to at least get the language that Abby's worked on up for people to look at before we, you know, decide which, which several different directions we could go in. Let me get to Scott and then maybe I'll have Abby put that language up. Scott. Thank you. I mean the largest, the largest determiner of tax rates is what districts spend and we won't even know that until March. So I'm not sure if we want to lock ourselves into a tax rate now. But I would think that the best thing that we could do for school districts right now in the in the December 1st letter is to clearly identify any funds that we can come up with that will help them with the costs that we know they're they're going to have. If we can identify those funds whether they're CRF or whatever they are expansion of sales tax to the software or whatever, anything that we can do to identify those revenues and make sure they are included in the tax letter will will help the the districts and it'll give them clarity as they start to develop their budgets and wrestle with the tax rate implications of those budgets. That's my two cents. Um, so, so let's let's look at the proposed language that is a draft at this point. I don't. That that that doesn't include representative answer list doesn't include the additional language on the it doesn't. Oh, okay. I have I have that language I can find out I don't think Abby is on. No, I don't see her. Mark, you're a co host so you can share from your computer. Okay, so let me see if I can find it. Okay, hold on. Is that coming up. Yeah. Okay, so that that that is part that is part of it. I made this is this is going to be difficult. Maybe we should take a take and give me a minute and I can put this together with the other language from Abby. This is only part of it. I don't have them in one on one street. Yep. Right. So, so let's, let's let's do that and maybe while while you're doing that we could have Brad talk a little bit about the CRF money because that's a big piece of this and I think it's really important to begin to understand what what it is that school districts have been able to use what the what the demand is and so on which I think Brad has information for us so we'll go to Brad. Okay. Excuse me. Brad dreams as you education just so everyone knows. So, so would you pull up that sheet. Thank you. What we have at the moment and I'll talk about this in a second. Give me, let me give you a quick overview. What we have at the moment is the CRF applications coming in for the grants. So there we have, we have, that would be 52 supervisor unions we have not heard from four of them I'm waiting to hear back from as to what they're doing. But the numbers that you're looking now represent the other 48. And I've kind of broken it out into two pieces the overall ask for CRF funds from from the school districts is 71.6 million that number down at the bottom. And then I have a second column to have the unbudgeted unexpected and what I mean by that is I mean those are the costs that they would not have had had it not been for COVID that they did not budget for they did not expect they just were definitely related. And those are not would have not have been paid for by through the Ed fund. And then I have a second column repurposed budgeting. It's a hard. I'm up with for for what this is. These are the numbers that were in their budget that because of federal guidance, they said are eligible for replacement of numbers that are in their budget. So that that column repurposed budgeting basically means these are the, this is these are the numbers that will be able to reduce education fund payments for FY 21. And there are three lines here there's the March June FY 20 so that that's the first period. And that total is 22 million of that 22 million, roughly 16.2 million should be able to be replaced by reduce money from the Ed fund payment in FY 21. That's that's the money that rules for according to act 120. The number may go up. I can't guarantee it. These are preliminary numbers I have not been through all the requests yet. One of the one of the reasons I said they may go up. I don't think they go down but they may go up is because when the when the application first one out the people did not have information necessary the way I wanted it to come out so I didn't it wasn't it was broken out. It was a single number as opposed to what that was unexpected and what was repurposed. And so once I put it out there as repurpose other people switched in so that 16.2 million they go up. We then asked them what what they had they spent over the summer and then what do they expect to spend December because that's when the CR funds December 30. And in in the July August period they spent another third there and to spend a 13.3 million of that about three and a half million can be used to reduce education fund money so that was in their budget. And then what they're projecting for FY for the for the September December period is about another 36 million and of that about seven and a half million has been identified by the business managers as possibly being as being eligible for CRF reimbursement. So the total amount that I think will roughly the total amount that will be able to reduce the education fund payments in FY 20 is about 27.2 million at the moment. Again, I need to go back over these. These are preliminary numbers. I have not been through all of them. We're still missing for s use and what I'm hoping that some of the districts who did not say that they had repurposed budgeting numbers or figures will have some in that hopefully that will push that number up. So that's kind of the high level overview at the moment if there are questions right now. Okay, Scott has question. Yes. This Brad mark this 27,249 repurposed budgeting. Is that reflected on the most recent the September nine ed fund outlook. I'll answer for Mark see he's working the answers no. That number just came out two days ago. It's, I hesitate to really put it out there as an official number at the moment just simply because I have not been through all these, all these applications yet I want to go through them first and then put them in. But I think I think that's a number that you can more or less count on, but I, I'm going to, I'm going to put hesitations around that a little bit, just because I have. So I'm wondering if, if I'm correct in thinking that the deficit in the most recent ed fund outlook which was projected to be I think 66.4 million is really 66.4 million minus 27249. I think I think it will be in that ball. Okay, well that's good news. Well it is good news I'm hoping it will become better. But yeah, it is good news. All right. And this does, this is just CRF this does not include Esther. That's, yes, thank you. Representative Ansel chair Ansel. Yes, this does not include Esther this is only CRF and I forgot to talk about Esther briefly. Esther. What I'm hearing from business managers is that they are holding off applying for Esther and deciding what they're going to do with Esther until they see what's happening with the CRF money. The reason for that is two fold CRF money expires more quickly that are much sooner than does the extra money is here as I said CRF money. I think that's what we're going to do with. Esther money goes through September 30, 2022, I believe, maybe September one one of the other of those two, but it's it's a ways out. And additionally, the extra money is more flexible it's it's it's allowed for more purposes. We've been as as flexible as we can be based on us Treasury guidance for the CRF money but the extra extra money is more flexible. The other districts I know are looking at if they had to hire somebody for to talk to people or for whatever purposes, because of the COVID-19 response, then what they're trying to do is they're trying to use the CRF money for the first roughly half of the year, and then backfill that second half of the year with the extra money so we're not sure what's going to happen with extra money yet. It's, I think we've only received three applications at this point out of 52. Those, those three I don't believe have been moved forward. Peter. Yes. Yes, thank you, Brad. I want to get my arms around the subtotal in the left column of 44,000 353. I'm sorry 44 million. How will that play in terms of district budget is. Will they have to eat that or somehow or another find. Since it's unbudgeted. It implies that they're going to spend it, but they haven't actually provided for it. Maybe I should or shouldn't include the FY 20, but in any case the bulk of that number is FY 21. How do I interpret that burden on the districts. Okay, so, so the way the way we've been sending information to the districts is that we're going to look at payment of the CRF money kind of in a in a layered structure. The first thing we're going to do is repay everything that we can for FY 20. So that'd be that 22 million on that that whole top line. So, and that that way everybody will be whole for that now what you did in act 120 is going through everything you you allocated out for you appropriate $50 million for the districts when all of a sudden done with where it was going. There's about 29 million for K 12. So we're using roughly 22 million of that for the K 12 right now that least about $7 million left over. I mean the right hand column at the moment. So if I take that 13.3 and that 36 for FY 21, where it basically $49 million, we only have seven at the moment. I understand that you're appropriating more there's in the new budget bill there's more higher appropriation but right now there's only $7 million. So what we will have to do is we will have to pro rate out that I'm going to subtract the six man for the 44 I'm pointing with my pen you can't see that I'm going to subtract the 6 million in the left hand column from the 44 million and leave with sleeves about 38 million. And then there's the same so we're getting up to the 20 to the 49 million. When, when we're, we'll see a seven seven millions of roughly a seventh of 49 million so each district will get about 14% of what they're asking for for FY 21 at the moment. That's that would be really be the pro ration factor. That's assuming. That's assuming no other money gets appropriated. That that's correct. That's correct. We're appropriating more money. That's right. Why doesn't seem like a. I mean, it's a, I understand the math, but it isn't where we're going to end up. No, that's that's true. It's just that I don't know what the final numbers going to be and I was going to come right back that. But I, and I, and Mark correct. If I'm wrong, is it another 32 million that is being appropriated. Okay. The house is the house is poised to appropriate an additional 32 million dollars. Okay. Most of which would be available to LEAs to reimburse them. Okay. So, so then, then if we would take that seven million that's kind of left over from, from that top line of 22 million. That leaves about 39 million versus a $49 million ask. So we, what we would do representative Conlon is, is we very Anthony is we would, we would prorate the money. So, so that would mean that there would be a deficit roughly, roughly 25% maybe of what, what they're, what they're requesting 20 to 25% and that would be a deficit that would roll forward into another year. Scott and then Kathleen. Brad, that first column there on its unbudgeted unexpected. Is that a, is that a gross or a net number that the district's reporting what I mean by that is that I mean, there, there are savings in here to reduce energy costs reduce contract services. There are expenses that I'm sure districts were able to shed, especially in March through June of FY 20 is this a, is this 44 million is this, is this just the expenses they've had to take on or does it include the any of savings they may have found. I, from what I'm hearing my guess is that this is largely the gross number, not a net number from what I had heard from and I'm talking to business managers tomorrow from what I heard from business managers in previous conversations with them is a lot of the savings that they have to save an FY 20, they're going to offset some of them were using it offset it varies from SU to SU to SU quite a bit. Some of them did use those savings to offset these costs so they didn't ask for CRF money. Others, others are taking those savings and rolling them forward for FY 20 use an FY 22 the way current law is structured. I think that's one that the savings would be available for them to use. But I think to answer your question more directly I think these are mostly gross numbers I don't think they're net numbers in general I sure there's some netting in there but I think it's mostly gross. Okay, thank you. Kathleen. Brad, will the S or money also reduce pressure on the Ed fund and help to reduce the amount of the anticipated deficit. It has the potential to. It's very clear in the CARES act when they're talking about that we as a state have no say in how the school districts to the supervisory institutes use that money. They are all aware of the issue I've been talking to them about it for months and months and months at this point they understand the issue with the FY 21 Ed fund they understand the issue that it will roll if it's not fix an FY 20 and it will roll forward to FY 22 making that difficult. But we can't tell them how to use it we can suggest to them how to use it and we have we have suggested that if possible and as to the greatest extent possible. You need to cover your unexpected needs but also if you can cover some of your budgeted purposes to to help the Ed fund. They're all aware of that. Whether they're all going to do it or not I can't say definitively but my guess is that 95% of them will and a few may not. But to, I don't I can't give you any estimate at the moment about how much of it of the extra money would be available to reduce the Ed fund deficit. Again, it depends on how they choose to use it. Thanks. Emily. Do you say my name and I didn't hear you the first time. I did but it's my internet. Yes, that's what I wanted to do with such things to follow up on representative James's question. Do you have a system for accounting for how they are spending S or money as we go along are they going to be reporting that to you so we can understand it better. And then to follow up on, I think representative becks question around net and gross. in excess of caps because of unanticipated COVID costs, and what are the implications of that? So let me do the latter one first. When you say caps, you're talking about excess spending threshold, is that what you mean? That is what I mean. Thank you. That's what I thought. Just to make sure. I appreciate you clarifying. At the moment, no, I don't have any sense of that. It will depend on how much money is available for Sierra after offset these costs. If is done and in the books basically for the vast majority of districts at this point, I think like two have not yet passed a budget and four or five still are in the 30 day reconsideration period. So for all intents and purposes, FY21 is done. I think the question that you're asking is really pertaining to FY22, and I don't have any feel for that at the moment. I think a lot of that is going to depend on how this, what we're looking at right here all plays out and what they're able to do with those buys. My guess is if there's not enough CRF money to fully fund, again, the number I have here at the moment, that's $71.6 million, then my guess is that that will probably push some people over. That could easily be changed and fixed by session laws just saying that any COVID related expenses are excluded from the excess spending threshold. And then going back to the, now I've talked too much and I forgot the first question that we had to do with Representative James's question about. Do you have a system for understanding and tracking extra spending, even if you don't get to control it? Yes, thank you. Yes, in the applications there's much more detail behind these numbers that you're seeing here. It's broken out into generally speaking, from what I've seen from most applications, 15 to 20 broad categories range from transportation, so it always benefits personal protective equipment, et cetera, et cetera, HVAC, if it's not covered by the efficiency from a lot of money. So it is broken out. And then when we're looking at these later on, when they're requesting money, we will be asking for them to send in information from their accounting system that details it out in more detail. So we're looking at it broadly, far less broadly than what you're seeing here on the screen. We're looking at it in some detail, just to make sure that their general expenses are eligible. And then once they start requesting the money, then they will be sending us more specific information that we will have so we can provide that to you too. Right now I haven't put it out there simply because I have not reviewed it. And I wanna go over before I start putting numbers out that people have sent in to us. Thanks, I've been, I think we've all been struggling lately with getting information in enough real time to be making good decisions about it. Right. And I just, I'm nervous about having too much of a lag time with district spending and the information getting to you and then it getting to us and how that all works, but I don't think that's something we have to figure out today. Well, I understand exactly what you're saying. And I have a group of people who have gone through the applications. They've been very good, they've worked through and that's where these numbers are largely coming from. There are things that I need to review too. And I'm hoping to be done, have a overall review done by the end of the day for any at the latest, which means that's what the rest of it today and tomorrow will be for me. I won't be doing much of anything else. Now I'm saying my internet connection's unstable. If somebody can still, Mark, I can see you or Scott, I can see you, would you raise your hand if you can still hear me? It just said my internet, okay, good, all right. So I think I will have a pretty good sense of what's going on by the end of the day, Friday, and I can send that information out to you all. So I don't wanna lose sight of sort of what it is that we can do as a legislature now and sort of what should we do, which is really the focus of this meeting. Sarita has a question, and then I think I'll switch to go back to Mark and. Thank you, Mr. Ansel. I'm just wondering, and this may be, we don't need to answer this right away, but I'm wondering what assumptions are being used with these numbers in terms of COVID. You know, in terms of what's the worst case scenario and what's the best case scenario with the way COVID is gonna go if we find a vaccine, if we don't find a vaccine that doesn't work, if there's a second wave of COVID, do we have additional savings or is that where we keep the savings in the reserves? I'm just, I think it sounds like we're just assuming that COVID there'll be a direction and we're basing some decisions on it. And I'm just wondering, do we, you know, is that an assumption and are there other scenarios that we're also, you know, kind of planning for? If I may, the CRF money, if it is not spent by the end of December 30th, it goes back to US Treasury. So it cannot be held in reserve. The US Treasury guidance also says you cannot use the CRF money to get supplies that you may need in advance. It's for the current situation is what they're saying. So if there's a second wave, unless if it happened, that second wave happens after December 30th and you know it's going to happen, the US Treasury guidance says you can't purchase it, could be a quote for that. Most of what people are getting though at this point can be used in the future, which is fine. He's currently and in the future. Okay, thank you. Mark, are you ready to look at a draft? I think so, let's try it, I put it together. Okay. Yes, okay. So I've got to start off by telling you, I'm not a drafter. And so I put this together. Abby's not available this morning, apparently. So... No, I thought she got, I thought I saw that she jumped on. She jumped on, she has. Yeah, she's here. So do you want to have Abby walk through this or? If she wants to and she's ready, that's fine. And otherwise you should do it. Okay. Sorry, I'm here. Abby, just so you know what's on the screen, was I just added the language that we were suggesting in terms of intent, those first two paragraphs. Yeah. Attached it to what you had said previously. Not in proper form, okay. Yes, and I actually was reworking that this morning just to put it into more standard formatting and to add in some sort of intent findings lead in. So the first two sections here would set out the intent to allow to, in the way that section two of what was passed in June of Act 122 that set out the intent of the General Assembly to address any projected or created deficit for fiscal year 21 by using federal funds, reversions, drying down the stabilization reserve and other sources of revenue. And then setting out existing law which currently requires the commissioner of taxes when the commissioner releases the December 1st letter to calculate and recommend the yields and the non-homestead rate because current law would require any projected deficit to be folded into those rates as well as the stabilization reserve being maintained at 5%. The recommendations would have, because that would have to take into account any projected deficit, the language that's proposed below would not withstand these requirements and require the commissioner to make the yield and non-homestead rates not include the deficit and not include a 5% stabilization reserve. So this, let's see, sorry, as you scroll down, there we go, on page two, you'll see the two pieces that are not withstood. So no projected deficit in the Education Fund for Fiscal Year 21 in setting the 22 property tax rates and yields and assuming that the stabilization reserve is what the reserve is maintained at the point in time when the December 1st letter is coming out. So I pinged this to the statute. It's also within the December 1st letter section that talks about the Education Fund Outlook being released by JFO. It's at honor before December 1st. So there is that sort of cutoff and we would know at that point what the stabilization reserve is. And I believe Mark has numbers for what the current amount is, but this would say that the commissioner takes whatever the 21 amount is before December 1st and ignores the projected deficit. So I am working on that language and I will be able to get that to you a little more polished this morning. And Scott. Yeah, so Abby, the way I understand that is that the commissioner will not be required to refill the reserve when calculating the yields. So it would only be up to the amount that it currently is set. Okay, so I guess that's my question. What is it currently? Can I jump in here? Because this is where I got you confused when I first introduced this. And let me see if I can pop up the Education Fund Outlook for you. Stop share and let's see. Okay, so the way that we present the deficit and the stabilization reserve and the Education Fund does not conform to general accounting principles. If we were doing it with general accounting principles you would say the deficit is $66.4 million less the $38.2 million we have in the reserve. Right. So I was concerned that the administration would interpret that language and to say that the gap deficit which is 66 minus 38 is the deficit that you don't want to offset. We would then go into FY22 with an empty stabilization reserve and the law then again, the statute requires that the stabilization reserve be restored to 5%. I'm sorry, I know this is a little bit weedy but that's the reason for that additional language in there. It's not intended to do anything with the stabilization reserve. It's intended to make sure that whether the administration interprets the deficit to be $66 million or 66 minus $38 million, they cannot replace that money with property tax money. Scott, are you done? I think so. So I guess what I'm so I'm asking is is that when the December 1st letter is constructed and there's an associated ed fund outlook with it, will we be looking at a line 26 or will we be looking at 38.2 or will we be looking at some other number? It depends how the administration wants to play this in terms of how they interpret what the deficit is but the intention was to not allow them to use the property tax to offset any of the deficit regardless of how they interpret it. Maybe I can lay it out in the sheet but they could come in and say the deficit's really only $28 million so we won't use the property tax to offset that $28 but we will use the property tax money to then restore the reserve back to 5% which is the same thing. Okay. You know what I mean? There's distinction between a surplus and a deficit. It doesn't really hold up when you in terms of accounting principles. So that's all I'm thinking. I'm starting to get my head around the idea. Thank you. Can I, I want to go back to what we're trying to do here that what I hope we're doing is we're telling school boards and ultimately taxpayers that they're not responsible for the projected deficit in fiscal 21. Yes. I think that's what we're trying to do. That's right. And I don't want to get so lost in the accounting principles and all this kind of stuff to lose sight of what we're trying to tell them. Right. That they still need to do their budgets the way you know the budget that they need to create for fiscal 22 needs to take into account the needs of the kids which are related to base needs and then pandemic related needs. And they should not be building into their budgets money to address the fiscal 21 deficit. Yes. And I think that's what this language does. And the rest of this is inside baseball but I felt like we had to address it. But I don't want to lose sight of the message. Right. And normally I probably wouldn't have even brought this up but in the draft we've had to include that section that addresses the stabilization reserve. And it's very confusing unless you understood this background piece. So I think what you've said is exactly what this language does. And I guess I'd look around to the committee is the committee on board with doing something now to accomplish to not just send a message but make sure that the statute which governs that December 1st letter reflects that position that we where we're not asking school boards to develop budgets that will account for this fiscal 21 deficit, protected deficit. George and Kathleen. Yeah, I would say as a minimum I am absolutely on board with that. Yeah, I could even go further but as a minimum I think that that would be really important. Kathleen. Yeah. Thanks, Chair Insel. I'm curious to know where or whether the issue of ADM fits in here because I know that's been a particular concern to my SU. So it's not in here. And sort of the second part of what it is that we were hoping to talk about this morning. So we'll, that's an important question. Insel. Bobby, I'm certainly on board with this concept. Let's see what we can do. Kate, are you trying to jump in? Emily, good. Oh, Mark, can you take down the screen share so that we can see everybody? Yes. Thank you. Emily. Almost eye contact now. I'm on board with this idea. I would also like to figure out a way to go a little bit further so districts know that they can really have the flexibility to meet the very changing and difficult needs of kids and families right now. Which I'm not sure they always feel like they can do during a regular budget year. Kate, I don't know that you can actually raise your hand. Do you want to jump in? Sure, thank you. I also very much appreciate you, Representative Ansel, in helping us get out of some of the detail of accounting and back into the reason that we're here, which is needing to respond to the school districts and administrators who are very concerned about how they're going to address their budgets. And this is clearly one issue that they will help to alleviate some of those concerns. And as we move forward, we can look at some of the others in the next part of our conversation. So I appreciate this and thank you. Yeah, Jenna, as a point of clarification, this being session law, this is only temporary, right? Next year we go back to business as usual in regards to the left. Absolutely, yeah. Kate, do you want to take... So I think we have sort of tentative agreement. We may tweak language, but is that... Can I get sort of, I don't know, I mean, people nod their heads or something. So we're working on this, there may be some language tweaks, but this seems like this is an important thing to do and make sure that the people who are going to have to work with this on the ground understand what our intention is. So Kate, do you want to lead the conversation around the letter? Sure, thank you. I think a lot of our interest came when we were approached by the various associations about the challenge in building budgets. Not only were they dealing with the challenges of trying to start this school year, we're also looking at the challenges they're gonna have in writing their budgets. And one of the issues that came forward of great concern was what was happening with homeschoolers and the fact that we knew that they had doubled in number this year, the applications had doubled. Yet we, as we worked through it, we realized that we could not tell at this point in time whether this was a broad concern or whether this was one that was gonna be more of an isolated concern for small districts where the impact would be large. So we had looked at three possible solutions, I'm hoping today we can come up with a fourth. We also heard some concern from the special ed association that there is great concern about the way that the agency is viewing compensatory education as it relates to COVID related learning loss and the impact on budgets that that could have. And we also, of course, have the concern related to failed budgets and a lot of people are asking us to do things at a time where the data that we have is just not sufficient to make a good cross the board decision. So we were looking at what data do we need? What do we need to be able to make an informed decision? And so as a result, we have worked with JFO to come up with a letter to address those issues, to ask the agency to be prepared to respond to us. Rather than on day one, we're asking them for this, we want them to be gathering that information now because they can. For example, also in terms of the homeschoolers, we don't know how that's gonna affect the October account. We also don't know if by December that's gonna look more normal or January. So I think, Mark, do you have a letter that you can bring forward? Yes. And I just also wanna say that there's- I'm actually trying not to Mark. Whoops, you got it, Georgia? I do, thank you. Is this the correct one? Yes. Okay, great. And before you start, Mark, I just wanted to say that the more that we talked in smaller conversations, the more concerned we became with doing anything in statute related to ADM. So I just wanted to say why we were looking at this alternative approach to addressing the problem to help the school districts know that we hear them and we're going to act. So do you want me to walk you through the letter? A little bit? Yes, please do, thank you. Okay, so this is a letter to the Secretary of Education that points out that the legislature's gonna be adjourning at the end of this month and you won't be back in January, but there's some additional information that you would be very interested in receiving and having the AOE work on the interim so that when you do come back in January, you'd be poised to take action if you need to or if you deem it necessary. One of the reasons for the delay is it's gonna take the agency of education some time to compile this information and get it together, especially information around the census and ADM is not gonna be collected until October. So this would give the agency the opportunity to collect this information for you and it would provide it to you on January 15th if they return the information by then, which is the point at which you can actually do something once you've come back. So we identified four areas that the legislature would like to see more information about. The first is use of federal funds and this is the topic that Brad's been covering this morning but this letter would request a full accounting of not only the CRF monies and how that money has been used, the appropriated CRF money for K-12 as well as the ESSER money and the GEAR money, the governor's money that he's planning to distribute to tech centers. And in order to assess the impact of this federal aid on the projected FY21 deficit, we're also requesting to know how much of that aid will be used to reimburse districts for previously budgeted costs. Those are the costs that can help chip away at the deficit. Brad's pointed out this morning that you have about 20, say, he thinks about $27 million is available now. This is asking for a more thorough accounting of that once all the information is in and the agency's had a chance to go through all the requests. Everybody okay on that part before I move on? Yes, can you page down a little bit, Sorcha, to ADM? So average daily membership, that information is collected in an October census. So right now we don't have a really good idea of how that's gonna play out. And we also don't know, we know how many homeschoolers are opting out at this point but we don't know where they're located. If it's clustered in different parts of the state or if it's gonna have a more significant impact on small districts than larger districts. So this section of the letter basically asks for an analysis of the change in ADM between October 19 and October 2020. But it also asks them for a report on the number of students who have opted for homeschooling in this current year but who were enrolled in their homeschool district in the previous year. And it also asks for information on the number of homeschoolers who returned to their homeschool district after the October 2020 census. We're thinking that it would be possible for AOE to collect this information along with the information they collect on ADM during the October census. So that's, any questions on that part of it? Is this document available somewhere that I? Just on my machine, on my computer so far. Go training through your computer into my computer. Okay, thank you. Again, this is just that, this was a first draft, this is just the first cut at this letter. We were trying to, you know, based on what the committee had been describing as need for more information. This is what we came up with. The third part of here is the special education service plans. In October, school districts report their service plan requests to the agency of education. So this asks for some of that information, which I think is normally available anyways. But it also asks for an estimated cost of any compensatory services that are provided for special needs students. And the concern there is if districts have to go remote or if they're hybrid, is there gonna be a pressure on special ed in order to provide the services that special needs kids have? For example, they may not be able to be fully served remotely in some cases. So it's asking for information on that. And then last, there's a request for an update on the operational status of all school districts. We know now that there's a mix of full-time, part-time, and hybrid in homeschooling. So this would give an update to find out how many districts have been able to stay open or closed in the interim. And it would also ask for the status of any school districts that failed to pass their budgets for this year. Right now, there's only two of those. But you'd get some back some information on how that issue was resolved. So anyways. This is a living document here right now. That there's opportunity for folks to participate in this. I just would also, I note that you've used the term compensatory services and that's actually, just wanna make sure that we, because that's actually a federal, federally available to parents and they can sue to get them versus COVID-related learning loss. And we can talk about that later, but there are some distinctions in terms of the way that the education has just put out guidance that has some of the school districts worried that actually could provide some legal access that they hadn't planned on. Shall I take over? Should I do take over here? Okay, Janet, okay. Peter Kamlin. Thank you. Maybe if Brad's still on, I need to just a quick reminder of ADM. I know it is a rolling two-year average, but does it also lag behind a year so that if we did see a precipitous drop in students? ADM is a 20-day full-time equivalency count of students in a district of residents that are publicly funded. That's what ADM is. When it is rolled into equalized pupils, which rates, tax rates, then it is a two-year average and it does lag behind a year because the equalized pupils are calculated based on this year. The equalized pupils, pardon me, for next year, FY22 are based on this year, FY21, and FY20 last year. All right, so if we saw for FY21 or school year 2021 precipitous drop in students due to homeschooling, the impact of that wouldn't actually hit until budgeting for FY23? No, it would hit for FY22 because it would hit in FY22 and FY23 because it's a two-year average. What would happen is you would get half that decrease in FY22 and the second half of that decrease in FY21 because the decrease was in FY20, or pardon not 21, my apologies, FY23 because the decrease was in FY21, so it works for two years of equalized pupils. All right. And, Brad, at one point we had asked if we could get some sense of the homeschool applications based on school districts and we learned that that was basically going to sink the system at the time. Moving forward with knowing that this is coming in advance, is that something that can be done? Did the school districts specifically know that there are students in their district that are being homeschooled? I'm not sure. I will have to check into that. I don't know the answer. I don't think school districts know definitively that people are being homeschooled. They may have been told, but I don't know that for a fact. I believe in our system though, we once the homeschool applications are run through, it does tell us what town they live in so we can fit in the grades. We can certainly figure out what district if nothing else. And you don't tell that district, this member of your community? Not to my knowledge. I don't know. I don't deal with homeschool too much, but I can check on that and see. I mean, homeschoolers do also participate in their school districts activities. I think that they can have a certain percentage of their classes at the district and participate in extracurricular activities and those kinds of things. Right, they can take classes and if they take classes, they get prorated for ADM. If they are taken in after school activities such as sports, which I don't think is gonna be happening too much, they get a very small percentage of ADM too. So if they are involved with the school either through extracurricular or through a class or two, then they are counted as a partial ADM. I think 60% needed to be homeschooled if I remember from testimony. I think that's correct. Catherine James. Thanks, Chair Webb. I wanna make sure I'm thinking through the timing correctly here. So if a school or an SU or a district will learn in October, that's when the census is taken and perhaps they've experienced a precipitous or a meaningful drop in enrollment because of homeschooling or maybe students have temporarily chosen to go to an independent school that's open and offering in-person instruction and maybe a lot of those students are gonna come back in January. Let's just, I'm just tossing out a hypothetical. And if none of this information is due to the legislature until January and we've just come back into session, budgets are done by then. And decisions have been made and if boards have made spending or spending decisions based on enrollment declines they've seen that may be corrected or temporary or fluctuating for that year. And we come back into session in January and we start taking testimony and talking about a bill and then it goes over to the Senate and things start moving along and town meeting happens and I just, I'm concerned about the timing of the process here. What was the data? Can I jump in on that? Just wanna point out that school boards do not know what their tax rate is gonna be. The January letter is just an estimate or a recommendation at the time that they base their budgets on but there's no assurances that they're gonna have a particular tax rate until the legislature actually passes yields in June of the year. So there's always a certain amount of flux in what the tax rate is gonna be for a town depending on what their per pupil spending has been. So the question I think here is that or what we're trying to get at is that we don't know right now how big the impact is gonna be. It may be that the impact of homeschooling is spread out all across the state in which case it will not have a very significant impact on anyone since we raised the same amount of money and send out the same amount of money in the school district. I think the concern was that there may be some small districts that have a, because of their unique situation have a particularly difficult situation with this. And the idea would be that if you had this information at hand when you return in January, you could act expeditiously to address that at that time. Right now we would be shooting in the dock a little bit because we know how many homeschoolers are out there but we don't know where they're located. Good questions. Again, this would be a letter that when the legislature ends, it doesn't mean that the letter can't continue. We can't continue. And I know that our committee will meet tomorrow and I'm happy to bring this forward and see if there are other things that you would want to ask the agency. I know our committee needs to be out of here at 10.25 because we have another meeting at 10.30. But I think we could probably hear from, I don't know if the school boards are in the room. Chair Webb, I apologize. I just lowered George representative Till's hand. And I think he had a question. I recognize George Till. I wondered who lowered it. He said at the beginning of this that when we looked at it more, we became more concerned about putting anything in statute about altering ADMs. And I had a couple of questions. You didn't explain that at all, what these concerns were or who the we was. I would say, I'll let Janet address that as well, but I would say that leadership. Janet, do you hear a little bit more Well, I think I guess I have two thoughts about that. One is more on the positive side. One of the benefits of a letter in my view is that we don't need to figure out exactly what it is that we're asking for today or close the door. We can supplement the letter with additional questions as additional issues arise. And my sense is that that's gonna happen. The other is putting a bill with ADM on the floors, gonna attract amendments on other issues. And some of them are quite frankly, not ready to deal with. Other questions? I don't know if the school boards are in the room or not. Can I, I do wanna hear from the school boards, but again, I wanna go back to what we are intending to do here and not get too lost in the words. What we wanna do here is we want to make a clear commitment and a clear path to getting the information that we feel we need in order to be able to make quick decisions to respond to issues around the federal money. There are just so, there's so much uncertainty. I think it may have been Cerrito was asking the question about, we don't know what the virus is gonna do. And we don't, there's so much uncertainty in the way our education system works of necessity is that things get locked in. And what we wanna do is we wanna build in as much information and flexibility so that we can respond and respond quickly. So that's the purpose of this. And if there are things that the school boards and other folks feel that we need to add to make this letter more meaningful, I think Kate and I are both very open to doing. Brad, just to go back to you, and I can't remember what the date was on this for them to get back to us, Mark, but what would be the earliest that you think you could provide the information that we're asking so far? Can you get to that? Could you do it in November? I think we could have, I'm thinking in terms of 8 a.m. at the moment. Yeah, I'm not that mute. I think probably by mid-November, we would have a pretty good number. Yeah, I think that's when dad are due to us. It might be a week or so after that so we can go pile it and put it together. But I think by the beginning of December, we would certainly have a number. By current law, it's to be frozen on December 15th. So we're kind of in that window where the numbers are out there by early December at the latest and then people are looking at them and making sure they're correct and revising them if necessary. But that's, we give a good idea. So I certainly say by December. And I would think that we could, again, I don't know about homeschool, but my guess is we probably have a pretty good idea of homeschool by then too, but I don't know that for a fact. Thank you. Sue, are there things that you would add to this letter? Good morning. Thank you for allowing us to comment. Sue Siglowski from the Vermont School Boards Association. This is the first we've seen of this letter this morning. So I would like the opportunity to give this a little bit more thought and provide you with some written feedback. Also just would like to let the committees know that we continue to be very concerned about possible declines in ADM due to homeschooling and other issues, a variety of reasons. So due to the pandemic, so that does continue to be a concern for the School Boards Association. Thank you. We can take this up tomorrow morning when we meet. And I don't see anything else at this point. So I think this is set up as our meeting and invited because Sorcia is writing it. So we have an agenda at 10, 15 or so. We don't have witnesses so we can, we're flexible in terms of time. But I think if when we're done with the joint meeting, we would just say goodbye to all of you. We'll head upstairs. We're heading up to human services. Okay. Okay. Thank you very much. We will, 1030, our house education will be heading to the Zoom room with human services. So I will see you there. And thank you very much, Janet, for this combined effort to deal with this difficult issue in a very complex time. I guess it is a tough one. I appreciate your being with us. So Waze Main, stay on this call, please. I keep wanting to hit leave, I'm not.