 to a joint hearing of House Ways and Means, Senate Finance, House Education and Senate Education. We are here today to essentially learn about this year's FY25's budgeting environment and education spending environment. I think Act 127 is a part of that, but I wanna be clear, this is not hearing about Act 127. It is hearing about education spending, education budgeting and our education fund as we get ready to set the yield for this year and future years. Really grateful for everyone's collaboration. We have a really incredible list of witnesses joining us today from around the state with a pretty, I think, significant range in patterns of budgeting and types of communities that they're serving. And I'm really looking forward to learning from all the people here. We are not going to have time for questions today. So really encourage folks to take notes, reach out to any of these districts or any of the witnesses that are here today. Many more people, many of the folks who are testifying have submitted written testimony and then many other folks have submitted written testimony who are not able to join us today. I encourage you to take a look at that when we're finished or follow along. You can find all of that. I think all of that testimony will eventually be uploaded to all four committee pages, but in the meantime, it is all on the Ways and Means Committee page. And if you go to today's date on the Ways and Means Committee page, it is under other documents, there's a specific folder for this hearing rather than trying to find it through each witness. Thanks to Sorcha, our committee assistant for all of the logistics, including creating that folder for today's hearing. So again, really glad to be jumping into this issue with so many folks around the table. We have a significant situation in front of us. Our schools have significant needs. Our Education Fund has fewer revenues going into it other than property taxes than it has in previous years. And we need to find our way through that on behalf of all Vermonters. And so with that, to really just sort of set the level field on what we are beginning to discuss, I'm gonna ask Julia Richter from our Joint Fiscal Office to join us. As Julia is walking up, I just wanna say if you are a witness and you happen to become unmuted, I'm gonna ask Sorcha to mute you herself so that we don't wind up in a situation where you have spinach in your teeth and no one has told you. And so we'll ask you to unmute, I'll say your name and sort of the school district for each school district that's testifying. We're really asking you to put your testimony all together. We're really thinking about five minutes per district. I'm sorry, we don't have more time. I think it's very reasonable to assume that we will have another hearing before the session is out where more people can have a chance to go deeper on this. So thank you. Julia. Thank you. For the record, I'm Julia Richter with the Joint Fiscal Office. Madam Chair, would you like me to share my screen? Yeah, I think that would be great. Thank you. All right. So the Education Fund Outlook that I will share today should look very familiar to people who are well-acquainted with the Ed Fund Outlook. This was the Ed Fund Outlook that was submitted to the emergency board on January 18th. It reflects a number of assumptions and incomplete data remnant from the December 1st letter as well as other updates that we still have outstanding from school budgets as their budgets are worn. I will also say, I realized just as I was heading up here that I had shared an outdated version of the Education Fund Outlook. So short, Sorcia is in the process of posting the right one. I'm sorry about that. So this is the Education Fund Outlook that I had submitted to the emergency board. What we're looking at here are a number of assumptions as I just said, this is certainly not the policy that is still outstanding for the General Assembly. Basically what we're seeing here is if all average bill changes were to be uniform or across our three property tax classes, homestead, non-homestead and income sensitized folks. If we were to see the current forecasted revenues as well as the forecasted education payment and other education expenditures, we would see an average bill change across the three classes of 17.3%, which is here in line H. And so one of those key assumptions is the fact is that this is based on sort of December 1st projections of education spending, not the sum total of warned budgets, education spending. Yes, that's true. So this is reflecting very outdated projections as warned budgets become made available. We will be putting that into the modeling to have a better sense of what's actually happening in the state with respect to the Ed Fund. Thank you. Sure. Secretary Boucher and team. And team, Nicole Lee, thank you for joining us. There are two chairs over there for the two of you. I know there are many things to say in very few minutes, but wanted to give you a chance to join in before we hear from David. Sure. For the record, Dr. Heather Boucher I'm the Infant Secretary of Education, nice to see you all. Joined by, well introduced yourself. For the record, Nicole Lee, Director of Education Finance. And we're also joined virtually by Sean Cusino, who's our Deputy Chief Financial Officer. And we're also joined on the side by Brad James, although I think this is his second to last day of work officially. And so he didn't quite make the roster. And I would say on behalf of everyone inside Zoomland and everyone in each of these committee rooms, I want to take this public moment to express my gratitude to Brad for all of those years of service. Let's move on. So I'll start by just contextualizing some of the things that we're thinking about. We actually, I will say we actually thought that the testimony was in response to the letter. So this is a little narrow. It's more about Act 127. And I just want to preface that from the outset. But good afternoon. Thank you for the opportunity to testify at your joint hearing today. As expressed in the letter from chairs Kornheiser incoming, AOE is also concerned about the current implementation of Act 127. It's certainly, there's definitely variability in terms of what's happening across the state for certain, but it is disconcerting to receive communications from districts such as Winooski, who expressed frustration that the very law that's meant to correct longstanding inequities for historically marginalized populations of students is in fact potentially penalizing them through regional budgeting decisions. And so I just want to say that on the record that that's also very concerning to us and not I think what any of us had been thinking would occur or hoping would occur. To assist in addressing the broader issue of local budget expansion and our broader fiscal situation for the Ed Fund as we just heard from Julia, we can today report some information that we've collected that is germane to the conversation and to potential actions. It's not completely complete, completely complete because that and Nicole will talk a little bit about that but we hope that it is useful so that you can both use it as we move forward together to think about some ways to then occur. We stand ready to assist and collaborate with the general assembly on this critical work. I know that you've been meeting with the chair and having some conversations and that will continue. Nicole, do you want to take it away? Sure, thank you. So what I wanted to start with is that the, as Julia said, the December 1st at spending information is outdated at this point. It is the typical AOE process to collect preliminary budget information. However, we have sent out an additional collection this year to gather warned budget information and hope to have that all collected and ready next week. And the goal of that is really just to update that Ed spending number that everyone is so interested in seeing. Can I just jump in for a second? Just process wise, I think the folks around the Ways and Means Table know this is how we usually do this but it's possible even the other policy committees don't know this is how we do this. So generally, every two weeks, starting around now, you, the person in your position previously, Brad, would come in and share sort of the updated information from the field as budgets came in. And then we would sort of use that data to move closer and closer to a number for the yield. And essentially when we felt like we'd have majority of the budgets and we understood what was really being warned or voted on, that's when we would set the yield for the year and send it over to the Senate to further refine and confirm. And so the data gathering process is like the most essential piece of us figuring out any of this. So, back to you. I just wanted to add, I think what has happened in the past, it's been more of an informal process. Indeed. And this is a new one-time formal collection that we've instantiated to say, hey, we really need this warned budget information. And I do think that's really important just as a point of fact. We don't use it to dive into like any individual districts anything, it's that we need to like sum those numbers in order to understand that. Yeah, okay, back to you. So the second item I wanted to talk about is this is the first year of long-term weighted pupils for many people. Those are the new pupils under Act 127. As we go through the session, which of course I am new to, but we sort of locked down one component at a time. And so the pupils have been frozen for fiscal year 25. So that is one component we can now use in our calculations that is set for the next year. There were a few trends on the pupil collection and to Secretary Boucher, you know, her point that this isn't necessarily about Act 127. We did publish our testimony. So I'm gonna skip over those points about the pupils and actually go to the next point that we have. And that's special education costs. We are seeing a large climb in the extraordinary special education costs and we're seeing both the cost increase as well as the reimbursement one follows the other. But the other thing that we're seeing is the number of students served by the excess, I'm sorry, not excess, the extraordinary cost threshold is increasing as well year over year. So it's more students and higher tuition rates, but that is an increase in totality. And then the last update I wanted to make is on the tax rate review committee and just say we do at the AOE have a small workgroup of volunteers helping to inform the AOE on what is really important from the field for us to look at as we engage in that process. And then the other thing that's of interest is that tax rate review committee, we need information to do that work. And so that will be pushing forward the budget collections, the final voter approved budget collections from the districts to April that has been signaled from education to finance, both Brad and myself multiple times at this point and we continue to discuss that earlier deadline to be able to perform the tax rate reviews. Thank you. Appreciate it. Jake, would you like to join us? So we invited Jake Feldman, the senior fiscal analyst from the Department of Taxes in. Jake does a lot of different things the Department of Taxes, but one thing is the common level of appraisal and given all of the attention on that this year, I thought it would be helpful for him to just share some. Thank you. Jake Feldman, tax department, there is some misunderstanding out there. So we thought we'd talk about it for a second. Common level and there's also a handout under my name in this folder, I believe. The common level of appraisal abbreviated CLA is it's a necessary part of our shared property tax system that was created by Act 60. Importantly, CLA is ensure that every town is sending its fair share of property tax to the education fund. It's not about individual properties. It's not overruling property values or saying that there's something different. It's a town correction factor. CLA's are always determined based on sales data and they are entirely independent of the cost pressures in the education funds. They never increase or decrease aggregate property taxes collected. CLA's are not the reason that taxes are forecasted to go up in FY25. Taxes are forecasted to go up because of unprecedented increases in anticipated education spending. And the one-time funds used in FY23 and FY24 to artificially lower tax rates. What that does is it creates kind of like a tax rate trough that you need to then climb out of, which we're going to experience in FY25. When CLA's are going down as they have the past couple of years, the yield goes up, which lowers equalized preset CLA tax rates. That is what happened the last two fiscal years. And I have a little table in my handout with an orange box around the yield and it shows that it went up by $2,000 over the last couple of years is because the CLA's were going down. Believe it or not, it's happening again this year too, but that effect on the yield is being drowned out by needing to rebase the yield to reflect the new way pupils are counted and the two factors listed in the prior point, which is education spending and the trough created by one-time money being used. Finally, it's possible that there was some confusion about the 5% limitation on homestead tax rate changes that is part of Act 127's transition mechanism. That limitation applies to the district level equalized tax rate, which is before the CLA and not the actual town level tax rates, which are after the town specific CLA's are applied. If that 5% limit was not there, the equalized tax rates in many of those districts would be going up even more than they are and the same CLA's would still be applied for every member of town. On the back of my handout, there's about six or seven links that have some really useful information about CLA's and education funding generally. Thank you very much. And so the next folks we're hearing from is the Norwich District. And then after that, we're gonna hear from the Burlington School District. Hello, Mr. Palm, thank you for joining us. Great, thank you. Can everyone hear me okay? We can, thank you. Great, and also have Jay on the phone as well. So we'll be reading from our written testimony here. We'll shorten it a bit just to make sure we try and hit the timeframe. So again, good afternoon, my name's Garrett Palm. I'm the Chair of the North School Board and also serve on the Dresden School Board, which is our Interstate School District with Hanover, New Hampshire. I'm with Jay Battams, the Superintendent of RSAU 70. Thank you all for allowing us the opportunity today to share our situation with the implementation of Act 127 and actually the education funding system more broadly. I wanna begin by saying that my colleagues and I fully support the intent of Act 127. The school districts in Vermont that have been underfunded deserve a system that allows them to provide for their students and their communities. The North's Board voted unanimously in support of a VSBA resolution that advocated for the changes brought about by Act 127. And this is despite being the town that was set to see the single largest tax rate increase in the state as a result of the changes we never once opposed the Act. And the time since the Act was passed, we've been working to educate our community about the impending changes and promoting work to increase the diversity of our student population in Norwich. I'll turn it over to Jay briefly. Great, thanks Garrett. I'd also like to thank our legislators for the opportunity for us to share our situation and appreciate that this is really complicated work. The way our interstate agreement works, there are five Norwich School Board members who oversee Marion Cross School or elementary school and then they join seven members from Hanover to govern our middle school and our high school which lie in Hanover. The two entities operate under the laws of their respective states. Total expenditures for Norwich consist of the elementary school budget plus the share of the Dresden budget that's assessed in Norwich based on the percentage of students at any given time. Roughly one third of the Dresden budget is assessed in Norwich and the rest to Hanover. And another way to think about this, it'll make sense later on in our testimony is that only a third of any budget cut in Dresden that is the middle and high school is actually realized in the Norwich budget. So for the last two years I've watched the Norwich Board educating our community including their peers in Hanover about Act 127 and the likely impact on our tax rates. But the situation we find ourselves in now is much worse than either we or the task force had projected and Garrett will detail the Norwich Board's efforts and show that while they have supported greater tax equity and this has been mentioned in almost every budget meeting they've had this year and they have really done everything they can do to control costs in Norwich in the Marion Cross budget. But they're in a place now they didn't imagine one that they can't cut their way out of and that threatens the viability of our school and the community that I oversee as a U70 superintendent. Thanks Jay. So I'll go on our journey a little bit for you guys for the remaining of our three or four minutes here. So this past December we were finally able to make some more accurate tax rate forecasts having received our new long-term weighted ADM and property yield numbers reflecting Act 127. The result was a tax rate increase of over 36% before the application of the 5% cap. This has since increased over 40% due to the further recent drop in the projected yield number. Although the 5% cap allows us to ease into the projection of 35 to 40% tax rate increases the application after the application is CLA we just discussed we're still anticipating a tax rate of over 15% in year one with similar greater increases in the years to follow. Knowing this magnitude of higher taxes was gonna be a hard sell in our community we spent time analyzing various scenarios to potentially lessen the increase. The work was eye-opening. To come in just under the 5% cap threshold we determined that we would need to cut over $2.5 million from our elementary school budget which in itself is only 7.8 million. If we wanted to come down with a 0% rate increase we would need to cut nearly $4 million. To put this into perspective this is the entire amount of our regular education portion of our budget. So all teacher salaries, all benefits and classroom supplies. Then another scenario we looked at cutting every K through 6 class down to one section. This would result in a reduction of 12 classes and 12 regular ed teachers in these classrooms. This would represent about 43% of our K through 6 regular ed teachers and result in average class sizes of about 42 students. It would only reduce our expenses by about 1.4 million and still result in a tax rate increase of over 27%. So that begs the question, why not spread the cuts to Dresden where the rest of our expenses lie? And this is where the challenge of the Interstate School District comes in. Our Hanover colleagues have been really sympathetic and gracious they actually deferred they had the ability in this current budget year to pay off some debt in one payment and chose to spread that payment over a longer timeframe in order to help the Norwich folks keep our budget down. But if they're pushed to continue to entertain cutting programs, increasing class sizes or deferring maintenance, they would view that as harmful to their students. And I really foresee considerable strain on the Interstate relationship if that were to take place. Even if they made those cuts, the configuration of the Interstate Agreement means that we'd have to cut $3 million from the Dresden budget in order to realize a million dollars in savings on the Norwich side. So regardless of the magnitude of the cuts that we have facing us to achieve this level of savings, no matter where we make them in our district, it'll profoundly disrupt our schools and programming on both sides of the river. Thanks Jay. So to fast forward now to our Norwich meeting on January 11th, we voted to approve our final budget for presentation to voters at our town meeting. Like many other districts, we became aware of the opportunity the law provided to add some additional spending in without increasing our tax rate, which we took advantage of. Over the summer of 2023, we'd contracted a facilities audit to do better understand our condition of our buildings and the cost of some repairs. We identified several items that needed to be addressed. We'd made the decision at the time to add $1.425 million into our budget to fund new boilers, upgraded heating system, new LED lighting, some weatherization and a partial new roof, all of which came back in the needs assessment. These items would provide substantial future cost savings for our taxpayers, as well as significantly cut carbon emissions, which is a priority for our students in our town. We understood that this would be an additional burden to the education fund, but we were also very worried about the pending tax increase to our community. Then last Friday we received your letter in response, we scheduled a board meeting. And two nights ago, the board voted to remove nearly all of this amount. Instead, we're pursuing a 10 year lease to handle the scale back, a scaled back version of the improvements with a net impact of only $89,000 in next year's budget. We are trying to do our best to balance the needs of our community with the needs of the state. Now, while all of this addresses the immediate needs concerns in the Norwich, it's the long-term impact of Act 127 that truly, truly keep me awake at night. With a very conservative spending estimates over the next five years, we forecast that Norwich education tax bills will more than double. We have some more detailed numbers in our written letter. In the longer term, given the impending cuts, I'm unsure we'll have a school, frankly, in the next decade. I cannot defend a school with the class sizes of 40 plus students. I'm concerned for those in our community, a community already with higher than average number of households with two working professionals who will not be able to afford these increases in the property taxes. Because we're tied to a larger community in a different school district, a community that does not have to support redistribution, we're unable to vote nor benefit from the cuts at the secondary level. So the entire burden falls on our elementary school. All of this is jumpstart conversations with our town around affordability and diversity. Things that in my community, are in our community's control as we try to bend this curve. Yet the higher taxes are only gonna make our affordability issues even worse. Residents are being replaced by second homeowners by benefit, but from paying increasingly lower non-residential tax rates. Developers are likely to be disincentivized given our tax rates will be in order of magnitude higher than our neighbors even over in handover. And to this end, we sit next to one of the highest wage, highest job density regions in our state that we're not able to take advantage of. We'll no longer have the capacity to support municipal investments that will make possible building a workforce housing to continue to fill our schools with students and expand opportunities for new generation of Vermonters. So in summary in the immediate term, I still need to stand in front of the people in the town meeting day as chair, explain to them why their tax rates are gonna be up over 15% this year and 40% when the cap expires. I'll need to explain that their taxes will go even higher unless we start making immediate cuts to our school staff. I'll need to explain to them that even if they vote the budget down, I will be unable to cut enough money from the budget to change the situation. I consider myself an optimist, but as I reflect on these things, I'm having a hard time staying positive. I'm debating whether I even wanna be on the face of the school board, delivering these messages to our communities, teachers and students, changes that will profoundly change their schools in a negative way. Looking at the staggering tax rate increase we're facing in zero ability to help at the school or our residents. I do not believe there's a positive future for Norch. In closing, I'm here to share our story from the Norch side, but also ask for your help. We firmly believe that every district in the state deserves access to the resources they need to serve their students, but I'm concerned that despite the best intentions of Act 127, the implementation of this law has placed those of us on the other end of the spectrum in an impossible situation. I do hope that we can work together on a solution that works for all of our monitors. I thank you all very much. Thank you both very much for your time and thank you to everyone in the hearing for your service to our schools and our children. These are really hard conversations we're having and I appreciate you being here. Mr. Flanagan. Ah, there you are. Hi. Hi. Sorry, one second before you get started, I just wanna say that the district after yours that's going to speak is Harwood. So if Harwood folks want to get ready and I will need to cut you off at right around the five minute mark. So I'm so sorry for that. I know that we will follow up with you if we need to hear more. The floor is yours, thank you. Okay, great. Thank you so much for having this session and for inviting me here to address the critical issue of equitable school funding. Again, I'm Tom Flanagan. I'm the superintendent of Burlington School District. We are the largest single town school district in Vermont. Last school year we served more than 3,300 students pre-K to 12 across more than 12 sites. I'm here to express my strong belief that we should continue to support the new weights in Act 127 to ensure the state funding model is equitable. I am deeply concerned that the impact of the CLA has become, as the impact of the CLA has become more apparent. Some are looking to place blame on the weights in Act 127, which seek to finally right the moral wrongs that for generations have impacted towns serving higher percentages of students who have been historically marginalized in our education system. Despite a citywide reappraisal in 2021, this year Burlington witnessed a significant CLA decline of 7.87%. This has a direct and substantial impact on our school budget's projected tax impact, causing our local tax rates to be nine percentage points higher due to increases in property values, something beyond any school board or superintendent's ability to control. In addition to these challenges, this is the first year of borrowing on a new high school in Burlington. This will result in the biggest increase, in a biggest tax increase by far in this upcoming fiscal year. As a result of these factors, in order to put forth a tax impact of less than 10% here in Burlington, we would need to lay off nearly 12% of our workforce. The issue we face is not unique to Burlington. Many of my colleagues across the state are in similar positions and many school districts are under similar pressures, which could lead to failed budgets on town meeting day and chaos in Vermont's education system that would negatively impact children. While some may suggest a legislative revisit of the new weights in Act 127 to solve this problem, I urge a different approach. The state should address the serious impacts caused by the CLA without conflating it with the weights in Act 127. These are distinct issues and should be treated separately. Act 127 addresses historical inequities and we should not retreat from that while we address other challenges, such as the CLA and other costs that drive education spending. It would be counterproductive and damaging to unravel the equity achievements represented in Act 127 for the sake of addressing issues unrelated to education spending. In conclusion, I appeal to this committee for support. These committees for support and solutions that can mitigate the CLA impacts while preserving and other impacts while preserving the integrity and progress of Act 127. Here and available if anyone ever would like to talk more and happy to come back at later dates. Thank you. Thank you so much, Mr. Flanagan. I appreciate your time. Thank you. Folks from Harwood Unified Union School Dish. Oh, here you are in relay. Hello. You have an extra chair. Yeah, there's a second chair. Fine start whenever. Yeah, thank you for joining us. Chairwoman Kornheiser and distinguished representative and senators. My name is Kristen Rogers. I serve as the chair of the Harwood Unified Union School District School Board. Accompanying me as our district superintendent, Dr. Mike Leichleiter. Thank you for inviting us to seek before you today on the current impact of Act 127 on our students, schools and communities. The majority of school budgets are made up of wages and benefits. An HUSD case that is about 71% of the school budget. When you add in our fixed costs, which accounts for another 20%, it leads only about 10% of our budget for which we have some discretion without laying off personnel. Additionally, our school district does not carry a fund balance but has routinely transferred a little over a million to capital reserve. We are indicating that in a transparent manner in our budget. Keeping in mind that capital improvement has not been supported by the state since 2007. With well over 10 million in immediate facility needs, our capital reserve fund contains less than 3 million. Our district has followed the rules set out by Act 127 and our cost for pupil is above the 5% increase while not exceeding the 10% threshold, which would require our budget to be automatically reviewed. What the school board has proposed to our community is a level service budget, which is what the board feels is right for the students of our district. When I say level service, I mean we are not increasing personnel or programs. However, it is not a level service budget as we are in fact working with our administration to phase out 14 positions through attrition as our district made use of ESSER funds to provide for the educational and mental health challenges faced by our children during the COVID-19 pandemic. We have not added more educational opportunities to our budget or new teaching positions. We are seeing double digit increases in statewide health insurance, contractual wage increases necessary to attract and maintain teachers and support staff, is increasing costs of federally mandated special education service, a new childcare tax, increases in transportation costs as well as increased costs associated with ongoing mental and physical health of our students. This is where our budget has increased in spite of a level service approach. As leaders, we are concerned with changing rules as our budget goes out to the public as suggested in the letter last week from two of the legislative committee chairs. In the letter, it is stated that you hope more extreme measures are not needed this year. While I understand that the legislature has questions about the implementation of Act 127, many board members were concerned with the adversarial tone of the letter. Does this mean that districts will be penalized or punished for following the rules as defined in the legislation? Is there an unintended consequence? If there is an unintended consequence, this is due to vague legislative language and not the hard work of school boards and superintendents across Vermont. As a district that is losing funds as a result of Act 127, our board understands what Act 27 is trying to accomplish. Unfortunately, in order to comply with this revised rules, many districts would need to take drastic measures by cutting a significant number of staff and programs to lower costs in the first year of implementation. The individuals who will feel the most pain of this is our students. It is already difficult to hire people and Vermonters are already struggling with income loss, poverty and mental health needs. With the new stress of higher educational taxes and compromised programs, we are concerned that the unintended consequences of rash, programmatic reductions will result in the loss of students, further impacting our per pupil costs. Students thrive when they have a vibrant school. Now is not the time that we should be making draconian program and educational cuts. This will certainly put our students and communities at a disadvantage. To change the rules at the 11th hour, when many districts have already voted on their budget is ethically wrong. And quite honestly, would put districts in unprecedented hardships. Thank you for your consideration. Thank you. My name is Mike Licklider. I'm the superintendent of the Harvard Unified Union School District. And while I'm in my second year as a school superintendent in Vermont, I have over 33 experience as a teacher and an educator, including 13 in an alley district, school district with over 5,400 students. So our board chair, Kristen Rogers has provided a thorough overview of the experience of developing of a very challenging budget in this particular year, due to many factors beyond all of our controls. As a district that has had historically higher cost for students compared to other districts in Vermont, our board and administrators understand that many of the transitional elements of Act 127 were implemented to levelize per pupil funding across the state and to make sure that we are treating every child in every seat in Vermont the way that is proper and ethical and make sure the funding is totally equitable for every student. We completely understand that. As a reminder from what Chair Rogers shared, the only significant way for us to reduce spending is to reduce personnel. I think some of my other colleagues did an eloquent job of describing some of those challenges. We've been engaged in some of those similar analysis of what we would need to cut to come in at a much lower tax rate. Sorry. One, I don't know how to pronounce your last name. McLeodder. McLeodder, thank you. And I'm very sorry, we're actually out of time for your swole, and I know this is just very stressful. I'm feeling terrible cutting people off. But thank you, and we were, I at least commit to delving deeply into each of your written testimony, because we really do wanna understand what's going on. Thank you. Very much. Next up we have South Burlington School District and then North Country School District. Ms. Nichols, hello. Hello, thank you so much for having me. My name is Violet Nichols and I'm the superintendent of the South Burlington School District. Thank you for the opportunity to speak with you all today. I also wanna thank you for the work that each of you have done to make strides in developing legislation aimed at improving education quality and increasing equity for all students in our state. I'm here today to share information with you regarding the impacts of the current education funding formula on our school budget in South Burlington. Our current fiscal year 24 budget of $62 million produced a 7% homestead tax increase. The same exact budget to the cent if rolled over next year would yield an increase of almost 18%, even without qualifying for the 5% cap. This is because of factors in the education funding formula that are out of the district's control. With our board approved fiscal year 25 budget of 71 million, the education funding formula would have led to a one year increase of over 37% in our community without the tax cap. This is a crisis and it requires attention and action from each of you. The most significant factor for you to understand about South Burlington is that we're one of the only districts in the state that is experiencing significant growth. Our city is developing and real estate values are increasing. Five year development plans show a significant amount of new growth already underway. This will continue to impact the CLA. South Burlington was reappraised in 2021. We have sustained two back to back significant drops in CLA with an 11.22% drop for fiscal year 25. And this is likely to occur again next year given housing shortages and continuous increases and real estate sale prices tied to our growth. The CLA has impacted many districts in Chittenden County the economic heart of our state. This CLA drop could mean significant reductions in force among our district's 518 employees which could impact employment rates and childcare in our local community. Decrease programming in our schools will impact the educational quality of our schools which correlate with real estate values. To prevent ongoing dramatic increases in homestead tax rates, we are asking that legislators consider some type of a limit in CLA fluctuations or a modification of the CLA factor in education funding formulas. This will provide more predictable budgeting for districts and produce tax rates that our community can support. I am also requesting that legislators consider allocating other sources of revenue to increase the education yield for fiscal year 25. Finally, I would ask for removal of the section of Act 127 that forces the school district to become disqualified for future access to the 5% cap if it fails to qualify for it in any year between fiscal year 25 and fiscal year 29 as this can severely penalize a district for otherwise prudent budgeting across the five year period under the current law. Looking further down the road to address the bigger issues of overall education spending and lack of affordability, the state must consider if maintaining the current number of schools is benefiting students and taxpayers statewide. With increasing requirements, greater student needs and significant facilities issues, we are reducing education quality and producing high tax increases for communities statewide. To address our education spending problem, the state needs to consider designing regional, collaborative public education models in an effort to maintain education quality and address school facilities. Facilities deficiencies in South Burlington rank us 11th neediest in the state. We are in no position to introduce a new capital improvement bond when facing post-CLA tax rate increase of over 18% while potentially dramatically decreasing by $8.6 million in athletics, world languages, the arts, course offerings and increasing class sizes, just to name a few. With all of these cuts, the community would still have increased homestead tax rate of 16.5%, which will disproportionately impact those needing equity supports in our community. I humbly ask you today for a modification of the CLA factor in the education funding formula, a mechanism for facilities funding, structures for public schools to pool resources regionally, a less volatile education funding formula inputs. Without these education costs will continue to soar, no economies of scale will be realized, equity will remain unattained and schools will continue to look to local taxpayers for facilities support. Our current education funding formula will undoubtedly negatively impact our students and our local and state economies. Our state's population will continue to decrease if spending is not addressed. I know that this work is complicated. But I ask you to try. I believe that together we can make changes to education, to support education and economic growth in Vermont. Thank you for all that you do for our communities and for hearing me today. Thank you. Thank you very much Ms. Nichols. Appreciate your time. Dr. Collins. Actually, just Dylan. Hi. The doctor right there. Hello, Elaine, thanks for joining us. And then after you, it's going to be Lemoyle South Supervisor Union. Thank you for taking the time to listen to my testimony today. My name is Elaine Collins. I am the second year superintendent. Just want to offer folks in the room. There's a lot more space in the education committee room right now. They're chairs, glorious down there. Okay, thank you. Sorry to interrupt you. Sure. So I'm Elaine Collins. I'm in my second year as a superintendent of North Country Supervisor Union, my 13th as a school administrator and my 34th working in Northeast Kingdom schools. You are grappling with very difficult and challenging circumstances as we all are. We all bring our own context to this conversation. So I'd like to share with you North Country's context. We have 12 different sites. We range at 65 miles from one end of our supervisory union to another and 520 miles in between. We are individual districts. We did not unify, which means there are 17 board meetings every month. Sorry. Just to add that little fact. Okay. We range from very rural pre-K to eight with 80 students to very large elementary schools for our area with over 500 students. In North Country, we approach this budgeting season with some trepidation, but also hope. If any district in Vermont should benefit from weights, it's a poorer rural district like North Country. Last month, before CLA rates came out, we were very hopeful our tax rates were down. We had significant decreases in projected taxes for our taxpayers. And we had not added in any additional programming into any of our schools. We were trying to level fund it best to try to realize as much of that benefit for our taxpayers as possible. Then CLA came out. And for school districts, for towns who are used to two or three cent increases on their taxes and really having to debate that at town meeting day, we now have school districts who, school board members were going to have to get up and defend 27 cent increases to 60 cent increases in some of our really rural and poor towns. It is a miracle if we're going to pass school budgets this year. It will be, and it's a mess. And it's a mess, I think, not of the schools making. I'm going to take a little bit of a different track than some of my colleagues and talk about our current context. Schools have been asked in the last 10 to 15 years to do much more than school our children. And that is really where the increase of education spending is coming from. Six years ago, I was the principal at Newport City Elementary eight years ago, rather the principal at Newport City Elementary School. It's a school of about 320 students, 80% poverty, 27% special ed, and 504 students. Six principals in five years before I got there and the house was a little bit on fire. There were lots of really big behaviors. In my first year, 890 restraints, escorts and seclusions in 175 days. Nobody was learning. The cost of remediating that system was adding lots of extra supports, doing lots of professional development and tweaking systems and refining systems. And it was expensive. My last year as principal, six years later, that number was under 50. It is the right work to do for our students. We will lose huge numbers of students if we don't do that work, but it's not sustainable for us to do this in education unless we find other revenue sources or other ways of funding our schools. Our local taxpayers can't afford it and we don't wanna price ourselves out of keeping local folks in their homes. So my hope is that you take into consideration all of our contexts and it's really complex and I really applaud your work and I know how difficult that must be. It's hard enough to take care of one district, let alone every district in the state, but I urge you to find different ways to fund education because this way is not the right way to do it. Thank you very much. Sir Herady, and then next up, we have Mr. Tucker from Caledonia Central. Welcome, thanks for joining us. Hi, good afternoon. My name is Ryan Herady and I'm the superintendent of the Lamoille South Supervisory Union, representing Elmore, Morristown and Stowe. I'm also the proud principal of the Elmore School, the last one-room schoolhouse in the state. This is my 16th year as an educator and I am fortunate to have served as a special educator in therapeutic and public schools as a principal in Massachusetts and Vermont and for the past three years as superintendent of the Moille South. We have many things to be proud of in our state. We have exceptional educators and historically our schools have been well-supported by the electorate. Today, although I will be candid, I speak in the spirit of collaboration and working in unison towards a solution that does not lose track of why this legislation was enacted. In 2004, the town of Killington overwhelmingly voted to pursue secession in New Hampshire. It was a time of great turmoil as Vermonters navigated the impact of X-60. Although extreme, it was a reflection of the anger and frustration felt by residents pushed to the breaking point. Within two years, X-60 was revised and new revenues were identified to ease the unsustainable tax burden felt by families. It appears that 20 years later, we may be at a similar political crossroads. Vermonters will soon face unprecedented economic pressure and it's clear that the root cause is Act 127. The latest version of X-60 and what I believe is one of the most detrimental and dangerous legislation in recent history. This bill signed in the spring of 2022 was intended to increase transparency and produce more equitable outcomes for students across the state. Although the intent is the right one, the reality is that this law decreases transparency and raises property taxes for Vermont residents to levels that will require many to make very difficult decisions. As a superintendent of the Memorial South Supervisory Union, I hold a unique perspective regarding the impact of education finance policy. Our supervisory union is composed of three unique towns, Elmore, Morse Town and Stowe. These three towns have been operating in a fiscally responsible way for many years and we have always strived to maintain a spending increase below the state average. We present our academic data on a regular basis and provide our taxpayers with a good return on their investment. What is our reward for this transparency and steadfast financial management? Well, based on our current projections, Elmore residents can anticipate an average property tax increase of 29% for FY25. In Stowe, the average resident can plan for an increase of 24% and in Morseville, residents can anticipate an 18% increase to their annual bill. Let there be no mistake that these increases are completely driven by Act 127, which has resulted in unprecedented statewide spending and a lower property yield. With the monumental upswing and state-negotiated healthcare costs and new state policy that removes even more local control, we have been put in a situation where property tax increases are untenable. This is not the Vermont way. Although we could offer many perspectives on how we got here, what is more prudent is a path forward. After countless conversations with colleagues, school boards and legislators, I present three strategies for a reversing course. First, develop policies that prioritize Romaners. The most pressing challenge we face is our lack of state revenue, decreasing enrollments and rising costs. Short-term rentals, second home owners and second homes owned by out-of-state residents need a separate tax rate. Why is the current non-home stead tax rate in the same category as local businesses? Why would local residents pay a higher tax increase than a second homeowner? Legislators must create a new category for out-of-state property owners and collect more revenue from those extracting money from our state. Short-term rentals have changed the game and we need to change with it. If these tax increases result in owner selling their property, so be it. It can only help our housing crisis. Imagine homes filled with teachers, firefighters and little league coaches. These year-round residents not only contribute to their local communities, they also increase our school enrollments. Second recommendation is to implement spending safeguards and increased transparency. Contrary to its claim, the new waiting model does not offer a transparent look at annual spending increases by town. Pupil weights, common level of appraisal property yields, et cetera, all work to distance voters from their actual spending increase. A lack of timely statewide academic data also leads to an erosion of trust. How many of your neighbors or legislators for that matter can explain how their tax increase was calculated or how investments are connected to student learning outcomes. Instead of complicated formulas that seek to confuse voters, we should be establishing safeguards for annual spending and providing clear annual reports on school performance. Massachusetts requires a voter override when property tax exceeds 2.5%. They also publish school report cards each fall that display current academic and social-emotional data in an easy-to-read format. These safeguards encourage efficiency and allow individual towns to have a strong say in what they're willing to pay in tax increases. The state also provides technical support, not just financial resources to school systems that are underperforming. And lastly, focus on healthcare. Everyone can agree on healthcare reform. The 16.4% increase in state-negotiated healthcare costs has imposed a significant hardship on local budgets. Instead of passing legislation that increases our tax rates, we must encourage legislators to help us control costs. Healthcare is the perfect place to start. Vermont is a state with a long history of providing students with an excellent education. It is arguably our greatest asset and needs to be prioritized in the current legislative session. We need to stop claiming we are pursuing equity while simultaneously pushing our residents into poverty and losing our focus on student learning. Those are three realistic steps that can be taken this year. Do we really want to visit a time in history when towns are asking to succeed in New Hampshire? Thank you for your time and consideration. Thank you very much for your time. I appreciate you joining us. Mr. Tucker. Hi, I'm going to try really hard to stay in the five-minute limit and not to repeat a lot of the ground that's been covered already. Okay, one second before you get started. And then after you, we have Addison Northwest coming. The floor is yours, Mr. Tucker. And I will cut you off at five minutes so you don't need to worry about that. Okay. Thank you. So I am Mark Tucker. I'm the superintendent for Caledonia's Central Supervisory Union. Thank you for the opportunity to speak today regarding our Act 127 has impacted the districts I serve in CCFU. My purpose in testifying today is to point out without judgment of others that not all the school districts in Vermont have used section seven to add spending to their budgets and to ask that in addressing your concerns over the spending cap loophole, you not penalize those of us who sell the 10% P P E S increase limit as encouragement to lower spending. I offer the following from our experience in CCFU. Overly optimistic hopes from the summer that improved people waiting would bring in additional revenue that we could use for our students and for building maintenance for largely dashed by the effects of inflation on our local budgets. There's a section in my written submitted testimony that outlines what those increases are that they were covered by the chair, board chair from Harwood. But our strategy in CCFU vis-a-vis the 5% cap has been to qualify for the cap by reducing per people at spending increases below the 10% threshold we're needed to qualify for the 5% cap. Some might fairly be in this as a slight perversion of the intent of the 5% cap but I'll give it more as reverse engineering the cap with fiscal responsibility in mind. I'm gonna skip over the section I've broken out in my submitted testimony, the experience from my five districts in CCFU and how we've handled budget increases this year. But I wanna be clear that none of the five districts in CCFU have added monies to their budgets to take advantage of section seven of Act 127. As you ponder what to do about any potential changes to 127, the fear out here is that you will make a decision that will have consequences to our districts that have already proved in one budget for a March 5th vote. While there may be time within the statutory window to make additional late changes and re-warn, we're also constrained by the fact that we have publishing deadlines for our district annual reports that cannot be pushed out if we are to meet our statutory requirements to provide these reports ahead of town meeting. In fact, we sent packets to the printer for the March 5th districts this week. Our annual reports include tax impact illustrations that are based on how Act 127 works now. I guess that's a long-winded way of me saying that any changes you might be considering should be FY26 changes. While you may be seeing different reactions and approaches to the implementation of Act 127, I respectfully would like to bring the discussion back to what Act 127 was meant to do, namely to address inequities in the distribution of available monies from the closed system we all know it's the ad fund. If fair distribution in this fund is long overdue and appealing to my districts, all of which have been historically underfunded under the prior waiting model. In closing, the spending pressures that are driving up education costs this year are not unique to our public schools. We see these pressures reflected in the tuition rate increases from the independent schools that serve choice students in the Northeast Kingdom. It is too simplistic to say that the solution is to just reduce spending. I would welcome a conversation with anyone that has realistic ideas of how to meet the increased emotional support needs of students in my schools, stemming from the effects of school absence during the COVID-19 pandemic, along with amounting mental health costs that come with this. That's a conversation for another day. Thank you for the opportunity to speak to you today. Thank you so much, Mr. Tucker. I appreciate your time. Ms. Sewell, did I say that right? Sheila Sewell, Superintendent of the Addison Northwest School District. And after you, it's gonna be Essex Westford. Thank you. Sorry, George. Great, thank you. Thanks for the opportunity to be here today. I am Sheila Sewell, Superintendent Addison Northwest. This is my 31st year in public education in Vermont, 20 as a school, as an administrator, six in my current position. And I'm here to provide testimony on behalf of the Addison Northwest School District regarding the implications of Act 127 on the FY25 budgeting process. I want to emphasize the unprecedented challenges we face, even as a district that remains relatively neutral in the changes to pupil waiting. Our level service budget for FY25 represents a 14.5% increase in expenditures, which is a 15% tax increase. This includes the continuation of eight out of 10 ESSER-funded positions due to continued needs. And our budget incorporates $750,000 in capital spending for middle school expansion, as well as an HVAC and roofing project whose cost came back unexpectedly doubled. Excluding the cap, the budget carries tax implications of 23 cents before CLA's are applied, with CLA's reflecting an average increase of 39 cents across our five town community. Even if we exclude the capital spending, we still confront an 11% increase resulting in a 17 cent rise in the union tax rate without the cap. While our circumstances may seem less dramatic than many others, I must highlight the proactive steps we've taken to address these anticipated fiscal challenges. In 2020, three years after our Act 46 merger, we closed the Addison Central School to control costs. This was a divisive and painful process for our community. A year after that school closure, we initiated a merger study with the Mount Abraham Unified School District, again, to preserve programming and control costs. In the fall of 22, the merger proposal ended in a failed vote and also resulted in the Lincoln School withdrawing from Mount aid, creating yet another district in Addison County. Each subsequent budget cycle feels like a fresh round of zero sum bargaining and blame. Despite our continued efforts on a per pupil basis, we remain among the highest spending districts in the state. Further, our program of studies analysis reveals a bare minimum of high school course offerings with far less diversity as compared to other high schools. Additionally, our central office is smaller than the average with most of us wearing many hats to cover all the bases. At the school level, we employ fewer than five interventionists and have no additional positions such as behavior support specialists or professional development coaches, positions that many other districts have. With no clear options to maintain even our basic level of programs and services, we are left with a difficult choice of continually increasing costs or cutting programs. What is local control? We have no control over this situation. The legislature must understand we have no other options. Our proposed budget aims to maintain programs provide fair but modest wages comparatively, address social and emotional needs, and accommodate uncontrollable costs such as health insurance, transportation, paid leave, pre-K and universal free meals. As the legislature considers the effects on districts that gained or lost tax capacity, please don't lose sight of those of us in the middle with nowhere to go. We have specific short-term questions that urgently need to be answered. Is there a definite 5% cap? And if not used this year, will it be available later? Is the yield fixed or will there be further changes potentially putting us under or remaining above the 5%? We preliminarily passed a budget with the expectation that our union tax rate will be capped at 5%, which we may rescind on Monday if necessary. If changes are imminent, we urgently request information. The ambiguity surrounding intentions and the lack of clarity in the law are unacceptable. Our message to the legislature is to make the law clear, allowing school boards to inform their constituents about the impacts of what they're voting on. In the long-term, we employ the administration and the legislature to collaborate with school leaders to outline a vision for public education that serves all Vermont students. If we believe every Vermont student deserves access to a next-generation, top-tier public education, what are we doing to bring that vision forward collectively? If our primary focus is on achieving positive outcomes for all learners, let's first establish the vision and subsequently decide how to address our aging facilities. Given that all Vermonters collectively bear the cost of education and facilities, it's imperative that we collaborate to determine the optimal way to invest in our shared future. The current problem cannot be solved with an interdependent funding system and local decision-making. Thank you for your attention to these critical matters and we truly appreciate your efforts to create a clear and supportive legislative framework for Vermont's education system. Thank you. Thank you very much. And I did not plan on to comment after anyone's testimony at all, but I will comment after your testimony and say the yield is definitely not fixed. It's not even close to fixed. There was an estimate on December 1st and we will set the yield based on your warned budget. That is, so we don't have even the beginnings of the information we need to set the yield, but it's quite possible because of the difficulty of education spending, that it will be significantly different than in the December 1st letter. That is just the basic math of the closed circle of the education fund. I want to be very clear. The yield will not be fixed until that passes the House and the Senate and that is quite a while off. Thank you. Thank you. Appreciate you and appreciate you coming in. Ms. Boushey, thank you. Hello. Thank you all for this opportunity to provide testimony on Act 127 and its impact on our budget development for FY25. My name is Heather Boushey and I am the director of finance at Essex-Westford School District and I'm joined by our school board chair, Robert Carpenter. Essex-Westford School District strongly supports the underlying goals of Act 127, emphasizing the importance of Vermont's education funding system promoting equity across the state. However, we've observed significant challenges in the mechanics of this legislation impacting both our district and our community members. Act 127 has led to a decrease in taxing capacity for Essex-Westford that far surpassed our initial expectations. To illustrate the impact in Essex-Westford, if we were to maintain the same net education spending in FY25 that we had in FY24, our homestead tax rates before CLA would have increased 0.58% in our communities. That is a significant tax rate increase without increasing one cent of spending. As most of you are aware and have heard from other testimonies today, FY25 is a year where districts are facing significant budget pressures. We are contending with the 16.4% increase in health insurance costs, expected rises in salaries and wages, increased payroll taxes, loss of federal S or grant funds, heightened demands for facility repairs, declining enrollments, increased need for mental health supports for our students and obligations to comply with stormwater regulations and PCB testing. In Essex-Westford, we are unable to incorporate all of those factors into our FY25 budget and meet the educational needs of our students without increasing our net education spending over last year. And we have serious concerns about the impact that this will have on our taxpayers. We are particularly concerned about our most vulnerable community members who pay an income sensitized tax. While Act 127 contains a tax rate cap of 5% on the homestead tax rate, a similar cap does not exist for the income sensitized tax rate. This may result in our most vulnerable community members experiencing a 23% increase in their property taxes. While the leadership of Essex-Westford feels like we are recommending the most responsible budget possible, we have deep concerns about whether the sentiment will be shared by the voters in our communities who are facing their own set of financial pressures. The current budget that we are recommending represents a 7.7% increase in general fund expenditures and results in a 20.65% increase in homestead tax rates before the cap and before CLA. The 5% tax cap in Act 127 is critical for the Essex-Westford community and allows us to make responsible cost reductions while continuing to ensure that the educational needs of our students are met. Looking ahead, future financial projections present uncertainties and we're not sure how to navigate the transformation of our district in the years to come to offset anticipated tax increases once the cap expires. Mere expense reductions or changes in our staffing ratios cannot fully address the complex changes that will be needed. Thank you for considering our perspective and I don't have an ask for you today because I don't know the answer but I really look forward to working collaboratively to address the challenges that our education system in Vermont faces. At this point, I'm gonna hand it over to Robert to share his thoughts and perspectives as our board chair. Hello everyone, thank you for your time. I am one of the 60% of families in Essex that's taxed on income sensitivity. I have two young kids and I have a difficult time making ends meet as an overburdened working professional. As a board chair, I am being placed in a position of having to choose between two terrible scenarios. First, we can pass a budget that includes reductions while still increasing our tax bill from 16 to 21% due to Act 127 and CLA. This would cause at minimum a $1,200 increase in my tax bill. This would force a financial crisis for many families, mine included. Or the other option we could look at is cutting millions from our budget to reduce the tax impact, resulting in devastation to our educational quality, our staffing, and our children's access to vital services such as busing and other mental health services. As school boards, we need explicit direction from the state on the following. Is it the will of the legislature and the governor to dramatically scale back public education as we know it in Vermont? Due to Act 127 and CLA, we must weigh laying off hundreds of teachers and staff who are middle-class community members or pass the burden to statewide lovers to our taxpayers. Either way, the fallout will alter the fabric of our communities and working-class professionals, raising families and paying taxes, deserve to know what kind of future we intend for Vermont. I hope we can collaborate together on a better solution. Thank you. Thank you, Mr. Carpenter. Next up, we have Franklin Northeast Supervisory Union and then Slate Valley Unified School District. Hello. For the record, I am Lynn Koda. I'm the superintendent of schools for the Franklin Northeast Supervisory Union. I represent the communities of Bakersfield, Berkshire, Innesburg, Montgomery, Richford and Sheldon. I've been a teacher, a principal and a superintendent in these schools since 1995. And for the record, I'm Morgan Debelle, representing Franklin Northeast as business manager. The intention of Act 127 was to improve student equity by adjusting the school funding formula. This adjustment to the pupil weights should provide more equitable opportunities and more equitable outcomes for Vermont students. As a state that has taken a strong equity stance, the intention of this law is good and moves us in the right direction. With these shifts, students' educational experiences would be impacted much less by the zip code their parents have the financial means to live in. In FDSU, we serve a population of students that are economically disadvantaged. We have historically made budget decisions with a mindset of limited resources created by the limited tax capacity we can generate in our communities. The increase in weights allows us to increase some offerings to meet the intent of the law. Some of those include opportunities and experiences for our students that they have not been able to access before. We've seen a doubling of our number of students who are emerging multi-lingual. It allows us to add an additional teacher there and additional resources to serve students' mental health needs and create some programs that are connected to STEAM and other resources that are highly engaging for our students. We understand the need for a soft landing for previously advantaged districts who are now needing to budget to more accurate pupil counts. In some historically advantaged systems that have hit the 5% tax rate cap, they found that spending capacity that has allowed them to obligate money for one-time investments in capital projects and capital reserves that will not impact their residential property tax rates. This results in us funding not only our increased opportunities but also their softly ending. The cost of these caps are being funded by the districts that were supposed to be brought whole by Act 127 by Vermonters statewide who are paying based on income and by non-homestead taxpayers which will indirectly impact renters. If the burgeoning obligations to the ed fund are not corrected and the dollar yields plummets, our tax rates will be driven to the 5% cap. And as more districts are capped, the yield will drop faster and faster until our colleagues from Winooski may represent the only system remaining under the cap and the only system left paying for all those caps. And if Winooski's rate is driven to the cap, the yield can no longer generate any more money from the residential grant list. The cost of funding these caps may push our proposed rate up to that 5% increase. Our communities will likely not support this kind of increase in their residential property taxes, especially when viewed as funding excess spending in other districts. If our budget vote fails and we go back to the board table to plan for the next budget proposal, there'll be no way to cut from the budget other districts have spent over their caps in the additive one-time investments that were made. The only things we will be able to cut are the very opportunities that we have added to equalize our students opportunities under Act 127. It's possible that in order to impact our tax rates we'll need to cut beyond those added opportunities and reduce some existing programs and expenditures. This is the antithesis of what Act 127 was intended to do. A correction to the loophole left in 127 is imperative for this year. Without it, the opportunities our students were intended to benefit from will be lost. We say we believe in equity in Vermont. If that is the case, there are immediate decisions to be made by the legislature to course correct. I don't believe that school boards and leaders understood the totality of the impact their decisions would have on others. I understand the rationale behind many of the decisions that have been made, especially given the long time moratorium on school construction aid. However, now that the ramifications are known, I implore districts to reconsider decisions that will disproportionately impact historically disadvantaged students and taxpayers. As you heard earlier from Mr. Feldman, there's been some miscommunication that local tax rate increases are due to the CLA. As you know, the CLA doesn't change costs, but rather changes how the state may divide out those costs. Capping CLA is we just push the yield down even faster and push more districts up to that 5% cap. That said, the CLA does add uncertainty and confusion to a finance system that's already confusing. People don't trust the information given when the district rate we talk about doesn't match the actual rate on their tax bills. People have a hard time understanding why they have a different tax rate than someone else in the same district. I can explain the reasons to people, but this against the backdrop of the rest of the formula, which is hard to explain, leads to a distrust of the fairness of the system. Finally, it's a distraction from where their focus and our focus should be, what is being funded in our school budgets and why that is important to our kids. What people do understand is that their house is worth more than some of their neighbors and less than others. They do understand that their houses are worth more now than they were before the pandemic, even if their assessment hasn't changed. If we applied the CLA to property assessments on tax bills rather than altering education tax rates, who would raise the same amount of money in a way that made more sense and seemed fair to our constituents. Finally, we know that houseways and means has been taking testimony from the joint fiscal office on cost containment measures and potentially transformative changes to education financing in Vermont, such as moving to a base education amount or a statewide level funding amount. We look forward to being a part of those future discussions. Thank you all for providing us the opportunity to speak with you today. Thank you both very much for your time and your attention to this. And next we have Slate Valley and then Addison Fairhaven. And you two are self-organizing, thank you, appreciate it. Go ahead. Good afternoon. For the record, I'm Brooke Olson Farrell, Superintendent of Schools in the Slate Valley Unified Union School District. And I have with me today our Director of Finance, Cheryl Scarzello. We appreciate the opportunity to share our thoughts on this important topic. Our district encompasses the towns of Fairhaven, Castleton, Benson, Westhaven, in Huberton and Rutland County, in Orwell, which is in Addison County. Slate Valley serves approximately 1,300 students pre-kindergarten through 12th grade with five schools. Since the implementation of Act 46, Slate Valley has worked really hard to realize efficiencies and opportunities for consolidation throughout our system. Since merging, we closed one school. And two years ago, we moved all of our seventh and eighth grade students to the high school campus. Now we operate one grade seven through 12 middle high school and four pre-k to six elementary schools. We have reduced 26 positions over the last seven years to respond to declining enrollment, create efficiencies and be responsive to taxpayer burden. Our equalized homestead tax rate has steadily decreased over the last five years. Slate Valley has always been fiscally conservative. Our practice has been zero based budgeting. We start each year by looking at precisely what we will need to accomplish our goals for the coming year. We budget without building incontinencies. Year after year, we return the majority of our prior year surplus to our taxpayers to reduce tax rates. At this time, our capital reserve account has been depleted and we do not have any other reserve accounts. Despite this conservative approach, our budget often does not pass on the first boat. And if it does pass, it passes by a very slim margin. The Slate Valley Board approved a $31 million expenditure budget for fiscal year 25, which is a 10% increase from fiscal year 24. This budget is in no way extravagant. Due to the changes in pupil weighting under Act 127, our spending per weighted pupil is $11,385, which is less than a 1% increase from fiscal year 24 using the new weights. In our proposed budget, we have included the addition of two teachers, one at the elementary level and one at the high school. We've added a nurse in two positions that were previously grant funded. We have also added 500,000 in building maintenance to address significant immediate needs. If it was not for this change in pupil weighting as a result of Act 127, we would not have proposed these increases to our budget. Our spending per weighted pupil at $11,385 is half of the $22,953 average per pupil spending the tax commissioner forecasted in the December 1st letter. We are clearly a district that Act 127 was intended to benefit. Historically, we have been a disadvantaged district. Again, despite relatively low education tax rates, our voters have voted down the school budget even in years with very little increase. With Act 127, while we are now advantaged by the change in pupil weights, we've continued to be conservative with our proposed budget. We could have added almost $6 million in expenditures before exceeding the 10% cap per pupil spending, but we proposed adding only half that amount. Each year we are challenged to help voters in our communities understand how our budget will impact their tax rates. This year has been more of a challenge than ever. We are not able to give taxpayers information about what their tax rate might be until we have pupil numbers, which were not finalized to last week. Once we have pupils and our CLA percentages, then the yield becomes more a significant variable in terms of determining tax rates. With the information that was shared with business managers based on the January 9th Education Fund Outlook, we are now using the 9,171 for the yield, which has pushed our equalized tax rate to just over the 5%. So now we are capped. When we use the yield recommended by the tax commissioner of the $9,452, we were below the 5% cap. At this point, until the yield is set, we will not actually know whether or not we are over or under the tax rate cap. We are concerned about how our residents will react to this uncertainty when they vote on the school district budget. I should also point out that even with the tax rate cap, we are apprehensive about passing our budget. The town of Benson will see a tax rate increase of almost 28% with the cap using the January 9th yield. Despite being advantaged under Act 127, we are in jeopardy of being disadvantaged. Being disadvantaged means that our regular building maintenance issues will continue to go unaddressed and that we would be unable to provide programs and opportunities for our most vulnerable students. The intent of Act 127 may have been to provide equity throughout the system, but it is poised to do the opposite. Wealthier districts will likely continue to pass their budgets, while districts like ours who are supposed to be advantaged may end up with less resources than we even have this school year, increasingly in equities in the public education system statewide. Thank you very much. Really appreciate your time, both of you. Thanks for all you're doing. Next up, we have Colchester School District. Great, thank you. My name is Amy Minor and I have served as Colchester Superintendent of Schools for the past eight years. Colchester has 2,100 students, six school buildings, and 180 acres of land. Historically, Colchester has been a fiscally responsible school district. When you compare Colchester spending per long-term weighted ADM to the average spending per pupil statewide, Colchester is well below the state average. In addition, Colchester is consistently the lowest or one of the lowest in spending per pupil when you compare us to all of the other Chittenden County districts or supervisory unions. Colchester School Board has consistently shown financial restraint in the budgeting process. The average annual tax increase over the past nine years is 1.21%. And in two of the past nine years, our taxpayers experienced a tax decrease. By far, this year has been the most challenging budgeting year that I have experienced. Colchester qualifies for the 5% tax rate cap as long as the yield holds. Our proposed FY25 budget does add funds for our multi-lingual department as we have seen a significant increase in the number of newcomers to our district. A newcomer is a student who is just beginning to learn English. Typically, Colchester has less than 10 newcomers across the district annually. This year alone, we have registered 35 newcomers since October 1. We are thrilled that these students have joined our district. The additional staff is critical to support these students and their families. This addition is an example of being in alignment with the spirit of Act 127. When you apply the common level of appraisal to the 5% tax cap in Colchester, it results in an estimated tax rate for our residents of 15.5%. If the tax cap were to be removed, our community would be looking at a 32% increase in taxes. The tax cap, I believe, is a critical component of Act 127 that provides districts with the time to plan for what will happen to the Ed fund formula in five years. I am, however, greatly concerned about what might happen in year six once the cap is no longer in play. In order to decrease the tax rate for Colchester residents from an estimated 15.5% to 9.5% for example, Colchester would need to reduce $7 million, approximately 67 teaching positions. This would decimate our school district. Approximately 78% of the CSD budget is salaries and benefits, and we would have no choice but to eliminate programs and services while also significantly raising class size. As a district, our class sizes are at the education quality standards recommendations. Reducing teachers will put many CSD classes well above those recommendations. We have added positions to provide early intervention for students who are not on grade level and to assist with closing the achievement gap in student performance data. I am concerned about the education fund over the next five years. And at this point, I believe funding education is at a critical moment for the students in Vermont. This issue is extremely complex. Thank you so much for hearing our testimony today and for working on this. I encourage you to find a way to support equity across our state, while at the same time, maintaining the quality programs and opportunities that we currently have for students across the state. Thank you for your time and your commitment to providing a high quality education for Vermont students. Thank you from Colchester. Thank you very much. I appreciate your time and your work. Next up, we have Wenuski and then Mount Mansfield. Oh, hi. Here you are in real life. So shock me. I'm sorry, I'm sorry. You're both welcome up there. Yeah, two chairs. Thank you very much. Thank you for joining us. Yeah, wow. That'd be a nice opportunity. My name is Robert Millar. I'm the president of the Wenuski School District Board of Trustees. Chair, I am joined by our superintendent, Wilmer Chavarria. Thank you for the opportunity to provide testimony on the unintended consequences of the 5% tax rate cap on the implementation of Act 127. Vermont is one of the only states in the country with a constitution that requires all students, no matter where they live, to have equal access to education funding. The Vermont Supreme Court identified this constitutional requirement in 1997. In the Brigham case and over the years, the legislature has adjusted the way we fund education to ensure that requirement is met. One way the legislature ensures students have access to sufficient resources is to weight them according to need. But the original student weights created back in 1997 had little objective basis. In 2019, an independent analysis demonstrated that the weights were not getting sufficient resources to the students who need them most, particularly students living in poverty, English language learners, and students in rural communities. Act 127 was a response to this analysis and adjusted the way we weight students to ensure Vermont meets its constitutional mandate. Winooski was a strong supporter of adjusting the weights as we serve the highest proportion of multilingual learners in the state and have among the highest levels of students experiencing poverty. The fiscal year 25 budget adopted by the Winooski School Board a couple of weeks ago invests the additional tax capacity intended by Act 127 in long identified student needs. The budget directs additional resources toward multilingual liaisons, teachers, social workers, and literary interventions and builds upon our existing pre-tay program to offer more opportunities for early education in the district. Despite the increased tax capacity, Act 127 provides to the Winooski School District like most other Vermont districts were forecasting potentially significant tax bill increases for some residents due to escalating property values. Two weeks ago, after adopting our budget with superintendent Chavaried Sport, we analyzed several districts' public statements and charts from public board meetings and came to a concerning conclusion that many are increasing their budgets beyond normal expected inflation increases in order to take advantage of Act 127's 5% tax rate cap, some even publicly stating that they would not be doing so if this protection is not up to us. The result is that districts like Winooski could see a higher equalized tax rate than districts protected by the cap, despite the fact that our spending for a long-term weighted membership is lower than the districts we analyze. Because the Education Fund is a self-balancing system, budget increases between 15% to 20% for districts that are protected by the tax rate cap will lead to continued decreases in the yield, you know, which will disproportionately affect districts without the cap, I promise. Recent projections by the JFO, not the ones we saw today, but to be clear, apparently, show that the projected yield had decreased by $300 from what was in the December 1st letter. That $300 drop in yields would mean a loss of $1 million in tax capacity for the Winooski School District. We now face the difficult choice of further increasing property tax bills for Winooski residents, revising our budget to pair back on these critical investments that we thought we would be able to make with Act 127, or even considering cuts beyond that that would be otherwise necessary due to the loss of revenue from previous years and the same pressures that have been mentioned by other districts today, such as 16% increase in health insurance. Shifting the expense of the 5% cap to districts like Winooski not only turns Act 127 on its head, it will further increase the tax burden on our residents. Exasperating issues our community is experiencing related to housing insecurity and the displacement of some of our most vulnerable families. One suggestion we have discussed that you could consider options to address this issue to explore the possibility of limited time revenue sourced from the transition period to avoid putting winners and losers under Act 127 against one another, which we've heard a little bit today, a revenue source that offsets the cost of a transition period could preserve the intent of the legislation and ensure the constitutional principle that will access to educational resources for some time. Thank you, I hope I said that quick. Thank you very much, Matt. I really appreciate your time and your attention on this. And our final witness is Mr. Alberghini. Oh, there you are. Hello. Hi there. Well, after listening to today's testimony, it's obvious that these are this a complex issue and probably I'm pressing at a time. I wanna thank you for allowing me to testify today. My name is John Alberghini. I'm the superintendent for the Mount Mansfield Unified Union School District. And I hope that today's testimony and what I'm about to share is helpful to the legislature and for all of our communities. First, I wanna share that Mount Mansfield strives to be a modeled school district, one that follows the rules and the laws that govern education. We were one of the first school districts to unify. We were an early implementer of e-finance, a change that caused some extreme challenges. We're a district that through cooperation, a systems mindset and scale have realized efficiencies and optimized resources. This includes repurposing a school which eliminated central office rent, enhanced our use of staff in space and expanded quality, early learning and care opportunities for students birth to five. Our district which encompasses approximately 200 miles has made some important and difficult decisions over the past several years intended to offer students a high quality education at a cost the electorate can support. These efforts have benefited Mount Mansfield and I believe the entire educational pre-K to 12 system. Next, I wanna share the process that we went through to come up with a proposed budget. Mount Mansfield studied Act 127 carefully and consulted with the agency of education to ensure our understanding of the law was accurate and that our long-term weighted ADM or our total pupil count was correct. The AOE confirmed that we had a notable increase in our long-term weighted ADM, which was a surprise. Additionally, we discussed the 5% tax rate cap as well as the 10% increase in per pupil education spending that would prompt a review to make sure our interpretation was correct. AOE shared that our long-term weighted ADM had increased due to the inclusion of students eligible for Medicaid in the economically disadvantaged category. All Medicaid eligible students were not included in the restated FY24 long-term weighted ADM total. Thus the method of calculating long-term weighted ADM is different in the restated FY24 than it is in FY25. This fact effectively increased the amount of spending to get to the 10% spending per pupil threshold. This is important because if Mount Mansfield had a substantial increase in its equalized pupils under Vermont's previous education funding formula, we would have considered investments that would benefit students in the school community such as facilities improvements. I believe many school districts would use a similar approach. Also, in preparing the FY25 budget, Mount Mansfield adhered to all the terms and conditions of Act 127. The board and district did not try to gain the system or to take advantage of a loophole. We do not consider the 10% increase in education spending per pupil threshold a loophole as it is a key provision of the law. The district's FY25 budget is meant to best serve and support students, staff, families, and all our constituents. This includes two positions funded by ESSER and necessary facilities upgrades. As our district and other districts across the state try to manage aging buildings without any construction aid from the state. In my 20 plus years working on school budgets, this year has been the most confusing and challenging. For Mount Mansfield to get below the 5% tax rate cap, we would have to reduce $5.8 million plus the facilities improvements and cut approximately 77 staff members. This would be catastrophic for our school system and for our students. There are significant issues with Act 127 that have to be addressed. This is a complex issue and we understand that. What we do ask is that if there are going to be changes or new conditions added for FY25, that we are informed as soon as possible so we can let our school boards and our communities know and meet the legal requirements for the school budget vote in March. Again, thank you for taking my testimony and I appreciate all of the school representatives today that offered information about 127 and their own situation. Thank you. Thank you very much. Thank you everyone for being here today for the work that we're all doing on behalf of kids and schools in Vermont. There is clearly no, at least for me, there's clearly no easy path forward through this. And I appreciate the diversity of the voices we had here today. And I think we will keep on working on this and I hope we can stay deeply in touch and in communication with each other as we keep on working. Thank you. House members are gonna head to the floor now.