 This is not the formal opening of the meeting, as Lindy just pointed out. This is budget training. The formal opening will come after budget training. So please consider this the informal welcome. And with gratitude to all who are here. And in particular to Lori and Brian, who I guess will be chief among those who will be leading us through the budget training. So should I turn it over to you, Brian? Yes, and I don't want to, I'm not going to believe the point, but this is really, I'm going to turn this over to Lori. Lori is our business administrator and we've been talking about this budget training a lot over the last few days. So without further ado, Lori. So I'm on page four of the budget packet. This training has typically been focused on how tax rates are calculated and how the budget process kind of comes all together. So I hope that's what everybody came here for. It's on page four is a one page summary that was developed a few years ago with feedback from the board at the time. If this training needs a little bit more improvement, I'm happy to take feedback at the end. But we're really here today to talk about the budget process and how it implicates the tax rates in the towns. So everybody on page four. Okay, so the budget process has several components. The first component is the budgeted expenditures in the general fund. And so what I gave you on this document was the final numbers after last year's budget process. And after town meeting. Yes, Scott. Lori, I'm so sorry to cut you off. I'm not sure if everybody who is here actually has access to page four. Is it possible, maybe while you're talking, if someone in the meantime could put up could share a screen showing that page. Does Jim have authority to do that Brian. I do and I'm actually going to pull it up right now. I was trying to figure out who would have the permissions to be back. No problem. It'll take 15 seconds. I'll have it up on the screen here. That's fine. No need to delay. Lori, go ahead. So last year, our budget was $35,430 and $502. So I'm going to just show you what's like at the top right here. Here it is. And it has an a beside it. Do you see that line. So that was the voter approved budget total. When we're calculating tax rates, that's a number that's really important and that number gets finalized so that we're prepared for town meeting. Usually it gets finalized by the first or second week in January. So right now we're in the initial stages of the budget process for this year, but I just wanted you to know that that number for this year wouldn't get finalized until early to mid January. The state has a formula for calculating tax rates and what it involves is subtracting off revenues that are related to the budget and those that are going to help reduce the tax rate. So I'm just going to describe the categories its interest income tuition from school districts and individuals. We have miscellaneous income other which includes things like the E rate reimbursements. And we have some miscellaneous state reimbursements like transportation aid drivers that we get a reimbursement for that, etc. Then there's special ed reimbursements for expenditures. So last year the total of all of those revenues that were in the budget was about 7.3 million. And I gave it the letter B. When you subtract the two numbers it comes up to a local education spending number which is a little over 28 million. So it's basically taking the A minus the B to come up with a local ed spending. That's the number that drives the tax rate. So those are the numbers that the board can control. You can control how much you budget for. You can control some of those budget items have revenues that offset them. But to this point that's pretty much the control that the board has in the tax rate and in the calculation process. The next line is the equalized pupils and what you need to know is that typically that's supposed to be finalized by December 15. Last year was a rare year that there was a software issue at the state level. And so it was until June that we finally received the final equalized pupils that were used in the tax rate. In the memo that I prepared. I gave you the details of the formula. So I just wanted to touch on some of the highlights on that formula. Just so you are aware of those and the formula takes a two year average of our district students. It doesn't count tuition students. The town who sends the tuition students gets to count those students. So it's again just the district students. It gives us some students a value for the number of state play students who come in to the district. Some of them come and go. So they take an actual from the prior year a single year and add that into that formula. They also give us some waiting. And so I was just going to describe what they give for waiting and why there's a state statute that identifies the waiting. So we get an extra point to or 20% for English as a second language students. We also receive some students in this value for poverty and that's a 25% formula. And then we have a reduction for preschool students preschool students are only attending for 10 hours a week. So the state has a reduction of 46% because they're not counted as a full student. When we get going on the state realize that high school waiting is 13% that it costs more to educate a high school student than elementary school students. So they take our high school students and increase them by 13%. And when you get all said and done, they realize we've added in what we call fake students to this formula. So at the end, there's a statewide reduction due to the fact that we want to come back to this total of the real students in this formula. So last year the state reduced by about 5%. It was they had us put in 94.931 as a reduction. So it's subtracting that equals 5% reduction. So that's how we come up to the 1440 students and it's very complicated. I have files a mile deep, but I was trying to abbreviate it so that you guys could better understand why this isn't really just a body count. It's an equalized pupil count. Again, the formula isn't state statue. If a school district in any year has the equalized pupils move downward of a significant amount. The most they have a whole harmless provision, which is a 5% window. So the least you could go down would be to 95% of that number that we're looking at right now, the 1440 for a single year. And then it could go down 5% each year, but if a school had a significant drop in enrollment. That's one way that the formula helps to protect the tax rate. Am I going too fast. I'm looking for nods. I can't really see everyone's face because of the screen share. Okay, thank you. So the other piece of the formula. It takes the $28 million local ed spending and it divides it by the equalized pupils. And that is the local spending per equalized pupil. So you can see that last year the final number for us was $19,531 per equalized pupil. The property yield is set by the legislature. They set this after this, just prior to the session ending and I think it was June. The number changed. We will receive a number for an estimate for next year on December 1. It's the letter from the tax commissioner. So last year, for example, it was about $10,700 when we received our letter and the legislature increased that value before they set the actual tax formula prior to the session ending. And it kind of babbled on. But anyway, so what you do is you divide the local spending per equalized pupil by that property yield. And it comes up with a spending increase that we're spending above that number by 77.59%. And that's G. And when you get all done that. I'm sorry, it's Joe. So let me just ask you a question. So it so what would make that spending adjustment that be at 100 and not be over it. What would have, what would have had to happen. We would have had to spend less in order for that to that adjustment to not be so off. We would have had to spend $10,998 per pupil. Instead of the 19 531. Okay, got it. Thank you. I appreciate the question. Does anyone else have a question before I move on. Okay. So that $177 is the equalized tax rate for the entire Washington Central Unified Union. And that tax rate would be the same in every town if they had a common level of appraisal of 100%. You might be aware that the common level of appraisal at every town changes. It's based on sales in the town through a formula. So what happens is every year in December we receive the common level of appraisal from the, I think it's the tax department, somebody, the property and evaluation department. And so I what I'm giving you here is the common level of appraisal that we received last December. So you will see that Berlin was appraised over 100% callus. East Montpelier and Middlesex are under 100% and Worcester is right around 100%. So the closer they are to 100% means the closer they are to that equalized tax rate. So what happens is any given year, the budget could be finished. And even if the budget was the same as the prior year, if the common level of appraisal changes, and if the property yield changes, then that could change the tax rate. And it's kind of like a moving part. So as we get moving along in the budget process, you'll see this sheet prepared. I plan to have it for the December 16 budget for this year. But what I wanted to show you was how last year ended, just so that you have that as a starting point. So you can see over to the right. I put in current. So what that 18,657 was is the local at spending per equalized pupil in the prior budget cycle. So you can see at Washington Central, our local at spending per equalized pupil went up 4.68% last year. Our property yield, you can see where that went up 3.29%. So the state, if we had increased by 3.29%, then we wouldn't have had a tax increase. That's another way to consider it. But our increase was greater. And so our tax rate did go up. It went up from $1.75 to I don't know if you see that on the right hand side. It went up by 2.4 cents. On average, if everyone was at 100% every town. So I'm kind of giving you a lot of data. I'm sure some of you may have questions after tonight and I'm happy to take an email or talk to you personally if you have a question. But I just wanted you to really understand kind of what happened last year. So you can see that down at the bottom, I was comparing the local impact on what happened with the budget. Berlin ended up with a not even a penny increase. Calis and East Montpelier had the largest increases of 4.2 and 5.5 cents. And Middlesex had a and Worcester had a reduction in their tax rate. So just kind of that's the summary of where I am and I'll pause and ask if anyone has questions right now about that. Gloria still again. So is this can I sum it up this way. So there's a complicated thing over which we have very little control which tells us how much revenue we're going to have. And then there's another formula over which we have no control that tells us how what we spend translates into a tax rate. And it's complicated as this all look how much we decide to spend is still the one factor we can control and the one factor that changes. Other changes what what the impact is on the people in the town. Thank you. That's very nicely put. I appreciate that. Okay, I know. Okay, thank you. I just wanted to be sure I was I was following like it. It's complicated. Yeah, and yet this is actually trying to make it simple. There's many, many files that make up this and I and I will explain one town when I get all done so that you can see it from a local level. But this seems to allude people over the years they really seem to need to understand. When we do the budget process what it is that we can control and what it is that we can't control and those items that we can't control when we're going to learn that information. Right. And I don't think I could have summarized it without that. So thank you very much. Okay, and they equalize pupils again we should have that December 15, the property yield, the first pass at that would be December 1. And the CLA would be around December 31. They usually lately have been getting it out before the holidays. So those are the three critical pieces of information that we will get during the month of December. So that's why doing the budget process early is helpful but it really doesn't bring it back to a tax rate until we get those critical documents. Lori, this is, Lori, this is Steve if I can interject one more thing. There's actually another thing that the school board doesn't have any control over. And that's the number of equalized pupils. True. You can you can market your town and get more students but the formula is still pretty much out of your control. So to the bottom of the page if Jim could just kind of scroll that up I would appreciate it. So oftentimes, there's another formula that the legislature has in statute and it's called the excess spending formula. And that is to encourage schools to not spend too much or if they do knowingly then they're going to have to pay taxes on a $2 for every dollar basis. And so what that means is if you're over the spending formula for the tax rate increase it might have been a 4 cent increase it might be 6 cents or 8 cents depending on how far you're over this formula. So over the years the board has really been paying attention to this formula. And I wanted to review last year's formula and then explain a couple of things that have changed. So last year we would take our spending numbered it's letter D which was the let's see the equalized pupils. So what they do is they take three or four things off your spending and kind of hold you harmless to those items. So if you've incurred debt to improve your school. If you have students who are over $50,000 at the time. Now it's $60,000. And if you had new teachers who required the school district to increase the budget for a retirement assessment. That means that they haven't worked in a school more than five years. Then you have to pay an assessment in the budget process. So those three things we were able to subtract off our spending per pupil in order to come up with an excess spending per equalized pupil. So what does that mean, just to get to the point the 19,531 number that you saw up on letter E would become 18,654 because they're giving us credit for things that we've had in our budget that some schools have and some schools don't. So when you get all said and done the state has a number that they provide to us every year and I'll be getting that I think by December 1 as well. So last year if we had spent using this formula over 18,756 we would have been in the penalty formula. We called the penalty formula it's also called the excess spending formula. So we were $102 per equalized pupil below the penalty formula. And I translated that into a an amount so we were almost 147,000 below the penalty formula district wide. If it was in the negative it would have been a reduction or cut that we would have needed to make to get below it, but we were actually below it already by about 147,000. It's pretty close kind of too close for comfort for me. So today I also have been researching some other things. Last March, the board did put on the ballot and the voters approved having our capital fund and our transfers to the capital fund. So that's great news because that puts us further away from the penalty formula. But the special ed number and the new teacher's retirement assessment and the debt actually all change every year. So these aren't fixed formulas. So when you hear me talk in December, I'm going to be adding another row for the capital transfer. So then in the future that can be reduced. And I have a contact Abbey who will at the agency of education. I'm confirming exactly what I'm going to be adding. I'm going to be adding another row for the capital transfer. So then in the future that can be reduced. And I have a contact Abbey who will at the agency of education. I'm confirming exactly what we have to do to make sure that full amount is eligible for this formula. There is some required reporting. And there is an approval process at the state in order to have that $700,000 in this formula, but I'm sure the district would want to follow whatever we have to to meet this requirement. And it's in your best interest. If I may interrupt us for a moment. Could you explain what happens if we cross that excess spending threshold. Yes, so if you crossed it by, let's just say one penny in the district is $160,000. So that's a budget adjustment needed. So if you crossed it by 160,000 instead of having a one penny increase in the tax rate, you would have a two cent increase in the tax rate. And it wouldn't stay locally that money would be in a formula reverted to the state education fund. I don't have all the details on the semantics on how that really, you know, from a cash flow point, but that's the basic overall way that it works. Does that answer your question Scott. Yes, thanks. So that basically for every $1 over it costs you to, and you don't actually get to use those two. But the extra dollar goes into the education fund. I'm using a penny because that's kind of the way a dollar works at the district level. Okay. All right. So then I was prepared to just go through a town of Berlin and just kind of explain how this looks over a period of time at the town. It's on the next page. I just picked Berlin because they're first on the list. So this is showing you over time. Some of these numbers are the same in every town and some are different. So what's the same at every town is the education spending per equalized pupil now that we are emerged district. What's the same at every town is the property yield and the district spending adjustment. So what's different is the common level of appraisal. So you can see that in the town of Berlin in the middle, there's an area where it says common level of appraisal. You can see the trend over time at this town for how the value of the property is comparing to sales. And so you can see that there's impact on the tax, the local tax rate in Berlin. That would be different in every town. So it's it's under the actual homestead tax rate. So you will see that 0.8 cents, which is $8 on $100,000 property. That's what's different at every town. Over to the right. There's also a non residential tax rate. And I'm going to cover what's homestead versus non residential. So the homestead is the home in two acres of primary residents. If you had a business or secondary property vacation home in the town of Berlin. It's considered a non residential property. The non residential properties are have a different tax rate. So while the legislature set the dollar as the homestead tax rate. Last year they set $1 and 62.8 cents. It's up at the top for the non residential tax rate. So, while the budget impacts the actual homestead tax rate. The statewide budget impacts the non residential tax rate. So actually non residents are paying more than homeowners or residents. You can see it's $10 more on $100,000 property. It would go from $8 to $18. So, if I can go through every town, but in the interest of time, I was thinking I should pause here and see if there's any specific questions. Lori, this is, this is Jill again. So I definitely don't think you need to go through every town. At least I'm good. But just going back to what Steven said. So the thing that we're really vulnerable to is it seems to me is losses of students that are too small to allow us to actually reduce a cost of serving students, right? Like, you know, you lose a few students while you still need the same number of teachers, the same number of support staff. You lose a lot of students actually maybe you can make an adjustment, but you lose a few. We're pretty vulnerable to that if we're trying to provide the same service from one year to the next. Is that a fair way of thinking about it? And I think every school in the state is currently seeing a large decline in pupils. I know Brian is planning to discuss this further at the regular meeting. Yeah, it is a very deep concern. I think our, our projection in the near future is that we really need to start to kind of look more at the cost per pupil and try to budget more in line with the property yield So if we're having a large decline in pupils, it's not going to hit all in one year. It's going to hit over a two year averaging. But it's still not good news what we're seeing right now. And I'm hopeful that and maybe Brian wants to speak to that now and again later. I'm okay if we wait till the, till the meeting I'm just trying to understand sort of how to think about the levers that are the ones that we both the ones we can pull on the ones that we're just sort of buffeted by so just trying to make sense of it. Okay. Yeah, and the board has asked or the finance committee has asked that I start pulling comparables and so I was looking at the education spending per equalized pupil and coming up with some comparables for that. And as well as our special ed spending per equalized pupil that information is at the state level. So for December you're going to get a pile of information that I think will be helpful as we are in the mid part of the budget process. Okay, that's awesome. Thank you. Pretty much what I had for the training. I hope it met your expectations or if it didn't, I guess I would love to hear what else we could have done differently tonight or what it is that we would need additional training on and we could have another meeting or Lori sorry this is Jill I found this really helpful the one thing that I think would have helped I think it's not on there but there's a whole bunch of key dates there's like a whole bunch you know you reference various factors or you know whatever I don't can't think of the word for them but anyway the you know the various things that however they get set impact the you know ultimately impact the the final tax rates and the and the impact of the budget would just be maybe helpful on this sheet for you to actually show like you know when to those usually come through because it's to me it's it's just really helpful to understand like we can actually fully understand the impact of what we're doing until all those things cascade through and so just to know the timing of them would be helpful. That would be my only suggestion I found this super helpful I thought I've I've had this explained to me before and not gotten it so this was very helpful. Okay thank you and we do have them all noted on the budget timeline but I will enhance the file so that in the future you'll have this in the file thank you. And I know every year I have this explained to me and then my mind on gets it while during the period when we don't have to worry about it and it's always really useful to to hear it all again. One question I had a way how if you wouldn't mind explaining what voters see when they vote how the how the budget article is actually presented on the ballot. Sure. In Vermont, the budget article is only for budgeted expenditures. And so the voters vote on an expenditure total. They don't vote on an education spending total or any other number. The revenues are still projections, but they actually just vote on the budgeted expenditures. And and floor. Finish with that and then I have a separate question. Okay, um, but I is the legislature still insisting that the budget article. It gives the the budget and then it says this represents an increase of X percent in education education spending per equalized people. I know that wording is identical. We can research it further, but I have not been personally notified of any change to the wording of the article. It is a canned wording. As you mentioned, thank you. Thank you very much. And floor, did you have something. Yeah, I just I just wonder, Laurie, if it for some you before had explained a little bit more about what the common level of appraisal and how it affects by town because not everybody appraises at the same time and it really shows a little bit of that differentiation. Do you mind speaking to it a little bit more just for others. What I put on this sheet sheet sheet is what I'm calling it in a little box down below actually shows you at Berlin that their tax rate is five cents lower than it would have been if their common level of appraisal was at 100%. So I don't know if you see that but the equalized tax rate was $1.776 their common level of appraisal is over 100%. So it saved the town five cents on the tax rate. It made their tax rate $1.723. Is that what you were and then you'll see that number as a positive in Calis because they're under the 100%. Do you want to turn to that page so I could review that as well please. It's the next page, Jim. So in Calis their tax rate is 8.2 cents above the equalized because the common level of appraisal is at 9561. Is that what you would hope for floor. Yeah, I was just talking about like every town has different times where they do, which is a problem kind of in Vermont, right. Okay. Now that especially now that we are unified so that part is but I was hoping that you slowly pending. Yeah. Yeah, so in Vermont, if your town gets I believe it's below 85%, but I'm not 100% sure of then you are required to complete a reappraisal townwide. So very currently we're having a reappraisal right now. But if you're hovering around the 90%, you're not required to have a reappraisal. The reappraisal cost money takes time. It could take a year or two. So sometimes you can see over time everyone pretty much is depends on how you sell your house. So what this is saying in Calis is people are selling properties that a little over 4% more than their value. I don't know if I can explain a different way. So if their house was 100,000, they're getting like 105,000 or 104,000. Yeah, that's what I want. Yeah, that's okay. Yeah. So that's what it's saying and it's saying in Berlin that when they're selling their house they're actually getting lower than the assessed value, because it's over 100%. That's a little complicated. It's a tough pill to swallow. So if someone has a personal question and you think of it tomorrow call me. This is this is Steve again, if I can jump in, is that all right, Scott? Of course, Steven and then Kari after you. What I'd like to add, so this is my understanding. So I'm talking from a taxpayer point of view. I think that the common level, the common level of appraisal affects this tax rate. But as a taxpayer between this tax rate and what I'm paying taxes on, it evens out. That's the purpose of the common level of appraisal. So as a taxpayer, I'm not saving any money. I'm paying it one way or another. Because that's what we hear as feedback from the from the taxpayer that, okay, so you're at Berlin, you're at 103%. So your tax rate went down. Well, no, my tax rate didn't go down because I'm paying paying for more than my property is assessed at. You see what I'm saying. I mean, for the savvy taxpayer, they're going to say, yeah, it makes it look good for your school board presentation that we save five cents, but I didn't save five cents. Because I was paying for more property, I was paying a higher property tax than my property is valued at. So it's, it all comes out in the wash. There's no real advantage one way or another. That's what the formula does. If you're being assessed, if your property is being assessed too high, then they make an adjustment that lowers it this way. If your property is being assessed too low, then you pay a penalty that raises it up. So it all comes out in the wash. It's just something I don't think we should harp on as an advantage too much. Intent to have every property in the entire state equalized. That's what the common level of appraisal actually does. It puts towns at parity for the sales in their towns compared to their tax level tax value. So Kerry had a question to you said yes. Yeah, hi everyone. I came a little late and Lori, you were covering this one when I joined but if we could back up a couple slides maybe to the last one before the towns. My question is about the excess spending formula and the impact of the debt allocation. So I'm thinking about the retirement of our U32 debt, which happens next year of course. We've been all waiting very patiently. So if I understand it correctly, that's going to be an expense that we don't occur next year. And it's quite a bit, right? It's over a million, as I recall. No, next year is only 155,000. The primary bond was paid off and it in this 1.1 million reflects the payment off the $9 million bond. Right. And this is, is this the last, the last payment this year? The payment this year that's in the budget is 155,000 that will come off in the future. Yes. Okay. Okay, so it's not, it's not a significant, I mean it's significant. But were you on when I was discussing about the capital approval by the town at town meeting? Yeah, I guess I didn't understand it if you could, if you could. 700,000. Okay. So at town meeting, this new merge district didn't have an established capital fund until town meeting March of 2020 as for the new entity. So we had had the board put a warning to establish a capital fund per title 24 section, whatever. And by doing that, and by following some criteria and following some rules at the state, we can add that as a new line in the excess spending formula. So we'll be able to subtract that 700,000 on, on that formula next year. I mean, this budget cycle. So that that's good news. We're paying, but it gives us, it would give us some buffer against that threshold. Yes, it will. And then the $150,000 debt payment that goes away will reduce the expense, but it won't be, it won't, it will also reduce the threshold. Right, so it's true. Right. Okay. Got it. Thank you. Thank you. Any other questions for the way. Lloyd, do you want to continue? I'm all done. That was my presentation. So if I did it quickly, I appreciate all the feedback and the questions. I think it's been a real good interactive meeting. Unless Brian has anything else to cover, I think, I think we're ready to take a break before the meeting. Yeah, I just want to thank you, Lori, for your leadership and your help in putting this together. So I was very informative. Lori, Lori has spent a lot of time with me the last few days to say the least, breaking the new superintendent into the budget here in Vermont and in Washington Central. And thank you very much, Lori. Appreciate it. I have one more question for Brian is you've worked in a bunch of different states or the school finance rules as arcane in other states as they're here. I actually wouldn't say it's arcane. I would say it's very unique and very, I would say that depending on who you talk to with different super intense around the country that I do know, they are very favorable towards the Vermont way it works because I know we talk about equity and it seems that the formula. Well, some, some folks may not like it. And there's always ways to improve things. It seems to be a very good way of doing that doing business with the way the state runs it here. It's definitely much more equity equity based in many ways. Nice to hear Brian. Thank you. Great. So it's 541. We can take a break and I think should take a break until when do we want to take 10 minutes and then get started up again, or do you want to go into a six. Brian, please. I just say one thing is that I'm ready to go whenever everyone else with I just want to let all the board members I did send you an email a few minutes several minutes ago, just to make sure we are addressing something right now but we're on top of it and I'll give a little brief update at the board meeting. Understood. Thank you very much. One question is that we had said to people's o'clock. So we might be throwing them off if we start earlier. So just, we were planning on a break. Yeah. Okay. Dinner. I just want to tell you. Exactly. Dorothy, I will not be at the rest of the meeting. I just can't stay up for tonight. I had, I was up early. Or it seemed like an emergency. It wasn't, but I lost about four hours sleep and I'm not going to make. So I decided to do this and skip the rest. So see you next time. Wonderful Dorothy. Thanksgiving Dorothy. Yeah, yeah, take care, both of you. Goodbye. So with that, I think let's, let's just recess until six o'clock then. And many thanks to all members of the public who joined. Really happy to see you. I hope you got something out of this. Anyway, see you.