Chairwoman Cummings launched the Senate Finance Committee right in on Tuesday morning, explaining that they had drafted an amendment to H.887 the previous day. She reiterated that the Commission on the Future of Education will remain in the bill, but the amendment creates an Education Finance Study Committee who’s work will result in proposed legislation after taking into account “everything that goes into school financing.” The task of this study committee will be to design an “affordable educational funding system designed to ensure substantially equal access to educational opportunities for all Vermont students.”

Ram Hinsdale was concerned about the number of legislators on the Commission, saying that they often “hamstring” themselves with other responsibilities (especially in the Senate) and she is worried about them being able to regularly participate.

She also was concerned about the language “giving as much consideration as possible to balancing representation from across different political parties” for the Commission.  She worried that if they choose only one party that will leave them open for criticism. Senator Brock countered that striking that language may result in one party participation. Ram Hinsdale suggested she wanted balance and “may even suggest” Representative Beck lead the group. Brock pointed out he recalled Beck voted against H.887.

Senator McCormack supported Ram Hinsdale’s language deletion saying “Last week I said, in my view, study committees were basically booby prizes…and what this committee is going to do is really what the Legislature should do…”

After some discussion, Cummings called for a straw poll and Ram Hinsdale’s changes were rejected. Ram Hinsdale and McCormack also wanted their names off the underlying amendment. Cummings indicated that a new draft would be forthcoming.

Tuesday Evening

Chairwoman Cummings began the Senate Finance Committee meeting on Tuesday evening by acknowledging the current confusion in H.887 (the property tax yield bill) around studies. There are two studies in the Senate version. On Friday they had struck the House version of the Futures Study and replaced it with the Senate Education Committee version.

Senator Watson brought forward an issue that had come up in the House about tuitioning districts. The concept is that tuitioning districts don’t have variable costs since the tuition they are paying doesn’t vary with each individual student (it’s averaged out). Her proposal was to take away weighting factors for non-operating districts.

Cummings noted that this was the Holcombe Amendment that the House rejected, and this is “not the place for it.” The Senate Government Operations Committee has jurisdiction because they drafted the weighting legislation and apparently, they have also rejected that proposal at this time.

Senator Gulick had joined the Committee and asked if she was correct that the Committee amendment would push the start date of the Future Study out another year. Cummings confirmed this was the case, saying that “right now we have a crisis in funding. We can’t get budgets passed. We’re quite sure some people are going to lose their homes because they can’t pay.” They wanted to get the “financial foundation” in place with the education funding study before opening it up to a broader conversation.

Gulick was enthusiastic to get the Commission on the Future of Education underway, saying that the “system that doesn’t seem to have a North Star, a guiding vision, a strategic plan.” Cummings told her they are sympathetic, but they are dealing with a financial crisis. “We are paying Ivy League prices and our kids are not getting an Ivy League education… our readiness,” she stated.

Gulick felt that the outcomes data didn’t fully represent the effectiveness of Vermont’s schools, saying there is “a very, very powerful narrative out there and I don’t think its solving the problem unfortunately.”

NOTE: Actually, the problem is that Vermont has fallen from the top 10 performing school systems to top 30 in the last decade while spending has increased $900M. Cummings is right.

Senator MacDonald suggested they just shrink the yield and let the school districts deal with that and see what they do.

NOTE: Shrinking the yield would mean having a stronger relationship between local spending and tax rates. Right now a $1 increase in spending costs an average district $0.40 on their tax base. A smaller yield would increase that number and transfer more of the responsibility for spending decisions onto the local tax base, which is the only check on spending in the current system.

At the end of the meeting Senator Brock announced he would have an amendment to offer in the morning.

Wednesday

During the lunch hour on Wednesday, the Senate Finance Committee walked through an amendment to the property tax yield bill, H.887, from Senator Brock. The amendment also appeared to have the support of the administration since Brock indicated that he had Drafted it with Craig Bolio (Commissioner, Department of Taxes).

Brock explained that the amendment would allow some spending caps and some financial controls on school budgets for the next two fiscal years. The levers included caps on use of false spending for reserve funds in lieu of taxing capacity. He noted that they were up until midnight in discussions with Administration policy-makers.

A key provision of the bill is the re-introduction of “allowable spending” for any individual school district. Each district would be assigned an “allowable spending percentage.” Spending above this threshold would be subject to an excess spending penalty. A similar mechanism was rejected on the House floor. This functions differently that the flat excess spending threshold that was in the underlying bill.

Legislative counsel noted that this language began as a version of a methodology to define excess spending considered earlier this session by the House Ways & Means Committee. Voters would have to vote on the “excess” portion of spending separately from the underlying budget. Ballot language was included in the amendment to make it clear what was happening.

The bill also moves towards a base funding amount in FY2026 called an “education opportunity payment.” This would be an amount set by the legislature and not count against the allowable spending growth of a district. Additionally, the amendment creates several entities like a State Aid to School Construction Special Fund and also a Excess Spending Reserve within the Education Fund.

Also key is State Aid to School Construction Special Fund created “to provide grants to supervisory unions and independent career and technical education districts to assist in funding school construction projects that are approved through the State Aid to School Construction Program.”

Chairwoman Cummings stated that she was “not going to vote this now. The idea is out there and let folks digest and I will attempt to get some time with it.” 

Wednesday Afternoon

When the Committee returned later that afternoon, Senator MacDonald announced that these amendments, specifically Brock’s needed testimony. He sensed they need to speak to the education interest groups. “They are watching and any of them that want to speak to us can…” retorted Cummings.

Bolio arrived and Cummings dove right in asking what increases would actually be capped at. She was concerned about fixed costs such as contracts with increases built in, healthcare insurance rates, and other cost pressures that are prohibitive.

Bolio explained that “this [amendment] says there is allowable growth rate and above that it hits the excess spending penalty… So it’s not to say you cannot go above that but there is a penalty for that…” His calculations show that some growth rates may be as high as 6% or as low as 2% but would mostly be in the 3-4% range.

MacDonald suggested this is a “form of redlining” because in the gaps needed to “catch up” in poorer towns is a harder lift due to limits on taxing capacity. In other words if you are poor and spending low, it is difficult to catch up with the high spending districts.

NOTE: If a district is spending low it is because of local voters. Property values haven’t been a factor for 25 years. Low spenders are choosing to be low.

Cummings suggested they need to decide quickly whether or not to move forward with this. Brock voiced that he wants to avoid the problem in the current system that incentivizes more spending today.

Senator Chittenden wished that Brock had sent them this proposal a few weeks ago (seemed intrigued) but had two other concerns. Small schools with small student counts can have huge swings in student bodies creating volatility. He thought it would be difficult to anticipate how problematic that could be for small SDs.

He also has large “at scale” school district that is reeling from the pupil weighting change and if they are executing a plan to adjust to that, something like this could shoot them in the foot.

Brock reminded them that allowable growth rates have been passed by the Legislature before, although they never went into effect. Bolio added that these are a bridge until Economic Opportunity Payments are implemented. He noted that the excess spending penalty is one of the few effective cost containment mechanisms they have seen for the Education Fund.

Every year they would see quite a few districts sitting right under it because that is where the “cheapest dollars” are. But using both the spending threshold and the allowable growth rate, he argued, would address some of the incentives in both directions.

Brock questioned again what legislators were doing to “ensure there isn’t another double digit increase in taxes next year? Or the year after? Or the year after?” Cummings agreed, to some degree, blaming local control and the voters who “chose” these double digits.

Bolio suggested that another perspective may “help give direction to that Committee to help flesh that idea out more.” He reiterated that the “Administration does think that is a really intriguing idea.”

Ted Fisher (Director of Communications, Agency of Education) chimed in as well, saying that the Agency also supported the amendment and they are also “very intrigued” with Education Opportunity Payments policy.

Cummings stated bluntly time is up and she is not ready and “we are not the Education Committee.” She was frustrated that the House had the bill for “four months. We got it less than ten days ago.” Fisher added that they “could not give up the opportunity to indicate how critical we think this is and how urgent this all is.” Cummings did not think they had enough support to get this through the Legislature and not enough time to build support for it.

Brock noted that they expect a veto so, so they may have more time than they think to work out some of the details. Cummings was dismissive.

Consensus was against the amendment at this time.

On his way out, Bolio added he would like to see an additional sentence on the Ballot language that says “School District Tax Rates are based on Per Pupil Spending.” Cummings agreed, saying she wanted that in there and it slipped away somehow in earlier versions.

See our report on the House's reaction to the Senate changes.

Friday

When the Senate Finance Committee met on Friday evening, Chairwoman Cummings stated that this was “the best we are going to get” in terms of addressing the immediate need in H.887. Senator Brock asked about the deliverables of the House’s new version of the Commission on the Future of Education, particularly in terms of “making education less costly.” Cummings confirmed that the new version has “a lot more in it there on the finance and the finance things than when it left here.” Brock commented that he sees “a lot of words” but not about lowering costs.

The new language regarding the Finance Subcommittee reads:

"(i) an analysis and recommendation for the most efficient and effective number and location of school buildings, school districts, and supervisory unions needed to achieve Vermont’s vision for education, provided that if there is a recommendation for any change, the recommendation shall include an implementation plan;”

It was noted that the Commission’s Steering Group is allowed to appoint non-commission members to the Finance Subcommittee; they are not allowed to appoint non-commission members to any of their other subcommittees.

Cummings recapped her conversations with Chairwoman Kornheiser about the income sensitized tax credit and how these taxpayers were being “left out” of the property tax reduction. The House Ways & Means Committee had agreed to sticking with the uniform homestead and non-homestead rate changes but wanted to re-introduce an increased property tax credit for FY2025.

She shared she has been meeting with Kornheiser “all day and some of last night” and asked the Committee for latitude to “close the deal.” She informed the Committee that late that night she would be pulling them into “the cloakroom and say this is what the final proposal is… we will be okay with it and we will go home.”

See our report on the Senate floor vote on the bill.