Joint finance committees review preliminary FY26 school budget collections and Ed Fund outlook

A joint meeting of the Senate Finance Committee and the House Ways and Means Committee on Feb. 25 heard updated school budget collections and a revised Education Fund outlook that JFO staff said narrows the range of likely property tax rates for FY26.

Julia Richter of the Joint Fiscal Office and Sean Kuzo, interim chief financial officer at the Agency of Education, told members the state had received 106 of 122 expected detailed preliminary school budget submissions and was using December/January filings for 13 additional districts; three remaining entities were described as unorganized towns. Kuzo and Richter said those submissions were enough to cover most weighted pupils but that data errors remain under review.

Richter walked the committees through three columns in a landscape Ed Fund outlook posted to committee pages. Column D reflects updated district submissions and new Equalized Education Grand List (EEGL) data from the Tax Department; it produces a uniform average bill change of about 5.9%. Column E shows the same updated data plus a one‑time $77.2 million general fund transfer to the Education Fund, which the JFO model shows would lower average bills for homestead, non‑homestead and income taxpayers by roughly 1.3% if used as a uniform credit. Column F models using the $77.2 million transfer to hold homestead and income tax bills flat while allowing the non‑homestead average bill to rise about 5.9%; Richter said the scenario would place approximately $32 million into an “Education Transformation Transition Reserve.” She emphasized the column F scenario was a modeling exercise, not a committee proposal.

Committee members pressed staff on drivers of the projected increase. Kuzo said the JFO’s current projection for the education payment appropriation is “about $1,903,000,000,” and that preliminary collections show roughly a $112 million increase over last year’s actuals in aggregated spending figures; he also said he had not yet completed a detailed review of salary and benefits data and had flagged some numbers that appeared incorrect. Richter noted two significant data changes since the December 1 letter: updated school budgets and the Tax Department’s EEGL data, and explained how the statewide adjustment (the CLA-based adjustment implemented under the yield bill) is applied in the yield model and in rate calculations.

Richter gave a range of modeled equalized homestead rates under the updated data: a minimum equalized rate of $1.00 per $100 of equalized value, a median about $1.672 and a maximum of about $2.46 in column D; she also presented quintile breakouts for rates so members could see distributional effects rather than only the statewide average. Members asked for more local detail — which towns fall in each quintile, the composition of the eight districts exceeding statutory excess‑spending thresholds, and where upward pressure on budgets was concentrated — and Richter and Kuzo said staff would return with more granular analysis. Members also asked staff to check whether districts were using reserves and whether reported salary/benefit figures were accurate.

Committee members discussed the practicality and risks of various one‑time transfers, and several members cautioned that one‑time transfers reduce the ability to address future shortfalls. Richter and JFO staff framed the $77.2 million figure as the governor’s proposal used for modeling; they said committees had not taken a final position and that alternative transfer sizes were still being considered. No formal motions or votes occurred during the session.

The committees paused the hearing planning follow‑up work and asked staff to return with a more complete review of salaries, benefits, reserve use and a town‑by‑town distribution of modeled rate impacts.

Ending: Committee chairs set next steps for staff to provide corrected salary and benefits comparisons, a town‑level breakdown of quintiles and the eight districts identified as exceeding excess‑spending thresholds; no formal decisions or legislative actions were taken at the hearing.