Ways & Means hears Joint Fiscal Office analysis of proposed foundation formula, per-pupil costs and tax mechanics

Montpelier, Vt.

The House Ways and Means Committee continued testimony Feb. 20 on the administration's proposed foundation formula and related tax mechanics, receiving cost modeling from the Joint Fiscal Office and draft statutory language from Legislative Council staff. Ezra of the Joint Fiscal Office presented prototypical school and district cost tables; John Gray of the Office of Legislative Council summarized a January 24 draft that would replace current yield-based property tax mechanics with a uniform statewide education tax and a separate locally approved school-district spending tax.

Why it matters: the proposal would change how K'12 funding is calculated and how education taxes are raised, shifting many decisions about base funding, local add-ons and equalization into a new structure that committee members said could affect property tax bills, school operations and equity among districts.

Joint Fiscal Office presentation

Ezra, a Joint Fiscal Office analyst, walked the committee through the PICUS-derived prototypical-school model and a prototypical district aggregation used to build a proposed per-pupil base. Ezra said the model treats custodial, maintenance and groundskeeping as the three maintenance-and-operations (M&O) staffing categories and that supply costs were set at $1 per square foot (the elementary-school example produced a $63,000 supply line). Utilities were modeled at $3.50 per student for prototypical schools. "So that's why this is more of an illustration rather than, I would say, like, the real cost of the schools," Ezra said, noting some maintenance staff are budgeted centrally and not at the individual school level.

Using the prototypical district in the presentation, Ezra reported a district-wide M&O total of about $3,950,000 and a modeled M&O contribution that averages to $1,014 per pupil. Aggregating school-level costs, central office and M&O, he said the prototypical district produced a school-level per-pupil cost near $10,637 and a combined per-pupil amount of about $12,845; applying an inflation adjustment of 2.76 percent used in the study produced a rounded illustrative figure of roughly $13,200 per pupil.

Ezra also reported a district staffing ratio of roughly "8.83 students per staff member" in the prototypical-district calculation and emphasized the model does not attempt to cover major capital repairs (for example, a new roof) or detailed special-education costs.

Model assumptions and limits

Committee members pressed on assumptions. Ezra said the PICUS EV model'the external prototypical-school tool cited in the report'was the source for several inputs but that he could not confirm whether PICUS had been updated specifically for Vermont in the version used. He noted the $1-per-square-foot supplies figure and the utility rate are based on the research literature, not the age or condition of Vermont's older building stock. "Based on the literature that I read in the report, the age of the building was not factored into this $1 amount per square foot," Ezra said.

Members asked whether the model is sensitive to class-size variation and to district-specific items such as career and technical education (CTE) centers, transportation, special education and universal school meals. Ezra and other panelists noted:

- Several items are outside the base calculation: capital construction, special-education services, school resource officers and transportation are handled separately or via proposed line items rather than baked into the base per-pupil amount.

- CTE students both count in a district's ADM (average daily membership) and also carry a proposed weight (described in testimony as roughly 1.3); Ezra said that as drafted the receiving CTE center would get the weighted share in addition to a portion of the base, which makes the resulting total per-CTE-student cost substantially higher than the base alone.

- The model does not explicitly account for federal reimbursements; federal funds were not included in the Joint Fiscal Office's base calculations, Ezra said.

Legal and tax mechanics presented by Legislative Council

John Gray of the Office of Legislative Council summarized draft statutory language (dated Jan. 24) that would implement several structural changes: repeal yield-based mechanics and excess-spending penalties used in the current system; set a per-pupil base amount that is inflation-adjusted annually; impose a uniform statewide education tax rate on all taxable property to raise the base plus any statewide cost of a state "guarantee"; and allow school districts to vote to raise additional funds via a separate school-district spending tax.

Gray said the state guarantee is intended to equalize capacity across districts by ensuring that lower-wealth districts can raise the same dollars at the same rate as a median-wealth district. "Basically, this is meant to ensure that districts, that are below the median wealth per student are able to raise the same dollars at the same tax rate as that median wealth district," Gray said. He cautioned that the draft leaves open several implementation choices, including how the guaranteed amount will be calculated and how quickly the statewide rate can be determined each year because the guarantee depends on local votes.

Committee concerns and points of discussion

Committee members raised operational and equity concerns: whether small schools within merged districts would be disadvantaged when a district-wide vote is required to raise local spending; how capital debt or previously bonded projects would be treated under a capped local-overspend proviso (the draft mentions a limit but does not specify a percent); timing and cash-flow impacts if less money flows through the State Education Fund; and the potential for predictable local incentives or political friction when district residents weigh a single districtwide ask.

Committee members also probed specific line items raised in testimony: whether the PICUS inputs reflect Vermont's older, less energy-efficient building stock; how CTE funding would be allocated and whether students are effectively counted twice; and whether universal school meals should be restored to the base. Phil Rickard of the fiscal office told the committee the education fund estimate for universal school meals is about $18.5 million and that losing the program could reduce certain federal drawdowns by roughly $16.9 million, figures he said came from current estimates of federal reimbursements and state cost calculations.

Next steps and materials

Committee members asked for follow-up briefing and data: confirmation of PICUS assumptions from Dr. Pikes (a consultant whose work the presentation cites), additional Agency of Education spreadsheets and detail on how weights (for poverty, sparsity, English learner status, etc.) would interact with the proposed new base. John Gray noted the statutory draft is an early working document and may change.

The committee did not take legislative action on Feb. 20; witnesses and staff said further testimony and analysis would follow.