Tape No. 98-4, 98-5

LEGISLATIVE OVERSIGHT COMMITTEE

ON RESTRUCTURING EDUCATION

MINUTES

Meeting of June 24, 1998

The Legislative Oversight Committee on Restructuring Education met at 9:40 a.m. in Room 10 of the State House, Montpelier, Vermont.

MEMBERS PRESENT: Representatives John S. Freidin, Chair; Paul A. Cillo; Martha P. Heath; Karen M. Lafayette; Senators Nancy I. Chard; James H. Greenwood; Cheryl P. Rivers; Jeb Spaulding.

STAFF PRESENT AT VARIOUS TIMES: Bill Russell, Emily Tartter, Anne Winchester and Rachel Levin of the Legislative Council; Catherine Benham of the Joint Fiscal Office.

Representative Freidin called the meeting to order at 9:40 a.m.

Representative Freidin told the committee that Representative Hathaway would be resigning due to the needs of his business. Senator Rivers made a motion for the committee to write a letter to Representative Hathaway thanking him for his service and counsel. Representative Freidin said he would send a letter on the committee's behalf. Representative Freidin noted that Senator Riehle would be chairing the Administrative Rules Committee which was also meeting and would not be able to attend the Oversight Committee meeting.

1. APPROVAL OF 6/3/98 MINUTES

Staff distributed minutes updated on 6/23/98 which reflected committee members' feedback. Representatives Freidin and Heath both said that they had made recommended revisions which were reflected in the 6/23/98 draft. Representative Heath made a motion to approve the 6/3/98 minutes as revised on 6/23/98. The motion passed unanimously on a voice vote.

2. UPDATE ON THE ORGANIZATION OF THE NEW VT ECONOMIC PROGRESS

COUNCIL AND REPORT ON APPLICATIONS FOR ECONOMIC INCENTIVES

Representative Freidin said that he had invited David Coates, Chair, and Chris D'Elia, Executive Director, of the Vermont Economic Progress Council (EPC) to brief the committee on the organization of the reconstituted EPC and on the application process for economic incentives. He said that he had asked the witnesses to organize their thoughts around four issues: the process they are initiating to organize the committee and staff; the time line for presentation of rules to the Oversight Committee; a profile of the current applications; and the time frame in which it is anticipated it will start making decisions.

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David Coates briefed the committee on the process of organizing the committee and staff and gave an overview of the Council's first meeting in June. He said that Chris D'Elia would be the Executive Director, that Glen Wright would serve as Vice Chair, and that the EPC would meet on a monthly basis throughout the state.

The EPC approved having economists Jeff Carr and Tom Kavet assess economic models. David Coates said they will have final rules ready by the end of the year but that the committee would see draft proposed rules much sooner. He said they had received no applications so far but that there had been 40 inquiries. In response to a question from a committee member, he said that they had met with the Regional Development Directors and view them as a conduit to businesses.

David Coates said that Chris D'Elia served on the advisory committee involved in the Request for Proposal for the economic model and that he would update the committee on their progress. Chris D'Elia said that the cost-benefit model was critical to the Council's progress and then reviewed the 60-day process which had been outlined to research models. He said that the advisory committee recommended Jeff Carr be hired, based on the submittal of two proposals and use of an evaluation process for choosing the contract.

Senator Chard noted her concerns about the makeup of the advisory committee which selected the contractor for the economic model and asked who the model would be submitted to for review, suggesting business schools, as well as others, would be appropriate and that an external evaluation would be beneficial. David Coates said that the reason that the specific contractor was selected was that the proposal submitted offered the greatest flexibility. He continued by saying that many factors would be discussed in finalizing the cost-benefit model and that it had to go before the Joint Fiscal Committee which would be an external check. Senator Chard reiterated that a critique of the model was important.

In response to a question from Representative Freidin about the process for rule making, Chris D'Elia said that the Council had started to draft rules. Representative Freidin said that he hoped the EPC would present draft proposed rules to the Oversight Committee well in advance of the public process.

In response to a question from the committee about what the application looked like, Chris D'Elia said he would provide a draft to the committee staffperson so that it could be distributed to committee members.

Representative Freidin asked if the budgeted amount of money to create the model was sufficient. Chris D'Elia said that it was and that the contractor had been selected and agreed to the amount as well.

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Chris D'Elia then went on to describe a booklet which would be available to prospective applicants. He said that as soon as the EPC had a draft ready he would provide copies to the committee's staffperson for distribution to committee members.

In response to a question from Senator Rivers about when applications would be considered and whether any decisions could be made prior to having a model in place, Chris D'Elia said that no decisions had been made to date and that none could be made prior to having a model in place.

Senator Greenwood said that he was concerned about the geographic distribution of the members on the Council's board and said that it appeared as if the three or four counties that probably needed economic development more than many others did not have representation. He said that it was his desire that the local representatives be voting members and was concerned about what affect the nonvoting members would have. Chris D'Elia said that the makeup of the board came from a list of suggested names from the Regional Development organizations, that the recommendations were given to the Governor and that the Governor made the appointments. He said that the nonvoting members would be important, because they would bring local expertise and perspective.

Representative Lafayette noted that local community's concerns were very important and that she didn't see those types of issues directly addressed anywhere. In response, David Coates said that the Council represented the entire state and that they knew where the economic development needed to happen. Senator Rivers said that she would like the EPC to keep the committee apprised of the inquiries which come in and be alerted early to problems. David Coates said the EPC would keep the committee informed.

3. EDUCATION DEPARTMENT RULES

Representative Freidin said that he had invited the Department of Education as well as others to discuss the Department of Education's proposed rules. He referred to a 6/8/98 letter he had written to Commissioner Marc Hull.

a. Definition of Full-Time Equivalent Enrollment of Pupils, Sec. 18 of Act 60

Commissioner Marc Hull of the Department of Education introduced the witnesses who would be participating in the discussion: Jim Squires, an Early Education Specialist, Department of Education; Jeff Francis, Executive Director, Vermont Superintendents' Association; Dr. William Mathis, Superintendent, Rutland Northeast School District and Chair of the Vermont Superintendents Association Finance Committee; Bill Talbott, Chief Financial Officer, Department of Education; Edie Miller, Executive Director, Vermont School Boards Association, and Margaret Schelley, Special Education Program Budgeting, Department of Education. Commissioner Hull then made opening remarks. He said that this was not just an education rule but that it connected administration staff and communities.

Bill Talbott distributed and discussed a Vermont Department of Education School Finance Workgroup spreadsheet which detailed what would have happened if the proposed rule had been

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in effect one year before 1999 and what would have happened if the proposed rule had been in effect two years before 1999. Bill Talbott also presented a 6/22/98 Department of Education printout entitled, "Estimated Changes to the General Support Grant Under the Proposed FTE Rule using FY99 Data." Dr. William Mathis distributed a June 1998 Vermont Superintendents' Association Policy Statement entitled, "Funding of Preschool Programs." In response to a question from Senator Rivers he said that the proposed rule would work for one year.

Edie Miller said the School Boards Association supported the proposed rule, that it was an issue of fairness and good public policy and that relating reimbursements to costs results in cost effectiveness. She also commented that the issue of standards for pre-k was not addressed in the proposed rule on quality.

After committee discussion, Representative Freidin asked the committee how it would like to proceed. Senator Rivers said that if there were no interest from committee members in grandfathering existing reimbursement/student count practice, she could not support the rule. Representative Heath responded that it wasn't right for any district to get more money for a program than the program costs. Representative Freidin encouraged the committee to consider the proposed rule in a broader context and said that the legislature should grapple with the issue. Senator Spaulding said that he supported the rule and questioned whether the committee should vote on every rule. Senator Chard said that it was not necessary to vote on every rule, unless the committee recommended changes to that rule. Commissioner Hull said he would feel constricted by a vote and that he had noted the different points of view which had come out of the discussion and that he would take them into account. Representative Freidin asked if any member would like to make a motion. Representative Cillo addressed Senator Rivers' grandfathering question, saying that it would be important to use it for easing transition and that he would encourage using it. Senator Greenwood said that he would not feel comfortable voting on the proposed rule until he had more information and figures to look at. Representative Freidin said that hearing no motions, he would move on to the next rule.

b. School Quality Standards, Secs. 3, 4 and 13 of Act 60, Sec. 96 of Act 71

Commissioner Marc Hull distributed and discussed a document entitled, "Time Line for Transitional School Quality Standards," as well as a graph entitled, "Phase-In of School Quality Standards" and 6/23/98 information entitled, "Summary Comment on School Quality Standards." Deputy Commissioner Marge Petit reviewed the time line in detail with the committee. Senator Chard asked how Commissioner Hull could assure her that the rule did not just make another layer of administration for schools. Representative Freidin suggested that there was an opportunity for the Department of Education to publish an easily understandable guide to school and student standards. Deputy Commissioner Petit said that was an excellent idea and that she would pursue it after September. Senator Chard mentioned one state which gave each child a bookmark with the expectations for that grade level, that it's simple and that it seemed to be effective. Deputy Commissioner Petit said that the Department had been getting a lot of feedback

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on the proposed rule on language and format and that Bill Reedy had been rewriting and reorganizing it, taking comments into account.

Representative Freidin asked if members wished to make any motions. Seeing none, he invited Joel Cook, Counsel for the Vermont National Education Association (VT NEA), to comment. He said the VT NEA was concerned about the September 1 deadline in the Deputy Commissioner's outline and that it would be difficult to respond to a draft which would be in the public domain and questioned whether the job could be done well quickly. Commissioner Hull responded that he would monitor the time frame and respond to it. Edie Miller said the September 1 date was important in order to keep the momentum going. Representative Freidin said that if Commissioner Hull anticipated that more time would be needed, he was encouraged to come before the committee.

4. TAX DEPARTMENT RULES

Draft Rule on Reappraisals, 32 V.S.A. § 4041a

Molly Bachman, General Counsel for the Department of Taxes, and Charles Merriman, Attorney for the Division of Property Valuation and Review (PVR), distributed and discussed a 6/24/98 proposed rule entitled, "Revised Time Line for Reappraisals Ordered in 1999." Bill Johnson, Director of PVR, answered some of the committee's questions.

Bill Johnson distributed and reviewed a 6/24/98 spreadsheet showing towns that will be subject to the reappraisal requirement. Senator Rivers said that she hoped in-state firms would be used for the reappraisals if at all possible and asked if Bill Johnson had any comments.

After committee discussion, Representative Freidin asked if members had any other comments on the rule or would like to make any motions. No motions were made.

5. REVIEW OF SETTING TAX RATE INFORMATION FROM PVR

Bill Johnson distributed and reviewed information entitled, "Setting the Tax Rates for the 1998 Tax Year," which was provided to municipal officials to help them with setting their education tax rates, as well as a 6/24/98 Vermont Department of Taxes document, entitled "Act 60 Update on Locally Approved Tax Agreements," which he said clarified that "Vermont law, including Acts 60 and 71, provides numerous opportunities for towns to reduce or eliminate property taxes on certain properties." Representative Freidin asked the committee if the information should be sent to the General Assembly. Committee members said they thought the information would be useful to all legislators. Representative Freidin said that he would draft a letter on behalf of the committee and send Tax Department materials to all members of the General Assembly.

Representative Cillo mentioned a Vermont Interactive Television meeting the previous week which 250 people attended through all 12 sites, addressing how towns will be setting their education tax rates and related information. The committee recessed for lunch and reconvened at 1:15 p.m.

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Staff distributed on behalf of Representative Freidin two news articles: a 6/21/98 Sunday Rutland Herald Business Section piece entitled, "Real Estate Market Hopping in Manchester," as well as a 6/19/98 Wall Street Journal Editorial entitled, "The World According to Irving."

6. REVIEW OF EDUCATION DEPARTMENT RULE

Licensing of Educators and the Preparation of Educational Professionals

Anne Winchester of the Legislative Council reviewed with the committee Section 14 of Act 60 on State Board of Education Plans and Educator Preparation and Professional Development which outlined the committee's responsibility.

Deputy Commissioner Marge Petit and Nancy Howe of the Professional Standards Board explained the purpose of the rules and requirements. Deputy Commissioner Petit said that they would like to come before the committee at a later date with other recommendations relating to licensure. Nancy Howe said that in the meantime it was important to go forward with the proposed rule. In response to a question, they said the committee could review two draft documents which had a connection to the Framework. Representative Freidin asked if any fees were being changed or proposed and if they were, to make sure they come before the appropriate legislative committees.

After committee discussion, Representative Freidin said that the committee would look forward to a follow up memo and draft documents between the present time and early September.

7. MEMBERS' CONCERNS AND OTHER BUSINESS

Senator Rivers asked staff to distribute a recent Guest Editorial of hers entitled, "Confessions of a Senator," which had appeared in the Vermont Standard.

Senator Spaulding said that as a regular part of the meeting agenda, he would like to have a half hour set aside for comment. After discussion, the committee agreed that Representative Freidin would clarify the committee's policy for scheduling persons who wish to testify on matters placed on the committee's agenda.

Deputy Commissioner Sean Campbell said that over 100,000 "prebate" checks would be going out in the mail by July 15 and that he would give an update at the next committee meeting.

The committee discussed the schedule, noting that the next committee meeting was scheduled for Thursday, July 16. The committee then set a meeting for Wednesday, August 19, beginning at 9:30 a.m. in Room 10 at the State House.

The Committee adjourned at 2:25 p.m.

Respectfully submitted,

Rachel Levin