As Vermont students said goodbye to their classmates for the summer and teachers gathered for the school year’s last faculty meetings, the legislature was also wrapping up its work. The Senate, then the House, voted on Monday to approve H.454, a sweeping piece of legislation that will transform the way schools are governed and funded in the coming years. Gov. Phil Scott has signaled he will sign it.
In the Senate, where it passed by a 17-12 vote, most Democrats voted against the bill, while all but two Republicans voted for it. In the House, the bill passed by a voice vote and then by a 96-45 tally to send it to the governor. The “nay” voters may have been swayed by the vociferous opposition expressed by superintendents, school boards and teachers — many of the people who will be most directly affected by the legislation.
Some lawmakers said they were dismayed by the intense focus on the interests of independent schools during last week’s conference committee, in which three Senators and three House members worked to find compromise on areas of disagreement. Two of the senators on the committee, Scott Beck (R-Caledonia) and Seth Bongartz (D-Bennington) have strong ties to those institutions.
Though the major changes in H.454 won’t go into effect for three years, the work will start soon. Here’s what we know about the 155-page bill.
1. The state will likely move to fewer, larger school districts by summer 2028.
Currently, Vermont has 52 supervisory unions and 119 school districts. That’s a lot of superintendents, central office staff and school board members for about 80,000 students. In January, Gov. Scott and Education Secretary Zoie Saunders proposed consolidating school governance into five regional school districts that would start operating in fall 2027. Legislators felt that was too extreme, but they agreed that some consolidation was necessary to reduce administrative costs and enable districts to operate at scale.
Starting this summer, an 11-member task force — made up of three state senators, three members of the House, and five retired superintendents and school business managers — will begin meeting. By December, they’re expected to recommend to the legislature new school district boundaries and configurations.
The task force will propose no more than three options for new districts or supervisory unions that have, “to the extent practical,” no fewer than 4,000 and no more than 8,000 pre-K through 12 students. Currently, the Champlain Valley School District, which draws from Williston, Shelburne, Charlotte, Hinesburg and St. George, is the only district in the state that has more than 4,000 students.
One thing worth paying attention to is who gets appointed to the redistricting task force and how their affiliations might influence the proposals.
2. Class-size minimums will go into effect next year, but schools won’t automatically close if they can’t meet those standards.
The governor’s transformation plan proposed average class-size minimums of 15 in kindergarten through third grade and 25 in grades 4 through 12.
The legislature softened those numbers, starting in the 2026-27 school year, to 10 students in first grade; 12 students in grades 2 to 5; 15 students in grades 6 to 8; and 18 students in grades 9 to 12.
A variety of classes — including prekindergarten, kindergarten, career and technical education, advanced placement courses, and driver’s education — are exempt from the requirements. Schools can also apply to the State Board of Education for a waiver if they can’t meet class-size minimums due to geographic isolation.
If a school doesn’t meet class-size minimum standards over the course of three consecutive school years, the education secretary may recommend that the State Board of Education take action to close the school — but only if its district has enough money to cover the construction costs needed to house those students at another school.
According to the Legislative Joint Fiscal Office, it’s not yet clear whether class-size minimums will actually save money.
3. Voters will have less say in their local school budgets.
Under the state’s current funding formula, school districts craft a budget for the next school year and taxpayers decide whether to approve it, typically on Town Meeting Day. Once a spending plan is OK’d, the state doles out the money to districts from its Education Fund, the majority of which comes from property tax revenue.
This has led to inequity in Vermont’s education system, since more affluent communities are typically willing to support budgets that spend more per pupil than poorer ones.
The new funding system, known as a “foundation formula,” will go into effect on July 1, 2028, only if new school districts have been formed by then. It calls for the state to give a base amount of $15,033 to every student in Vermont, which will be adjusted annually for inflation. Additional money, or “weights,” will be allocated to English learners, students from economically disadvantaged backgrounds and those with disabilities, since research shows they cost more to educate.
Schools with fewer than 100 students that are designated “small by necessity” and schools located in a town with fewer than 55 people per square mile of land designated “sparse by necessity” will be eligible for additional grants. Districts will also be able to spend as much as 10 percent above the foundation amount with voter approval; that will eventually taper down to 6 percent by 2036.
A uniform foundation formula means that there will be eventually be a statewide tax rate and that some communities will see their property taxes go up, while others will see them go down. To account for this, the bill builds in a tax-rate transition mechanism that will cushion the blow for districts that are currently low spenders.
The Department of Taxes is required to submit an implementation plan by December 2027 that ensures education property taxes do not increase as a result of the new funding formula.
4. Tuitioning to independent schools will still happen, but fewer independent schools will be eligible to receive public dollars.
Under the current system, if a student lives in a town that doesn’t operate a public school, they’re allowed to use public dollars to “tuition” to a public or approved independent school of their choice. A small number of families even use the money to subsidize tuition to elite boarding schools in New England or overseas.
H.454 prohibits students from using public dollars to attend independent schools outside of Vermont. And it only allows money to go to an approved independent school within Vermont if it is located in a school district that doesn’t operate a public school for some or all grades. Additionally, at least 25 percent of the school’s enrollment — as of July 1, 2024 — must have been of students attending through Vermont’s tuitioning program. That means a school wouldn’t qualify if, for instance, it had 100 students and only five attend through Vermont’s tuitioning program.
The changes mean that the number of independent schools eligible to receive public dollars will likely be reduced substantially. But the bill also includes several carve-outs for indies: Schools that accept public tuition can charge up to 5 percent more than the base foundation amount per student if they receive approval from the State Board of Education and their local voters. And two independent schools that operate as career and technical centers — St. Johnsbury Academy and Lyndon Institute — can continue setting their own tuition rate, as they do now, until the issue of career and technical education is studied more thoroughly in the legislature.
During conference committee negotiations last week, lawmakers removed a provision in the bill that would have prohibited a school district from closing a public school and then paying tuition for its students to go to an approved independent school.
5. A number of new tax provisions meant to protect low- and middle-income Vermonters will be implemented in the coming years.
The bill replaces the current statewide education property tax credit with a homestead property tax exemption based on income. Homeowners with an annual household income of $115,000 or less will be allowed to exempt a portion of their housesite value — up to $425,000 — from property taxes. A study will also look at whether to increase the income eligibility threshold.
Additionally, a new property tax classification — nonhomestead residential — is meant to ensure that second homes are taxed at a higher rate than businesses and apartment rentals. By the end of this year, the tax commissioner is required to submit a report that looks at how the next taxation structure will be implemented.
6. The Commission on the Future of Public Education and State Board of Education will have some new work to do.
In 2024, the legislature created the loftily named Commission on the Future of Public Education and charged it with developing an affordable, equitable and sustainable vision for public education in Vermont. But after the governor unveiled an education transformation proposal of his own in January and the legislature began working on its version, the commission’s work was largely sidelined.
H.454 narrows the 13-member commission’s responsibilities. It is tasked with providing recommendations for how Vermont’s new education system should balance local- and state-level control and suggesting a process that ensures communities will have a voice in school-closure decisions.
The bill requires the State Board of Education to adopt standards for statewide graduation requirements, slated to go into effect at the beginning of the 2027-28 school year. The state board will also be required to submit a report by the end of next year with a plan for updating its rules, which relate to issues such as special education, independent schools, and career and technical education. Perpetually starved for money, the state board will also get a $200,000 appropriation to complete its work.
7. Many critical educational issues are subject to further study.
In the coming years, various government entities will be required to study and submit reports related to transportation, prekindergarten, and the cost of career and technical, secondary, and special education that could lead to tweaks in the foundation formula before it goes into effect.
The bill also calls for the Department of Taxes to submit recommendations by January on the implementation of new, regional assessment districts. The change would allow multiple municipalities to work together to conduct full appraisals of their grand lists every six years, a change intended to make the process more streamlined.
A seven-member working group, led by the Secretary of State, will also convene later this year to create voting wards within new school districts and to ensure an equitable distribution of school board members in every district.
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