House Education reviews Ways and Means amendment to H.454, outlining new foundation formula and special-education study

The House Committee on Education met April 9, 2025, to review the Ways and Means Committee amendment to H.454, a comprehensive education finance bill that would create a new statewide foundation formula, revise property‑tax categories and school spending rules, and require a sequence of reports and planning steps on special education and construction financing.

The committee heard an overview of the Ways and Means changes followed by a section‑by‑section walk‑through from agency and legislative counsel. Beth St. James of the Office of Legislative Council presented a highlighted draft (referred to as draft 4.1) and described many of the specific text changes included in the amendment. John Gray, Office of Legislative Counsel, summarized the bill’s new funding concepts, and members asked clarifying questions about timing and implementation.

Why it matters: the amendment would replace existing Vermont education finance mechanics with a new “base amount” and an “educational opportunity payment” (EOP) that multiplies that base by a student‑level weighted count. The change seeks to align fiscal rules with forthcoming governance changes (larger school districts and new district‑level governance), to target resources by student need, and to create a pathway for a future evidence‑based recalibration of rates and weights.

Key proposals and details

- Foundation formula and base amount: The amendment establishes a per‑pupil base education amount of $15,000.33 (inflation adjusted and rounded as required by the bill) as the starting point for district funding. The “educational opportunity payment” (EOP) is calculated by multiplying the base amount by a student‑level weighted membership total. (Explained by John Gray.)

- New weights: The bill replaces some existing weights and adds refined weights for: economic disadvantage (adjusted to 1.02), English‑language proficiency (multiple tiers, with the lowest proficiency tier receiving the largest incremental weight), and special education (three cost tiers: low cost 0.79, medium cost 1.35, high cost 2.49). The bill also distinguishes English‑learner newcomers or students with limited/interrupted formal education and makes those students eligible for an additional weight. The bill removes separate grade‑level weights and replaces small‑school and sparsity weights with targeted “support grants.”

- Supplemental district spending and limits: Districts could adopt supplemental local spending above the foundation payments but would be limited to an additional 10% of the foundation formula payments as a cap on such supplemental spending. The amendment ties the allowable local tax increase to ensure no district can raise more by tax rate than a district with the lowest grand list capacity, a mechanism intended to limit widening inequality across districts.

- School board elections and timing: The amendment sets larger district boundaries to take effect July 1, 2027, and moves initial school board elections for those new larger districts to a special election in March 2028 (rather than November 2028) to provide more lead time for board members to prepare budgets and transition operations for a July 1, 2029 full operational date for some functions.

- Tuition and receiving school payments: The amendment consolidates existing separate statutes for elementary and high‑school tuition into a single K–12 tuition statute. Under the proposal, tuition to a receiving school (public or approved independent) would equal the base amount with the applicable student weights applied — effectively “money follows the student.” Many statutory sections related to calculating varying tuition rates would be repealed contingent on implementation dates and conditions tied to the foundation formula and new districts.

- School construction and funding: The amendment creates a school construction aid special fund and adds a requirement that a school construction advisory board report on debt transfer and funding options by December of this year. The bill sets the base amount of a school construction award at 20% of eligible debt service cost and specifies that awards will be paid annually rather than as one lump sum. The amendment provides that amounts deposited to this special fund may include a share of revenues from the supplemental district spending reserve.

- Property tax and homestead changes: The amendment includes language to regionalize reappraisals, clarifies homestead and three types of non‑homestead categories (including a “non‑homestead tenant apartment” classification), and replaces the old income/property yields approach with a homestead exemption tied to updated income eligibility and an inflator. Supporters said this aims to increase transparency and restore income sensitivity for homeowners whose eligibility may have been lost due to rising property values.

- Adult education funding and contracts: The bill requires the Agency of Education (AOE) to allocate adult education payments under State Board rules, using a funding approach that references a share of the base amount (26% of the base education amount for students who complete the diagnostic portion) with a funding mix proposed as 40% from the Education Fund and 60% from the General Fund. AOE must consult local stakeholders and negotiate short one‑year contract extensions to maintain service while funding models are reconsidered.

- Special education reporting and strategic planning: The amendment requires an extensive series of deliverables focused on extraordinary special‑education costs. Key elements include: - By Sept. 1, 2025, AOE must deliver a written report identifying factors contributing to growth in extraordinary special‑education reimbursement costs and recommend structural, practice, and legal changes. The report must include: a geographic map of specialized programs; program‑level data (disability categories served, grades served, number of IEP students, average duration in program over the last 10 years); average cost per pupil inclusive of extraordinary spending; staffing and oversight reviews; and an assessment of AOE capacity and pending federal findings. - A three‑year strategic plan for special‑education delivery (in consultation with the State Advisory Panel on Special Education) is required; an initial strategic plan draft from that advisory panel is due Dec. 1, 2025, with annual progress updates through Dec. 1, 2029. - The bill creates an additional permanent AOE position (effective FY2026) to support implementation and appropriates $150,000 from the general fund to AOE as part of base budget funding for that position.

What the committee heard and what remains to be decided

Beth St. James (Office of Legislative Council) walked the committee through line‑by‑line changes in draft 4.1, identifying where Ways and Means added language (for example, clarifying intent dates, the CTE provisions, and moving the first meeting of the school construction advisory board to Sept. 1, 2025). John Gray (Office of Legislative Counsel) summarized the new funding concepts (base amount, EOP, weights, and support grants). Committee members asked about operational details such as election timing, whether the tuition changes will need additional reexamination when larger districts are formed, and how the supplemental district spending reserve would flow into the Education Fund.

Members and staff emphasized that (1) several elements are contingent on the new district governance and the staged implementation called for in the bill, (2) the special‑education work is central to whether a weighted foundation formula will function as intended, and (3) more work remains on school construction financing and how supplemental local dollars will be collected and appropriated back to districts.

Quotes from the hearing

Beth St. James, Office of Legislative Council, summarized the draft changes: "So we are walking through draft 4.1 of the, I'm just gonna call it the ways and means amendment. The lead in language tells you exactly what's being amended here." (April 9, 2025)

John Gray, Office of Legislative Counsel, described the core concepts: "The real core concepts that are running here are your base amount... and your educational opportunity payments, that's your aggregate figure..." (April 9, 2025)

Paul (Commission on the Future of Public Education subcommittee), referencing earlier subcommittee work on special education, told the committee: "The agency of education came in, said they were working on a comprehensive report in time related to it... given all the other work they're doing, they haven't been able to sort of finish that work." (April 9, 2025)

Next steps and timing

Committee members paused the session and scheduled a continued review; the presentation covered the Ways and Means amendment in substantial detail but did not include a committee vote on the amendment itself during the April 9 session. The special‑education report is on an expedited schedule: AOE must deliver its written analysis by Sept. 1, 2025, and the initial strategic plan materials from the advisory panel are due Dec. 1, 2025. The school construction advisory board must report to the Education and Appropriations/Money Committees by December 2025 on debt‑transfer recommendations.

Ending

Committee staff and members repeatedly thanked legislative and agency staff for the volume and complexity of the work. The committee paused to take a brief break and planned to reconvene to continue the section‑by‑section review of the amendment.