Expert: student-based funding will force policy choices on tuition, transportation and CTE

Professor Colby, an education finance consultant presenting to the House Ways & Means Committee, told lawmakers that moving to a student-based funding formula will require several policy choices including how to treat transportation grants, how tuitioned students carry funding, whether career and technical education (CTE) should have a separate base, and how to index the base for inflation.

Colby said a state could avoid tying dollars to disability placement by developing a needs-based weighting framework that does not rely on disability categories, but warned that would be a major undertaking and that there is no evidence yet that needs-based weights would be more accurate or equitable than disability-category weights. "If the State wanted to do that, you would have to invest in developing a different set of measures for student need and develop cost estimates for that. That's not a small undertaking," Colby said.

Why it matters: the choices the committee makes about what sits inside the base spending amount and how weights are applied determine which dollars follow a child, how much the state must appropriate each year, and where the state may face legal or equity challenges.

Key points Colby made:

- Transportation. Vermont currently runs a categorical transportation reimbursement outside the base (a fixed percentage of transportation costs). Colby said including transportation in a student-based formula would be "really tricky" because not all districts provide transportation and costs vary widely by miles and ridership.

- Tuitioned students. Under a student-based model the base spending amount must be uniform to apply weights consistently across students. Colby used the state example base of roughly $15,033 per student, saying "once you say that $15,000 is the adequate spending amount for a student ... then that has to be the common base for everybody." If towns/districts pay different approved tuition amounts today, the committee will have to decide whether and how towns may pay tuition amounts that differ from the base and whether limits are set on per‑student excess spending.

- Independent (approved) schools and nondiscrimination. Colby said approved independent schools are subject to rules that prohibit discrimination, but they can still set tuition and application practices. She warned the committee that whether an independent school must accept a student at a state-determined base-plus-weight amount is a policy and legal question for the Legislature and potentially Legislative Counsel.

- Career and technical education (CTE). Colby said the presentation's base and weights do not apply to the state's current CTE programs because they were not included in the analysis and have different cost structures. "Most states' student-based funding formulas do not include weights for students who attend CTE programs," she said, and recommended a separate cost study for CTE if the committee wants to include those students in a student-based model.

- Annual adjustments (inflation index). Colby recommended indexing the base to an employment-cost measure rather than a general price index because the bulk of school spending is personnel. She noted the team used the U.S. Bureau of Labor Statistics' Employment Cost Index (ECI) to move estimates to FY25, and flagged Title 16 statutory references that point to other indices. "The inflation index that you choose is incredibly consequential," she said.

Committee members pressed Colby on practical implications. Representative Kimball stepped through a hypothetical of 500 tuitioned students with different need weights and asked whether receiving schools could refuse a student whose weighted per‑pupil amount exceeded the receiving school's tuition charge; Colby replied that current rules bar discrimination by approved independent schools but that the admission and tuition-pricing practices raise policy questions the Legislature must resolve.

Colby closed by urging the committee to be explicit about which costs remain outside the base, to plan for monitoring and accountability that a funding formula alone cannot guarantee, and to consider a robust, separate cost analysis for CTE if the committee wants parity between CTE pathways and the general education base.

Ending: Colby said a detailed memo with assumptions was provided to the Joint Fiscal Office and offered to return for follow-up questions; lawmakers asked for further detail on which inflation indices other states use and how to reconcile approved tuition with a uniform base.