Staff outlines key differences between House and Senate education funding proposals

John Grant, Office of the Western Council, walked committee members through side-by-side language from the House and Senate education funding proposals, saying the walk-through would cover sections 34 through 94 and explain where the chambers differ.

Grant said the bills agree on core definitions in Title 16, including the base amount (15,033) and weights for special education, English learners and newcomers, but diverge on how sparsity support grants, tax rates and the homestead exemption are calculated.

Why it matters: the proposals change how state education dollars flow to districts and homeowners and include a multi-year transition plan and a contractor study billed to inform a move to an evidence-based foundation formula.

The House and Senate proposals use different geographic approaches for sparsity support. Grant said the House defines “sparse school district” as a district with fewer than 55 residents per square mile and computes a sparsity grant by multiplying a two‑year average enrollment for each public school in that district. The Senate instead defines a “sparse area” at the ZIP code level and awards grants to school districts for each school located in a ZIP code that meets the sparsity test. Grant noted the dollar amounts and broad concepts are the same; the difference is the geographic unit used to determine sparsity.

Both chambers keep the same overall education fund structure, including the supplemental unit spending tax and stabilization reserve language, but they take different approaches to property tax classification. Grant said the House proposal sets a single statewide education tax rate that is then adjusted by property classification (homestead, nonhomestead, etc.), while the Senate version removes property tax classifications and instead references uniform homestead and nonhomestead rates. He said that difference requires multiple conforming changes throughout the bill.

The bills also differ on how supplemental district spending caps are calculated. Grant said both proposals include a 10% cap, but the House measures that 10% against a district’s Educational Opportunity Payment (EOP, which uses weighted pupil counts) while the Senate measures it against the product of the base amount and the district’s unweighted long‑term membership, which would typically produce a smaller cap.

On transition timing, Grant described a five‑year phase in that would move districts from current education spending to the EOP. The transition divides a district’s “transition gap” — the difference between its fiscal‑year 2028 education spending and its EOP in the applicable year — into five increments, moving 20% per year, with full transition targeted in fiscal year 2034. He cautioned that the gap is recalculated each year, so the actual change in any given year may not be an identical 20% step.

The Senate adds a new, committee‑directed study and contractor engagement that does not appear in the same form on the House side. Grant said the Joint Fiscal Office (JFO) would contract with a vendor with expertise in Vermont’s education funding system to develop a cost‑factor foundation formula, including tiered weights for career and technical education, English learners, special education and other empirically necessary weights. The contractor report and foundation formula analysis would be submitted to Ways and Means Finance and the Joint Fiscal Office on or before Dec. 1, 2026, and the bill funds the contract at $115,000.

Grant said Section 45(b) in both versions outlines a five‑year transitional measure so districts move from education spending to EOP; Section 45(c) reflects a tax‑department request to delay the Education Fund Advisory Committee’s first required meeting until 2027 because of the scale of the changes.

The homestead exemption proposals differ in structure and brackets. Grant summarized the House approach as a set of income brackets with percentage exemptions of a claimant’s house‑site value (for example: under $25,000, a 95% exemption; $25,000–$47,000, 90%; and so on, tapering to a 10% exemption in upper brackets and no exemption above $115,000). He said the Senate presents the exemption in a table that limits the exemption to the first $425,000 (for the lowest income bracket) and phases eligibility out at higher incomes (the Senate’s table applies to incomes up to $100,000). Grant also said both proposals include inflationary adjustments, but they apply differently: the House inflator language references income brackets, while the Senate’s inflator applies to both income brackets and the house‑site value caps because of the bill’s structure.

Grant noted several miscellaneous and technical provisions in the bills: removal or adjustment of property‑tax classification language in multiple sections, establishment of statewide and regional property assessment districts, and conforming changes to move the grand list date in the House text (the Senate held some of those changes for further stakeholder review). Other items mentioned include a $1,500 minimum tax debt before a municipality may start a tax sale (from a working group recommendation), Department of Taxes requests on PBR hearing officer compensation, and technical corrections to remove references to a $15 late penalty that was removed last year.

Committee members asked clarifying questions during the briefing. One committee member asked whether inflators applied to both income brackets and house‑site value; Grant confirmed the difference between chambers. Another asked whether the existing maximum cumulative credit ($5,600) was preserved; Grant said language that created a $5,600 cap had been struck in the draft and that current mechanics intended to allow comparable benefits but that the $5,600 cumulative‑credit line had been removed from the new text.

No motions or votes took place during the session; the event was a staff walk‑through of bill language. Grant and staff signaled the briefing would continue with additional presenters (one participant said Kirby will cover the final sections).