Senate Finance advances H.454 with placeholder CTE weight, agrees 10% supplemental cap and phased tax-rate transition

"This is Senate Finance. This is May 15, and we are going to finish up our work today on page 4 54," the committee chair said as the panel resumed work on H.454.

The Senate Finance Committee on May 15 agreed in committee to advance H.454 — the bill that sets a new school foundation formula — carrying forward Senate Education’s recommended model with a placeholder career-technical-education (CTE) weight of 1 and a phased implementation schedule. Committee members also agreed to allow supplemental district spending equal to 10% of a district’s base (not weights) and to include a multi-year tax-rate transition tied to the foundation rollout; several technical items were left to staff and the conference committee for final drafting.

Why this matters: H.454 would change how state education funding is calculated and phased in, with effects on property tax rates, district payments and school budgets statewide. Committee members said the bill aims to hold the total education payment at roughly the FY2025 level while introducing new weights (for poverty, English learners, small schools and a placeholder CTE weight) and mechanisms to ease districts into new payment and tax-rate outcomes.

Most important points

• Modeling and base numbers: Joint Fiscal Office (JFO) staff reported the Senate Education recommendation uses the FY2025 education payment target of $2,880,000,000 as the funding constraint. Under the recommended modeling, the foundation base was approximately $14,807 before adding the CTE weight; when a CTE weight of 1 was included to hold the FY2025 payment constant, the modeled base fell to roughly $14,541. JFO cautioned that different CTE full-time-equivalent (FTE) counts or other weight choices would change those estimates.

• CTE weight and evidence: Several senators questioned the empirical basis for the CTE weight. JFO staff and committee members described the CTE weight of 1 as a placeholder drawn from an administration/APA model; Senator Brock and others asked for an empirical analysis or alternate calculations before final implementation. Professor Tammy Colby’s prior modeling and testimony were discussed as a point of comparison; committee members asked JFO to run alternative scenarios based on updated inputs.

• Weights and small-school eligibility: The model under discussion includes weights for poverty (1.02 in one proxy), tiered English learner weights (a single proxy or tiered options were discussed), grade weights (grades 6–8 +0.02; grades 9–12 +0.10) and a small-school weight for schools under 100 students that also requires a district density test (fewer than 55 people per square land mile) to be eligible.

• Transitioning payments and tax rates: The committee agreed to phased transitions so no district would experience the full change immediately. Staff described a tax-rate transition mechanism calculated from the gap between a district’s FY2027 rate and the uniform homestead rate required under the new foundation; that gap would be phased in over multiple years (committee discussed a 4–5 year ramp, with language drafted to phase in tax-rate adjustments across FY2028–FY2031 and fully transitioned in FY2032). Committee members signaled support for pairing payment and tax-rate transitions so districts do not face sudden fiscal shocks.

• Timing and contingency for CTE: The draft bill posted to the committee anticipates a July 1, 2027 effective date for the foundation formula (FY2028 school year) but contains contingent language specific to the CTE weight so that the CTE weight would be implemented only if its underlying assumptions are met. Several senators said they would prefer a later implementation (FY2029) to allow more time for recalculation and public adjustment; the committee majority nevertheless moved the FY2028 timeline forward for committee action while noting political and implementation risks.

• Supplemental district spending and equalization: The committee accepted supplemental district spending set at 10% of the base (10% of a district’s average daily membership base, not of weighted pupils). The body also decided to retain the House language for equalization as the working approach for now (a mechanism that would tie rates to a lower-yardstick district), while instructing staff to draft and test alternative equalization approaches — including the Chittenden/average-based approach — for possible floor or conference amendment.

• Conference and outstanding drafting: Several technical drafting tasks were assigned to legislative staff, JFO and Agency of Education (AOE) staff for conference work: recalculating bases and weights under alternate CTE FTE inputs, formalizing the contingency language for CTE, and producing final tables showing the tax-rate transition and payment-phase mechanics. The committee repeatedly emphasized that language and numerical assumptions would be revisited in conference and when district maps and other future-state inputs are available.

Quotes from committee members and staff

• "This is the weight that was provided in the enhanced evidence based model," JFO staff said describing the origin of the placeholder CTE weight of 1.

• "We are not putting anything into action today," the chair said, stressing that many numbers will be recalculated once district configurations and additional data are available.

What the committee decided (procedural outcome)

The committee agreed to advance H.454 to conference with the Senate Education-recommended modeling as a starting point, including: a placeholder CTE weight of 1, the basis for the foundation base described above, a tax-rate transition phased over several fiscal years starting in FY2028 (07/01/2027 effective date in the posted draft), and allowance of supplemental district spending equal to 10% of the base. The committee also kept the House equalization language in the bill as the working approach pending drafting of alternatives for the floor or conference.

Next steps and caveats

Staff will produce updated tables and alternative scenarios requested by senators (including running Tammy Colby’s updated inputs and recalculating a CTE FTE-based scenario) for conference and for final legislative drafting. Committee members noted implementation risk if the FY2028 timeline is kept and urged careful conference negotiation; several senators signaled they could support the committee motion to move the bill forward while reserving final judgment for conference outcomes and later recalculation.

Ending

The committee paused for a break after agreeing to the working decisions and assigned drafting tasks; most members cautioned that the bill’s mechanics and numerical assumptions remain subject to change in conference and in future sessions as district maps and updated fiscal inputs become available.