Senate Finance debates foundation formula, holds base at $1.88 billion and phases in changes

Chair Cummings convened the Senate Finance discussion of the committee's education reform approach, saying the panel must find a path that avoids the months of work being overturned later: “I think most of us agree that something needs to change,” the chair said.

The Senate's draft of a foundation formula would begin from the state's present education spending level, $1,880,000,000, and apply a three-year phase-in, according to presenters and committee discussion. The draft keeps many of the weights in place (poverty and English language supports were cited) but explicitly chose the lower base to keep the overall price tag nearer to current spending while scaling formulas to fit that base.

Why it matters: the base and the policy choices determine whether towns'tax rates and school budgets rise or fall, how small or rural schools fare, which independent schools remain eligible for tuition support and how quickly a governance restructuring could reshape districts across Vermont.

Most of the committee's debate centered on four linked questions: (1) whether the Senate bill underfunds an empirically derived cost to meet educational standards; (2) how to treat independent schools in a new system; (3) whether consolidation should be driven locally or by a faster, legislatively directed map and fallback; and (4) what rules (class size, district governance, construction aid) the legislature should set now versus leave to districts.

On funding, the sponsor told the committee the Senate began by asking what could be done under the present spending level rather than starting from a higher cost estimate. Senator Von Dertz summarized the approach: “We indeed, you're right, we chose the 1,880,000,000.00 that we're spending this year, and we when we we'll squeeze those a little bit, to fit that, formula.” Committee members who favor a cost-based model pushed back, noting consultant Dr. Colby's estimates and earlier House drafts would begin from a higher base intended to reflect the empirically measured cost of meeting standards.

Independent schools: the Senate draft replaces the previously discussed 51% test with a two-part approach. First, only independent schools located within a supervisory unit (SU) that includes operating public districts would remain eligible; second, the bill sets a 25% threshold for tuition-derived students as a proxy for whether a private school is "integral to the delivery system." Sponsors said a 25% cutoff is an attempt to limit tuition eligibility to schools that substantially depend on the program; they estimated the change would reduce the number of tuition-eligible independent schools by roughly 60% compared with current eligibility.

The bill also includes a 25-mile border provision for out-of-state schools and would require that an independent school had at least one tuition student in school year 2023'24 to qualify under the new test.

Supervisory unions and vouchers: Senators explained that keeping SUs in some form in statute was tied to preserving the current tuition arrangement for qualifying independent schools. Committee members raised the SU structure's administrative inefficiencies (multiple payrolls, audits and budgets) and asked whether those issues could be addressed statutorily.

Class size and consolidation: the Senate draft intentionally omits prescriptive class-size minimums and direct mandates to force consolidations. Instead, it relies on a multiplier and the fixed base to create downward fiscal pressure and allow districts to respond locally. Several senators warned the locally driven approach could produce painful, emotional transitions for small towns and that some state tools or guidelines (including construction aid for schools that would receive displaced students) would be needed to ease transitions.

Timeline, task force and the fallback: the bill creates a legislative task force of lawmakers to recommend new district boundaries and a timeline that would begin implementation by the 2027 fiscal year. Several senators said the task force is composed only of legislators and questioned why the panel does not include district leaders, geographers or education practitioners. Critics said a narrowly framed, legislator-only committee risks politicizing maps and might compress the time available for drafting charters, holding local elections and resolving local operational issues; supporters said the legislature has to act to create the momentum to achieve consolidation.

Accountability and legal risk: several members referenced prior litigation and precedent (the Brigham decision and Act 60) and cautioned about underfunding a foundation formula that had been designed to meet constitutional obligations. Others said the three-year phase-in and built-in inflator (NEPA discussed by staff) mean the $1.88 billion is a starting point that will be adjusted over time.

Next steps and administration input: staff (Ezra) and counsel (Julia Richardson) were asked to provide the Senate'version of the bill text and a side-by-side with House proposals. Senators asked fiscal staff for NEPA/NEBA trend reports to show how the base would inflate or deflate in out years and requested more work over the summer and next year on governance details, construction aid and local transition supports.

Ending note: the committee did not vote on the measure during the session captured in the transcript; members agreed there is more work to do on funding levels, district maps and implementation mechanics before any formal action.