Senate Education Committee reviews H.454 draft that would create foundation formula, change special-education and CTE funding

The Senate Education Committee on May 2 reviewed draft language for H.454, a bill that would create a statewide "foundation formula" for school funding, change special-education funding from a census-block grant to a weighted approach, and revise how career and technical education (CTE) tuition is paid.

Committee staff and fiscal analysts presented a modeling scenario labeled "scenario C" that applies a new set of weights to long-term membership while holding the state education payment at the fiscal 2025 level of $1,880,000,000. Joint Fiscal Office staff said the scenario uses fiscal 2025 data and current-law district boundaries to test how different base and weight choices would redistribute that fixed total.

Why it matters: The draft would change how state education dollars are allocated among districts. That affects district revenues, the amount available for supplemental district taxes, and how much each district would receive as the committee phases in the foundation formula in fiscal 2028.

Key provisions and numbers

- Aggregate constraint: Joint Fiscal Office modeling held the overall education payment at $1,880,000,000 (fiscal 2025 level) while changing bases and weights to test distributional effects.

- Base and membership: The draft showed alternative base amounts (examples discussed include bases near $14,683–14,870) and produced different long-term weighted ADM figures (committee handouts cited figures near 27,951 and 26,433 depending on the model).

- English learners (EL): The committee debated whether to model EL students using a flat proxy weight or a tiered set of weights drawn from a cost-factor analysis. Two proxied flat weights were discussed: 1.39 (from a Colby/Baker memo used earlier) and 1.4 (from an APA/AOE memo used in scenario C). Joint Fiscal Office staff said they used the flat number because they do not have unsuppressed student-level data to model the tiered approach in real time. Committee counsel and staff discussed restoring the multi-tier EL categories (six proficiency levels plus a newcomer/SLIFE category) so the final statute would reference the tiers and the bill could use a flat proxy for interim modeling.

- Small-school and sparsity treatment: Scenario C applies a small-school weight that is conditioned on a sparsity count: fewer than 55 persons per square mile within the counted geographic area triggers eligibility. The draft includes a small-school weight amount of 0.21 for qualifying schools/districts. Committee members debated whether the small-school threshold should cover schools with enrollments above 100 up to 250 (a sliding scale that some earlier models attempted) and noted a mathematical issue reported by analysts where the sliding formula produced negative weights near some enrollment points; staff recommended further work with finance to correct that math and to decide whether the policy should target "schools in sparse areas" rather than district averages.

- Special education: The intent section of the draft states a direction to "enact updates to special education funding to move from a census block grant to a weight for special education within the foundation formula" for consideration in the 2026 session. The draft added language to the intent section signaling that special-education funding should be moved into the foundation framework rather than remain as a separate census-block categorical payment.

- Career and technical education (CTE) and tuition: The draft revises tuition rules so that, for approved independent schools functioning as approved area career-technical centers (there are two in Vermont noted in committee discussion), the district would pay the full tuition charged by the receiving approved independent school rather than only the amount of state "money follows the student" allocations. St. James of the Office of Legislative Council summarized the change: "notwithstanding subsection a . . . the district shall pay the full tuition charged students attending an approved independent school in Vermont, functioning as an approved area career technical center." Laura Flossie, representing Saint Johnsbury Academy, said, "the two comprehensive high schools cannot charge a separate CTE tuition. They have to charge one tuition."

- Transition timeline: The draft phases in the foundation formula over multiple years. For fiscal years 2028–2030 the bill would apply an annually adjusted education-opportunity payment (EOP) that moves districts partway from FY2025 spending to their calculated EOP; by FY2031 districts would be on the full EOP. Committee counsel described the approach as a multi‑year, gradual transition that can move districts up or down toward the EOP depending on whether FY2025 actual spending was above or below the new formula amount. Because many programs (including supplemental district spending caps or property tax changes) reference the EOP, the draft substitutes the transitional EOP in statutory references for the three-year rollout period.

Committee questions and outstanding issues

- Data and modeling: JFO and committee staff said the modeling reflects current-law district boundaries and noted complications where districts cross county lines. Staff removed county-level totals from some tables after receiving feedback that coded county assignments in the agency data did not align with town-level reality.

- EL tiering: Several senators pressed for restoring the tiered EL weights in the statute so the final law would reference proficiency tiers and newcomer status; staff said they could insert the tiered definitions and corresponding weights with additional time.

- Small-school definition and math: Members asked whether the policy should identify sparsity at the school-level geographic area rather than at a district average since district configurations can change (consolidations, supervisory districts). Analysts flagged a mathematical problem in one variable formula for the 101–249 enrollment band that produced negative weights for some inputs; staff recommended fixing the formula or substituting a grant approach as used in other drafts.

No formal vote or final committee action was taken during the meeting. Committee members directed staff and fiscal analysts to refine the EL weighting language, correct the small-school calculation or return to an alternative approach, and continue modeling with current-law districts while noting implications of potential boundary changes.

Ending: The committee recessed for a short break and planned to reconvene with updated language and additional modeling from fiscal staff and counsel.