Vermont finance committee hears educators' concerns about H.454 foundation formula, class size and health-care costs

Lawmakers heard multiple witnesses urge caution as they consider H.454, the House‑passed education finance bill that would replace the current system with a foundation formula (called in testimony an “educational opportunity payment”) and set new class‑size and school‑size standards.

“My comments for this committee are around education spending and education finance,” Jay Nichols, executive director of the Vermont Principals Association and an appointee to the commission for the future of public education, told the committee. “My comments are related directly to H.454, as it was passed in the House.” Nichols said foundation formulas typically do not cut spending in the short term and that most states begin a foundation formula at current spending levels and “infuse cash into the system to help with the transition.”

The concerns fell into three broad areas: short‑term fiscal impacts, the design of class‑size and school‑size rules, and the effect of rising employee health‑care costs on districts’ budgets.

Jeff Bannon, executive director of Vermont NEA, praised Vermont’s public schools and educators while warning that “shaking the system snow globe even more after surviving the pandemic, including the loss of federal pandemic recovery funds and the new student weights that are all still becoming better known could do affirmative harm to our students.” Bannon cited staff reductions reported in recent local budgets and said the state must avoid creating an implementation plan that forces additional immediate cuts to staff or programs.

Representatives of school leaders and business officers — Chelsea Meyer, executive director of the Vermont Superintendents Association, and Heather Bushey, president of the Vermont Association of School Business Officials — told the committee that the bill’s scale and timing require more modeling and stronger capital supports. Meyer and Bushey urged robust state school construction aid to accompany any district consolidations and said leveling up teacher pay in merged districts could add millions to local costs; one example cited in testimony estimated an additional $2.7 million for teacher contracts in a hypothetical regional district.

Several witnesses and committee members debated the bill’s numeric targets. Testimony raised minimum district size figures (a frequently mentioned 4,000‑student guideline), alternative proposals that keep local exceptions, and the risks of applying a single numeric threshold across Vermont’s widely varying regions. “There’s no one class size that’s appropriate,” Meyer said. Speakers urged that any minimums include exceptions for schools that are “small by necessity” and be paired with capital funding when consolidation or capacity changes are expected.

Multiple witnesses pressed for a realistic inflator for the foundation formula. Nichols, Meyer and others said a general CPI‑style inflator may not capture education cost drivers such as health‑care and labor costs; one witness suggested a labor‑market or health‑care component be considered for the annual adjustment. Several witnesses also suggested limiting reliance on general U.S. Department of Commerce inflation measures for setting education funding growth.

Health‑care costs for school employees emerged as a central implementation risk. Witnesses described the statewide bargaining/arbitration structure for school employee benefits and said the current process had produced highly generous plans that are expensive to sustain. Witnesses recommended exploring changes to how health benefits are bargained or how arbitrators weigh cost. Committee discussion noted the next round of statewide bargaining would begin in April 2026 for plans that would take effect January 1, 2028.

Several public‑interest and governance groups asked for more time and clearer rulemaking responsibilities. Testimony urged removing or softening fixed numeric minimums in favor of research‑based targets, strengthening the composition and independence of the rulemaking and advisory bodies, and ensuring the Agency of Education has sufficient capacity before moving additional rulemaking duties from the State Board of Education.

At the meeting, committee members also noted one other bill on the agenda for the day — an item listed as “page 96,” described in committee remarks as increasing monetary thresholds for certificates of need — but the transcript does not specify the committee’s vote or final disposition of that item.

The witnesses repeatedly emphasized that while the bill’s long‑term goals of equity and predictable funding are laudable, the state needs more concrete models of short‑term tax and budget impacts, clear capital funding commitments for school construction, and a defensible inflator for the new formula before moving to implementation.

Looking ahead, multiple witnesses volunteered to return with more detailed proposals and modeling. Committee members said they would invite additional expert testimony and that working groups and statutory task forces named in the bill would be responsible for many of the technical recommendations and rules the legislature would ultimately use.