Vermont lawmakers press Agency of Education on special education costs, Act 173 rollout

The Agency of Education told a joint hearing of legislative committees on Oct. 12, 2025, that special education is a fast-growing driver of K-12 costs and that the state must improve the quality and scale of services while refining how those services are funded.

The discussion focused on three linked topics: how much is currently spent and from what sources, whether Act 173 of 2018 has reduced unnecessary evaluations or paperwork and how the agency is supporting districts to deliver higher-quality services without undermining access for students with individualized education plans, or IEPs.

Agency officials and consultants outlined the funding picture and existing gaps. "We are looking at just over 90% coming from state and local money," Sean Cousinau, interim CFO at FAU, said while presenting finance slides, adding that federal funding accounted for about 8% of special education spending in recent years and that FY 2023 spending coded to special education was approximately $437,500,000.0. Amanda Brown of APA Consulting clarified that "local can include tuition... general education fund dollars" and that districts sometimes use other state grants and Medicaid to fill gaps left by federal and state special-education-targeted funding.

Why this matters: state leaders said they bracketed special education out of some proposed immediate formula cuts while reforms and quality improvements are implemented, because cutting funding while the system changes could reduce services for students on IEPs. "Special education is a major cost driver in our system," Meg Porcella, director of the Student Support Services Division at the Agency of Education, said, and the agency is prioritizing improving delivery as well as addressing scale and workforce shortages.

Key funding details presented to legislators included the agency’s estimate that state special-education formula grants for FY 2025 total about $265,000,000 and that early childhood special-education funding is roughly $9,000,000. Agency staff and consultants flagged that districts also rely on general education fund dollars, tuition, Medicaid billing and other state grants to meet special-education needs. Committee members requested trend comparisons that pair spending by source with district expenditures; the agency agreed to follow up with more detailed analysis.

Lawmakers pressed the agency on implementation of Act 173, which shifted Vermont’s model from reimbursement to a census block grant and sought to expand multi-tiered systems of support (MTSS) to reduce unnecessary special-education referrals. Cassie Santo, state director of special education, told the committee the agency is rewriting its monitoring system and developing a risk-assessment approach to determine whether districts need standard or intensive monitoring beginning August 2025. She said the agency is also building a due-diligence process for off-cycle reviews when credible concerns arise about a district or placement.

Santo said the agency is aligning monitoring and corrective action to strengthen whole-district systems: "Students on IEPs are Vermont students first, and special education is a service designed to support students with disabilities in accessing and succeeding in the general education curriculum." She added that monitoring changes are intended to identify systemwide gaps that, when remediated, will improve outcomes for all students.

Consultant Nate Levinson of New Solutions K-12 urged lawmakers to consider scale and staffing differently: "Oddly enough, you will need fewer adults to cope with more higher skill levels," he said, arguing that focused, higher-skill interventions and shared staff across schools can reduce adult-intensive models. Levinson and others cited examples from other states where the approach has reduced identification and produced improved outcomes when implemented at scale.

Legislators repeatedly asked for more and clearer data: how much Medicaid the state draws down using education dollars as the state match, the trend in extraordinary-cost reimbursements, and whether independent and therapeutic schools receiving placed students meet the education quality standards and special-education staffing rules. Agency staff acknowledged gaps in some data linkages (for example, between Medicaid and IEP systems) and agreed to follow up with requested breakdowns and trend lines.

The hearing highlighted tensions between pursuing long-term transformation and meeting urgent, current needs. Several legislators warned that reforms like fuller Act 173 implementation require sustained multi-year support and clear metrics for success; agency officials said the current transformation proposal intends to address those implementation and scale barriers but would need continued refinement and resources.

The agency did not present any formal motions or votes at the hearing. Officials said they will provide follow-up materials with the requested funding-source trend lines, Medicaid pull-down figures, data on independent-school approvals and the proposed monitoring and corrective-action timelines.

The committee scheduled further oversight and follow-up requests to track data updates and the agency’s monitoring revisions.