Fiscal Office: Repeal of Vermont’s Universal School Meals could shift $18.5M burden to local budgets

Julia Richter, a senior fiscal analyst with the Joint Fiscal Office, told the committee the estimated state cost to fund Vermont'wide universal school meals in fiscal year 2026 is $18.5 million and that the program sits inside the statewide Education Fund.

"This is estimated to cost $18,500,000 from the Education Fund," Richter said, adding the Education Fund aggregates local and state spending and that property tax rates are set to fund the resulting expenditures.

Why it matters: Richter said the fiscal outcome of repealing the statutory universal school meals program established by Act 64 would depend on choices made by each school district. If districts return to charging for meals, some federal reimbursements and additional administrative costs would change; if districts keep free meals on their own, the expense would remain in local budgets funded through the statewide Education Fund.

Richter described the mechanics: the Education Fund receives nonproperty revenues (sales and use taxes, meals and rooms, lottery transfers) and whatever is not covered is raised through property taxes. Universal school meals in statute are currently reimbursed as a categorical aid; repeal would remove that reimbursement and leave districts to cover meal costs through their budgets or pricing programs.

Key numbers and program details Richter provided: - FY26 state estimate for the universal school meals categorical aid: $18,500,000. - AOE (Agency of Education) estimate of additional federal reimbursement associated with the current program in FY26: $16,900,000. - USDA estimate of average administrative savings for districts operating universal meals versus pricing programs: roughly $100,000 per district per year. - AOE "back of the napkin" estimate if every district returned to a pricing program: about $5.4 million in additional administrative costs statewide (in addition to the cost of meals themselves). - Prior to the COVID-19 pandemic, 77 Vermont schools provided universal meals (drawn down through CEP or Provision II); the state has more than 200 public schools in total, though Richter said she had not pulled an exact current count at the time of testimony.

Richter stressed historical comparison is difficult because of policy changes since 2019, including the COVID-19 period when federal funding temporarily covered universal meals for all schools and the implementation of the Medicaid Direct Certification Pilot Program that increased identification of students eligible for federal meal benefits.

On local budget timing: Richter said many school budgets are finalized and voted on at Town Meeting Day, about a month away, and that districts have generally assumed continued state provision of universal meals while preparing budgets. She noted that if a repeal were to occur, districts that want to continue free meals would need to decide how to fund them (reserves, reallocation, or higher local spending), and those choices would alter local homestead tax rates as well as the statewide calculation.

Committee members pressed Richter for clarifications. Representative O'Brien asked about federal dollars; Richter said Rosie Krueger at AOE (Director, Food Nutrition Programs) was scheduled to provide more detailed federal reimbursement estimates and that AOE had provided the $16.9 million figure. Representative Burke and others asked about prior-year costs and the difficulty of comparing to pre-pandemic figures given changes in federal and state programs.

No formal action or vote on repeal occurred during Richter's presentation; the session was a fiscal briefing and question-and-answer about budgetary implications and timing.

The committee expects to hear more detailed federal and program-level figures from the Agency of Education at a later date, and Richter noted districts nearing Town Meeting Day must make budgeting assumptions in the near term.