Vermont education officials urge caution, data and transition plans as legislature weighs foundation formula

Representatives of three statewide education groups told a joint hearing of the Vermont House Education and House Ways & Means committees that the legislature should not rush changes to school funding and must provide clear data, transition mechanisms and accountability before adopting a foundation formula.

"The Agency of Education is expected to be the most trusted source of financial data related to Vermont education," said Sue Zaglowski, executive director and general counsel of the Vermont School Boards Association, testifying for VSBA. Zaglowski said the Agency has not provided timely, consistent financial data and urged the legislature to require improved data, modeling and predictable timelines.

Why it matters: Witnesses said an underfunded or poorly designed foundation formula could force widespread staff cuts, weaken services for high‑need students and shift costs to local voters. Jeff Phan, who identified himself as executive director of Vermont NEA, estimated the governor's proposal could reduce education spending by about $184 million and warned that shortfalls would translate into layoffs and cuts to student services.

Key concerns from witnesses included adequacy, predictability and transition planning. Zaglowski listed six VSBA priorities: focus on sufficient funding for students; ensure predictability in district budgets; allow districts time to adjust; require modeling of impacts over time; strengthen accountability for public dollars; and include measures to address major cost drivers such as health care, facilities and student mental health supports.

Nicole Mace, a Winooski school board member and VSBA appointee to the Commission on the Future of Vermont Public Education, urged lawmakers to map how governance reforms and funding changes would interact. "Changing the funding system alone ... will not lead to lower costs for Vermont taxpayers," Mace said, cautioning that combining districts could affect how weights for multilingual learners and other high‑need students are applied.

Labor and policy groups urged specific policy fixes. Phan told the committees that health care and hospital costs are the principal drivers of rising school budgets and urged exploration of reference‑based pricing as one tool to reduce premiums. He also called for immediate tax relief adjustments to address income sensitivity "cliffs" and said moving more of school funding to income taxes should be considered to reduce the residential property tax burden.

Jay Nichols, executive director of the Vermont Principals Association, urged lawmakers not to "rush into financial decisions without looking at potential unintended consequences." He recommended embedding an inflation index or inflator into any foundation formula, designing appropriate student‑level weights, and addressing governance and scale before cutting funding in ways that would force personnel reductions.

Witnesses gave examples of specific pressures that a new formula must account for: funding for career and technical education students, the growing cost of employee health benefits (which VSBA testified have grown from under 10 percent of budgets in 2018 to roughly 15 percent more recently), and rising mental health spending. Zaglowski asked how the state will account for capital needs given the long moratorium on school construction aid since 02/2008 and whether private schools receiving public tuition will be required to provide financial accountability.

Committee members asked witnesses for transition options and more district modeling. Zaglowski said VSBA would try to provide examples of transition mechanisms; witnesses told legislators that the Joint Fiscal Office and Agency of Education data and modeling will be critical to understanding winners and losers under any proposed formula.

The hearing produced no committee votes. Lawmakers signaled they will continue to gather information from the Agency of Education, JFO and stakeholder groups before deciding whether and how to proceed with a foundation formula.