House Education hears details of governor’s proposed foundation funding formula, including $70M special-education gap and new small-school glide path

Secretary of Education Zoe Saunders and Agency of Education staff and consultants briefed the Vermont House Committee on Education on Feb. 4, 2025, on details of the governor’s proposal to move the state to a foundation-formula school funding system, showing a $13,200 base per student, a set of weights for student needs and school size, and categorical increases intended to cover gaps in special education and transportation funding.

The presentation sought to answer questions raised in prior hearings and to explain modeling choices, what the state would guarantee under the new formula, and what would remain subject to local decision-making and future policy choices.

The switch to a foundation formula matters because it redraws how state education dollars are allocated across districts and schools: the plan defines a common base amount and applies weights for student needs and school characteristics to direct more dollars to higher-cost students and smaller schools, while also leaving several categorical streams in place to cover known funding shortfalls.

The proposal’s core elements, as described by the Agency and its consultants, are a $13,200 base per long‑term average daily membership (ADM), plus weighted supplements for identified student needs and school characteristics. Justin, a consultant from APA, summarized the basic structure: “base funding at 13,200, that funding is for all long term, ADM.” The weights shown in the committee briefing include 0.75 for economically disadvantaged students, 1.5 for English‑learner (EL) students, and an additional 1.3 weight applied to career and technical education (CTE) students and programs. Several current categorical programs would remain outside the foundation formula but receive modeled increases.

Special education and transportation were the most frequently raised categorical issues. Agency staff told lawmakers that districts currently spend roughly $70 million more on special education than they receive from the state census block grant and federal funds; the agency’s model therefore proposes adding about $70 million into the special‑education categorical “to avoid shortfalling” those services during transition. As the deputy explained, the $70 million figure reflects the difference between districts’ current spending and the state/federal amounts they receive; she said the amount could alternatively be rolled into the base as a policy choice but was modeled as a categorical to preserve flexibility during multi‑year implementation.

Transportation was modeled as roughly a $25 million increase (about $300 per student) to reflect that the state currently reimburses up to roughly 50% of transportation costs; the presenters said the increase is intended to maintain that level of support while the state and districts study potential efficiencies.

The committee also heard how the model treats CTE students. Agency staff and consultants described a split payment approach: the district of record would continue to receive the $13,200 base for each CTE student, and an additional CTE student weight would produce money that flows to CTE providers. The presenters described an on‑behalf payment to CTE BOCES and a supplemental payment to home districts to cover guidance, diploma responsibilities and other incurred costs. As the consultants summarized, the modeling estimates that “each of those FTE will generate $25,000 to the CTE BOCES” when the CTE weight and related payments are combined; presenters framed that structure as an attempt to reduce the long‑standing tension districts face when deciding whether to send students to regional CTE programs.

A major focus of questioning was the proposal’s small‑school adjustment and how the plan would handle consolidation, facilities needs and the proposed district governance changes (including a model the presenters shared that groups the state into a small number of larger districts). Amanda Brown of APA described an alternative to the current “cliff” approach for small schools, replacing hard cutoffs with a smooth curve so funding tapers rather than drops abruptly. Amanda said, “the adjustment itself would at the beginning be applied to all schools, regardless of if they're in a sparse area,” with eligibility rules to be developed later to distinguish schools that are “small by necessity” from those that are “small by choice.”

Committee members pressed how construction and major facilities needs would be addressed; the presenters repeatedly told lawmakers that the base amount covers ongoing operations and maintenance but does not fund major construction. “Best practice is not to have facilities funding in your ongoing operational funding,” a consultant said, and the agency said a targeted state construction‑aid program would need to be designed separately and would likely follow multi‑year planning, facilities master plans and district consolidation conversations.

On impacts and distribution, Agency presenters said the modeled “future state” funding would be different from current spending patterns: compared with FY2025 spending, the recommended funding mix is a net reduction of roughly 8% statewide in the high‑level comparison shown to the committee, but the change is not uniform. The consultants said the recommended funding level would increase resources for about a third of districts (they cited “36 districts, or about 30 of your districts,” while noting different counting methods), and that those districts are primarily higher‑need communities. Amanda noted that under the current system some higher‑need districts are spending about $2,000 less per weighted student than low‑need districts; the proposed model is intended to reduce that variation by allocating similar resources for similar weighted needs.

Committee members repeatedly asked for district‑level examples and one‑on‑one modeling to show what the transition would mean for large, urbanized districts and for smaller, rural districts. Agency staff responded that they are scheduling follow‑up modeling with districts and partners (including New Solutions K–12) and said they would bring concrete district examples back to the committee. “We are having those follow‑up conversations and setting up meetings where we really roll up our sleeves, look at the data,” a presenter said, committing to provide more detailed scenarios to districts and the committee.

Speakers stressed the proposal is intended as a phased, multi‑year approach rather than a single immediate reallocation. Secretary Zoe Saunders summarized that posture in answering several committee questions: “And I think it's important just to reinforce that this is a a multiyear approach.” Presenters said some formula elements (the base and the glide path for small schools) would be steady features of the formula; eligibility rules and governance changes would be developed in parallel and require additional policy decisions by the Legislature.

The briefing closed with agency staff promising more specificity in coming briefings and follow‑up meetings with districts, including illustrative budget scenarios and district‑level modeling.

The committee did not take a vote on the proposal during the session and no formal action or amendment was recorded.