Lawmakers hear experts on costs, implementation gaps of Vermont’s Act 173 for special education

Megan Roy, a special‑education expert and former chair of the Census‑based Funding Advisory Group, briefed the Vermont House Committee on Education on Wednesday, Jan. 29, about the implementation and funding consequences of Act 173, the law that changed how Vermont funds special education.

Act 173 moved state funding from a reimbursement model to a census‑based grant calculated on overall enrollment rather than the number of students identified for special education, Roy told the committee. “Act 173 is a general education initiative,” she said, adding that “the financial end of Act 173 was a shift from a reimbursement model to a census based model.”

The shift means two districts of the same size receive the same special‑education census grant even if one identifies many more students for special education than the other. Roy noted that identification rates vary widely among districts and that the census grant does not adjust for those differences. She said the uniform base amount increases annually by a cost‑of‑living adjustment but that districts whose actual special‑education spending grows faster than the census grant must cover the difference from local general funds.

Roy described the law’s programmatic elements as focused on strengthening general education through a multi‑tiered system of supports (MTSS). Act 173 further defined MTSS expectations and added accountability measures, she said, and emphasized that students who need additional instruction should receive it “in addition to core instruction” rather than being removed from it.

On funding details, Roy said extraordinary reimbursement remains available for unusually costly individual student programs. For the current year she cited a threshold of $66,446, with districts receiving 95 percent reimbursement on costs above that amount. She warned, however, that the extraordinary reimbursement is intended to cover high‑cost individual cases and does not shield districts whose overall special‑education costs are high across many students.

Committee members asked about federal maintenance‑of‑effort (MOE) requirements, which Roy described as “a federal requirement to make sure that school districts maintain effort” and called “an expenditure test.” She explained MOE was designed to protect entitlement services for students with disabilities and that allowable exceptions include staffing retirements or when high‑cost students leave the system; districts that can document such exceptions may avoid penalties.

Lawmakers raised concerns that Act 173 did not come with dedicated new funds for intervention or implementation supports. Roy acknowledged that the law provided limited implementation funding to the Agency of Education but not to districts, and she said professional learning and targeted implementation supports remain uneven across the state. “Districts really need more than just materials,” she said, calling for strategic, differentiated implementation assistance so improvements translate into better outcomes rather than just cost reductions.

Members also probed how the census grant interacts with independent schools. Roy said that when a public school district places a student in an independent general‑education school the district retains responsibility for ensuring services on the student’s IEP, but the independent school typically bills the district fee‑for‑service for supports. That billing can exceed the district’s census grant for that pupil, she said, creating fiscal pressure the district must manage.

Republican Representative Long told the committee he was concerned about Vermont’s long‑term enrollment decline and asked whether lower enrollment or a reduced percentage of students eligible for special education would be an allowable reason under MOE. Roy said yes: spending reductions tied to overall enrollment declines or to fewer students qualifying because earlier MTSS interventions are effective are among allowable circumstances if adequately documented.

Roy urged lawmakers to include the cost of implementing Act 173 and MTSS when they evaluate school adequacy or any foundation‑level staffing proposals. She said some proposed base staffing levels should be scrutinized to confirm they are sufficient to deliver the MTSS and specialized instruction Act 173 requires, noting that some funding proposals assume extra dollars for poverty or English‑learner weights but not for other students who need support.

After about 40 minutes of presentation and questions, the committee recessed for lunch and moved on to other items. Roy told members she could follow up with materials and answer detailed questions about implementation and MOE exceptions.

The discussion makes clear that while Act 173 changed funding mechanics, the law’s programmatic goals — stronger general‑education core instruction and early intervention through MTSS — require ongoing, state‑level supports for implementation, targeted professional learning, and careful consideration of how census grants interact with existing federal requirements and placements in independent schools.