Administration outlines sweeping education transformation: funding formula, five districts and tax changes

Secretary Zoe Saunders of the Vermont Agency of Education outlined Governor Phil Scott’s education transformation proposal Wednesday, Jan. 22, telling a joint legislative briefing the plan would replace Vermont’s current local-driven funding system with a state foundation formula, consolidate governance into five larger districts, and change how education property tax relief is delivered.

Saunders said the proposal aims to make school funding fairer and more predictable while expanding access to courses, services and teacher pay equity. “This plan is bold in its focus on rebuilding public education to better serve students,” she said, and argued the proposal would bring both educational improvements and property-tax relief.

The plan matters because Vermont faces declining enrollment, sizable achievement gaps and recurring budget failures that the administration says the existing governance and finance structure cannot address. Saunders told lawmakers the state serves 83,733 publicly funded students through 52 supervisory unions, 119 districts and 287 schools and that K–12 enrollment has declined by more than 20 percent over the past two decades. She also reported a 33 percent failure rate for fiscal year 2025 school budgets.

Saunders framed the core diagnosis as a combination of limited scale, variable spending and uneven student outcomes. She said smaller, higher-need districts tend to spend less, rely more on federal dollars and struggle to hire or retain specialized staff; those patterns, she said, help produce the persistent achievement gaps shown in Vermont’s assessments. Using National Assessment of Educational Progress results and state data, the Agency reported a roughly 20 percent achievement gap for students in poverty and gaps exceeding 30 percent for English language learners and students receiving special education services.

On finance, the administration proposes a foundation formula that guarantees a generous base amount per pupil and adds weights for student needs, while retaining categorical funds such as special education. Under the proposal the state would fund the majority of the foundation via a single statewide education property tax rate and reform the existing property tax credit program into an income-based homestead exemption. Commissioner Beaulieu of the Department of Taxes said the current system is “super complicated” and argued a foundation approach would be easier for voters and officials to understand and would provide earlier tax-impact certainty for school boards and taxpayers.

To achieve scale the proposal would dissolve the supervisory union construct and create five larger school districts, each governed by a single elected school board and supported by a regional central office. Saunders said the change is intended to reduce redundant administration, reallocate savings to teacher pay and services, and expand program offerings — for example, larger high schools and more consistent career and technical education pathways. The plan also calls for required school advisory councils to include caregivers, educators, students and community partners to provide input on school improvement plans and budgets.

Saunders emphasized the proposal preserves local input while setting statewide guardrails: it would standardize certain policies, including a single statewide school calendar, and strengthen the Agency of Education’s role in implementing coherent curriculum, proficiency-based learning and statewide graduation standards. She noted the administration contracted APA Consulting and relied on a commissioned study by Pikus and Auden as background for the recommendations and that the legislature previously established the Commission on the Future of Public Education to guide work.

Saunders described the reforms as comprehensive and acknowledged they will be difficult. She closed with a personal anecdote and a student motto: “little voices, big solutions,” which she said helped sustain her through the work of designing the plan.

No formal motions, votes or binding decisions were recorded during the briefing. Presenters said the plan will require legislative action, rulemaking and collaboration with other state agencies and local communities for implementation.