State education officials outline how Vermont’s complex funding system affects equity and local taxes

MONTPELIER, Vt., Jan. 15, 2025 — Officials from the Vermont Agency of Education told a joint hearing of the House Education Committee, the Senate Education Committee and the Senate Finance Committee that the state’s education funding, governance and program-delivery systems are “inextricably linked,” and that the complexity of the current finance model makes it difficult for voters and school boards to predict how district budget votes will affect local property tax bills.

The briefing, led by Zoe Saunders, Secretary of Education, and Emily Simmons, general counsel at the Agency of Education, framed the presentation around legal requirements, how the education fund is calculated and paid for, and policy issues that the administration says must be addressed if Vermont is to deliver more equitable educational opportunities statewide.

“The public education funding, governance and program quality are all inextricably linked,” said Zoe Saunders, Secretary of Education. Saunders and agency staff said the state’s system was designed to equalize tax capacity after the state supreme court ruling that found wealth-based differences in opportunity unconstitutional, but that in practice local choices, enrollment shifts and other factors can produce unequal per-pupil outcomes.

Emily Simmons reviewed the legal baseline for the conversation, pointing to the state constitution’s education clause and to statutes that require education quality standards. “The constitution does not allow a system where a student’s educational opportunity is a function of the wealth of the district or location where they live,” Simmons told legislators while reviewing court guidance and statutory sections including Title 16 and the statute directing education quality standards (16 V.S.A. §165).

Agency presenters described how district budgets, the statewide education fund and several revenue sources fit together. Districts prepare budgets and submit them to local voters; once approved, those spending totals feed into the statewide education fund. The fund is financed through a mix of non-property revenues (sales and use taxes, portions of meals and rooms and other sources) and property tax mechanisms (homestead and nonhomestead rates and income-sensitive credits). Property tax rates are adjusted for differences in town appraisal levels through the common level of appraisal, or CLA, which the agency said has become more volatile in recent years and confuses many taxpayers.

Agency staff used examples to show how a district’s tax rate can rise even when its voted budget is flat or declines: statewide changes in total education spending, shifts in enrollment or weights, and the interplay of homestead income-yield calculations and lagged property tax credits can all affect a homeowner’s bill in ways that are not easily tied to a single local budget vote.

Officials painted a statewide picture of governance and scale: Vermont has dozens of supervisory unions and many small school boards, and the state’s small average district sizes contribute to both strengths and operational challenges. The presenters said there are roughly 52 supervisory unions/districts overseeing 118 school districts that govern about 287 public schools serving a little more than 83,000 students (figures presented for the 2022–23 school year, with an additional supervisory union added since then). Over the last two decades, the agency said, statewide K–12 enrollment has fallen by about 20 percent.

The briefing also covered tuitioning — a practice that lets students in towns with no public school attend public or approved independent schools elsewhere at public expense — and noted that tuition formulas and exceptions (area technical centers, certain designated schools and local electorate approvals) add further variation across towns.

Presenters said federal funding has been an important supplement in higher-need communities and that when analysts isolate solely state education fund spending, the relationship between need and state-funded per-pupil spending is less clear than policymakers intend. Agency presenters noted the state adopted new weights for fiscal year 2025 (Act 127 was mentioned as recent legislative action) and that those changes should be considered in analysis of impact.

Saunders and agency staff outlined next steps being contemplated by the administration and the governor’s office: broader education transformation proposals that would revisit how the state defines adequate funding, whether and how to set statewide budget parameters, and options for aligning funding with defined measures of educational opportunity and staffing. The agency said it has published an education funding report, provided district training on staffing and budgeting, and will continue to work with the Joint Fiscal Office and the General Assembly on technical modeling and policy options.

No formal votes or legislative decisions were taken during the hearing; the session was a briefing and question-and-answer period. Legislators raised questions about the CLA, the lag in property tax credits, the mechanics of homestead and nonhomestead rates, and how tuitioning amounts are computed.

The presentation emphasized that any major funding change would require policy choices about the definition of educational quality, what the state will guarantee, and how much local flexibility to preserve. Agency staff repeatedly urged that funding discussions be paired with decisions about governance, staffing models and safeguards to ensure that promising changes would produce consistent educational opportunities across districts.

The hearing ended with staff noting the complexity of the system and the intent to provide additional material and district-level appendices used for the presentation. The agency said it will continue to brief the committees as the governor’s transformation proposals and technical modeling proceed.