Testimony warns S.220’s broad school-spending caps could force cuts; witnesses urge targeting health-care and structural reforms

Lawmakers on January 14 heard sustained testimony opposing S.220, a bill that would cap school district spending for fiscal years 2028 and 2029, with witnesses urging the Legislature to target major cost drivers rather than impose a blunt per-pupil cap.

Jeff Bannon, who identified himself as an executive director, told the committee that prior attempts to impose statewide spending caps were later repealed and that a new, artificial cap would limit districts’ ability to respond to crises. “That cap . . . should be rejected,” he said, warning that caps risk widening gaps between high- and low-spending districts.

The Vermont School Boards association and school business officials urged the committee to focus on structural cost drivers, chiefly employee health benefits. Sue Zaglowski, executive director of a school boards association, told the panel that health benefits are “approaching $400,000,000 annually” for public school employees and urged reforms such as capping the actuarial value of plans, creating a single statewide health-reimbursement administrator and changing arbitration rules to avoid winner-take-all outcomes.

Elizabeth Jennings, president of the Vermont Association of School Business Officials, said district budgets already shift to meeting financial limits when strict caps are imposed. “In the district I’m currently working for, 78% of our costs are personnel,” Jennings said, adding that that concentration of costs makes blunt caps especially harmful to instructional programming and student services.

Witnesses and committee members discussed alternatives and trade-offs. Suggestions included: capping the actuarial value of school health plans and other targeted health-care reforms; reconsidering what the Education Fund covers versus the general fund; temporary buy-downs in transition years; pausing or rethinking early-college and dual-enrollment incentives for short-term relief; and pursuing district consolidation or different district configurations to achieve economies of scale.

Several witnesses and legislators also discussed broader tax-policy options. Some speakers raised moving some school funding away from property tax toward an income-tax–based approach, and one witness urged exploring a second-home tax; committee members and witnesses repeatedly cautioned that prior studies found income-tax shifts difficult to model and potentially regressive without careful design.

Superintendents’ representatives emphasized the long-term structural pressures driving costs: declining enrollment and rising per-pupil costs that cannot be solved solely by imposing a cap. Jeff Francis, speaking in an interim capacity, said reorganization and attention to district configuration are central to getting long-term costs under control.

No formal vote was taken on S.220 during the hearing. Multiple witnesses said the panel had asked them to return on February 20 for further testimony and that additional technical analysis will be needed before any legislative action.

What the bill would do and what remains unresolved S.220 would set a temporary per-pupil spending constraint for two years; witnesses agreed the issue of moderating education spending and tax impacts is urgent but disagreed on whether a uniform cap is the right tool. Several witnesses urged the Legislature to prioritize measures that directly address cost drivers — especially health benefits and pension growth — and to craft any transition-year measures carefully to avoid unintended consequences for students.

Next steps The committee signaled it will take more testimony and technical briefings before advancing S.220. Witnesses said they will provide data requested by members, including health-benefit breakdowns and district-level fiscal impacts. The committee moved to the next agenda item at the session’s close.