How Vermont’s Higher Education Endowment Trust Fund is structured and how distributions work
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Summary
Legislative counsel and the treasurer’s office told the House Appropriations Committee that the Vermont Higher Education Endowment Trust Fund is funded by initial appropriations, estate-tax windfalls and small unclaimed-property transfers; statute requires a mandatory annual 5% allocation for non-loan aid and allows up to 2% for endowments with a 2:1 private match.
John Gray, legislative counsel, walked the House Appropriations Committee through the statute that creates the Vermont Higher Education Endowment Trust Fund and its operating rules.
Gray said the fund ‘‘is established in the office of the state treasurer’’ and is composed of initial appropriations, additional appropriations, contributions and — in fiscal years when certain revenue and reserve conditions are met — estate-tax receipts that exceed 125% of the e‑board’s July forecast. He described the statutory definition of ‘‘assets’’ as a rolling average of market values used to compute distributions.
At the heart of the statute, Gray said, is a mandatory allocation: ‘‘the state treasurer shall withdraw and divide an amount equal to 5% of the assets equally among the University of Vermont, the Vermont State Colleges, and Vermont Student Assistance Corporation’’ for non‑loan financial aid. That 5% distribution is subject to a statutory proviso that prevents distributions from reducing the fund below its initial FY2000 principal plus any later contributions to principal.
Gray also described a permissive allocation for endowment growth: during the first quarter of each fiscal year the secretary of administration and the fund council may authorize up to 2% of assets — divided equally between the University of Vermont and the Vermont State Colleges — for creating or increasing permanent endowments. Those withdrawals require certification that the institution has raised private donations at a 2:1 ratio to the amount it plans to withdraw.
Deputy Treasurer David Sherritt told the committee that the fund’s balance at the end of FY2025 was about $65.7 million and that approximately $60 million of that was principal that cannot legally be touched. He said the fund’s income sources include the original $6 million appropriation (plus a later $1 million), occasional estate‑tax windfalls, annual transfers from unclaimed property and investment earnings; distributions come from earnings and market gains rather than principal.
Sherritt said the 5% allocation has been distributed in most years (with 2022 cited as an exception because of pandemic losses), while the 2% endowment allocations were used intermittently when returns and prudence allowed. He gave FY25 examples: the 5% distribution that year yielded roughly $621,500 for scholarships (about 675 awards averaging $1,400), and a 2% allocation produced $327,250 to each beneficiary when approved.
Committee members asked for additional detail on the fund’s composition over time, including a chart of principal by fiscal year and the treasurer’s full annual model of assets and assumptions; Sherritt agreed to provide the treasurer’s annual report and the Vermont Saves model and to send meeting minutes that list current council membership.
The committee paused to schedule follow up and to hear administration witnesses the next day; no formal changes to the statute were made at this meeting.
The treasurer’s office materials and the legislative council text provided the statutory citations and figures used in this account.
