Education & H. 454

Greetings from your House Representatives in Montpelier. The discussion on the vitally important work to reimagine the governance and financing of public education in Vermont is hitting a crucial phase and we wanted to provide an update.

Months of work by two key House committees – Education and Ways & Means – is being brought before the full House. These committees have worked tirelessly since the beginning of the session to craft a vision for the future of public education in Vermont. Their work has resulted in a comprehensive proposal.

The proposal has two areas of focus. One looks at structural and governance changes, and the other addresses how we finance education. This bill creates a system that is fairer, predictable, and more affordable for taxpayers while ensuring structural changes to create equitable opportunities that all of Vermont's children deserve.

The key elements related to structure and governance are as follows:

1. DISTRICT SCALE: The proposal redefines school districts, consolidating Vermont's 119 districts into fewer, larger districts that serve at least 4,000 students. This should result in between 12 and 20 districts achieving economy of scale that everyone seeks. A group of experts, former superintendents, and district business managers, will develop three (3) proposals by December 2025, which will be acted upon by the legislature in early 2026. This puts us on a path for the election of school boards for these new districts in 2028.

2. SCHOOL SCALE: This plan is to move toward regional middle and high schools with at least 450 students. This shift intends to address the inefficiency of small schools and the growing use of public funds for private schools. The state will also reestablish a school construction program to support the newly created districts as needed.

3. CLASSROOM SCALE: The plan envisions minimum class sizes by the 2026-27 school year to enhance instruction, with exemptions for specific courses and needs. Like the re-scaling of districts, this will create appropriately sized classes that will also have the benefit of generating cost savings.

4. STATEWIDE COHESION AND CAPACITY: The bill outlines steps to improve the capacity of the Agency of Education (AOE), including setting standards for graduation requirements, a statewide school calendar, and plans for financial data systems and school construction. Additionally, it aims to strengthen the State Board of Education, maintaining its independence and transparency in the transformation process.

Education Update – Part 2 – Broad Support

As noted, the second focus of the House bill is to reform how we finance education. The aim is to create a system that simultaneously recognizes the cost of educating our students while ensuring property taxes are more predictable, sustainable, and fairer.

The key elements to how the House bill reform how we pay for education are as follows:

1. FOUNDATION FORUMULA: We will move away from a system where each town across the state sets its spending levels and then sends the bill to Montpelier. This has resulted in significant variations in spending between districts. We risk falling outside of the Vermont Supreme Court's ruling in the Brigham decision and Vermont's constitutional requirement to provide an equitable education to all children. Our current system also adds to the unpredictability in tax rates from year to year. Under the new model, the state will set per-pupil spending through a foundation formula. This formula includes "weights" that consider factors such as poverty, how rural a district is, and whether a student is an English language learner. Districts will receive a payment from the state based upon their weighted pupil count. Districts then decide how to spend those funds.

2. PROPERTY TAX CREDIT: This proposal also greatly simplifies the current system of identifying who receives some relief on their property taxes and how that is calculated. The current system, put into place in 1997 with very few adjustments since, has sharp "cliffs" where some just miss out on receiving a credit and has failed to adjust income levels in more than a quarter century. The new system exempts a percentage of your home's value based upon income, and that percentage is applied to the first $400,000 of the homestead's value. This eliminates cliffs, eliminates the one-year lag, is simpler, and is intended to better support lower- and middle-income earners.

3. PROPERTY CLASSIFICATION: How we currently classify properties for taxation is a blunt tool; your property is either a homestead or a non-homestead. The non-homestead could be a $2 million second home, a parking lot, an apartment building, a farm, a restaurant, or an office building. The House proposal breaks the non-homestead properties into three separate categories. This more nuanced and equitable plan creates the opportunity to increase revenue from high-value, non-homestead properties and potentially lowers taxes on primary residences.

4. PROPERTY APPRAISALS: Property valuation across the state is uneven and not consistently updated. Far too many towns are years behind and struggle to find qualified assessors/listers, resulting in a great disparity in property values. The bill moves Vermont toward a regional system of appraisals with more frequent reassessments. The goal is to achieve more accurate and equitable valuations across the state. The result will be more predictable taxes and a fairer, statewide system, mirroring the statewide approach to how we pay for education.

The House plan incorporates the same themes as the Governor's proposal, which was submitted to the legislature in bill form in February. There is currently a difference in approach as to a feasible timeline to accomplish this enormously complex undertaking. The House proposal is a deliberate, phased strategy to address our current challenges in funding, governance, and education opportunity. To see the timeline envisioned by this bill, visit this link: https://legislature.vermont.gov/.../House.../Bills/H[...]pdf

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KEY BILL ENDORSEMENTS: We were heartened by yesterday's endorsement of House Bill H.454 by four key organizations representing students and communities. These groups are the Vermont Superintendents Association, the Vermont School Boards Association, the Vermont Principals' Association, and the Vermont Association of School Business Officials. They shared their support for the substance and timeline of H.454.

We take this work seriously and value the incredible work of our colleagues, who have helped us reach a point where we can envision significant and achievable progress on these crucial issues.

As the legislature continues its work, and discussions with the Governor progress, we will remain focused on our work – to support strong educational results for our students and stable and predictable property taxes for our neighbors.

With appreciation,

Doug Bishop, dbishop@leg.state.vt.us

Gayle Pezzo, gpezzo@leg.state.vt.us

Sarita Austin, saustin@leg.state.vt.us

Wendy Critchlow, wcritchlow@leg.state.vt.us