Changes in education policy complicate spending analysis

Recent major changes and minor tweaks to Vermont’s education funding system have added complication and confusion. They’ve made it harder for Vermonters to understand the connection between school budgets and tax bills or see how spending and tax rates have changed over time. With metrics and calculation methods changed, it is more difficult to compare education funding data from fiscal 2024 and earlier with data since fiscal 2024 to assess whether the reforms are achieving their goals.

What are the changes?

1. How the number of pupils are calculated, which affects per-pupil spending and tax rates. Pupil weighting—counting some pupils as more than one—is designed to make it easier to provide additional funding for certain categories of students. The new weighting system introduced in fiscal 2025 dramatically increased the count of students in poverty and students whose first language was not English and added other new weighting factors. The new system made some towns better off—allowing them to raise spending or lower taxes—and some worse off—leaving them a choice of cutting spending or increasing taxes. On top of those changes, the state moved away from “equalizing” pupils—adjusting the count of weighted students to match the count of actual students—and substituted the count of weighted student to calculate per-pupil spending. The result: a 70 percent rise in the student counts and a sharp drop in per-pupil spending, which make before-and-after comparisons hard.
2. A new method of calculating property values and “equalized tax rates.” Local property tax rates are based on locally appraised values. To make them comparable, they need to be based on property valued by the same standard, by a “common level of appraisal.” For years, the standard measure was fair market value, and each year the state adjusted town property values and calculated “equalized tax rates” that voters could compare town to town. In fiscal 2026, the state stopped using fair market value as the common level of appraisal and switched to a lower standard. The change doesn’t affect anyone’s taxes. Bills are the same. But the change made the increase in equalized tax rates look worse than they really are.
3. Another buydown of tax rates. In response to unusually big increases in school spending in fiscal 2024 2025, and 2026, driven largely by inflation, rising health care costs, and an increase in mental health services for kids, Montpelier used reserves and one-time appropriations to buy down tax rates. While relief was warranted, it meant that tax rates didn’t fully reflect budget increases.

Vermont’s school funding system reduces inequities between wealthier towns and less wealthy ones by pooling resources and evening out the ability of towns to raise money for education. Towns that have the same per-pupil spending have the same tax rates and towns that spend more have higher rates—meaning greater equity for taxpayers, and giving all kids access to the same resources. That wasn’t true in the old system. Then, wealthy towns could raise a lot of money with relatively low tax rates, while towns with less property wealth had to struggle to provide their kids with a basic education. But a lot of the recent and proposed changes (and lack of updates to income sensitivity thresholds) have undermined that basic equity. And uneven and sharp increases in tax bills—even for cost drivers’ outside of schools’ control—have shifted the focus away from kids’ needs.

The new fiscal measures need to be transparent and easy to grasp so that Vermonters can gauge the fairness of the system for kids and taxpayers. Until that happens, this edition of the town2town report offers readers a tool to view and assess their local education spending and tax data. In the interactive charts, readers can view tax rates and per-pupil spending from fiscal 2012 to fiscal 2026 in relation to the statewide averages. So, while the drop in per-pupil spending from fiscal 2024 to fiscal 2025 will be hard to interpret, readers can see whether their town moved closer to or farther from the state average in those years.