Research & Publications

The latest: Ed funding reform

Earlier this year, the Governor introduced a sweeping proposal to reform public education in Vermont and the House endorsed a similar plan in early April. Now it’s the Senate’s turn to come up with their own plan.

But neither the House plan nor the Governor’s plan address the two biggest problems we face in education funding:

• unfairness in who pays school taxes
• the biggest cost drivers out of districts’ control like teacher healthcare and inflation

And both plans are proposing some big structural changes that raise serious concerns:

• reverting to a foundation plan
• dismantling democratic participation in schools
• state-imposed school and district consolidation
• eliminating income-based taxes and doubling down on property-based taxes

Vermonters did not ask for another overhaul of our public education finance and governance system; they asked for tax relief. Our schools and communities are still reeling from the pandemic and the last decade of major changes imposed by the governor and legislature: consolidation, special education reform, and pupil weighting changes. The state has not provided any evaluation of the outcomes of those reforms, but there has been a lot of confusion and chaos and negative unintended consequences.

How to make school taxes fairer this year and beyond

The two most pressing problems in public education are the unfairness in who pays school taxes and the cost drivers out of schools’ control. Current proposals in Montpelier won’t solve either of these problems. We can provide immediate tax relief to thousands of Vermonters by updating income sensitivity and ultimately moving to income-based taxes. And we can address the cost drivers without slashing school budgets, forcing consolidation, or taking away Vermonters’ say in their schools.

Education reform redux

Now that the House has passed an education reform plan, it will be easy to get bogged down in the minutiae that differentiate it from Gov. Phil Scott’s “Education Transformation Proposal.” But before Vermonters get lost in the weeds debating these proposals, they might want to ask themselves if they support the radical change that both plans represent:

-Are they ready to abandon the idea that taxation for public education should be based on residents’ ability to pay and that a person’s income is the fairest measure of that ability?
-Are they ready to take control of education spending away from local voters and cede it to the Agency of Education?

House Ways & Means Committee Testimony—April 3, 2025

Homestead exemptions perpetuate unfairness – testimony by Steph Yu:

Since the 1970s, the state has been moving towards basing school taxes on income because the value of your primary residence is not a good measure of your ability to pay. For low- and middle-income Vermonters with mortgages, the value of the primary home overstates their ability to pay because their home equity is less than the home value. And many taxpayers have other debt so may even have a negative net worth. And at the high end, the primary residence is a small share of their wealth and understates their ability to pay. Any homestead exemption structure perpetuates the regressivity of the current system—meaning that higher-income taxpayers pay a smaller share of their income in school taxes than middle-income Vermonters.

House Ways & Means Committee Testimony—March 26, 2025

Good Public Schools & Fair Taxes – testimony by Steph Yu:

The most pressing problem with education funding isn’t how much we spend.

The two biggest problems we face in education funding are unfairness in who pays school taxes and cost drivers out of districts’ control like teacher healthcare and inflation.

There are two ways in which how we pay for education taxes are unfair now:
1. The richest Vermonters pay a smaller share of their income in school taxes than low and middle-income Vermonters;
2. Income sensitivity has gotten out of whack for many low and moderate-income Vermonters, leaving them facing tax cliffs that can double their bills from one year to the next. This is because the thresholds determining income sensitivity have not been updated in decades.

Teacher health insurance, inflation, and rising demand for special education services and mental healthcare for kids are biggest cost drivers in school budgets and are outside of school districts’ control.

These aren’t school funding problems; they’re societal issues.

Press conference: Keep the Public in Public Education

Public Assets is part of a coalition of students, parents, teachers, and community members who support public education. The group gathered at the statehouse on Tuesday, February 25 for a press conference and sledding party. Press conference speakers included: Susan Clark, author and community facilitator; Liz Schlegel of the Alchemist Foundation; Jamie Kinnarney, Superintendent of the White River Valley Supervisory Union; Vermont 2017 Teacher of the Year and Montpelier Representative Kate McCann; Harwood Union High School Tenth Grader Harmony Belle Devoe; and Bekah Mandell, Communications & Development Director at Public Assets Institute.

House Ways & Means Committee Testimony—January 29, 2025

From Steph Yu’s testimony: We’ve been working on education funding for over 20 years because public education is the biggest thing the state does and the most visible tax Vermonters pay. I want to start by defining what we see as the most pressing problems in the education funding system, then raise some questions about some other concerns we’ve been hearing.

Our primary focus has always been on how we pay for schools. And we see two major problems with the current distribution: low and middle-income Vermonters are paying more of their income in school taxes than the highest-income Vermonters; and many moderate- and middle-income Vermonters face tax “cliffs” that cause big tax jumps from one year to the next regardless of whether school spending goes up in their district. Changes in how much we spend will not fix either of these problems.

Statement on Gov. Phil Scott’s Jan. 28, 2025 Budget Address

Gov. Phil Scott said again today he would reform education by doing more with less. We’re hearing understandable concerns about his plan. While we don’t know all the details yet, we’ve heard this promise before—and don’t have a lot to show for it.

Here’s what we do know: Vermonters want good schools and fair taxes.

Right now, low- and middle-income Vermonters pay more of their income to support schools than the richest Vermonters. And the biggest cost drivers in recent years, like healthcare and inflation, are out of school districts’ control. Until we address those underlying problems, any changes won’t do much to help kids, communities, or taxpayers.

Property tax relief for Vermonters: three-part plan

First things first: Vermonters need property tax relief

Policymakers need to focus on the urgent school funding priority: providing our kids with a quality education while delivering property tax relief to middle-class Vermont homeowners. These taxpayers were hit hard this year, experiencing abrupt school tax increases. In three steps, the Legislature can make the system much fairer and simpler for taxpayers, providing needed property tax relief for next year—fiscal 2026—and addressing the longer-term issues of school costs and tax fairness in subsequent years.

Ed Funding 101 (and what happened in FY25)

Vermont has one of the most equitable education funding systems in the country. It hasn’t felt that way lately, because there are pockets of inequities that hit some taxpayers and some districts more than others.

Public Assets’ Executive Director explains the fundamentals of our public education funding system.

Public education is one of the most important things the state does and there is a lot we can do to make the tax system simpler and fairer without losing what’s equitable about it, while ensuring that Vermonters can make good decisions about their schools.

There’s more to school tax increases than spending

Vermonters have been understandably upset by the abrupt rise in their school taxes for fiscal 2025. Most of the complaints focus on the rise in spending, as does the response from policymakers. But taxpayers may also be affected by changes that make the funding system less fair.

The Agency of Education presented some clear analyses last spring explaining the main reasons for the spending increase: rises in salaries and benefits in response to inflation; health insurance cost increases exceeding inflation; the expanding need for expensive mental health services for students; the loss of federal funds the schools received as part of the pandemic-related American Rescue Plan Act (ARPA). There are other reasons as well, related to fiscal decisions made in the past few years. The expenditures are critical for providing kids with a quality education. But knowing that doesn’t make the tax bumps easier to take. Even modest increases can be a problem if the costs, and who pays them, are not distributed fairly.

In fact, some districts and taxpayers have been facing disproportionately higher bills for a while.

Education funding: The three cliffs problem

Education spending saw its biggest jump in years in fiscal 2025, and school taxpayers are noticing the change in their bills. The increase this year was due to a lot of factors outside both schools’ and taxpayers’ control—inflation, healthcare costs, and the loss of pandemic-era federal support chief among them. All of that led to an increase in total homestead taxes of 12.9 percent, although the rate varied from town to town.

But taxpayers can see their tax bills suddenly balloon even when spending increases are modest. The reason: thresholds built into the system. A majority of Vermont resident homeowners pay all or some of their school taxes based on their household income, which better reflects their ability to pay. But the Legislature has imposed limits on these income-based taxes, which means some homeowners—and the number has been increasing—pay a combination of the income-based and property-based school taxes. The property taxes kick in when homeowners’ incomes or house values pass certain thresholds. These thresholds create tax “cliffs”—sudden rises in tax owed. Because the thresholds haven’t been increased or adjusted for inflation over time, more and more Vermonters have hit these cliffs and seen a jump in their school tax bills.

Education funding: Diagnosis before treatment

Whatever Montpelier did this year about education taxes was going to be a can-kicking exercise. By overriding the governor’s veto of the so-called “yield bill,” which sets tax rates for the coming year, the Legislature avoided a protracted fight over how far to kick the can. That bought them some time—about six months. Now, let’s hope, we’ll get a serious effort to understand what’s going on with education funding before plunging ahead with solutions.

In response to the uncharacteristically large increase in school budgets for next year, the Legislature created the ambitiously named Commission on the Future of Public Education in Vermont. It is scheduled to start meeting in July.

The new and “improved” CLA

The 1973 oil embargo prompted many energy-saving ideas—real and imaginary. Daylight savings was extended year-round, which was spoofed in a cartoon of President Richard Nixon demonstrating an energy-saving blanket. He was shown cutting a strip from one end of the blanket and sewing it back on to the other end.

The current plan to reform the notorious CLA—common level of appraisal—looks a lot like Nixon’s blanket. It doesn’t actually change how things work, it just makes them look a little better to the public.

Taking a beat on education funding reform

A projected jump in school taxes next year has everyone’s hair on fire in Montpelier. But before taking drastic action, legislators and the administration ought to take the time to assess all of the reforms of recent years to understand what’s really going on.

Nobody is saying that the double-digit increases in education spending and likely tax bills this year are sustainable, including many voters. In a normal year, a handful of school budgets get voted down while 90-95 percent of them pass. This year, a third went down, some more than once. The voters spoke and rejected increases that felt too high.

But does that mean Vermont needs more funding reform? It’s too soon to tell. Let’s look at how we got here.

The Ed Fund needs an outside opinion

Gov. Phil Scott wants to use a $96 million surplus in the Education Fund for a little tax relief for homeowners and to expand job training. Another scenario laid out by the tax commissioner in December was, in essence, to just lower everybody’s school taxes for one year. These aren’t the only options, nor the best ones, which is why the Legislature needs to create an Education Fund Advisory Committee to oversee the long-term stability of the education finance system.

Governor Scott proposed last week that half of the surplus—about $48 million—be returned to resident homeowners in the form of a rebate. He recommended a flat amount of $250-$275 to each household. If you were going to issue rebates, that would be a better way to do it than, say, a small percentage reduction in everyone’s tax bills. The percentage approach favors those with higher tax bills, i.e. those with more valuable property or higher incomes. A fixed rebate is better for lower-income households, but better still would be to set a maximum income threshold and to include something for renters.

A big opportunity to improve school funding

The Legislature is actually looking at two big changes to education funding this session. There are misconceptions about each, but both, if done right, can strengthen the school funding system and make it fairer.

The change that has generated the most attention and discussion is a plan to provide more money to students who require additional resources, such as English-language learners, kids from poor families, and those attending small, rural schools. The money isn’t really the sticking point, although there are questions about the latest cost estimate for teaching English as a second language. The main point of disagreement is how to distribute additional resources to the districts that need them. One approach, student weighting, is more complicated for voters and tends to favor high-spending school districts. The other option, cost equity aid, would provide fixed payments per pupil for various categories of students, which would be more transparent and easier for voters to follow, and it wouldn’t exacerbate disparities in per-pupil spending among districts.

The other important change being considered doesn’t involve the distribution of education funds, but how those funds are generated.

Brigham Decision: Shared responsibility for funding education

Twenty-five years ago the Vermont Supreme Court declared the state’s education funding system to be unconstitutional. More than a third of the state’s residents are too young to remember what was happening back then. And more than half of Vermonters now over 25 moved here from somewhere else. It’s safe to say, for many Vermonters, the old Foundation Plan and the ruling that ended it are distant or non-existent memories.

A brief retrospective is in order.

Task Force uncovered flaws with student-count weights

The Legislative Task Force looking at changes to the state’s school funding system deserves Vermonters’ thanks for work it did over the last six months. The committee, officially known by the unwieldy name “Task Force on the Implementation of the Pupil Weighting Factors Report,” released its report and recommendations last Friday. It’s not a quick […]

Student enrollment is higher than it appears

We’ve all heard the complaint: Why does Vermont education spending continue to rise when student enrollment has declined? The answer can be found in the UVM student weighting study released in late 2019 and in the spotlight for the last 6 months. There may be approximately 87,000 actual students in Vermont public schools on any […]

Vermont’s tools for education funding equity: Weighting and categorical aid

Vermont’s education funding system is built on fairness to taxpayers, to communities, and to students. The state has two tools to help mitigate variable costs so that all schools can afford to educate all their students, regardless of need: categorical aid and pupil weighting.m

This explainer shows how they work.

American Rescue Plan brings $200 million to Vermont towns and villages

The American Rescue Plan Act (ARPA), passed in March 2021, earmarked $76.6 million for Vermont’s local governments, and another $121 million for county government. Because Vermont counties have limited roles, the feds redirected the dollars to towns and villages. Local governments can use money through the end of 2024 to help pay for government services; direct assistance to households, small businesses, and non-profits for COVID-related costs; premium pay to essential workers; and infrastructure investments.

Funds will be distributed in two equal payments, at least 12 months apart. Towns and villages have already received the first payments from both grants. See the map for the total grants towns will receive over the next two years. See the table for information on village allocations.

Weighing money and education

Student weighting dominates a lot of discussions around Vermont school funding these days. I guess that’s what we should expect after the release of a report to the Legislature titled: “Study of Pupil Weights in Vermont’s Education Funding Formula.” But the study also raises broader questions about money and education. The weighting study examined the […]

Affordable higher education

If there was ever any doubt that unaffordability prevented Vermonters from pursuing higher education, the news last week should have laid it to rest.

Reports that there was more demand than supply for a state program offering free tuition to Vermont colleges were probably not surprising to many in the higher education field. While Vermont’s high school graduation rates consistently have been among the highest in the country, college attendance rates have been low. And attempts over the years to understand and solve this conundrum haven’t provided much new clarity.

At the risk of stating the obvious, it seems that cost is a barrier for many.

Student weighting is more complicated than it seems

Many legislators and school officials are eager to adjust Vermont’s education finance system to provide more money for school districts with kids from low-income families and those for whom English is not their first language. We agree these resources are necessary and should be provided as soon as possible. But the Legislature was right to set up a special legislative task force this session to research and discuss with Vermont parents and voters the options for providing additional funding to these school districts. Here’s why:

The proposed changes are an extreme use of weights, and made more so by Vermont’s funding system. Student weighting is just what the term suggests: Certain students who cost more to educate are counted as more than one person—given more weight—as a means to provide the additional funding to their school district.