The Education establishment provided mixed feedback on Governor Scott's education reform proposal this week. They generally focused on the need to provide "sufficient funds" for education and predictability in funding. Of course, the teachers union already took a shot at the Governor because they rightly concluded that cost-savings would be generated by staffing reductions (both teachers and administrators). We already know that a driving factor in Vermont education spending is our ultra small class sizes; it seems like others are also catching on. They also took the opportunity to attack the 3500 students in tuitioning districts who chose to take their tuition dollars to independent schools.

We learned this week that the Administration's proposal sets the base funding at about 92% of current spending, which should put moderate pressure on spending. Districts can still spend above this level, but would pick up the cost on their local tax rate. The unions fear that districts will choose staff cuts instead of facing angry voters, and they are probably right. This is a reversal from the last 25 years under the current funding system, where money was "cheap" and it was easier to maintain staffing levels in the face of declining enrollment than to make tough decisions.

There were some legitimate concerns around the long-term foundation payments keeping up with inflationary pressures over time. This is an area where other states (and Vermont, when we used to have a foundation formula) run into issues with this type of funding system. The NEA proposed building an inflationary increase into the law, which seems like a prudent idea, assuming it's a reasonable rate. The primary issue with education spending over the past two decades is that it has far exceeded inflation. Additionally, there were concerns raised around maintaining community ties with the new governance system proposed by the Administration.

The State Board of Education also testified on the proposal this week. They were less than thrilled with a provision taking away some of their rulemaking authority, and re-tasking the Board with a focus on improving education quality and oversight. Of course, they also highlighted the "necessity for adequate resources" for the Board to continue engaging in rulemaking.

In other education news, H.37 was introduced in the House. The short-form bill closely resembles a proposal we put forward in 2014 that called for consolidating Vermont's Supervisory Unions around our 17 regional Career and Technical Education Centers. There are a number of benefits to this approach, which we outlined in the recommendations section of the report.

Housing

A series of developers testified in the Legislature this week, highlighting all the ways in which state and local policies drive up housing costs. For example, multi-family buildings are required to have elevators, which cost around $200k to install and also significantly impact overall construction costs. The state energy code requirements also differ based on the height of the building; those over four stories are subject to commercial building codes, introducing additional costs. They cited real challenges with incorporating renewable energy solutions within the constraints of the urban development required by Act 250. Of course, supply chain issues are also impacting cost and speed of development.

Administration officials did a deep dive on the Governor's housing proposal for this year, which involves:

1. Increased financial support for public infrastructure to allow housing development.
2. Streamlining the appeal process for Act 250 permits to minimize project delays and added costs.
3. Tax Increment Financing for small municipalities. Only large towns and cities are able to leverage the existing program.
4. Providing municipalities with more regulatory authority to manage short-term rentalseffectively to mitigate their impact on local housing and resources.
5. Meeting the significant rise in unsheltered homelessness with additional resources and offramps.

The Vermont Housing and Finance Agency (VHFA) introduced a report this week that highlighted the opportunities of off-site housing (aka manufactured homes). The report was put forward as a model of effective work without the need for a summer study committee (which the Legislature is fond of, despite their limited productivity). The report highlighted the significant shortage of affordable housing for working families in Vermont, which is driving up housing costs and adversely affecting local businesses seeking to hire workers. The cost of subsidized "low-income" projects reached $520 per square foot in 2024 (that's over $1m for a 2k square foot home).

The report suggested that manufactured homes (mobile, modular, and panelized) could offer a solution to these exorbitant building costs. This type of construction can lead to significant cost savings compared to traditional building methods, particularly through the use of standardized products and processes. The method allows for faster construction timelines, reduced waste, and the potential for creating well-paying jobs in Vermont's manufacturing sector. It also provides for the ability to build homes year-round in factory settings, which can address labor shortages and increase housing production capacity.

There is only one modular home factory operating in Vermont currently. Production would need to be ramped up with a set of standardized products in order to achieve economies of scale. Variations in local zoning rules are an obstacle to this and may require state innervation so significant changes don't need to be made for developments in different municipalities. Efforts are underway to explore the potential of restarting operations at an unused manufactured housing facility in Fair Haven to contribute to local job creation.

A separate proposal was floated this week to create an Infrastructure Sustainability Fund, which aims to provide municipalities with additional resources for community projects, particularly in drinking water and transportation sectors. Potential strategies for deploying the fund include direct loans, subsidizing interest rates, and providing credit enhancements for more complex projects.

Energy

A number of bills were introduced this week to repeal the Clean Heat Standard and the Global Warming Solutions Act. The House Energy and Technology Committee reviewed three of them briefly, but it remains to be seen what the Legislature will do with these two unworkable pieces of legislation. The discussions this week highlight the need for equitable solutions that do not disproportionately affect lower-income Vermonters and whether or not the responsibility for climate action should lie with elected officials or the courts.

Efficiency Vermont introduced a report this week on the energy burden being experienced by Vermonters, which is a calculation of household energy spending (electric, thermal, and transportation) in relation to income. The report compared energy burden across towns, noting lower burdens in the Northwestern part of Vermont and higher burdens in the Northeast Kingdom. The energy burden in some communities was as low as $4,000, with others exceeding $8,000.

It was noted that electricity may not always be the most cost-effective option; individual scenarios should be assessed. Some of the data on heat pump installations was outdated, prompting questions about current trends as well as concerns about the alignment of current incentive structures with those taking advantage of discounts. In other words, are the current subsidies actually helping people with the highest energy burden?

On behalf of Vermonters,