Thank you for taking on such an entrenched issue this legislative session. The bill you are working on essentially equates to Act 60, Act 68, and Act 46 all wrapped into one and the fact that you have gotten this far in one year is already impressive.
There is no doubt more work to do to get this bill to the finish line, and tweaks will need to be made next year and in following years. I do not think it is an understatement to say that Vermonters are relying on you. They are relying on you to arrest skyrocketing education costs. They are relying on you to bring stability to a chaotic tax structure. They are relying on you to reverse the declining student outcomes that are jeopardizing the futures of so many young Vermonters.
This is a tall task, and one that I (and some of you) have been working for over a decade. We have an opportunity to do something transformative with H.454 in a way that previous legislation fell short. I encourage you not to get discouraged by the hurdles that still remain.
To that end, I have thoughts to offer on at least one of those hurdles. The recent realization that the extreme high and low-spending districts will see both significant spending cuts and large tax increases, respectively, is a result of how the foundation formula in H.454 is designed.
The bill essentially moves from a system where approximately 90% of education spending is locally-determined to a system where 90% of spending is state-determined. This is a significant shift in policy that has ripple effects. Most states have not gone this far, and instead opt for their base payments to cover somewhere between 50-80% of total spending.
The $15,033 base payment is quite high, especially after it is adjusted for weighting factors. An easy way to solve the high/low spending district problem is to lower this base payment and raise the cap on supplemental district spending. This is what the vast majority of states do to allow for some level of local control.
Much of the modeling around the base payment and weights seems to use FY2025 data, which is available on the AOE website. Looking at this data, we can see that the highest spending district is (after weighting) at $27,020 per student and the lowest spending district is at $8,740, over a 3x less. We don't have the financial data yet to show this, but history would indicate that this discrepancy will grow even more when weighting is removed.
Lowering the base payment to somewhere closer $11,000 with a higher cap might make sense. Only five districts spend less than this based on FY2025 data, and three of the five have the statewide $1.00 homestead tax rate because they spend below the current yield amount (essentially they are hitting the floor anyway). Essentially this means they would receive more funds but not massive tax increases.
Similarly, capping weighted education spending per pupil at $20,000 would only impact three districts, which would have to make cuts. The largest district in this group, Addison Central, is just above this threshold at $20,346 (based on current weights) and would only need to make minimal spending reductions. The next largest district is Hartford at $24,107, which would need to find roughly 17% savings. That will be difficult but manageable. The remaining district is Ferdinand, which has fewer than five equalized students and may require some sort of waiver no matter what system is put in place.
This allowable spending range of $11k base to $20k equalized should result in a spread of less than 90% between the highest and lowest spending districts. This is a significant equity improvement over the current system (at over 300%). However, I would still recommend leaving the $20k cap in place for several years in order to further compress the range in spending over time.
I would also note that the tax mechanism for supplemental district spending in the bill would equalize the tax bases for the district-directed spending which is important for Brigham compliance. Overall the system described here is more equitable, stable, and in-line with the intent of Brigham than our current system is.
I believe this mechanism is also preferable to the "underspending discount" proposal that has been offered because that would inject more complexity into a system that we are trying to make less complex. Lowering the base and increasing the allowable supplemental spending is a more simple approach that increases transparency and ease of understanding for taxpayers.
One final thought, since there is uncertainty about how the weights should work in the new system, it might be easiest to use the current weighting factors initially in order to promote stability in the system until a longer-term study can thoroughly vet a new weighting system for the foundation formula. This way you aren't trying to change too many variables at once. It is going to take time an effort to reach a long-term weighting formula. There are other factors that drive costs which have not been considered, such as regional labor rates, for example.
In summary, this is a historic opportunity to do something profound for both our students and Vermonters living paycheck-to-paycheck. The instability and spending growth in our education system since Act 60 is notable and action is required to correct it. We believe H.454, while it is not perfect, addresses many of these issues and urge you to find a way to get to YES. Hopefully some of the recommendations here aid in that effort.