After a week of stalled negotiations between House and Senate members over private school funding, compromise prevailed. But the bill — a generational transformation of Vermont’s education system — still requires a majority vote in both chambers.

MONTPELIER—After days of stagnated negotiations, a group of lawmakers and Gov. Phil Scott reached a compromise on the year’s landmark education reform bill.

Loaded with caveats, the proposal would consolidate school districts, create a new education funding formula, impose class-size minimums and reimagine income-sensitive property tax relief. Those changes, however, would take place over many years and only if a number of contingencies are met.

While Friday’s compromise represented a significant breakthrough, the legislation still requires a majority vote in the House and Senate — far from a done deal on what’s become a proposal filled with policies that are unpopular for some Democrats and Republicans.

“I’m happy to say we’ve reached an agreement,” Scott said at his weekly press conference Friday afternoon, adding that his team would work with legislative Republicans over the weekend to explain the legislation.

The three senators and three representatives who’ve spent weeks negotiating a compromise shook hands soon after Scott’s announcement, eliciting applause from legislative leaders and staff looking on.

“All of us compromised a lot to get here,” Sen. Seth Bongartz, D-Bennington, chair of the Senate Education Committee and chair of the conference committee, told his fellow conferees.

The Legislature will return Monday, when it intends to wrap up the year’s business — including voting on the changes to the education reform bill proposed by the conference committee.

In the meantime, lawmakers are in for a busy weekend. Democratic and Republican leadership, as well as the Scott administration, will need to explain the 155-page bill to their colleagues and attempt to build support.

With such a wide-ranging proposal, there’s lots for lawmakers to dislike. Some have argued the bill spends too much. Others say it underfunds schools. Some fear it will gut rural school districts and shutter small schools. Still others argue it shifts too much power out of local hands and into Montpelier.

Sen. Scott Beck, R-Caledonia, who leads the Senate Republicans, said he’d start calling his colleagues tomorrow.

“I think the conversation will definitely start with a lot of ‘no’s,’” he said in an interview. “There are things in this bill I don’t like. I would have certainly done it differently. But there are tax savings in here for Vermonters.”

Scott too acknowledged the challenge ahead in getting a majority behind the proposal.

“I don’t believe this is a slam dunk by any stretch,” he said. “There will be Republicans that won’t vote for it, and there’ll be Democrats who won’t vote for it as well.”

The details
The bill, H.454, referred to by the governor and lawmakers as the “education transformation proposal,” is replete with unknowns and contingencies, and requires years of phase-ins and -outs before it takes full effect.

After last year’s double-digit average increases in education property taxes, both Scott, a Republican, and the Legislature’s top Democrats vowed to reform Vermont’s education system. But while agreement existed in the abstract, the details proved far harder to hash out. Even after more than five months of work, coming out with a bill that both chambers and the governor could support never looked certain.

Friday’s compromise, a product of hours of public meetings and even more backroom negotiations, lays the groundwork for generational change to the state’s public education and property tax systems.

In the broadest terms, the proposal would consolidate Vermont’s more than 100 school districts into larger, regional bodies, and move the state to a new education funding formula, a combination that Scott’s team says will save hundreds of millions after fully implemented.

The state will gradually pivot to funding its education using a foundation formula. The method — used in most states across the country — moves primary authority over how much school districts can spend from the local to the state level. Districts receive money based on the number of students enrolled, with additional dollars for students who are more expensive to educate, such as English learners and students from economically disadvantaged backgrounds.

To ease the whiplash of transitioning to the new formula, lawmakers designed a gradual transition. In effect, that would phase in tax increases for districts that currently spend well below average, and slowly pull back funding from districts that spend well above average now. Plus, lawmakers hope a new property tax break structure will moderate the impact for most Vermont resident homeowners.

As written, H.454 would allow districts to spend more — but not less — than the foundation formula provides. That supplemental spending, which would need to be approved by school district voters, would start at a maximum of 10%, phasing down to 5% over time.

The bill’s biggest unknown is what future consolidated school districts could look like. A task force will hash out not more than three possible configurations this summer that the legislature would need to vote on as soon as next session.

Those districts, as well as the new funding formula, would take effect in 2028.

Other key, outstanding details include how to handle existing district debt and different teachers contracts in new, consolidated districts. Lawmakers also need to figure out how to pay for — and bring down the cost of — special education, and how money would be allocated to career and technical education and pre-kindergarten.

Without fulfilling future requirements, the transformation self-destructs. The foundation formula is contingent on creating consolidated school districts. Several aspects rely on future studies and the outcomes of those analyses.

The bill would put into effect class-size minimums in first grade through high school. But the enforcement of those minimums involve several caveats, and districts would need to be out of compliance for three years before facing even the possibility of repercussions. Plus, a waiver process would allow schools to petition for an exemption.

Though the future school districts remain a huge unknown, the bill instructs the redistricting task force to compose districts of 4,000 to 8,000 students, though that range is approximate and only to “the extent practical.” Currently, only the Champlain Valley School District has more than 4,000 students.

The proposal would move Vermont away from a system of income-adjusted property tax credits. Instead, the framework would pivot to a homestead exemption that would allow homeowners making $115,000 or less to exempt up to $425,000 in property value from taxes. The exemption creates a sliding scale, with lower-income homeowners eligible for bigger exemptions.

Negotiations stall, then a breakthrough
Conferees spent the bulk of their time this week squabbling over issues around Vermont’s version of school choice, which allows students in towns that don’t operate public schools for some or all grades to use taxpayer money to attend either a public or private school.

Up for debate: which private schools would be allowed to keep receiving public money, and how much control they would have over their tuition rates.

Though private school regulations made up a tiny fraction of the bill — and only roughly 5% of Vermont’s publicly-funded students attend private schools — public versus private debates have long divided Vermont politicians.

At times, the conferees appeared legions apart. Thursday, as the House put forward a new proposal, its Democratic conferees appeared to draw a line in the sand.

“We have with this gone as far as we can and still have the support of our caucus,” Rep. Emilie Kornheiser, D-Brattleboro, chair of the House Ways and Means Committee, told Senate conferees.

She and Rep. Peter Conlon, D-Cornwall, chair of the House Education Committee, called for strict controls on which private schools can receive public money and how much money they can receive, arguing that private schools should face similar restrictions to those the bill proposes for public schools.

At times, that line of thinking appeared a nonstarter for Senate members, mainly Bongartz and Beck, who argued in some cases for maintaining the status quo for Vermont’s most prominent private schools.

Both senators have longstanding ties to those schools. Bongartz served as the board chair at Burr and Burton Academy. Beck works as a teacher at St. Johnsbury Academy.

In particular, the senators pushed for a provision that would allow high schools that enroll publicly-funded students — both public and private receiving schools — to receive more money per student than lower-grade schools, arguing high school is more expensive. Some of the state’s private schools, like St. Johnsbury Academy and Burr and Burton, serve as the primary high school for local students, and Beck and Bongartz suggested that private high schools could cease to operate without the extra dollars.

Both sides also failed for days to find compromise on how many private schools would still be eligible to receive public funds. The Senate had proposed regulations that they said would have cut the number more than in half, but the House conferees pushed for tighter restrictions.

But in the end, lawmakers managed to meet in the middle. The bill proposes a significant winnowing of which private schools can receive public money. Those schools must meet a multipart test. First, they must exist in a school district that does not operate public schools for some grades, or in a supervisory union with school districts that fit that description. Next, the private school’s student body must have consisted of at least 25% publicly-funded students as of last year to continue to be eligible.

The goal, lawmakers said, was to narrow eligibility only to those private schools that have functioned for years as a popular option in areas where no public school existed.

Asked about how the Senate conferees ultimately found compromise, Senate President Pro Tempore Phil Baruth, D/P-Chittenden Central, said in an interview that the House had met his chamber “more than halfway” on the issue of private schools.

He described the state’s persistent fights over public money going to private schools as an “infected wound.”

“The wound, such as it is, is tiny, but the pain and the outrage and the way that people get worked up over it comes from this infected quality of the debate,” he said.