The Legislature passed H.454, a landmark education reform bill that begins a multi-year transformation of how Vermont funds and governs its public schools.
- The bill aims to reduce property tax burdens, expand educational equity, and shift budget authority from local districts to the state, but many details remain unresolved, and many stakeholders walked away disgruntled and wondering if the bill can live up to these goals.
Zoom out: After a year of heated debate and last-minute compromises, House and Senate conferees signed their agreement after the Governor signaled support, and the bill passed both chambers with the House adopting it by voice vote.
What’s in the bill?
Transition to a Foundation Formula: By FY29, Vermont will fund schools through educational opportunity payments, a base amount of $15,033 per pupil, adjusted for student needs via weights, much as we do now, that account for poverty, English learners, and disability status.
- Local districts can vote to spend more under Supplemental District Spending (SDS), capped and taxed separately.
Tax system overhaul: The current income-based property tax credit will be replaced in 2028 with a homestead exemption.
- Up to $425,000 of house value exempted for households making less than $115,000
- Sliding scale: A point of debate between the House and Senate, the final version provides a full exemption for households under $25,000, dropping to 10% by $110,001
New property tax classes: Starting in 2028, properties will be categorized into three categories as opposed to our current two. This was a key point of contention for the business community, which feared being put in its own category and possibly targeted with a higher rate. Each of these categories will have its own multiplier. The three new categories are;
- Homestead – any parcel with a homestead declaration.
- Nonhomestead–Residential – second homes, such as short-term rentals.
- Nonhomestead–Commercial/Industrial: everything else.
District consolidation begins: An 11-member Redistricting Task Force must propose new regional districts of approximately. 4,000–8,000 students, by December 1, 2025. These plans, a major trigger for full reform, are required before the foundation formula can take effect.
Class size minimums set: Mandated averages begin in 2028, prompting state intervention only to occur after three years of noncompliance. Minimums are different for each grade level, and waivers are possible.
Graduation standards: The State Board must adopt statewide graduation requirements and a uniform school calendar. The Agency of Education will assess needs related to PreK funding, staffing, and rule reviews.
School construction aid returns: A new aid program begins in FY26, with advisory and approval structures in place.
Independent schools face new rules: Now, to receive public tuition, approved independent schools must:
- Be in Vermont,
- Serve more than 25% publicly funded students,
- Comply with class size minimums, and
- Be located in districts with no public alternative for the grade level.
Special education strategy required: AOE must deliver a cost-containment and delivery plan for special education, plus a 3-year strategic roadmap. $150K is appropriated for new staff support.
Regional assessment districts created: Twelve regional reappraisal districts will be launched by FY29 to ensure regular, equitable grand list updates.
What’s next?
While H.454 lays the legal groundwork, 2025 and 2026 are mostly planning years.
- Major changes, such as district consolidation, tax shifts, and funding formula implementation, are contingent on new task force recommendations, agency studies, and future legislative action.
Lawmakers acknowledge that the bill is not a finished product. Without follow-through, the reform structure could unravel before it takes hold.
