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Education: 3. Legal Architecture For Education In Vermont

Education: 3. Legal Architecture For Education In Vermont

Education was once principally a local matter.

The first wave of change came in 1997 with the passage of Vermont Act 60. The intended purpose of this law was to achieve a fairer balance of educational spending across Vermont as between “rich” and “poor” towns.
Act 60 was amended/adjusted in subsequent years pursuant to Acts 68 and 130. This body of legislation created the following key changes:


  1. The centralization of school funding at the state level by pooling local school budgets and local property taxes
  2. The creation of the Education Fund at the state level. This is funded largely by residential and non-residential property taxes (say 67%), state income taxes, sales, and purchase and use taxes and by the lottery and Medicaid transfers. These amounts are in addition to other sources of revenue for the schools, principally US federal grants.
  3. The creation of a state property tax on both residential and non-residential property called the Homestead Tax to partially fund schools. There is effectively a minimum level of property tax, calculated on a per “equalized pupil” basis (different types of students have different weightings). Towns can elect to spend more than the minimum, in which case the Homestead property tax rate increases by the percentage by which the spend per equalized pupil exceeds the minimum spend determined by the State. As the Homestead property tax covers only a portion of the total funding need, the increase in property taxes to cover such excess spending is therefore less than the actual spending increase. In a final twist, there is an Excess Spending cap to prevent “rich” towns from gaming the system. If the spend per equalized pupil exceeds a threshold above the minimum spend (25%), all excess amounts are added to the local property tax rate on a dollar-for-dollar basis.
  4. To help assure fairness in Homestead property taxes, the state adjusts local property valuations pursuant to a Common Level of Land Value Appraisal (the “CLA”) in an attempt to achieve apples-to-apples fair market values across the state. This mitigates both different appraisal methodologies and different appraisal timing used across towns in Vermont. It also helps to prevent gaming the system in any given town, not that any town in Vermont would do such a thing.
  5. Finally, there is an Income Sensitivity test that allows taxpayers to receive a rebate of a portion of their Homestead tax if their household income is less than specified levels. This is intended to be an affordability test. In fiscal year 2016, Vermont collected $1.2 billion in education property taxes and rebated $158.6 million, or about 13%, under this program.


In 2015, the passage of Vermont Act 46 did to the organization of schools what Act 60 did to their funding, all in response to cost pressures.

With an environment of declining enrollments and escalating costs, three-dozen towns in Vermont voted down school budgets in 2014. Act 46 provides meaningful financial incentives and disincentives for schools to combine districts with other towns in an effort to reduce costs.

Act 46 is now having a major impact on certain Vermont communities, many of which are reluctant to cede control of their schools to a regional authority or risk the loss of a local school facility.

There are 273 school districts in Vermont. The goal of Act 46 is to have a minimum 900 students per unified district, which would suggest only 87 surviving school districts given 78,000 K-12 pupils in all of Vermont.

The ultimate objective of Act 46 is to reduce costs through consolidation. In the next section, the Informed Vermonter will survey Vermont’s education infrastructure, which should all begin to shrink in the years ahead if Act 46 is successfully implemented.











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