VermontH.9552025-2026 SessionHouseWALLET

An act relating to next steps in transforming Vermont’s education system

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Signed by Governor

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Bill Overview

Analyzed Economic Effects

37 provisions identified: 11 benefits, 8 costs, 18 mixed.

Regional school workers gain bargaining coverage

The law includes regional education service areas and their employees in school collective-bargaining rules and negotiations councils. Employees outside the teacher and administrator labor law gain municipal school employee coverage unless another statutory exclusion applies. The law does not set their wages; pay and working conditions depend on bargaining.

Stronger protections for special education students

Districts cannot make program cuts, staffing changes, or budget decisions that disproportionately harm students with disabilities. They also cannot take these actions if they weaken the district’s ability to provide a Free Appropriate Public Education.

Class-size rules limit independent school tuition

District-paid tuition at an approved independent school depends on the school meeting minimum class-size rules. Schools can request a State Board waiver when geographic isolation prevents compliance. They can also request a waiver after developing a plan to meet the requirements.

District taxes must cover construction bonds

School districts must fund annual construction-bond payments through their supplemental district spending tax. This debt remains an ongoing district obligation without annual approval of supplemental spending. The law does not state a household tax amount.

Homeowners face new tax filing penalties

Municipalities can charge up to 5% of education tax for incorrect or missing homestead declarations or nonfraudulent dwelling-use statement errors. For homestead declarations, this replaces the prior 3% limit and removes a separate 8% penalty option. Fraud findings require a 100% education-tax penalty, plus interest and late charges. An undeclared homestead also requires a corrected tax bill. These rules are repealed July 1, 2029, unless a new classification tax multiplier is enacted by then.

New property categories and homeowner filings

Parcels receive one or more tax categories: homestead, nonhomestead residential, or nonhomestead nonresidential. Mixed-use buildings and underlying land are split by finished floor-space use; surrounding homestead land remains homestead. Homestead treatment expands to owner-used domestic second dwellings on the parcel and homestead dwellings unsuitable for year-round living. Owners of nonhomestead dwellings can file annual use statements by the Vermont income tax deadline, without extensions. Filing neither a homestead declaration nor a use statement triggers the category with the highest statewide education tax multiplier. The category and use-statement rules are repealed July 1, 2029, unless a new classification tax multiplier is enacted by then.

School districts must begin merger planning

By September 1, 2026, the Vermont Learning Collaborative must hire seven regional merger facilitators and one lead with Vermont education experience. A $442,000 grant is due within 45 days after passage, with administration capped at $32,000. Each district must name a current board member by September 15, replace members who leave the board, and participate in good faith. Facilitators must consult boards, form committees, and hold first meetings by October 15, 2026; groups must be contiguous and, as practical, serve at least 2,000 students. They use 20 suggested groupings, explain departures, and include advisory, nonvoting technical-center representatives where applicable.

Schools get shared services with fees

The law creates seven regional education service areas to provide shared school programs. When a member requests a listed service and the regional board approves, the area must offer it. Services include special education, transportation, staff training, business and technology support, merger help, curriculum work, and facilities planning. Membership fees follow member school systems’ average daily enrollment; service fees reflect services provided. Each area must employ an executive director and review their work yearly; $300,000 funds $50,000 hiring grants, excluding the Vermont Learning Collaborative.

School extra spending faces shrinking caps

Voters outside interstate school districts face caps on supplemental school spending based on the base amount times long-term enrollment. The caps are 10% in fiscal years 2030–2034, 9% in 2035, 8% in 2036, 7% in 2037, and 6% in 2038. Legacy construction debt payments count as supplemental spending only to the extent legacy debt aid does not cover them. The law also excludes school construction expenditures from the five-percent supplemental spending cap.

School funding shifts over four years

For fiscal years 2030–2033, district education payments include 80%, 60%, 40%, then 20% of a transition gap. The gap equals inflation-adjusted fiscal year 2025 education spending minus the district’s fiscal year 2030 formula payment. A positive gap adds funding; a negative gap reduces it. The Secretary must calculate inflation through fiscal year 2030 using the NIPA implicit price deflator, round upward to whole dollars, and finish by November 15. During these years, per-student receiving-school tuition equals the district’s adjusted payment divided by weighted long-term enrollment, multiplied by one plus applicable student weights.

No extra tuition for covered families

Schools receiving public tuition cannot charge covered students extra tuition above the sending district’s payment. This protection applies to students attending under Vermont’s public tuition rules.

School construction workers get wage protection

School construction contracts paid with Vermont state aid must follow the higher applicable prevailing-wage standard. The comparison is between Vermont’s state construction wage requirements and federal Davis-Bacon local wage requirements. Workers on covered projects receive that higher wage protection.

Larger grants for regional school services

Each eligible Cooperative Educational Service Area can receive one $15,000 start-up grant, up from $10,000. The grants cover formation costs, including bylaws. The law directs another $30,000 to the program. The existing $70,000 fiscal year 2025 appropriation remains available, and unused money carries forward.

Limits on forced school consolidation

The State Board cannot force consolidation for class-size violations when construction costs exceed the district’s capital reserve. This limit lasts until the Legislature sets new district boundaries and addresses consequences for failing education standards. Class-size violations also temporarily stop counting toward the three-year threshold for State Board action. Counting resumes when the Board updates its rules or July 1, 2027, whichever comes first.

More state help for school construction

Base state aid covers 30% of an approved school construction project’s cost. Qualifying consolidated districts can receive additional bonus aid of up to 45% of approved costs. Eligible districts include mergers identified as advisable in the specified merger recommendations or districts averaging at least 2,000 students. Aid supports debt payments, state bonding, or both, and depends on annual appropriations.

School districts keep alternative merger routes

A committee that finds a unified district inadvisable and votes to dissolve can form study committees for other legal district-formation options. Districts that have not successfully merged through the law’s process by July 1, 2028, can propose joining a neighboring unified district. That unified district must be created under this law or already exist on July 1, 2026. A proposal can start with the board or signatures from at least 5% of district voters and must analyze educational, financial, operational, and other effects. Voters decide within 90 days after the board finalizes it; the merger takes effect only after legislative enactment.

Voters decide recommended school district mergers

When a committee recommends a unified district, the Secretary of Education reviews its report and proposed governing articles. The Secretary’s recommendation is due within 30 days of receipt or by December 1, 2027, whichever comes first. If that deadline is missed, the State Board acts and must issue required findings by December 15, 2027. Voters in each district identified as necessary or advisable vote on the proposed district on March 7, 2028.

Small and sparse schools get grants

Districts receive annual grants for qualifying public schools, based on each school’s two-year average enrollment. Small-school grants equal $3,157 per student and require fewer than 12 students per grade on average. Sparse-school grants equal $1,954 per student and require a municipality with fewer than 55 people per square mile. Amounts receive annual inflation adjustments, and the education agency must annually find each school small or sparse by necessity. The State Board must update necessity criteria by March 31, 2027, consistent with its December 17, 2025 recommendations, unless the rule-review committee extends the deadline.

State funds study of preschool costs

The law provides $75,000 from the General Fund in fiscal year 2027 for a prekindergarten cost study. The Joint Fiscal Office hires a Vermont education-funding expert to study full costs for children ages three, four, and five not yet eligible for kindergarten. The study uses recent cost models and statewide tuition rates, with education and child-development agencies and Building Bright Futures. It does not itself change family tuition, eligibility, or benefits.

Tuition-funded students must complete funding forms

Districts must require funding forms for resident students in prekindergarten through grade 12 whose tuition the district pays. This includes students attending a receiving school. The forms collect information for student funding weights and accompany residency and public-tuition forms. The Agency of Education must create the form by September 1, 2026, and make paper and electronic versions available to all Vermont families.

Schools get new day and class definitions

The law defines class-size terms, including average class size, class, school day, student, teacher of record, and specified exclusions. The State Board must adopt definitions by rule and can use different definitions. The statutory definitions end on the July 1 following those rules’ effective date. The Board must also set school-day length criteria for every grade from prekindergarten through grade 12, consistent with the school-day definition. That update is due March 31, 2027, unless the rule-review committee extends the deadline.

Towns cannot petition to leave unions

Through fiscal year 2035, towns or groups of towns cannot petition to withdraw from union school districts. The ban applies to the two statutory withdrawal procedures named in the law.

Schools lose deferred maintenance aid

The law repeals the deferred maintenance aid provision. School districts can no longer receive aid through that provision. The repeal states no affected funding amount.

Utilities must report taxable property values

Public utilities must submit sworn inventories of taxable property values by municipality each year by March 31. The state must send those values to local assessing officials by May 1. Local officials must use state valuations for electricity transmission and distribution property.

Property owners get regional appeal boards

Beginning July 1, 2031, regional boards hear valuation appeals; towns fund and staff them, with state training. Each town appoints at least one representative for three years and can appoint one per 1,000 parcels, rounded up. Owners have 30 days to appeal final valuations or board decisions; specified state valuations go directly to the Commissioner or court. Commissioner appeals cost $70, with possible waiver, reduction, or refund for hardship or joining same-parcel appeals. If a board substantially fails appeal requirements, the value must preserve prior-year tax liability unless the appeal is withdrawn or deemed withdrawn.

Fewer merger studies need voter approval

The voter-approval threshold for union school district formation studies rises from $50,000 to $500,000. State, federal, and private grant-funded costs do not count toward that threshold. When remaining costs exceed $500,000, each potentially participating district’s board must seek voter approval.

School construction requires testing and notices

Districts seeking construction aid for buildings built or renovated before 1980 must test indoor air for PCBs. Testing must meet Vermont environmental standards, and the district pays the testing cost. Districts seeking state bonding support must wait for the Secretary of Education’s support notice before issuing bonds. That rule applies when funds or a bond have been approved for the project’s full estimated cost.

School merger studies get limited funding

Committees must study unified districts, including local elementary schools, central middle schools, and regional high schools with universal career technical education access. Reports to district boards and state education leaders are due September 1, 2027, with technical-education consultation, access analyses, and required minority views. Committees must add districts found necessary; a district can switch committees with majority school-board approval. Legislative appropriations fund committees, which can increase budgets through statutory procedures when that funding falls short. A $210,000 set-aside reimburses needed legal and other services up to $10,000 per committee: quarterly invoices receive half payment immediately and half after the final report.

School regional membership changes need approval

A supervisory union can propose joining another regional education service area with majority support from its board. Both affected regional boards must hold advisory votes within 45 days, and the Legislature must enact the change. By December 15, 2027, River Valley Technical Center School District and the Vermont Learning Collaborative must propose adding River Valley. Until that change is enacted, the Collaborative must offer River Valley requested services; the law does not itself add membership.

School voters get clearer budget disclosures

School budget materials must show expected statewide education tax rates for each property class and annual debt payments. They must also show proposed supplemental spending, the prior three years’ amounts, and the supplemental spending yield. Materials must be distributed at least 10 days before a money vote; voter-approved notice instead requires 30 days before the annual meeting. Boards must put supplemental spending for non-debt expenses on the ballot. When construction aid is determined before bonds are issued, boards must seek one-time voter approval for the related annual debt payments.

Schools face budgeting and reserve rules

The Agency of Education must set rules for dividing district resources among schools under the foundation formula. The rules must support equal educational opportunities and state quality standards by June 1, 2028, unless the rule-review committee extends the deadline. Working with school associations, the agency must also adopt reserve-fund rules. Those rules cover minimum and maximum balances, allowed uses and timing, replenishment, accounting terms, and justified exceptions.

Regional rules replace town reappraisal duties

Beginning January 1, 2031, regional assessment rules replace the prior municipal reappraisal requirements and their funding-withholding penalty. The repealed rules required reappraisal for excessive valuation unevenness, late compliance, and at least every six years. Regional district members must fully reappraise every six years and coordinate later reappraisals with other member municipalities. The state can withhold funds for missing the regional schedule. After one simultaneous full reappraisal confirmed by the Director, member towns count as one entity for state valuation equalization.

High school funding rules have triggers

The law schedules specified secondary-student funding rules to begin July 1, 2029, only when three triggers are met. The Legislature must receive the merger facilitator report. The foundation-formula report must show that educating grades nine through 12 costs more. The Legislature must also have failed to enact a secondary-student weight.

Schools get help with older debt

Eligible districts receive aid equal to 75% of payments on voter-approved school construction or renovation debt. Construction must have begun by December 31, 2024. Total yearly aid is capped at $45.75 million and depends on annual appropriations. Districts named as bad-faith merger participants in the specified facilitator report are excluded unless they successfully appeal. Appeals are due February 15, 2029, and the Secretary of Education must decide them by May 15, 2029.

School tax changes require further safeguards

The law sets July 1, 2029, as a conditional start date for specified school tuition, funding, and tax changes. These include the foundation formula transition, statewide education and supplemental district taxes, property tax credit repeal, and homestead exemption provisions. First, lawmakers must receive the foundation formula and merger facilitator reports and enact legislation expressing clear intent to address listed issues. Those issues include career and technical education, special education, sparsity, secondary-student weights, geographic costs, pre-K funding, existing labor agreements, and school debt.

Towns get targeted property assessment funding

Municipalities receive $8.50 per property-list parcel each year, restricted to maintaining the list rather than reappraisal costs. In a scheduled full-reappraisal year, a municipality can request advance funding by giving written notice that it is ready. The state must transfer the lesser of two-thirds of estimated costs or $66 per parcel within 30 days.

Valuation appeals change towns’ tax bills

Qualifying final valuation reductions or fair-market-value settlements can earn municipalities credits against their next year’s education tax liability. Requests generally are due January 15 for appeals resolved the previous year and must show compliance with state best practices. The credit applies after the municipality has paid the reduced liability. Qualifying final valuation increases add tax to the next year’s municipal liability, but additions below $300 are not assessed. The reduction-credit provision is repealed July 1, 2029, unless a new classification tax multiplier is enacted by then.

Sponsors & Cosponsors

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 265 • No: 182

House vote • 5/29/2026

Which was agreed to on a Roll Call Passed -- Needed 68 of 135 to Pass -- Yeas = 125, Nays = 10

Yes: 125 • No: 10 • Other: 1

Senate vote • 5/26/2026

3rd reading ordered on roll call Passed -- Needed 15 of 29 to Pass -- Yeas = 27, Nays = 2

Yes: 27 • No: 2

House vote • 4/16/2026

Which was disagreed to on a Roll Call Failed -- Needed 71 of 142 to Pass -- Yeas = 34, Nays = 108

Yes: 34 • No: 108 • Other: 1