Every winter, Vermonters hear headlines about another jump in education property taxes. The dollar amounts change, but the machinery underneath is the same – and complicated enough that even people who follow politics closely can lose the thread.
This explainer walks the current system from end to end and then sketches how Act 73 is starting to change the governance picture on top of it.
One statewide pot, local spending decisions
Since the late 1990s, Vermont has funded its schools through a single statewide Education Fund rather than separate town systems. Money flows into the fund from:
- homestead and non-homestead education property taxes,
- portions of the sales and meals & rooms taxes,
- lottery proceeds and a few other state sources.
The fund then pays districts an “education payment” plus categorical grants such as special education and transportation aid.
The key design choice is that total education spending is driven from the bottom up. School boards propose budgets, voters approve or reject them, and the state then sets tax parameters so the Education Fund can cover that statewide total. The Joint Fiscal Office (JFO) summarizes the system this way: expenditures are chosen first, and property tax rates are then set “at the level necessary to fund education expenditures.”
School budgets and Town Meeting
Each winter, districts and supervisory unions prepare budgets for the next school year. They estimate their education spending – salaries and benefits, program costs, transportation, special education and so on – and warn those budgets for a public vote.
On Town Meeting Day in March, voters in each district decide whether to pass the proposed school budget. If the budget passes, that spending becomes part of the total that must be paid out of the Education Fund for the coming fiscal year.
Local budget votes, plus a handful of state-level appropriations from the Education Fund, determine the total amount that has to be raised.
The December 1 letter
The process actually starts a few months earlier.
By statute, on or before December 1 the Commissioner of Taxes must publish projections for the coming year’s key tax parameters:
- the property dollar equivalent yield,
- the income dollar equivalent yield, and
- the base non-homestead education property tax rate.
This “December 1 letter” is the starting point for tax and budget discussions. It gives school boards a first look at the likely tax implications of different spending levels and gives lawmakers an early sense of how fast costs are rising.
JFO’s briefing materials stress that the letter is not final. Actual rates depend on the budgets voters approve in March and on policy choices the Legislature makes during the session.
The Legislature’s “yield bill”
After Town Meeting, lawmakers know how much education spending local voters have approved statewide. During the spring, they pass what is often called the “yield bill.”
That bill sets:
- the final property and income dollar yields for homestead taxpayers, and
- the statewide non-homestead education property tax rate,
along with any one-time transfers or adjustments needed to balance the Education Fund.
In practical terms, the General Assembly tunes the statewide tax levers so that Education Fund revenues will match the total expenditures that local districts and the state have decided on.
How your town’s rate is calculated
Once the yield bill is in place, state officials turn a statewide system into town-by-town tax rates. Two pieces of jargon matter here: equalized pupils and the Common Level of Appraisal (CLA).
Equalized pupils. Vermont does not simply divide a district’s budget by its raw student headcount. The state first converts that enrollment into “equalized pupils” by applying weights for factors like grade level, poverty, English learners and rurality. Education spending is divided by equalized pupils to get the per-pupil spending figure that drives tax rates.
Common Level of Appraisal. Property values on local grand lists can lag behind market values. The CLA is used to adjust tax rates so that towns with systematically under- or over-appraised properties still contribute fairly to the statewide fund.
By June 30 the Department of Taxes must calculate a homestead education tax rate for each town based on its per-pupil spending, the statewide yields and the town’s CLA. Towns then apply that rate to property tax bills on their usual billing schedule.
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What Act 73 is trying to change
In 2025, lawmakers passed Act 73, a sweeping education governance law aimed at tackling costs, enrollment decline and uneven access to programs. The act does not immediately replace the funding mechanics described above, but it does start restructuring the system that sits on top of them.
Two big pieces matter for understanding “what comes next”:
- Larger districts. Act 73 sets the state on a path from today’s 119 school districts toward fewer, larger districts that each serve several thousand students. The statute expresses the Legislature’s intent that new districts assume responsibility for educating students on July 1, 2028, after lawmakers adopt new district boundaries and related policies.
- Toward a foundation formula. The law points toward a future “foundation formula” in which the state would guarantee a base per-pupil amount, with adjustments for student need, and give the larger districts more structured options to spend above that level locally. The exact design of that formula is still being developed in legislative working groups and in the Commission on the Future of Public Education.
Redistricting task force: one voluntary model
To implement the governance changes, Act 73 created a School District Redistricting Task Force and told it to develop up to three statewide proposals for replacing the current map with larger regions.
When the task force finished its work in late 2025, it chose to send the Legislature a single recommendation rather than multiple maps. Its report, “A Map for the Future: The Vermont Regional Education Partnership Model,” outlines a system based on Cooperative Education Service Areas (CESAs), strategic voluntary mergers and comprehensive regional high schools. The model leans on regional partnerships and phased consolidation rather than a single mandatory statewide map drawn in statute.
The General Assembly will decide in 2026 whether to adopt that approach, modify it or take a different path.
FYIVT created a map to help them previously.
Who helps design the next version of the system
While the task force focused on district maps, the broader vision work is being done by the Commission on the Future of Public Education, created in 2024 and carried forward under Act 73. Its charge is to recommend a long-term vision for governance, funding and delivery of public education in Vermont.
All voting seats on the Commission are held by state officials, legislators or representatives of statewide education organizations: the Tax Department, Agency of Education, State Board of Education, the Census-Based Funding Advisory Group, and appointees from the Vermont School Boards Association, Vermont Principals’ Association, Vermont Superintendents Association, Vermont-NEA, the Vermont Association of School Business Officials, the Vermont Rural Education Collaborative and the Vermont Independent Schools Association.
The Commission has tried to widen its lens through county meetings, surveys and other public engagement. Its preliminary findings explicitly note that many Vermonters affected by education policy are not represented directly in existing decision-making bodies and call for deeper community engagement as the work continues.
Putting it together
For now, Vermont’s school funding system still works much the way it has since the Act 60 era:
- local voters approve school budgets, and
- the state adjusts tax levers in a statewide Education Fund so those budgets can be paid for.
Equalized pupils and CLAs translate those decisions into tax rates that vary by town, while the December 1 letter and the yield bill provide the bridge between local votes and statewide revenue.
Act 73 does not overturn that structure overnight, but it does start to reshape who runs the system and what the map of public education will look like over the next decade. Understanding the nuts and bolts of today’s system is a necessary first step before Vermonters can judge whether the next version will be simpler, more affordable or more effective than the one they are living with now.
Dave Soulia | FYIVT
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