Editor’s Note:
This article is longer than our usual format. The subject demands it. What follows is a detailed examination of the interconnected policy and economic pressures shaping Vermont’s current fiscal situation. The analysis is presented in two parts, both of which are intended to be read together for full context.
For years now, Montpelier has been struggling to contain the explosion in statewide education property taxes. Public debate has focused almost entirely on education funding — how schools are paid for, how much they cost, and whether the system itself has become unsustainable.
But treating education funding as the problem misunderstands what is actually happening. Rising school taxes are not the root cause of Vermont’s fiscal crisis. They are the most visible symptom of a much deeper, statewide failure finally showing up on the balance sheet.
What Vermonters are experiencing now is the predictable result of multiple systems breaking down at the same time: education finance, demographic decline, housing scarcity, regulatory overreach, healthcare inflation, workforce deterioration, and a tax base that continues to shrink while public obligations grow.
Education funding is where these failures collide — not where they begin.
Below is the full picture, and the choices Vermont must make if it wants any kind of viable future.
I. Education Costs Are Skyrocketing — But Not Because of Brigham
Vermont spends over $26,000 per student, placing it among the highest per-pupil spenders in the United States. Despite this, academic outcomes have drifted toward the national average rather than improving. The cost alone is alarming, but it becomes more troubling when viewed alongside the underlying trends driving it.
Student enrollment has been declining for decades. Staffing levels have not declined accordingly. Benefit costs continue to rise. Administrative overhead has expanded. Small schools remain expensive outliers. And the return on investment remains flat or falling.
These are structural labor and governance costs, not educational necessities.
Much of the current system traces back to policy responses following the 1997 Brigham v. State decision, which required Vermont to provide substantially equal educational opportunity. But Brigham established a floor, not a spending mandate. It did not require Cadillac health plans, multi-layer administration, staffing ratios disconnected from enrollment, or the indefinite preservation of every local cost structure using statewide dollars.
What has spiraled out of control is everything built on top of that constitutional baseline — choices made by legislatures, school boards, and bargaining systems over decades.
This is why focusing narrowly on the funding formula misses the point. The formula did not inflate costs by itself. It simply exposes the consequences of the system Vermont chose to build.
II. The Role of Unions: Shared Responsibility in the Fiscal Crisis
While much of Vermont’s education cost crisis stems from regulatory and economic policy, it is impossible to ignore the role of public-sector unions. Over time, teachers’ unions and other education employee associations have negotiated compensation, benefits, and job security measures that significantly outpace the state’s economic growth.
Collective bargaining agreements have often locked in salary increases, step raises, and generous benefits—such as premium health insurance and pension commitments—that do not align with the state’s stagnant demographic and economic realities. These contracts create a rigid cost structure that makes it nearly impossible to adjust spending downward without legislative intervention.
This is not about vilifying teachers or public employees. It is about recognizing that the system has been built on agreements that assumed perpetual growth and unlimited resources. When the underlying economy does not grow, these agreements become unsustainable.
For Vermont to fix its education funding and public spending crisis, unions will need to be part of the solution. That means negotiating new tiers of compensation and benefits for future hires, aligning salary growth with actual economic conditions, and accepting that the current model is no longer viable.
In short, the unions have a responsibility to help reform the system if Vermont is to avoid a deeper fiscal crisis that threatens everyone — including educators and public employees themselves.
III. Small Schools Can Stay — But Only If Communities Accept the Cost
Contrary to popular belief, preserving small rural schools is entirely compatible with a Brigham-compliant funding system. The key is separating the state baseline obligation from local preference spending.
- The state funds a fair, equal per-pupil amount.
- If a small town wants to maintain a school that costs more than the baseline, the town covers the difference.
- No community is forced to close its school.
- No other towns are forced to subsidize that choice.
This is the honest path: local control paired with local responsibility.
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IV. Workforce Readiness Is Collapsing
Employers report chronic difficulty finding workers who can:
- pass a drug test
- show up consistently
- handle basic math
- communicate effectively
- manage time
- meet workplace expectations
This is not a condemnation of young people. It is evidence of a school system that has deprioritized academic rigor, discipline, and skill mastery.
A state cannot rebuild its economy without a reliable workforce. And no workforce pipeline can exist if the K–12 system produces graduates unprepared for the jobs Vermont needs. When employers cannot find workers, they do not move here. When they do not move here, the tax base continues to shrink.
This is not an education policy issue alone. It is an economic survival issue.
V. Healthcare Costs Quietly Erode Everything
Even if Vermont perfectly reformed its education formula and solved the housing crisis, the healthcare system would continue quietly draining public and private budgets alike. Vermont has:
- among the highest insurance premiums in the nation
- limited insurer competition
- heavy coverage mandates
- a certificate-of-need system that protects hospital monopolies
- escalating administrative overhead in the healthcare sector
When school districts see health insurance premiums increase by 15–25 percent, budgets rise even when salaries stay flat. These cost pressures ripple through every town budget and every tax bill.
Education spending cannot be contained when healthcare eats every available dollar.
VI. The Environmentalist Veto Is Choking Out Vermont’s Ability to Survive
Here is where honesty becomes unavoidable.
Vermont cannot fund its schools — or any of its public obligations — under an economic policy framework that treats nearly all development as a threat.
For decades, environmental policy in Vermont has operated on a single implicit assumption:
“Growth is dangerous, development is harmful, and the best way to protect the state is to prevent as much building and business expansion as possible.”
This worldview has created:
- Act 250 bottlenecks
- endless permitting delays
- unpredictable development reviews
- restrictive local zoning
- anti-housing appeals
- anti-business activism
- a political culture that treats economic growth as a moral hazard
The result is a state where:
- new housing is nearly impossible to build at scale
- industrial or commercial development is rare
- employers look elsewhere
- young families cannot afford to settle
- retirees become the dominant tax base
- small towns hollow out
- school enrollment drops
- per-pupil costs explode
You cannot claim to support Vermont’s scenic beauty while ignoring the economic devastation caused by regulatory absolutism. A state that refuses to allow growth cannot fund a modern public system. Period.
Vermont’s economy is not failing because businesses hate nature. It’s failing because Vermont treats economic activity as an intrusion rather than a necessity. Environmental protection and economic growth are not mutually exclusive, but Vermont policy treats them as incompatible.
Stay Tuned for Part 2
What is emerging is not a single failure, but a pattern. Vermont’s current strain reflects years of policy choices that constrained growth, increased costs, and expanded obligations, often without considering how those decisions would interact over time.
Education funding is one visible expression of that strain, but it is not the only one. Housing, healthcare, workforce readiness, regulation, and demographics all play a role in shaping the reality Vermonters now face.
In Part 2, we continue this examination by looking at the remaining policies and economic pressures bearing on the state — and what they mean for Vermont’s path forward.
Dave Soulia | FYIVT
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