MONTPELIER — Vermont school districts could see their spending capped beginning in 2028 if the Legislature passes a bill introduced Thursday by Senate Pro Tempore Phil Baruth, D/P-Chittenden Central.
The bill, S.220, is meant to contain the growing cost of public education in Vermont while lawmakers get back to work on the education reform that began last session.
“We have to take the moment in our hands and try to do something about this ed fund growing by leaps and bounds,” Baruth said in an interview Wednesday. “It’s just a situation where, with everybody acting in good intentions, it’s producing a nightmare for the budget.”
The legislation would limit the growth in each school district’s per pupil education spending in fiscal years 2028 and 2029.
Julia Richter, a principal fiscal analyst with the Legislative Joint Fiscal Office, said during a Senate Finance Committee meeting Thursday that if the bill was implemented in fiscal year 2027 — the budget year starting July 1 — the state would save an estimated $67 million. That projection is based on preliminary local school budget data, as school districts are actively crafting their budgets for the next school year.
Under the language of the bill, the cap on a school district’s spending would be tied to district’s per student spending in the prior fiscal year.
“So, if you were a high spending district, you’d be able to spend less. If you’re a low spending district, you’d be able to spend more,” Baruth said in an interview Wednesday. “The idea is to try to reach equity.”
In Vermont, where school districts are granted wide latitude to set their budgets, the lowest spending districts sometimes spend half the amount per student that the highest spenders approve.
Baruth’s bill was referred to the Senate Committee on Finance after its introduction on the Senate floor Thursday.
The legislation mirrors a similar concept proposed during the 2024 legislative session that would have created “allowable spending percentages,” specific annual growth rates each school district would have had to stay within during subsequent budget cycles.
Under that legislation, lower-spending districts would have been able to increase spending more than their higher-spending counterparts. But the legislation ultimately did not come to pass.
Baruth’s legislation comes as Republican Gov. Phil Scott said he plans on using about $75 million in excess revenue to dampen an expected 12% average property tax increase. That spike is driven in part by a projected $115 million increase in education spending next year.
“While it goes against the grain and doesn’t actually fix the problem we’re trying to solve, I’ll be asking you to provide some property tax relief with another band-aid,” Scott said on Wednesday during his State of the State address.
Even as similar property tax buy-downs have become common in recent years, average education property taxes have risen more than 40% across the state in the last five years, according to the Vermont Tax Department.
Baruth said he generally supports Scott’s use of General Fund dollars to buy down education costs, but said it must be contingent on efforts to cap school districts’ spending.
“I can follow him on that move,” he said, “as long as we have some kind of more immediate cost containment.”
Scott, for his part, “believes addressing spending is an important pillar of education transformation in addition to addressing quality and is encouraged by Senator Baruth introducing legislation to curb spending,” his press secretary, Amanda Wheeler, said in an email.
The legislation already has detractors. Darren Allen, communications director with the Vermont-National Education Association, the statewide teachers’ union, called the bill a “non-starter.”
“We have long opposed Montpelier-based spending caps, and we’re flummoxed, frankly, at the lack of imagination coming out of Montpelier right now,” Allen said.
Allen said lawmakers should scrap the property tax as the means to pay for education and instead institute an income tax “that ensures everybody pays their fair share.”
“We know this is popular, we know this will simplify and make the way we pay for schools more transparent,” he said.
House Speaker Jill Krowinski, D-Burlington, on Thursday said she had concerns about Baruth’s bill. She pointed out that the state already has a version of a spending cap via the excess spending threshold, which financially penalizes districts for spending above certain amounts.
“So the question is, is that not working the way that we intended it to?” she said. “Committees in past years have taken lots and lots of testimony on cap versus excess spending threshold.”
She also questioned what impact the cap would have on school programming.
“If we’re asking people to cut more, what does that mean for our kids?” she said. “And what programs are being slashed? So, there’s a lot of questions.”
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