H 454

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No. 73. An act relating to transforming Vermont’s education governance,
quality, and finance systems.
                                    (H.454)
It is hereby enacted by the General Assembly of the State of Vermont:
                        * * * Findings and Intent * * *
Sec. 1. FINDINGS; INTENT; PLAN
   (a) The General Assembly finds that:
      (1) In 1997, the first piece of law the General Assembly enacted in
response to Brigham v. State, 166 Vt. 246 (1997) stated, “[t]he right to public
education is integral to Vermont’s constitutional form of government and its
guarantees of political and civil rights…[and] fundamental for the success of
Vermont’s children in a rapidly-changing society and global marketplace as
well as the State’s own economic and social prosperity.” 16 V.S.A. § 1.
      (2) From the very first attempt at creating a basic frame of government,
Vermont’s founders chose to include a right to public education, the only
governmental service included in Vermont’s first Constitution of 1777.
      (3) As the U.S. Supreme Court stated in Brown v. Board of Education,
347 U.S. 483 (1954), “education is perhaps the most important function of
state and local governments…[i]t is required in the performance of our most
basic public responsibilities…[i]t is the very foundation of good citizenship.”
      (4) The most enduring legacy of Brigham is the State’s responsibility to
ensure substantially equal educational opportunities for all Vermont students.
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      (5) The education system is still reeling from the effects of a global
pandemic, yet the same challenges that have faced Vermont’s education
system remain. Thirty to 40 years ago, Vermont educated more than 110,000
students each year. Today, there are approximately 84,000 students in the
public education system. Many schools have lost a significant number of
students and, with them, the ability to offer robust services and programs at
every school. Vermont’s youth need to be prepared for a rapidly evolving
future.
      (6) Vermonters deserve an exceptional educational system that is stable
and predictable and where a student’s home address does not dictate the
quality of education they receive. School district size and boundaries, school
size, and class size are all influential factors in shaping the quality of
instruction and overall student outcomes. The effectiveness of our schools
depends on teacher quality, resource availability, and the unique strengths of
local communities. Change in our educational system is needed. Systems are
made of people, so change must come carefully and thoughtfully, with
meaningful engagement by all Vermonters.
   (b) Intent; plan.
      (1) To ensure each student is provided substantially equal educational
opportunities that will prepare them to thrive in a 21st-century world, it is the
intent of the General Assembly to work strategically, intentionally, and
thoughtfully to ensure that each incremental change made to Vermont’s public
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education system provides strength and support to its only constitutionally
required governmental service.
      (2) It is further the intent of the General Assembly to:
         (A) in the 2026 session:
            (i) enact new, larger school district boundaries that would be
effective July 1, 2026;
            (ii) enact updates to career and technical education governance
systems, both at the local and statewide levels, that are reflective of the larger
public education governance transformation to new, larger school districts;
            (iii) create a coordinated and coherent statewide strategy for career
and technical education that is responsive to students and the State’s workforce
needs and that provides opportunities for more integration between career and
technical education and traditional high school work;
            (iv) enact student-centered updates to fully fund career and
technical education within a foundation formula that does not create
competition between sending schools and career and technical education
programs for available funds nor exceed current spending levels;
            (v) begin the process to create voting wards within each school
district to ensure school board membership is apportioned in such a manner as
to achieve substantially equal weighting of the votes of all voters in the
election of school board members; and
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            (vi) establish an appropriate weight for prekindergarten students,
as well as enact changes to the publicly funded prekindergarten program that
ensure costs are borne by the appropriate funding source depending on the age
of the student and the prekindergarten education provider;
         (B) provide or enable the provision of the necessary staffing,
resources, and support to the Agency of Education, the Secretary of State’s
Office, town clerks, and other integral parties to the election system to hold the
first school board member elections within the newly created school districts in
a special election in November 2027; and
         (C) provide or enable the provision of the necessary staffing,
resources, and support to the Agency of Education, State Board of Education,
and other integral parties to ensure that the necessary guidance and funding is
in place to allow for a smooth and successful transition between the operation
of Vermont’s current 119 school districts to the new, larger school districts,
with new school districts assuming responsibility for the education of all
resident students on July 1, 2028.
      (3) It is further the intent of the General Assembly to ensure that the
imposition of the new statewide education tax rate contemplated by this act
does not result in an increase of education property tax bills relative to
Vermont’s current education funding system for municipalities across
Vermont. The General Assembly intends to mitigate or reduce property tax
bills for Vermonters by, among other things:
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         (A) enacting new school district boundaries that increase the
efficiency of the delivery of educational services through scale;
         (B) addressing inefficiencies of education delivery through
programmatic updates to prekindergarten, career and technical education, and
special education;
         (C) improving staffing ratios to increase sustainability and reduce
costs;
         (D) addressing high-cost, languishing physical school infrastructure
through implementation of a new State aid for school construction program;
         (E) evaluating and consolidating education governance structures to
reduce administrative costs and burdens;
         (F) stabilizing education property taxes by transitioning from an
education funding system that funds locally varying budgets to a foundation
formula that funds predictable educational opportunity payments;
         (G) implementing a foundation formula with costs reflective of the
most efficient method of delivery of education services to Vermont pupils of
all educational needs within Vermont’s existing education structure;
         (H) providing a process for regular recalibration of the foundation
formula to reduce costs over time as educational efficiencies are gained
through the implementation of new governance and programmatic structures;
         (I) reserving support for small and sparse schools for schools that are
small or sparse by necessity;
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         (J) shifting certain education and other related costs off of the
Education Fund and on to other sources of funding that do not impact the
property tax bills of Vermonters;
         (K) implementing equalizing measures for any local spending
additional to educational opportunity payments that reserve funds within the
Education Fund to reduce following-year property tax bills;
         (L) imposing a cap on local spending additional to educational
opportunity payments to limit property tax rate increases through the
supplemental district spending tax;
         (M) providing transitionary measures to ease school district
movement from current education spending to educational opportunity
payments under the new foundation formula; and
         (N) replacing the existing property tax credit with a homestead
exemption that increases income sensitivity benefits to Vermonters with low
and moderate income and smooths existing income sensitivity benefit cliffs.
          * * * Commission on the Future of Public Education * * *
Sec. 2. 2024 Acts and Resolves No. 183, Sec. 1 is amended to read:
   Sec. 1. THE COMMISSION ON THE FUTURE OF PUBLIC
           EDUCATION; REPORTS
   (a) Creation. There is hereby created the Commission on the Future of
Public Education in Vermont. The right to education is fundamental for the
success of Vermont’s children in a rapidly changing society and global
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marketplace as well as for the State’s own economic and social prosperity.
The Commission shall study the provision of education in Vermont and make
recommendations for a statewide vision for Vermont’s public education system
to ensure that all students are afforded substantially equal educational
opportunities in an efficient, sustainable, and stable education system. The
Commission shall also make recommendations for the strategic policy changes
necessary to make Vermont’s educational vision a reality for all Vermont
students.
   (b) Membership. The Commission shall be composed of the following
members and, to the extent possible, the members shall represent the State’s
geographic, gender, racial, and ethnic diversity:
      (1) the Secretary of Education or designee;
      (2) the Chair of the State Board of Education or designee;
      (3) the Tax Commissioner or designee;
      (4) one current member of the House of Representatives, appointed by
the Speaker of the House;
      (5) one current member of the Senate, appointed by the Committee on
Committees;
      (6) one representative from the Vermont School Boards Association
(VSBA), appointed by the VSBA Executive Director;
      (7) one representative from the Vermont Principals’ Association (VPA),
appointed by the VPA Executive Director;
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      (8) one representative from the Vermont Superintendents Association
(VSA), appointed by the VSA Executive Director;
      (9) one representative from the Vermont National Education
Association (VTNEA), appointed by the VTNEA Executive Director;
      (10) one representative from the Vermont Association of School
Business Officials (VASBO) with experience in school construction projects,
appointed by the President of VASBO;
      (11) the Chair of the Census-Based Funding Advisory Group, created
under 2018 Acts and Resolves No. 173;
      (12) the Executive Director of the Vermont Rural Education
Collaborative; and
      (13) one representative from the Vermont Independent Schools
Association (VISA), appointed by the President of VISA.
   (c) Steering group. On or before July 1, 2024, the Speaker of the House
shall appoint two members of the Commission, the Committee on Committees
shall appoint two members of the Commission, and the Governor shall appoint
two members of the Commission to serve as members of a steering group. The
steering group shall provide leadership to the Commission and shall work with
a consultant or consultants to analyze the issues, challenges, and opportunities
facing Vermont’s public education system, as well as develop and propose a
work plan to formalize the process through which the Commission shall seek
to achieve its final recommendations. The formal work plan shall be approved
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by a majority of the Commission members. The steering group shall form a
subcommittee of the Commission to address education finance topics in greater
depth and may form one or more additional subcommittees of the Commission
to address other key topics in greater depth, as necessary. The steering group
may appoint non-Commission members to the education finance
subcommittee. All other subcommittees shall be composed solely of
Commission members.
   (d) Collaboration and information review.
      (1) The Commission shall may seek input from and collaborate with key
stakeholders, as directed by the steering group. At a minimum, the
Commission shall consult with:
         (A) the Department of Mental Health;
         (B) the Department of Labor;
         (C) the President of the University of Vermont or designee;
         (D) the Chancellor of the Vermont State Colleges Corporation or
designee;
         (E) a representative from the Prekindergarten Education
Implementation Committee;
         (F) the Office of Racial Equity;
         (G) a representative with expertise in the Community Schools model
in Vermont;
         (H) the Vermont Youth Council;
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         (I) the Commission on Public School Employee Health Benefits; and
         (J) an organization committed to ensuring equal representation and
educational equity.
      (2) The Commission shall also review and take into consideration
existing educational laws and policy, including legislative reports the
Commission deems relevant to its work and, at a minimum, 2015 Acts and
Resolves No. 46, 2018 Acts and Resolves No. 173, 2022 Acts and Resolves
No. 127, and 2023 Acts and Resolves No. 76.
   (e) Duties of the Commission. The Commission shall study Vermont’s
public education system and make recommendations to ensure all students are
afforded quality educational opportunities in an efficient, sustainable, and
equitable education system that will enable students to achieve the highest
academic outcomes. The result of the Commission’s work shall be a
recommendation for a statewide vision for Vermont’s public education system,
with recommendations for the policy changes necessary to make Vermont’s
educational vision a reality recommendations for what roles, functions, or
decisions should be a function of local control and what roles, functions, or
decisions should be a function of control at the State level. In creating and
making its recommendations, the Commission shall engage in the following:
      (1) Public engagement. The Commission shall conduct not fewer than
14 public meetings to inform the work required under this section. At least one
meeting of the Commission as a whole or a subcommittee of the Commission
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shall be held in each county. The Commission shall publish a draft of its final
recommendations on or before October 1, 2025, solicit public feedback, and
incorporate such feedback into its final recommendations. When submitting its
final recommendations to the General Assembly, the Commission shall include
all public feedback received as an addendum to its final report. The public
feedback process shall include:
         (A) a minimum 30-day public comment period, during which time
the Commission shall accept written comments from the public and
stakeholders; and
         (B) a public outreach plan that maximizes public engagement and
includes notice of the availability of language assistance services when
requested.
      (2) Policy considerations. In developing its recommendations, the
Commission shall consider and prioritize the following topics The
Commission’s work shall include recommendations for:
         (A) Governance, resources, and administration. The Commission
shall study and make recommendations regarding education governance at the
State level, including the role of the Agency of Education in the provision of
services and support for the education system. Recommendations under this
subdivision (A) shall include, at a minimum, the following:
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            (i) whether changes need to be made to the structure of the
Agency of Education, including whether it better serves the recommended
education vision of the State as an agency or a department;
            (ii) what are the staffing needs of the Agency of Education;
            (iii) whether changes need to be made to the composition, role,
and function of the State Board of Education to better serve the recommended
education vision of the State;
            (iv) what roles, functions, or decisions should be a function of
local control and what roles, functions, or decisions should be a function of
control at the State level; and
            (v) the effective integration of career and technical education in
the recommended education vision of the State. necessary updates to the roles
and responsibilities of school district boards and the electorate, including
amendments to 16 V.S.A. §§ 562 and 563;
         (B) Physical size and footprint of the education system. The
Commission shall study and make recommendations regarding how the unique
geographical and socioeconomic needs of different communities should factor
into the provision of education in Vermont, taking into account and building
upon the recommendations of the State Aid to School Construction Working
Group. Recommendations under this subdivision (B) shall include, at a
minimum, the following:
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            (i) an analysis and recommendation for the most efficient and
effective number and location of school buildings, school districts, and
supervisory unions needed to achieve Vermont’s vision for education,
provided that if there is a recommendation for any change, the
recommendation shall include an implementation plan;
            (ii) an analysis of the capacity and ability to staff all public
schools with a qualified workforce, driven by data on class-size
recommendations;
            (iii) analysis of whether, and if so, how, collaboration with
Vermont’s postsecondary schools may support the development and retention
of a qualified educator workforce;
            (iv) an analysis of the current town tuition program and whether,
and if so, what, changes are necessary to meet Vermont’s vision for education,
including the legal and financial impact of funding independent schools and
other private institutions, including consideration of the following:
               (I) the role designation, under 16 V.S.A. § 827, should play in
the delivery of public education; and
               (II) the financial impact to the Education Fund of public dollars
being used in schools located outside Vermont; and
            (v) an analysis of the current use of private therapeutic schools in
the provision of special education services and whether, and if so, what,
changes are necessary to meet Vermont’s special education needs, including
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the legal and financial impact of funding private therapeutic schools. a process
for a community served by a school to have a voice in decisions regarding
school closures and recommendations for what that process shall entail; and
         (C) The role of public schools. The Commission shall study and
make recommendations regarding the role public schools should play in both
the provision of education and the social and emotional well-being of students.
Recommendations under this subdivision (C) shall include, at a minimum, the
following:
             (i) how public education in Vermont should be delivered;
             (ii) whether Vermont’s vision for public education shall include
the provision of wraparound supports and collocation of services;
             (iii) whether, and if so, how, collaboration with Vermont’s
postsecondary schools may support and strengthen the delivery of public
education; and
             (iv) what the consequences are for the Commission’s
recommendations regarding the role of public schools and other service
providers, including what the role of public schools means for staffing,
funding, and any other affected system, with the goal of most efficiently
utilizing State funds and services and maximizing federal funding a process
for monitoring implementation of this act in a manner that is transparent and
public facing.
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         (D) Education finance system. The Commission shall explore the
efficacy and potential equity gains of changes to the education finance system,
including weighted educational opportunity payments as a method to fund
public education. The Commission’s recommendations shall be intended to
result in an education funding system designed to afford substantially equal
access to a quality basic education for all Vermont students in accordance with
State v. Brigham, 166 Vt. 246 (1997). Recommendations under this
subdivision (D) shall include, at a minimum, the following:
            (i) allowable uses for the Education Fund that shall ensure
sustainable and equitable use of State funds;
            (ii) the method for setting tax rates to sustain allowable uses of the
Education Fund;
            (iii) whether, and if so, what, alternative funding models would
create a more affordable, sustainable, and equitable education finance system
in Vermont, including the consideration of a statutory, formal base amount of
per pupil education spending and whether school districts should be allowed to
spend above the base amount;
            (iv) adjustments to the excess spending threshold, including
recommendations that target specific types of spending;
            (v) the implementation of education spending caps on different
services, including administrative and support services and categorical aid;
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            (vi) how to strengthen the understanding and connection between
school budget votes and property tax bills;
            (vii) adjustments to the property tax credit thresholds to better
match need to the benefit;
            (viii) a system for ongoing monitoring of the Education Fund and
Vermont’s education finance system, to include consideration of a standing
Education Fund advisory committee;
            (ix) an analysis of the impact of healthcare costs on the Education
Fund, including recommendations for whether, and if so, what, changes need
to be made to contain costs; and
            (x) implementation details for any recommended changes to the
education funding system. [Repealed.]
         (E) Additional considerations. The Commission may consider any
other topic, factor, or issue that it deems relevant to its work and
recommendations.
   (f) Reports. The Commission shall prepare and submit to the General
Assembly the following:
      (1) a formal, written work plan, which shall include a communication
plan to maximize public engagement, on or before September 15, 2024;
      (2) a written report containing its preliminary findings and
recommendations, including short-term cost containment considerations for the
2025 legislative session, on or before December 15, 2024; and
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      (3) a written report containing its final findings and recommendations
for a statewide vision for Vermont’s public education system and the policy
changes necessary to make that educational vision a reality based on its
analysis of the governance topics contained in subdivisions (e)(2)(A)–(C) of
this section, on or before December 1, 2025; and
      (4) proposed legislative language to advance any recommendations for
the education funding system on or before December 15, 2025.
   (g) Assistance. The Agency of Education shall contract with one or more
independent consultants or facilitators to provide technical and legal assistance
to the Commission for the work required under this section. For the purposes
of scheduling meetings and providing administrative assistance, the
Commission shall have the assistance of the Agency of Education. The
Agency shall also provide the educational and financial data necessary to
facilitate the work of the Commission. School districts shall comply with
requests from the Agency to assist in data collections.
   (h) Meetings.
      (1) The Secretary of Education shall call the first meeting of the
Commission to occur on or before July 15, 2024.
      (2) The Speaker of the House and the President Pro Tempore shall
jointly select a Commission chair.
      (3) A majority of the membership shall constitute a quorum.
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      (4) Meetings shall be conducted in accordance with Vermont’s Open
Meeting Law pursuant to 1 V.S.A. chapter 5, subchapter 2.
      (5) The Commission shall cease to exist on December 31, 2025.
   (i) Compensation and reimbursement. Members of the Commission shall
be entitled to per diem compensation and reimbursement of expenses as
permitted under 32 V.S.A. § 1010 for not more than 30 meetings, including
subcommittee meetings. These payments shall be made from monies
appropriated to the Agency of Education.
                    * * * School District Redistricting * * *
Sec. 3. SCHOOL DISTRICT REDISTRICTING TASK FORCE; REPORT
   (a) Creation. There is created the School District Redistricting Task Force
to recommend new school district boundaries and configurations to the
General Assembly.
   (b) Membership. The Task Force shall be composed of the following
members:
      (1) Nonlegislative members. There shall be five nonlegislative
members, all of whom shall have extensive experience working within the
Vermont public education system. Appointing authorities shall coordinate to
ensure that, to the extent possible, each of the five nonlegislative members
represents a different geographic region of the State.
         (A) Two members shall be appointed by the Speaker of the House,
one of whom shall be a retired or former Vermont superintendent of a
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supervisory union with multiple member school districts and one of whom
shall be either a retired or former Vermont school business manager or a
retired or former school board member.
         (B) Two members shall be appointed by the Committee on
Committees, one of whom shall be a retired or former Vermont superintendent
and one of whom shall be a retired or former Vermont school business
manager.
         (C) One member shall be appointed by the Governor, who shall be a
retired or former Vermont superintendent.
      (2) Legislative members. There shall be six legislative members.
         (A) Three members shall be current members of the House of
Representatives, not all from the same political party nor from the same school
district, who shall be appointed by the Speaker of the House.
         (B) Three members shall be current members of the Senate, not all
from the same political party nor from the same school district, who shall be
appointed by the Committee on Committees.
   (c) Powers and duties. In consultation with the Commission on the Future
of Public Education, the Task Force shall study and consider different
configurations for school district consolidation and propose not more than
three options for new school district boundaries. At least one boundary
proposal recommendation shall consider the use of supervisory unions and
supervisory districts, allow for the continuation of a tuitioning system that
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provides continued access to independent schools that have served geographic
areas that do not operate public schools for the grades served by the
independent schools, and to the extent practical, not separate geographic areas
that contain nonoperating school districts as such districts exist on July 1,
2025.
        (1) Proposed new school districts or supervisory unions and supervisory
districts shall have, to the extent practical, an average daily membership of not
fewer than approximately 4,000 and not more than 8,000 prekindergarten
through grade 12 students.
        (2) Proposed new school districts or supervisory unions and supervisory
districts shall also be, to the greatest extent possible, grand list and pupil-count
balanced, demographically equitable, logistically feasible, and create the least
amount of disruption to students as possible.
        (3) In creating the proposed districts, the Task Force shall consider the
following with the goal of increasing equitable access to educational
opportunity for all students:
           (A) current school district and town boundaries and other historic and
current community connections, including access to regional services for
students, such as designated agencies;
           (B) geographic barriers, including mountains and rivers;
           (C) population distribution;
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            (D) location, capacity, and the facility condition index score of
current school buildings;
            (E) transportation and employment patterns and practices;
            (F) grand list values accounting for the homestead exemption and
current education spending;
            (G) student demographics;
            (H) the debt, liabilities, and assets of current school districts;
            (I) staffing levels and salary scales;
            (J) opportunities to support local elementary schools, central middle
schools, and regional high schools, with the least disruption to students;
            (K) access to career and technical education (CTE) for all eligible
students;
            (L) the maximization of cost efficiencies;
            (M) the location of schools and CTE centers; and
            (N) any other factors the Task Force deems relevant.
   (d) Public input. The Task Force shall hold not fewer than two public
hearings to receive and consider feedback from members of the public
regarding school district consolidation and proposed boundaries and shall work
closely with the Commission on the Future of Public Education’s public
engagement process to maximize public input regarding the development of
the proposed new school district boundaries.
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   (e) Assistance. The Task Force shall have the administrative, technical,
and legal assistance of the Agency of Administration, the Agency of Digital
Services, Vermont Center for Geographic Information, and the Department of
Taxes. The Task Force shall retain the services of one or more independent
third parties to provide contracted facilitation resources or any other services
the Task Force deems necessary.
   (f) Report and maps. On or before December 1, 2025, the Task Force shall
submit a written report to the House Committees on Education and on
Government Operations and Military Affairs and the Senate Committees on
Education and on Government Operations with its proposals for new
consolidated school district boundaries. The report shall include how each
proposal meets the requirements contained in subdivisions (c)(1) and (2) of this
section, how the considerations in subdivision (c)(3) of this section factored
into each proposal, and the pros and cons of each proposal. Detailed maps
shall also be included with the report and the maps shall include the following
information, in addition to the proposed school district boundaries themselves:
      (1) average daily membership for each proposed school district for the
2023–2024 school year;
      (2) the member towns for each proposed school district;
      (3) the location of public schools and nontherapeutic approved
independent schools that are eligible to receive public tuition as of July 1,
2025, and the grades operated by each of those schools;
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      (4) the five-year facility condition index score for each school;
      (5) PCB testing score for each school;
      (6) the 10-year change in enrollment between 2014 and 2024 for each
school; and
      (7) the grand list value of each proposed school district.
   (g) Meetings.
      (1) The member appointed by the Governor shall call the first meeting
of the Task Force to occur on or before August 1, 2025.
      (2) The Task Force shall select co-chairs from among its members at the
first meeting, one a member of the House and the other a member of the
Senate.
      (3) A majority of the membership shall constitute a quorum.
      (4) The Task Force shall cease to exist on June 30, 2026.
   (h) Compensation and reimbursement. Members of the Task Force shall be
entitled to per diem compensation and reimbursement of expenses as permitted
under 32 V.S.A. § 1010 for not more than eight meetings. These payments
shall be made from monies appropriated to the Agency of Administration.
   (i) Appropriations.
      (1) The sum of $50,000.00 is appropriated to the Agency of
Administration from the General Fund in fiscal year 2026 for the purposes of
supporting the Task Force and the hiring of one or more facilitation consultants
pursuant to subsection (e) of this section.
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      (2) The sum of $100,000.00 is appropriated to the Agency of Digital
Services from the General Fund in fiscal year 2026 to cover costs associated
with supporting the Task Force, or, if necessary, for the purposes of hiring one
or more consultants to provide support to the Task Force.
      (3) The sum of $10,000.00 is appropriated to the Agency of
Administration from the General Fund in fiscal year 2026 for per diem
compensation and reimbursement of expenses for nonlegislative members of
the Task Force.
      (4) The sum of $10,000.00 is appropriated to the General Assembly
from the General Fund in fiscal year 2026 for per diem compensation and
reimbursement of expenses for legislative members of the Task Force.
           * * * School District Voting Ward Working Group * * *
Sec. 4. SCHOOL DISTRICT VOTING WARD WORKING GROUP;
         REPORT; MAPS
   (a) Creation. There is created the School District Voting Ward Working
Group to create voting district wards within the new school districts
contemplated by this act, to ensure school board membership is apportioned in
such a manner as to achieve substantially equal weighting of the votes of all
voters in the choice of school board members.
   (b) Membership. The Working Group shall be composed of the following
members who shall have substantial understanding of Vermont geography,
trade, travel, social interaction, and Vermont’s public education system:
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      (1) the Secretary of State or designee, who shall be the chair;
      (2) three members, who shall be appointed by the Vermont Municipal
Clerk Treasurer Association;
      (3) two members, appointed by the Vermont School Boards
Association; and
      (4) the Director of the Vermont Center for Geographic Information or
designee.
   (c) Powers and duties. On or before October 15, 2025, the Working Group
shall consult with the School District Redistricting Task Force created in Sec. 3
of this act to gain an understanding of the status of the work of the Task Force
and to determine whether the Task Force has one or more boundary proposals
ready for the Working Group to begin the work of creating voting wards.
Using the boundary proposals of the Task Force, the Working Group shall,
following the principles of apportionment followed by the legislative
apportionment board, make recommendations to the General Assembly to
achieve voting districts within each school district that are compact,
contiguous, and drawn to achieve substantially equal weighting of votes and
that meet the requirements of applicable State and federal law. If at any time
during the work of the Working Group, the General Assembly enacts new
school district boundaries, or it appears clear the General Assembly is focused
on only one proposal, the Working Group shall focus its work and
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recommendations to align with the work of the General Assembly. The
Working Group’s recommendations shall include:
      (1) the optimal number of school board members per school board to
maximize public representation and democratic input while maintaining
effective school board size; and
      (2) boundaries for school district voting wards within each school
district, with alternative options if necessary, including detailed maps clearly
and unambiguously delineating ward boundaries that respect current municipal
boundary lines.
   (d) Assistance. The Working Group shall have the administrative,
technical, and legal assistance of the Secretary of State’s office and the
technical assistance of the Agency of Digital Services, Vermont Center for
Geographic Information. The Working Group may contract for such expert
services as may be necessary to carry out its duties.
   (e) Meetings.
      (1) The Secretary of State shall call the first meeting of the Working
Group to occur on or before October 1, 2025.
      (2) The Secretary of State shall be the chair.
      (3) A majority of the membership shall constitute a quorum.
      (4) The Working Group shall cease to exist on June 30, 2026.
   (f) Compensation and reimbursement. Members of the Working Group
shall be entitled to per diem compensation and reimbursement of expenses as
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permitted under 32 V.S.A. § 1010 for not more than 10 meetings. These
payments shall be made from monies appropriated to the Secretary of State’s
office.
   (g) Appropriation for Working Group. The sum of $15,000.00 is
appropriated to the Secretary of State’s Office from the General Fund in fiscal
year 2026 for per diem compensation and reimbursement of expenses for
members of the Working Group.
   (h) Appropriation for voting ward creation. The sum of $200,000.00 is
appropriated from the General Fund to the Office of Legislative Counsel for
the contracting and software resources necessary to create school district
voting wards.
                       * * * Class Size Minimums * * *
Sec. 5. SCALE; INTENT
   It is the intent of the General Assembly to transform education in Vermont
by leveraging attainable and research-based scale to increase equity of
opportunity and promote efficiency and affordability.
Sec. 6. 16 V.S.A. § 165 is amended to read:
§ 165. EDUCATION QUALITY STANDARDS; EQUAL EDUCATIONAL
          OPPORTUNITIES; INDEPENDENT SCHOOL MEETING
          EDUCATION QUALITY STANDARDS
   (a) In order to carry out Vermont’s policy that all Vermont children will be
afforded educational opportunities that are substantially equal in quality, each
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Vermont public school, including each career technical center, shall meet the
following education quality standards:
                                        ***
      (9) The school complies with average class size minimum standards;
provided, however, that when class size minimums apply to content areas, an
individual class may be smaller than the minimum average. As used in this
subdivision, “content area” means a group of courses within a specific
licensing endorsement area.
         (A) Class size standards.
               (i) The average class size minimum for first-grade classes shall be
10 students.
               (ii) The average class size minimum for grades two through five
shall be 12 students.
               (iii) The average class size minimum for grades six through eight
in all required content areas shall be 15 students.
               (iv) The average class size minimum for grades nine through 12 in
all required content area classes shall be 18 students.
               (v) Multiage classrooms for grades kindergarten through eight
shall be limited to two grade levels per classroom.
               (vi) Prekindergarten, kindergarten, career and technical education,
flexible pathways, terminal courses, advanced placement courses, courses that
require specialized equipment, and driver’s education classes shall be excluded
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from the class size minimum requirements in this subdivision (9). Small group
services for the purpose of providing special education, supplemental or
targeted academic intervention, or English learner instruction shall also be
excluded from the class size minimum requirements in this subdivision (9).
            (vii) Class sizes shall not exceed the maximum occupancy limits
established by local and State fire codes, including egress and safety
requirements.
         (B) Waivers. If a school board determines that it operates a school
that is unable to comply with the class size minimum standards due to
geographic isolation, or a school has developed an implementation plan to
meet the standards contained in this subdivision (9) that may include
consolidation or merger, the school board may ask the State Board of
Education to grant it waiver from this subdivision (9). The State Board shall
define what qualifies as geographic isolation in its rules adopted pursuant to
subdivision (a)(3) of this section. The State Board’s decision shall be final.
         (C) State Board action. If the Secretary determines that a school is
not meeting the class size minimum standards set forth in this subdivision (9)
over the course of three consecutive school years, the Secretary may
recommend to the State Board one or more of the actions listed in subsection
(b) of this section, regardless of whether the school is meeting all other
education quality standards. The State Board shall then follow the procedure
of subsection (c) of this section.
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   (b) Annually, the Secretary shall determine whether students in each
Vermont public school are provided educational opportunities substantially
equal to those provided in other public schools. If the Secretary determines
that a school is not meeting the education quality standards listed in subsection
(a) of this section or that the school is making insufficient progress in
improving student performance in relation to the standards for student
performance set forth in subdivision 164(9) of this title, he or she the Secretary
shall describe in writing actions that a district must take in order to meet either
or both sets of standards and shall provide technical assistance to the school. If
the school fails to meet the standards or make sufficient progress within two
years of following the determination, the Secretary shall recommend to the
State Board one or more of the following actions:
      (1) the Agency continue to provide technical assistance for one more
cycle of review;
      (2) the State Board adjust supervisory union boundaries or
responsibilities of the superintendency pursuant to section 261 of this title;
      (3) the Secretary assume administrative control of an individual school,
school district, or supervisory union, including budgetary control to ensure
sound financial practices, only to the extent necessary to correct deficiencies;
      (4) the State Board close an individual school or schools and require that
the school district pay tuition to another public school or an approved
independent school pursuant to chapter 21 of this title; or
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      (5) the State Board require two or more school districts to consolidate
their governance structures.
   (c) The State Board, after offering the school board an opportunity for a
hearing, shall either dismiss the Secretary’s recommendation or order that one
or more of the actions listed in subsection (b) of this section be taken. The
action ordered by the State Board shall be the least intrusive consistent with the
need to provide students attending the school substantially equal educational
opportunities. A school board aggrieved by an order of the State Board may
appeal the order in accordance with the Rules of Civil Procedure.
                                      ***
   (e) If the Secretary determines at any time that the failure of a school to
meet the education quality standards listed in subsection (a) of this section is
severe or pervasive, potentially results in physical or emotional harm to
students or significant deprivation of equal education opportunities, and the
school has either unreasonably refused to remedy the problem or its efforts
have proved ineffective, he or she the Secretary may recommend to the State
Board one or more of the actions listed in subsection (b) of this section. The
State Board shall then follow the procedure of subsection (c) of this section.
                                      ***
Sec. 7. FAILURE TO COMPLY WITH EDUCATION QUALITY
         STANDARDS; STATE BOARD ACTION
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   Notwithstanding 16 V.S.A. § 165(b)(4) and (5) and any other provision of
law to the contrary, the State Board shall be prohibited from ordering school
district consolidation or school consolidation if a school fails to comply with
class size minimum education quality standards and the resulting consolidation
would result in school construction costs in excess of the applicable district’s
capital reserve account until the General Assembly establishes new school
district boundaries and takes further action regarding the consequences for
failure to meet education quality standards.
            * * * Agency and State Board Rules and Reports * * *
Sec. 8. STATE BOARD OF EDUCATION; RULES; REPORT
   (a) Rules.
      (1) The State Board of Education shall initiate rulemaking to amend the
Education Quality Standards rule 2000 series, Agency of Education, Education
Quality Standards (22-000-003), pursuant to 3 V.S.A. chapter 25:
         (A) on or before August 1, 2026, to ensure compliance with the class
size minimum standards set pursuant to 16 V.S.A. § 165(a)(9); and
         (B) on or before July 1, 2027, to adopt standards for statewide
graduation requirements based on standards adopted by the State Board and
recommendations from the Agency of Education, which shall take effect
beginning in the 2027–2028 school year for the graduating class of 2031 and
every graduating class thereafter.
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      (2) On or before August 1, 2026, the State Board of Education shall
initiate rulemaking to amend the approved independent school rule 2200 series,
Agency of Education, Independent School Program Approval (22-000-004),
pursuant to 3 V.S.A. chapter 25, to require approved independent schools that
intend to accept public tuition to comply with the class size minimum
standards set pursuant to 16 V.S.A. § 165(a)(9). The amendments shall also
create a process for review by the State Board for failure to meet the class size
minimum requirements and the corresponding actions the Board may take for
such noncompliance; provided, however, that the Board shall provide an
approved independent school a substantially similar opportunity to come into
compliance with class size minimum standards that it would provide to a
public school.
   (b) Report. On or before December 1, 2025, the State Board of Education
shall submit a written report to the House and Senate Committees on
Education with proposed standards for schools to be deemed “small by
necessity” or “sparse by necessity.”
Sec. 9. AGENCY OF EDUCATION; SCHOOL CALENDAR;
         GRADUATION REQUIREMENTS; REPORT
   (a) Statewide graduation requirements. On or before January 1, 2026, the
Agency of Education shall recommend to the State Board of Education
standards for statewide graduation requirements based on standards adopted by
the State Board.
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   (b) Statewide school calendar.
      (1) On or before January 15, 2027, the Secretary of Education shall
develop and publish a statewide calendar for the public schools of the State,
including career and technical centers, that shall be in effect in the
2028–2029 academic year and after.
      (2) On or before January 15, 2027, the Secretary shall present to the
House and Senate Committees on Education a list of the statutory amendments
necessary to effect the intent of this subsection.
   (c) Report. On or before December 1, 2025, the Agency of Education shall
submit a written report and recommended legislative language, as applicable,
to the House and Senate Committees on Education with the following:
      (1) In consultation with educators and administrators, a proposed
implementation plan for statewide financial data and student information
systems.
      (2) Recommendations for a school construction division within the
Agency of Education, including position descriptions and job duties for each
position within the division, a detailed description of the assistance the division
would provide to the field, and the overall role the Agency would play within a
State aid to school construction program.
      (3) A progress report regarding the development of clear, unambiguous
guidance that would be provided to school officials and school board members
regarding the business processes and transactions that would need to occur to
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facilitate school district mergers into larger, consolidated school districts,
including the merging of data systems, asset and liability transfers, and how to
address collective bargaining agreements for both educators and staff. The
report shall include a detailed description of how the Agency will provide
support and consolidation assistance to the field in each of these areas and an
estimate of the costs associated with such work.
      (4) In consultation with superintendents, directors of therapeutic
independent schools, special education directors, and, in the opinion of the
Agency, other experts, recommendations for the need for cooperative
education services and the oversight of therapeutic schools within the school
governance framework both at a State and local level.
Sec. 10. STATE BOARD OF EDUCATION; REVIEW OF RULES;
         APPROPRIATION
   (a) The State Board of Education shall review each rule series the State
Board is responsible for and make a determination as to the continuing need
for, appropriateness of, or need for updating of said rules. On or before
December 1, 2026, the State Board of Education shall submit a written report
to the House and Senate Committees on Education with its recommendation
for rules that are no longer needed and a plan to update rules that are still
necessary, including the order in which the Board proposes to update the rules
and any associated costs or staffing needs.
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   (b) The sum of $200,000.00 is appropriated from the General Fund to the
Agency of Education in fiscal year 2026 to provide the State Board of
Education with the contracted resources necessary to review and update the
Board’s rules.
Sec. 11. [Deleted.]
                  * * * State Aid to School Construction * * *
Sec. 12. 16 V.S.A. § 3440 is added to read:
§ 3440. STATEMENT OF POLICY
   It is the intent of this chapter to encourage the efficient use of public funds
to modernize school infrastructure in alignment with current educational needs.
School construction projects supported by this chapter should be developed
taking consideration of standards of quality for public schools under section
165 of this title and prioritizing cost, geographic accessibility, 21st century
education facilities standards, statewide enrollment trends, and capacity and
scale that support best educational practices. Further, it is the intent of this
chapter to encourage the use of existing infrastructure to meet the needs of
Vermont students. Joint construction projects between two or more school
districts and consolidation of buildings within a district where feasible and
educationally appropriate are encouraged.
Sec. 13. 16 V.S.A. § 3442 is added to read:
§ 3442. STATE AID FOR SCHOOL CONSTRUCTION PROGRAM
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   The Agency of Education shall be responsible for implementing the State
Aid for School Construction Program according to the provisions of this
chapter. The Agency shall be responsible for:
      (1) reviewing all preliminary applications for State school construction
aid and issuing an approval or denial in accordance with section 3445 of this
chapter;
      (2) adopting rules pursuant to 3 V.S.A. chapter 25 pertaining to school
construction and capital outlay, including rules to specify a point prioritization
methodology and a bonus incentive structure aligned with the legislative intent
expressed in section 3440 of this title;
      (3) including as part of its budget submitted to the Governor pursuant to
subdivision 212(21) of this title its annual school construction funding request;
      (4) developing a prequalification and review process for project delivery
consultants and architecture and engineering firms specializing in
prekindergarten through grade 12 school design, renovation, or construction
and maintaining a list of such prequalified firms and consultants;
      (5) providing technical assistance and guidance to school districts and
supervisory unions on all phases of school capital projects;
      (6) providing technical advice and assistance, training, and education to
school districts, supervisory unions, general contractors, subcontractors,
construction or project managers, designers, and other vendors in the planning,
maintenance, and establishment of school facility space;
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      (7) maintaining a current list of school construction projects that have
received preliminary approval, projects that have received final approval, and
the priority points awarded to each project;
      (8) collecting, maintaining, and making publicly available quarterly
progress reports of all ongoing school construction projects that shall include,
at a minimum, the costs of the project and the time schedule of the project;
      (9) recommending policies and procedures designed to reduce
borrowing for school construction programs at both State and local levels;
      (10) conducting a needs survey at least every five years to ascertain the
capital construction, reconstruction, maintenance, and other capital needs for
all public schools and maintaining such data in a publicly accessible format;
      (11) developing a formal enrollment projection model or using
projection models already available;
      (12) encouraging school districts and supervisory unions to investigate
opportunities for the maximum utilization of space in and around the district or
supervisory union;
      (13) collecting and maintaining a clearinghouse of prototypical school
plans, as appropriate, that may be consulted by eligible applicants;
      (14) retaining the services of consultants, as necessary, to effectuate the
roles and responsibilities listed within this section; and
      (15) notwithstanding 2 V.S.A. § 20(d), annually on or before December
15, submitting a written report to the General Assembly regarding the status
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and implementation of the State Aid for School Construction Program,
including the data required to be collected pursuant to this section.
Sec. 14. 16 V.S.A. § 3443 is added to read:
§ 3443. STATE AID FOR SCHOOL CONSTRUCTION ADVISORY
         BOARD
   (a) Creation. There is hereby created the State Aid for School Construction
Advisory Board, which shall advise the Agency on the implementation of the
State Aid for School Construction Program in accordance with the provisions
of this chapter, including the adoption of rules, setting of statewide priorities,
criteria for project approval, and recommendations for project approval and
prioritization.
   (b) Membership.
      (1) Composition. The Board shall be composed of the following eight
members:
         (A) four members who shall serve as ex officio members:
             (i) the State Treasurer or designee;
             (ii) the Commissioner of Buildings and General Services or
designee;
             (iii) the Executive Director of the Vermont Bond Bank or
designee; and
             (iv) the Chair of the State Board of Education or designee; and
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          (B) four members, none of whom shall be a current member of the
General Assembly, who shall serve four-year terms as follows:
             (i) two members, appointed by the Speaker of the House, each of
whom shall have expertise in education or construction, real estate, or finance
and one of whom shall represent a supervisory union; and
             (ii) two members, appointed by the Committee on Committees,
each of whom shall have expertise in education or construction, real estate, or
finance and one of whom shall be an educator.
        (2) Members with four-year terms.
          (A) A member with a term limit shall serve a term of four years and
until a successor is appointed. A term shall begin on January 1 of the year of
appointment and run through December 31 of the last year of the term. Terms
of these members shall be staggered so that not all terms expire at the same
time.
          (B) A vacancy created before the expiration of a term shall be filled
in the same manner as the original appointment for the unexpired portion of the
term.
          (C) A member with a term limit shall not serve more than two
consecutive terms. A member appointed to fill a vacancy created before the
expiration of a term shall not be deemed to have served a term for the purpose
of this subdivision (C).
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   (c) Duties. The Board shall advise the Agency on the implementation of
the State Aid for School Construction Program in accordance with the
provisions of this chapter, including:
      (1) rules pertaining to school construction and capital outlay;
      (2) project priorities;
      (3) proposed legislation the Board deems desirable or necessary related
to the State Aid for School Construction Program, the provisions of this
chapter, and any related laws;
      (4) policies and procedures designed to reduce borrowing for school
construction programs at both State and local levels;
      (5) development of a formal enrollment projection model or the
consideration of using projection models already available;
      (6) processes and procedures necessary to apply for, receive, administer,
and comply with the conditions and requirements of any grant, gift,
appropriation of property, services, or monies;
      (7) the collection and maintenance of a clearinghouse of prototypical
school plans that may be consulted by eligible applicants and recommended
incentives to utilize such prototypes;
      (8) the determination of eligible cost components of projects for funding
or reimbursement, including partial or full eligibility for project components
for which the benefit is shared between the school and other municipal and
community entities;
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      (9) development of a long-term vision for a statewide capital plan in
accordance with needs and projected funding;
      (10) collection and maintenance of data on all public school facilities in
the State, including information on size, usage, enrollment, available facility
space, and maintenance;
      (11) advising districts on the use of a needs survey to ascertain the
capital construction, reconstruction, maintenance, and other capital needs for
schools across the State; and
      (12) encouraging school districts and supervisory unions to investigate
opportunities for the maximum utilization of space in and around the district or
supervisory union.
   (d) Meetings.
      (1) The Chair of the State Board of Education shall call the first meeting
of the Board to occur on or before September 1, 2025.
      (2) The Board shall select a chair from among its members at the first
meeting.
      (3) A majority of the membership shall constitute a quorum.
      (4) The Board shall meet not more than six times per year.
   (e) Assistance. The Board shall have the administrative, technical, and
legal assistance of the Agency of Education.
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   (f) Compensation and reimbursement. Members of the Board shall be
entitled to per diem compensation and reimbursement of expenses as permitted
under 32 V.S.A. § 1010 for not more than six meetings per year.
   (g) Report. On or before December 15, 2025, the Board shall submit a
written report to the House Committees on Education and on Ways and Means
and the Senate Committees on Education and on Finance on recommendations
for addressing the transfer of any debt obligations from current school districts
to future school districts as contemplated by Vermont’s education
transformation.
Sec. 15. PROSPECTIVE REPEAL OF STATE AID FOR SCHOOL
              CONSTRUCTION ADVISORY BOARD
   16 V.S.A. § 3443 (State Aid for School Construction Advisory Board) is
repealed on July 1, 2035.
Sec. 16. 16 V.S.A. § 3444 is added to read:
§ 3444. SCHOOL CONSTRUCTION AID SPECIAL FUND
   (a) Creation. There is created the School Construction Aid Special Fund,
to be administered by the Agency of Education. Monies in the Fund shall be
used for the purposes of:
       (1) awarding aid to school construction projects under section 3445 of
this title;
       (2) awarding grants through the Facilities Master Plan Grant Program
established in section 3441 of this title;
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      (3) funding administrative costs of the State Aid for School
Construction Program; and
      (4) awarding emergency aid under section 3445 of this title.
   (b) Funds. The Fund shall consist of:
      (1) any amounts transferred or appropriated to it by the General
Assembly; and
      (2) any interest earned by the Fund.
Sec. 17. 16 V.S.A. § 3445 is added to read:
§ 3445. APPROVAL AND FUNDING OF SCHOOL CONSTRUCTION
         PROJECTS
   (a) Construction aid.
      (1) Preliminary application for construction aid. A school district
eligible for assistance under section 3447 of this title that intends to construct
or purchase a new school, or make extensive additions or alterations to its
existing school, and desires to avail itself of State school construction aid shall
submit a written preliminary application to the Secretary. A preliminary
application shall include information required by the Agency by rule and shall
specify the need for and purpose of the project.
      (2) Approval of preliminary application.
         (A) When reviewing a preliminary application for approval, the
Secretary shall consider:
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            (i) regional educational opportunities and needs, including school
building capacities across school district boundaries, and available
infrastructure in neighboring communities;
            (ii) economic efficiencies;
            (iii) the suitability of an existing school building to continue to
meet educational needs; and
            (iv) statewide educational initiatives.
         (B) The Secretary may approve a preliminary application if:
            (i)(I) the project or part of the project fulfills a need occasioned
by:
                   (aa) conditions that threaten the health or safety of students
or employees;
                   (bb) facilities that are inadequate to provide programs
required by State or federal law or regulation;
                   (cc) excessive energy use resulting from the design of a
building or reliance on fossil fuels or electric space heat; or
                   (dd) deterioration of an existing building; or
                (II) the project results in consolidation of two or more school
buildings and will serve the educational needs of students in a more cost-
effective and educationally appropriate manner as compared to individual
projects constructed separately;
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             (ii) the need addressed by the project cannot reasonably be met by
another means;
             (iii) the proposed type, kind, quality, size, and estimated cost of
the project are suitable for the proposed curriculum and meet all legal
standards;
             (iv) the applicant achieves the level of “proficiency” in the school
district quality standards regarding facilities management adopted by rule by
the Agency; and
             (v) the applicant has completed a facilities master planning
process that:
                (I) engages robust community involvement;
                (II) considers regional solutions;
                (III) evaluates environmental contaminants; and
                (IV) produces a facilities master plan that unites the applicant’s
vision statement, educational needs, enrollment projections, renovation needs,
and construction projects.
      (3) Priorities. Following approval of a preliminary application and
provided that the district has voted funds or authorized a bond for the total
estimated cost of a project, the Agency, with the advice of the State Aid for
School Construction Advisory Board, shall assign points to the project as
prescribed by rule of the Agency so that the project can be placed on a priority
list based on the number of points received.
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      (4) Request for legislative appropriation. The Agency shall submit its
annual school construction funding request to the Governor as part of its
budget pursuant to subdivision 212(21) of this title. Following submission of
the Governor’s recommended budget to the General Assembly pursuant to
32 V.S.A. § 306, the House Committee on Education and the Senate
Committee on Education shall recommend a total school construction
appropriation for the next fiscal year to the General Assembly.
      (5) Final approval for construction aid.
         (A) Unless approved by the Secretary for good cause in advance of
commencement of construction, a school district shall not begin construction
before the Secretary approves a final application. A school district may submit
a written final application to the Secretary at any time following approval of a
preliminary application.
         (B) The Secretary may approve a final application for a project
provided that:
            (i) the project has received preliminary approval;
            (ii) the district has voted funds or authorized a bond for the total
estimated cost of the project;
            (iii) the district has made arrangements for project construction
supervision by persons competent in the building trades;
            (iv) the district has provided for construction financing of the
project during a period prescribed by the Agency;
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               (v) the project has otherwise met the requirements of this chapter;
               (vi) if the proposed project includes a playground, the project
includes a requirement that the design and construction of playground
equipment follow the guidelines set forth in the U.S. Consumer Product Safety
Commission Handbook for Public Playground Safety; and
               (vii) if the total estimated cost of the proposed project is less than
$50,000.00, no performance bond or irrevocable letter of credit shall be
required.
            (C) The Secretary may provide that a grant for a high school project
is conditioned upon the agreement of the recipient to provide high school
instruction for any high school pupil living in an area prescribed by the Agency
who may elect to attend the school.
            (D) A district may begin construction upon receipt of final approval.
However, a district shall not be reimbursed for debt incurred due to borrowing
of funds in anticipation of aid under this section.
      (6) Award of construction aid.
            (A) The base amount of an award shall be 20 percent of the eligible
debt service cost of a project. Projects are eligible for additional bonus
incentives as specified in rule for up to an additional 20 percent of the eligible
debt service cost. Amounts shall be awarded annually and are subject to an
annual appropriation for the purposes of the program.
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           (B) As used in subdivision (A) of this subdivision (6), “eligible debt
service cost” of a project means the product of the lifetime cost of the bond
authorized for the project and the ratio of the approved cost of a project to the
total cost of the project.
   (b) Emergency aid. Notwithstanding any other provision of this section,
the Secretary may grant aid for a project the Secretary deems to be an
emergency in the amount of 30 percent of eligible project costs, up to a
maximum eligible total project cost of $300,000.00.
Sec. 18. 16 V.S.A. § 3446 is added to read:
§ 3446. APPEAL
   Any municipal corporation as defined in section 3447 of this title aggrieved
by an order, allocation, or award of the Agency of Education may, within
30 days, appeal to the Superior Court in the county in which the project is
located.
Sec. 19. TRANSFER OF RULEMAKING AUTHORITY; TRANSFER OF
           RULES
   (a) The statutory authority to adopt rules by the State Board of Education
pertaining to school construction and capital outlay adopted under 16 V.S.A.
§ 3448(e) and 3 V.S.A. chapter 25 is transferred from the State Board of
Education to the Agency of Education.
   (b) All rules pertaining to school construction and capital outlay adopted by
the State Board of Education under 3 V.S.A. chapter 25 prior to July 1, 2026
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shall be deemed the rules of the Agency of Education and remain in effect until
amended or repealed by the Agency of Education pursuant to 3 V.S.A. chapter
25.
   (c) The Agency of Education shall provide notice of the transfer to the
Secretary of State and the Legislative Committee on Administrative Rules in
accordance with 3 V.S.A. § 848(d)(2).
Sec. 20. REPEALS
   (a) 16 V.S.A. § 3448 (approval of funding of school construction projects;
renewable energy) is repealed on July 1, 2026.
   (b) 16 V.S.A. § 3448a (appeal) is repealed on July 1, 2026.
              * * * Schools Eligible to Receive Public Tuition * * *
Sec. 21. 16 V.S.A. § 828 is amended to read:
§ 828. TUITION TO APPROVED SCHOOLS; AGE; APPEAL
   (a) A school district shall not pay the tuition of a student except to:
        (1) a public school, located in Vermont;
        (2) an approved independent school, that:
          (A) is located in Vermont;
          (B) is approved under section 166 of this title on or before July 1,
2025;
          (C) is located within either:
             (i) a supervisory district that does not operate a public school for
some or all grades as of July 1, 2024; or
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             (ii) a supervisory union with one or more member school districts
that does not operate a public school for some or all grades as of July 1, 2024;
          (D) had at least 25 percent of its student enrollment composed of
students attending on a district-funded tuition basis pursuant to chapter 21 of
this title during the 2023–2024 school year; and
          (E) complies with the minimum class size requirements contained in
subdivision 165(a)(9) of this title and State Board rule; provided, however, that
if a school is unable to comply with the class size minimum standards due to
geographic isolation or a school has developed an implementation plan to meet
the class size minimum requirements, the school may ask the State Board to
grant it a waiver from this subdivision (E), which decision shall be final;
       (3) an independent school meeting education quality standards,;
       (4) a tutorial program approved by the State Board,;
       (5) an approved education program, or;
       (6) an independent school in another state or country approved under the
laws of that state or country, that complies with the reporting requirement
under subsection 4010(c) of this title, a public school located in another state;
or
       (7) a therapeutic approved independent school located in Vermont or
another state or country that is approved under the laws of that state or country.
     (b) nor shall payment Payment of tuition on behalf of a person shall not be
denied on account of age.
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   (c) Unless otherwise provided, a person who is aggrieved by a decision of a
school board relating to eligibility for tuition payments, the amount of tuition
payable, or the school the person may attend, may appeal to the State Board
and its decision shall be final.
   (d) As used in this section, “therapeutic approved independent school”
means an approved independent school that limits enrollment for publicly
funded students residing in Vermont to students who are on an individualized
education program or plan under Section 504 of the Rehabilitation Act of
1973, 29 U.S.C. § 794, or who are enrolled pursuant to a written agreement
between a local education agency and the school or pursuant to a court order.
Sec. 22. TUITION TRANSITION
   A school district that pays tuition pursuant to the provisions of 16 V.S.A.
chapter 21 in effect on June 30, 2025 shall continue to pay tuition on behalf of
a resident student enrolled for the 2024–2025 school year in or who has been
accepted for enrollment for the 2025–2026 school year by an approved
independent school subject to the provisions of 16 V.S.A. § 828 in effect on
June 30, 2025, until such time as the student graduates from that school.
                       * * * State-Level Governance * * *
Sec. 23. STATE-LEVEL GOVERNANCE; INTENT
   It is the intent of the General Assembly to consolidate structures and
systems that are foundational to the administration of education and to ensure
that the State Board of Education is the independent, transparent, and public
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facing body for public education and to ensure the Board maintains its ability
to provide an important outlet for the public to engage in the rulemaking
process and regularly provide public comment regarding the state of
Vermont’s education system.
Sec. 24. 16 V.S.A. § 161 is amended to read:
§ 161. STATE BOARD OF EDUCATION; APPOINTMENT OF
         MEMBERS; TERM; VACANCY
   The State Board shall consist of ten 10 members. Two of the members shall
be secondary students, one of whom shall be a full member and the other of
whom shall be a junior member who may not vote. All Eight members,
including the two student members, shall be appointed by the Governor with
the advice and consent of the Senate. One member shall be appointed by the
Speaker of the House and one member shall be appointed by the Senate
Committee on Committees. In the appointment of the nonstudent members,
priority shall be given to the selection of persons with a demonstrated
commitment to ensuring quality education for Vermont students. To the extent
possible, the members shall represent the State’s geographic, gender, racial,
and ethnic diversity. The Secretary shall serve on the State Board as a
nonvoting member.
      (1) Upon the expiration of the respective terms of those members of the
Board previously appointed, excluding the student members, the Governor
appointing authority that made the initial appointment to the expired term
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shall, biennially in the month of February with the advice and consent of the
Senate, as applicable, appoint members for terms of six years. The terms shall
begin March 1 of the year in which the appointments are made. A member
serving a term of six years shall not be eligible for reappointment for
successive terms.
         (2) In the event of any vacancy occurring in the membership of the
Board, the Governor appointing authority that made the initial appointment to
the vacated term shall fill the vacancy with a qualified person whose
appointment shall be for the unexpired portion of the term.
         (3) Biennially, the Board shall choose a member of the Board to be its
chair.
         (4) Annually, using an application process that is open and accessible to
all eligible students, the Governor shall appoint a Vermont secondary school
student who will continue to be a secondary student for at least two years
following taking office, to serve on the State Board for two years, beginning on
July 1 of the year of appointment. The student member shall not vote during
the first year and shall be a full and voting member during the second year of
his or her the student’s term.
Sec. 25. TRANSITION PERIOD APPOINTMENTS; STATE BOARD OF
            EDUCATION
   (a) Members currently serving on the State Board of Education may
continue to serve for the duration of the term to which they were appointed.
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   (b) Beginning on July 1, 2025, as terms of currently serving members
expire, appointments of successors shall be made in accordance with the
considerations and appointment authority contained in 16 V.S.A. § 161.
      (1) The Speaker of the House shall make the first appointment to a
vacant or expired seat that occurs after July 1, 2025 and shall make any
subsequent appointments to fill the vacated or expired term for that same seat
after the initial transition period appointment.
      (2) The Senate Committee on Committees shall make the second
appointment to a vacant or expired seat that occurs after July 1, 2025 and shall
make any subsequent appointments to fill the vacated or expired term for that
same seat after the initial transition period appointment.
      (3) The Governor shall make the third appointment, with the advice and
consent of the Senate, to a vacant or expired seat that occurs after July 1, 2025
and shall make any subsequent appointments to fill the vacated or expired term
for that same seat after the initial transition period appointment.
   (c) Once the first three appointments after July 1, 2025 are made in
accordance with subsection (b) of this section, the Governor shall make all
subsequent appointments for the remaining five nonstudent seats, with the
advice and consent of the Senate, in accordance with 16 V.S.A. § 161.
Sec. 26. 16 V.S.A. § 162 is amended to read:
§ 162. REMOVAL OF BOARD MEMBERS
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   After notice and hearing, the Governor may remove a member of the State
Board for incompetency, failure to discharge his or her the member’s duties,
malfeasance, illegal acts, or other cause inimical to the welfare of the public
schools; and in case of such removal, he or she the appointing authority that
made the initial appointment shall appoint a person to fill the unexpired term.
                        * * * Calculation of Tuition * * *
Sec. 27. 16 V.S.A. § 823 is amended to read:
§ 823. ELEMENTARY TUITION
   (a) Tuition for elementary students shall be paid by the district in which the
student is a resident. The district shall pay the full tuition charged its students
attending a public elementary school to a receiving school for each resident
student attending the receiving school an amount equal to the base amount
contained in subdivision 4001(16) of this title multiplied by the sum of one and
any weights applicable to the resident student under section 4010 of this title.
If a payment made to a public elementary school is three percent more or less
than the calculated net cost per elementary pupil in the receiving school district
for the year of attendance, the district shall be reimbursed, credited, or
refunded pursuant to section 836 of this title. Notwithstanding the provisions
of this subsection or of subsection 825(b) of this title, the boards of both the
receiving and sending districts may enter into tuition agreements with terms
differing from the provisions of those subsections, provided that the receiving
district must offer identical terms to all sending districts, and further provided
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that the statutory provisions apply to any sending district that declines the
offered terms.
   (b) Unless the electorate of a school district authorizes payment of a higher
amount at an annual or special meeting warned for the purpose, the tuition paid
to an approved independent elementary school or an independent school
meeting education quality standards shall not exceed the least of:
      (1) the average announced tuition of Vermont union elementary schools
for the year of attendance;
      (2) the tuition charged by the approved independent school for the year
of attendance; or
      (3) the average per-pupil tuition the district pays for its other resident
elementary students in the year in which the student is enrolled in the approved
independent school. (1) In addition to the tuition amount calculated in
subsection (a) of this section, a receiving school may charge, and a sending
school shall be required to pay, an additional fee in the amount of the product
of the base amount and up to 0.05 for each student attending the receiving
school in grades nine through 12 only if the following conditions are met:
         (A) the receiving school has received approval from the State Board
of Education to charge the additional fee under this subsection (b), which
approval shall be granted in accordance with rules adopted by the State Board;
and
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          (B) the electorate of each school district with at least one student
attending the receiving school has approved supplemental district spending, as
defined in 32 V.S.A. § 5401, for the purpose of this subsection and in an
amount sufficient to cover the additional fee authorized under this subsection
(b).
       (2) For the purposes of this subsection, a receiving school shall not
include an approved independent school in Vermont functioning as an
approved area career and technical center.
   (c) A receiving school that elects and is eligible to charge an additional fee
pursuant to subsection (b) of this section shall charge the same additional fee
for each student attending on a publicly funded tuition basis pursuant to
chapter 21 of this title. A receiving school is prohibited from charging
different fees pursuant to this section to different school districts.
   (d) Notwithstanding subsections (a), (b), and (c) of this section, or any
other provision of law to the contrary, the district shall pay the full tuition
charged its students attending an approved independent school in Vermont
functioning as an approved area career and technical center.
Sec. 28. REPEALS
   16 V.S.A. §§ 824 (high school tuition), 825 (maximum tuition rate;
calculated net cost per pupil defined), 826 (notice of tuition rates; special
education charges), and 836 (tuition overcharge or undercharge) are repealed
on July 1, 2029.
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Sec. 28a. STATE BOARD OF EDUCATION; TUITION FEE RULES
   On or before July 1, 2027, the State Board of Education shall adopt rules
pursuant to 3 V.S.A. chapter 25 to govern the approval process for a receiving
school to charge an additional fee pursuant to 16 V.S.A. § 823. The Board’s
rules shall require a receiving school to demonstrate that an additional fee is
necessary to educate the specific students the fee is being applied to and that
the fee will be used to educate such students and not used to shift costs
elsewhere within the applicable school’s budget.
                     * * * Special Education Delivery * * *
Sec. 29. STATE OF SPECIAL EDUCATION DELIVERY; AGENCY OF
         EDUCATION; REPORT
   (a) On or before September 1, 2025, the Agency of Education shall submit
a written report to the House and Senate Committees on Education, the House
Committee on Ways and Means, and the Senate Committee on Finance
addressing the factors contributing to growth in extraordinary special education
reimbursement costs. The report shall include detailed information regarding
the current state of special education delivery in Vermont, including an update
on the implementation of special education changes enacted pursuant to 2018
Acts and Resolves No. 173 (Act 173). The report shall include a description of
the current state of support for students with disabilities in Vermont and
recommended changes to structure, practice, and law with the goal of:
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      (1) improving the delivery of special education services and managing
the rising extraordinary special education costs as Vermont’s special education
finance system transitions from a census block grant to a weight for special
education costs;
      (2) ensuring better, more inclusive services in the least restrictive
environment in a way that makes efficient and effective use of limited
resources while resulting in the best outcomes;
      (3) responding to the challenges of fully implementing Act 173 and the
lessons learned from implementation efforts to date;
      (4) ensuring that the delivery of special education is responsive to
student needs; and
      (5) addressing drivers of growth of extraordinary expenditures in special
education.
   (b) The report shall include:
      (1) An analysis of the costs of and services provided for students with
extraordinary needs in specialized settings, separated by school-district-
operated specialized programs, independent nonprofit programs, and
independent for-profit programs. The report shall include a geographic map
with the location of all specialized programs within the State of Vermont, as
well as the following information for each individual specialized program:
         (A) disability categories served;
         (B) grade levels served;
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          (C) the number of students with IEPs and the average duration of
time each student spent in the program over the last 10 years;
          (D) average cost per pupil, inclusive of extraordinary spending and
any costs in excess of general tuition rates;
          (E) years of experience, training, and tenure of licensed special
education staff;
          (F) a review of the findings of all investigations conducted by the
Agency of Education; and
          (G) a review of the Agency’s public assurance capabilities, with
respect to special education programs in all settings, and an analysis of the
effectiveness of current oversight or rule, and recommended changes if needed.
       (2) An evaluation of the state of implementation of Act 173, including
examples of where implementation has been successful, where it has not, and
why.
       (3) Identification of drivers of accelerating costs within the special
education system.
       (4) Identification of barriers to the success of students with disabilities.
       (5) A description of how specialized programs for students with
extraordinary needs operated by school districts, independent nonprofit
schools, and independent for-profit schools are funded, with an analysis of the
benefits and risks of each funding model.
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      (6) An assessment of whether Vermont’s current special education laws
ensure equitable access for all students with disabilities to education alongside
their peers in a way that is consistent with the Vermont education quality
standards for public schools and the right to a free appropriate public education
(FAPE) under the Individuals with Disabilities Education Act, 20 U.S.C.
§§ 1400–1482.
      (7) A review of the capacity of the Agency to support and guide school
districts on the effective support of students with disabilities, as well as
compliance with federal law, which shall include:
         (A) a review of final reports of investigations conducted by the
Agency in school-district-operated specialized programs, independent
nonprofit programs, and independent for-profit programs in the previous
10 years and an evaluation of what practices could reduce adverse findings in
these settings;
         (B) an assessment of the ability of the State to ensure State resources
are used in the most efficient and effective way possible to support the success
of students with disabilities and their access to a free and appropriate public
education;
         (C) a review of any pending and recent federal findings against the
State or school districts, as well as progress on corrective actions;
         (D) a review of the Agency’s staffing and capacity to review and
conduct monitoring and visits to schools, especially independent settings;
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         (E) a description of the process and status of reviews and approvals
of approved independent schools that provide special education and therapeutic
schools; and
         (F) recommendations for whether the Agency has capacity to ensure
timely review of approved independent schools and provide sufficient
oversight for specialized programs in nonprofit independent schools and for-
profit independent schools.
      (8) Recommendations for needed capacity at the Agency to provide
technical assistance and support to school districts in the provision of special
education services.
      (9) An analysis of whether more strategic support for better primary first
instruction and more successful implementation of Act 173 needs to be in
place for a weighted funding model for special education to succeed, including
a suggested transition timeline, with indicators, to be incorporated into the
Agency’s strategic plan.
      (10) If warranted, a review of options for changes to practice, structure,
and law that ensure students with disabilities are provided access to quality
education, in the least restrictive environment, in a cost-effective way that is
consistent with State and federal law, which may include a review of the
possible role of BOCES and the impact of larger districts on effective, high-
quality support for students with disabilities.
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      (11) Recommendations for reducing the growth in extraordinary special
education reimbursement costs, which shall include recommended legislative
language to accomplish any such recommendations.
Sec. 30. SPECIAL EDUCATION STRATEGIC PLAN; AGENCY OF
         EDUCATION
   (a) Strategic plan. In consultation with the State Advisory Panel on Special
Education established under 16 V.S.A. § 2945, the Agency of Education shall
develop a three-year strategic plan for the delivery of special education
services in Vermont. The strategic plan shall include unambiguous measurable
outcomes and a timeline for implementation. The strategic plan shall be
informed by the analysis and findings of the report required of the Agency
under Sec. 29 of this act and be designed to ensure successful implementation
of 2018 Acts and Resolves No. 173 (Act 173) and provide the supports and
processes that need to be in place for the transition to a weighted funding
model for special education to succeed, including a suggested transition
timeline, with benchmarks for success. The strategic plan shall also include
contingency recommendations for special education funding in the event
federal special education funding under the Individuals with Disabilities
Education Act, 20 U.S.C. §§ 1400–1482, is no longer available or transitions
to a system that requires more planning and management on the part of the
State to ensure funds are distributed equitably.
   (b) Reports.
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       (1) On or before December 1, 2025, the Agency shall submit the three-
year strategic plan created pursuant to subsection (a) of this section to the
House and Senate Committees on Education, the House Committee on Ways
and Means, and the Senate Committee on Finance.
       (2) On or before December 1 of 2026, 2027, 2028, and 2029, the
Agency shall submit a written report to the House and Senate Committees on
Education, the House Committee on Ways and Means, and the Senate
Committee on Finance with a detailed update on the Agency’s implementation
of its strategic plan and any recommendations for legislative changes needed to
ensure a successful transition to a weighted funding model and continued
successful implementation of Act 173.
Sec. 31. POSITION; AGENCY OF EDUCATION
   (a) Establishment of one new permanent, classified position is authorized
in the Agency of Education in fiscal year 2026 to support development and
implementation of the three-year strategic plan required under Sec. 30 of this
act.
   (b) The sum of $150,000.00 is appropriated from the General Fund to the
Agency of Education’s base budget in fiscal year 2026 for the purposes of
funding the position created in subsection (a) of this section. The Agency shall
include funding for this permanent position in their annual base budget request
in subsequent years.
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           * * * Agency of Education Transformation Support * * *
Sec. 32. AGENCY OF EDUCATION; TRANSFORMATION
         APPROPRIATION
   The sum of $2,865,000.00 is appropriated from the General Fund to the
Agency of Education in fiscal year 2026 to support education transformation
work as follows:
      (1) $200,000.00 to support school boards transitioning to new
governance models as contemplated in this act;
      (2) $562,500.00 for positions established in Sec. 33 of this act; and
      (3) $2,102,500.00 for contracted services to support school districts with
administrative activities relating to consolidation, including accounting, budget
and operational practice, and to support education quality activities including
the alignment of curricula, instructional materials, and teaching activities.
Sec. 33. EDUCATION TRANSFORMATION; POOL POSITIONS
   The General Fund appropriation in Sec. 32 of this act shall fund five limited
service classified positions taken from the position pool. The pool positions
shall be used to establish the following limited service classified positions at
the Agency of Education in fiscal year 2026 to support education
transformation work:
      (1) one Business Operations Support Specialist;
      (2) one Data Integration Support Specialist;
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      (3) one Curriculum and Education Quality Standards Integration
Specialist;
      (4) one Learning and Teaching Integration Specialist; and
      (5) one School Facilities Field Support Specialist.
                 * * * State Funding of Public Education * * *
Sec. 34. 16 V.S.A. § 4001 is amended to read:
§ 4001. DEFINITIONS
   As used in this chapter:
      (1) “Average daily membership” of a school district or, if needed in
order to calculate the appropriate homestead tax rate, of the municipality as
defined in 32 V.S.A. § 5401(9), in any year means:
                                      ***
      (6) “Education spending” means the amount of the school district
budget, any assessment for a joint contract school, career technical center
payments made on behalf of the district under subsection 1561(b) of this title,
and any amount added to pay a deficit pursuant to 24 V.S.A. § 1523(b) that is
paid for by the school district, but excluding any portion of the school budget
paid for from any other sources such as endowments, parental fundraising,
federal funds, nongovernmental grants, or other State funds such as special
education funds paid under chapter 101 of this title.
         (A) [Repealed.]
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         (B) For all bonds approved by voters prior to July 1, 2024, voter-
approved bond payments toward principal and interest shall not be included in
“education spending” for purposes of calculating excess spending pursuant to
32 V.S.A. § 5401(12). [Repealed.]
                                      ***
      (13) “Base education Categorical base amount” means a number used to
calculate categorical grants awarded under this title that is equal to $6,800.00
per equalized pupil, adjusted as required under section 4011 of this title.
      (14) “Per pupil education spending” of a school district in any school
year means the per pupil education spending of that school district as
determined under subsection 4010(f) of this title. [Repealed.]
                                      ***
      (16) “Base amount” means a per pupil cost-factor amount of
$15,033.00, which shall be adjusted for inflation annually on or before
November 15 by the Secretary of Education. As used in this subdivision,
“adjusted for inflation” means adjusting the base dollar amount by the National
Income and Product Accounts (NIPA) implicit price deflator for state and local
government consumption expenditures and gross investment published by the
U.S. Department of Commerce, Bureau of Economic Analysis, from fiscal
year 2025 through the fiscal year for which the amount is being determined,
and rounding upward to the nearest whole dollar amount.
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        (17) “Educational opportunity payment” means the base amount
multiplied by the school district’s weighted long-term membership as
determined under section 4010 of this title.
Sec. 35. 16 V.S.A. § 4010 is amended to read:
§ 4010. DETERMINATION OF WEIGHTED LONG-TERM MEMBERSHIP
          AND PER PUPIL EDUCATION SPENDING EDUCATIONAL
          OPPORTUNITY PAYMENT
     (a) Definitions. As used in this section:
        (1) “EL pupils” means pupils described under section 4013 of this title.
        (2) “FPL” means the Federal Poverty Level.
        (3) “Weighting categories” means the categories listed under subsection
(b) of this section.
        (4) “Child with a disability” means any child in Vermont eligible under
State rules to receive special education who is enrolled in any of kindergarten
through grade 12.
        (5) “Disability” means any of:
           (A) a specific learning disability or a speech or language impairment,
each of which is identified as “Category A”;
           (B) an emotional disturbance, intellectual disability, developmental
delay, or other health impairment, each of which is identified as “Category B”;
or
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         (C) autism spectrum disorder, deaf-blindness, hearing impairment,
orthopedic impairment, traumatic brain injury, or visual impairment, each of
which is identified as “Category C.”
      (6) “English language proficiency level” means each of the English
language proficiency levels published as a standardized measure of academic
language proficiency in WIDA ACCESS for ELLs 2.0 and available to
members of the WIDA consortium of state departments of education.
      (7) “Newcomer or SLIFE” means a pupil identified as a New American
or as a student with limited or interrupted formal education.
   (b) Determination of average daily membership and weighting categories.
On or before the first day of December during each school year, the Secretary
shall determine the average daily membership, as defined in subdivision
4001(1) of this title, of each school district for the current school year and shall
perform the following tasks.,
      (1) Using using average daily membership, list for each school district
the number of:
         (A)(1) pupils in prekindergarten;
         (B)(2) pupils in kindergarten through grade five;
         (C)(3) pupils in grades six through eight;
         (D)(4) pupils in grades nine through 12;
         (E)(5) pupils whose families are at or below 185 percent of FPL,
using the highest number of pupils in the district:
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             (i)(A) that meet this definition under the universal income
declaration form; or
             (ii)(B) who are directly certified for free and reduced-priced
meals; and
         (F)(6) EL pupils who have been most recently assessed at an English
language proficiency level of:
         (A) Level 1;
         (B) Level 2 or 3;
         (C) Level 4; or
         (D) Level 5 or 6;
      (7) EL pupils who are identified as Newcomer or SLIFE; and
      (8) children with a disability whose disability is identified as:
         (A) Category A;
         (B) Category B; or
         (C) Category C, provided that a child with multiple disabilities shall
be counted solely under this subdivision (C).
      (2)(A) Identify all school districts that have low population density,
measured by the number of persons per square mile residing within the land
area of the geographic boundaries of the district as of July 1 of the year of
determination, equaling:
             (i) fewer than 36 persons per square mile;
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             (ii) 36 or more persons per square mile but fewer than 55 persons
per square mile; or
             (iii) 55 or more persons per square mile but fewer than 100
persons per square mile.
         (B) Population density data shall be based on the best available U.S.
Census data as provided to the Agency of Education by the Vermont Center for
Geographic Information.
         (C) Using average daily membership, list for each school district that
has low population density the number of pupils in each of subdivisions
(A)(i)–(iii) of this subdivision (2).
      (3)(A) Identify all school districts that have one or more small schools,
which are schools that have an average two-year enrollment of:
             (i) fewer than 100 pupils; or
             (ii) 100 or more pupils but fewer than 250 pupils.
         (B) As used in subdivision (A) of this subdivision (3), “average two-
year enrollment” means the average enrollment of the two most recently
completed school years, and “enrollment” means the number of pupils who are
enrolled in a school operated by the district on October 1. A pupil shall be
counted as one whether the pupil is enrolled as a full-time or part-time student.
         (C) Using average two-year enrollment, list for each school district
that has a small school the number of pupils in each of subdivisions (A)(i)–(ii)
of this subdivision (3).
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   (c) Reporting on weighting categories to the Agency of Education. Each
school district shall annually report to the Agency of Education by a date
established by the Agency the information needed in order for the Agency to
compute the weighting categories under subsection (b) of this section for that
district. In order to fulfill this obligation, a school district that pays public
tuition on behalf of a resident student (sending district) to a public school in
another school district, an approved independent school, or an out-of-state
school (each a receiving school) may request the receiving school to collect
this information on the sending district’s resident student, and if requested, the
receiving school shall provide this information to the sending district in a
timely manner.
   (d) Determination of weighted long-term membership. For each weighting
category except the small schools weighting category under subdivision (b)(3)
of this section, the Secretary shall compute the weighting count by using the
long-term membership, as defined in subdivision 4001(7) of this title, in that
category.
      (1) The Secretary shall first apply grade level weights Prekindergarten
weight. Each pupil included in long-term membership shall count as one,
multiplied by the following amounts:
         (A) who is enrolled in prekindergarten— shall receive an additional
weighting amount of negative 0.54;
         (B) grades six through eight—0.36; and
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         (C) grades nine through 12—0.39.
      (2) The Secretary shall next apply a Economic disadvantage weight for
pupils whose family is at or below 185 percent of FPL. Each pupil included in
long-term membership whose family is at or below 185 percent of FPL shall
receive an additional weighting amount of 1.03 1.02.
      (3) The Secretary shall next apply a weight for EL pupils EL proficiency
weights. Each EL pupil included in long-term membership shall receive an
additional weighting amount, based on the EL pupil’s English language
proficiency level, of 2.49:
         (A) 2.11, if assessed as Level 1;
         (B) 1.41, if assessed as Level 2 or 3;
         (C) 1.20, if assessed as Level 4; or
         (D) 0.12, if assessed as Level 5 or 6.
      (4) The Secretary shall then apply a weight for pupils living in low
population density school districts EL Newcomer/SLIFE weight. Each EL
pupil included in long-term membership residing in a low population density
school district, measured by the number of persons per square mile residing
within the land area of the geographic boundaries of the district as of July 1 of
the year of determination, who is a Newcomer or SLIFE shall receive an
additional weighting amount of: 0.42
         (A) 0.15, where the number of persons per square mile is fewer than
36 persons;
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         (B) 0.12, where the number of persons per square mile is 36 or more
but fewer than 55 persons; or
         (C) 0.07, where the number of persons per square mile is 55 or more
but fewer than 100.
      (5) The Secretary shall lastly apply a weight for pupils who attend a
small school. If the number of persons per square mile residing within the land
area of the geographic boundaries of a school district as of July 1 of the year of
determination is 55 or fewer, then, for each pupil listed under subdivision
(b)(3)(C) of this section (pupils who attend small schools) Special education
weights. Each child with a disability included in long-term membership shall
receive an additional weighting amount, based on the categorization of the
child’s disability, of:
         (A) where the school has fewer than 100 pupils in average two-year
enrollment, the school district shall receive an additional weighting amount of
0.21 for each pupil included in the small school’s average two-year enrollment
0.79, if the disability is identified as Category A; or
         (B) where the small school has 100 or more but fewer than 250
pupils, the school district shall receive an additional weighting amount of 0.07
for each pupil included in the small school’s average two-year enrollment 1.89,
if the disability is identified as Category B; or
         (C) 2.49, if the disability is identified as Category C.
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      (6) A school district’s weighted long-term membership shall equal long-
term membership plus the cumulation of the weights assigned by the Secretary
under this subsection.
   (e) Hold harmless. A district’s weighted long-term membership shall in no
case be less than 96 and one-half percent of its actual weighted long-term
membership the previous year prior to making any adjustment under this
subsection.
   (f) Determination of per pupil education spending educational opportunity
payment. As soon as reasonably possible after a school district budget is
approved by voters, the Secretary shall determine the per pupil education
spending for the next fiscal year for the school district. Per pupil education
spending shall equal a school district’s education spending divided by its
weighted long-term membership The Secretary shall determine each school
district’s educational opportunity payment by multiplying the school district’s
weighted long-term membership determined under subsection (d) of this
section by the base amount.
                                      ***
   (h) Updates to weights, base amount, and transportation reimbursement.
On or before January 1, 2027 2026 and on or before January 1 of every fifth
year thereafter, the Agency of Education and the Joint Fiscal Office shall
calculate, based on their consensus view and with the advice and consultation
of a professional judgment panel convened by the Agency, updates to the
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weights and the base amount, including any inflationary measure, to account
for cost changes underlying those weights and shall issue a written report on
their work to the House and Senate Committees on Education, the House
Committee on Ways and Means, and the Senate Committee on Finance. The
General Assembly shall update the weights under this section, the base
amount, and transportation reimbursement under section 4016 of this title not
less than every five years and the implementation date for the updated weights
and transportation reimbursement shall be delayed by a year in order to
provide school districts with time to prepare their budgets. Updates to the
weights may include recalibration, recalculation, adding or eliminating
weights, or any combination of these actions.
Sec. 36. 16 V.S.A. § 4011 is amended to read:
§ 4011. EDUCATION PAYMENTS
   (a) Annually, the General Assembly shall appropriate funds to pay for
statewide education spending each school district’s educational opportunity
payment and supplemental district spending, as defined in 32 V.S.A. § 5401,
the small schools and sparsity support grants under section 4019 of this
chapter, and a portion of a base education categorical base amount for each
adult education and secondary credential program student.
   (b) For each fiscal year, the categorical base education amount shall be
$6,800.00, which shall be adjusted for inflation annually on or before
November 15 by the Secretary of Education. As used in this subsection,
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“adjusted for inflation” means adjusting the categorical base dollar amount by
the National Income and Product Accounts (NIPA) implicit price deflator for
state and local government consumption expenditures and gross investment
published by the U.S. Department of Commerce, Bureau of Economic
Analysis, from fiscal year 2005 through the fiscal year for which the amount is
being determined, and rounding upward to the nearest whole dollar amount.
   (c) Annually, each school district shall receive an education spending
payment for support of education costs its educational opportunity payment
determined pursuant to subsection 4010(f) of this chapter and a dollar amount
equal to its supplemental district spending, if applicable to that school district,
as defined in 32 V.S.A. § 5401. An unorganized town or gore shall receive an
amount equal to its per pupil education spending for that year for each student.
No district shall receive more than its education spending amount.
   (d) [Repealed.]
   (e) [Repealed.]
   (f) Annually, the Secretary shall pay to a local adult education and literacy
provider, as defined in section 942 of this title, that provides an adult education
and secondary credential program an amount equal to 26 percent of the
categorical base education amount for each student who completes the
diagnostic portions of the program, based on an average of the previous two
years; 40 percent of the payment required under this subsection shall be from
State funds appropriated from the Education Fund and 60 percent of the
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payment required under this subsection shall be from State funds appropriated
from the General Fund.
                                      ***
   (i) Annually, on or before October 1, the Secretary shall send to school
boards for inclusion in town reports and publish on the Agency website the
following information:
      (1) the statewide average district per pupil education spending for the
current fiscal year; and
      (2) a statewide comparison of student-teacher ratios among schools that
are similar in number of students and number of grades.
Sec. 37. 16 V.S.A. § 4019 is added to read:
§ 4019. SMALL SCHOOLS; SPARSE SCHOOLS; SUPPORT GRANTS
   (a) Definitions. As used in this section:
      (1) “Enrollment” means the number of students who are enrolled in a
school operated by the school district on October 1. A student shall be counted
as one whether the student is enrolled as a full-time or part-time student.
      (2) “Small school” means a school that:
         (A) has fewer than 100 pupils in two-year average enrollment; and
         (B) has been determined by the State Board of Education, on an
annual basis, to be “small by necessity” under standards consistent with those
submitted to the General Assembly pursuant to Sec. 8(b) of this act.
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      (3) “Sparse area” means a city, town, or incorporated village where the
number of persons per square mile residing within the land area of the
geographic boundaries of the city, town, or incorporated village as of July 1 of
the year of determination is fewer than 55 persons.
      (4) “Sparse school” means a school that:
         (A) is within a sparse area; and
         (B) has been determined by the State Board of Education, on an
annual basis, to be “sparse by necessity” under standards consistent with those
submitted to the General Assembly pursuant to Sec. 8(b) of this act.
      (5) “Two-year average enrollment” means the average enrollment of the
two most recently completed school years.
   (b) Small schools support grant. Annually, the Secretary shall pay a small
schools support grant to each school district for each small school within the
school district in an amount determined by multiplying the two-year average
enrollment in the small school by $3,157.00.
   (c) Sparse schools support grant. Annually, the Secretary shall pay a sparse
schools support grant to each school district for each sparse school within the
school district in an amount determined by multiplying the two-year average
enrollment in the sparse school by $1,954.00.
   (d) Inflationary adjustment. Each dollar amount under subsections (b) and
(c) of this section shall be adjusted for inflation annually on or before
November 15 by the Secretary. As used in this subsection, “adjusted for
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inflation” means adjusting the dollar amount by the National Income and
Product Accounts (NIPA) implicit price deflator for state and local government
consumption expenditures and gross investment published by the U.S.
Department of Commerce, Bureau of Economic Analysis, from fiscal year
2025 through the fiscal year for which the amount is being determined, and
rounding upward to the nearest whole dollar amount.
Sec. 38. 16 V.S.A. § 4025 is amended to read:
§ 4025. EDUCATION FUND
  (a) The Education Fund is established to comprise the following:
     (1) all revenue paid to the State from the statewide education tax on
nonhomestead and homestead property under 32 V.S.A. chapter 135;
     (2) all revenue paid to the State from the supplemental district spending
tax imposed pursuant to 32 V.S.A. § 5402(f);
                                     ***
  (b) Monies in the Education Fund shall be used for the following:
                                     ***
     (3) To make payments required under 32 V.S.A. § 6066(a)(1) and only
that portion attributable to education taxes, as determined by the Commissioner
of Taxes, of payments required under 32 V.S.A. § 6066(a)(3). The State
Treasurer shall withdraw funds from the Education Fund upon warrants issued
by the Commissioner of Finance and Management based on information
supplied by the Commissioner of Taxes. The Commissioner of Finance and
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Management may draw warrants for disbursements from the Fund in
anticipation of receipts. All balances in the Fund at the end of any fiscal year
shall be carried forward and remain a part of the Fund. Interest accruing from
the Fund shall remain in the Fund.
                                       ***
Sec. 39. 16 V.S.A. § 4026 is amended to read:
§ 4026. EDUCATION FUND BUDGET STABILIZATION RESERVE;
         CREATION AND PURPOSE
                                       ***
   (e) The enactment of this chapter and other provisions of the Equal
Educational Opportunity Act of which it is a part have been premised upon
estimates of balances of revenues to be raised and expenditures to be made
under the act for such purposes as education spending payments, categorical
State support grants, provisions for property tax income sensitivity, payments
in lieu of taxes, current use value appraisals, tax stabilization agreements, the
stabilization reserve established by this section, and for other purposes. If the
stabilization reserve established under this section should in any fiscal year be
less than 5.0 percent of the prior fiscal year’s appropriations from the
Education Fund, as defined in subsection (b) of this section, the Joint Fiscal
Committee shall review the information provided pursuant to 32 V.S.A.
§ 5402b and provide the General Assembly its recommendations for change
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necessary to restore the stabilization reserve to the statutory level provided in
subsection (b) of this section.
Sec. 40. 16 V.S.A. § 4028 is amended to read:
§ 4028. FUND PAYMENTS TO SCHOOL DISTRICTS
   (a) On or before September 10, December 10, and April 30 of each school
year, one-third of the education spending payment under section 4011 of this
title each school district’s educational opportunity payment as determined
under subsection 4010(f) of this chapter and supplemental district spending, as
defined in 32 V.S.A. § 5401, shall become due to school districts, except that
districts that have not adopted a budget by 30 days before the date of payment
under this subsection shall receive one-quarter of the base education amount
and upon adoption of a budget shall receive additional amounts due under this
subsection.
   (b) Payments made for special education under chapter 101 of this title, for
career technical education under chapter 37 of this title, and for other aid and
categorical grants paid for support of education shall also be from the
Education Fund.
   (c)(1) Any district that has adopted a school budget that includes high
spending, as defined in 32 V.S.A. § 5401(12), shall, upon timely notice, be
authorized to use a portion of its high spending penalty to reduce future
education spending:
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         (A) by entering into a contract with an operational efficiency
consultant or a financial systems consultant to examine issues such as
transportation arrangements, administrative costs, staffing patterns, and the
potential for collaboration with other districts;
         (B) by entering into a contract with an energy or facilities
management consultant; or
         (C) by engaging in discussions with other school districts about
reorganization or consolidation for better service delivery at a lower cost.
      (2) To the extent approved by the Secretary, the Agency shall pay the
district from the property tax revenue to be generated by the high spending
increase to the district’s spending adjustment as estimated by the Secretary, up
to a maximum of $5,000.00. For the purposes of this subsection, “timely
notice” means written notice from the district to the Secretary by September 30
of the budget year. If the district enters into a contract with a consultant
pursuant to this subsection, the consultant shall not be an employee of the
district or of the Agency. A copy of the consultant’s final recommendations or
a copy of the district’s recommendations regarding reorganization, as
appropriate, shall be submitted to the Secretary, and each affected town shall
include in its next town report an executive summary of the consultant’s or
district’s final recommendations and notice of where a complete copy is
available. No district is authorized to obtain funds under this section more than
one time in every five years. [Repealed.]
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                                       ***
Sec. 41. 16 V.S.A. § 563 is amended to read:
§ 563. POWERS OF SCHOOL BOARDS; FORM OF VOTE
   The school board of a school district, in addition to other duties and
authority specifically assigned by law:
                                       ***
      (11)(A) Shall prepare and distribute annually a proposed budget for the
next school year according to such major categories as may from time to time
be prescribed by the Secretary.
         (B) [Repealed.]
         (C) At a school district’s annual or special meeting, the electorate
may vote to provide notice of availability of the school budget required by this
subdivision to the electorate in lieu of distributing the budget. If the electorate
of the school district votes to provide notice of availability, it must specify how
notice of availability shall be given, and such notice of availability shall be
provided to the electorate at least 30 days before the district’s annual meeting.
The proposed budget shall be prepared and distributed at least ten 10 days
before a sum of money is voted on by the electorate. Any proposed budget
shall show the following information in a format prescribed by the Secretary:
            (i) all revenues from all sources, and expenses, including as
separate items any assessment for a supervisory union of which it is a member
and any tuition to be paid to a career technical center; and including the report
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required in subdivision 242(4)(D) of this title itemizing the component costs of
the supervisory union assessment;
            (ii) the specific amount of any deficit incurred in the most recently
closed fiscal year and how the deficit was or will be remedied;
            (iii) the anticipated homestead statewide education tax rate and the
percentage of household income used to determine income sensitivity in the
district as a result of passage of the budget, including those portions of the tax
rate attributable to supervisory union assessments, as adjusted for each tax
classification pursuant to 32 V.S.A. § 5402; and
            (iv) the definition of “education spending supplemental district
spending,” the number of pupils and number of equalized pupils in long-term
membership of the school district, and the district’s education spending per
equalized pupil supplemental district spending in the proposed budget and in
each of the prior three years; and
            (v) the supplemental district spending yield.
         (D) The board shall present the budget to the voters by means of a
ballot in the following form:
            “Article #1 (School Budget):
               Shall the voters of the school district approve the school board
to expend $ ______, which is the amount the school board has determined to
be necessary in excess of the school district’s educational opportunity payment
for the ensuing fiscal year?
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                The ________ District estimates that this proposed budget, if
approved, will result in per pupil education supplemental district spending of
$________, which is _____% higher/lower than per pupil education
supplemental district spending for the current year, and a supplemental district
spending tax rate of ________ per $100.00 of equalized education property
value.”
                                      ***
Sec. 42. REPEALS
   (a) 16 V.S.A. § 4031 (unorganized towns and gores) is repealed.
   (b) 2022 Acts and Resolves No. 127, Sec. 8 (suspension of excess spending
penalty, hold harmless provision, and ballot language requirement) is repealed.
   (c) 16 V.S.A. § 2961 (census grant; special education) is repealed.
   (d) 16 V.S.A. § 4013(d) (English learners services; State aid; categorical
aid) is repealed.
   (e) 16 V.S.A. § 4015 (merger support for merged districts) is repealed.
Sec. 43. 16 V.S.A. § 4032 is added to read:
§ 4032. SUPPLEMENTAL DISTRICT SPENDING RESERVE
   (a) There is hereby created the Supplemental District Spending Reserve
within the Education Fund. Any recapture, as defined in 32 V.S.A. § 5401,
paid to the Education Fund as part of the revenue from the supplemental
district spending tax imposed pursuant to 32 V.S.A. § 5402(f) shall be reserved
within the Supplemental District Spending Reserve.
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   (b) In any fiscal year in which the amounts raised through the supplemental
district spending tax imposed pursuant to 32 V.S.A. § 5402(f) are insufficient
to cover payment to each school district of its supplemental district spending,
the Supplemental District Spending Reserve shall be used by the
Commissioner of Finance and Management to the extent necessary to offset
the deficit as determined by generally accepted accounting principles.
   (c) Any funds remaining in the Supplemental District Spending Reserve at
the close of the fiscal year after accounting for the process under subsection (b)
of this section shall be unreserved in the Education Fund for the purpose of
decreasing the following year’s statewide education property tax rate.
Sec. 44. AGENCY OF EDUCATION; TRANSPORTATION
         REIMBURSEMENT GUIDELINES
   On or before December 15, 2025, the Agency of Education shall submit a
written report to the House Committees on Ways and Means and on Education
and the Senate Committees on Finance and on Education on clear and
equitable guidelines for minimum transportation to be provided and covered by
transportation reimbursement grant under 16 V.S.A. § 4016 as part of
Vermont’s education transformation.
Sec. 45. REPORT; JOINT FISCAL OFFICE; INFLATIONARY
         MEASURES; PREKINDERGARTEN EDUCATION FUNDING
   (a) On or before December 15, 2025, the Joint Fiscal Office shall submit a
report to the House Committees on Ways and Means and on Education and the
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Senate Committees on Finance and on Education that analyzes the National
Income and Product Accounts (NIPA) implicit price deflator for state and local
government consumption expenditures and gross investment published by the
U.S. Department of Commerce, Bureau of Economic Analysis, and alternative
inflationary measures that may be applied to state education funding systems.
As part of the report, the Joint Fiscal Office shall analyze options and provide
considerations for selecting an inflationary measure appropriate to Vermont’s
education funding system.
   (b) On or before December 15, 2025, the Joint Fiscal Office shall submit a
report to the House Committee on Ways and Means, the Senate Committee on
Finance, and the House and Senate Committees on Education on the current
funding systems for prekindergarten education, the Child Care Financial
Assistance Program, or any other early care and learning systems. The report
shall review financial incentives in these existing early care and learning
systems. As part of the report, the Joint Fiscal Office shall provide
considerations for changing the funding streams associated with these early
care and learning systems to align with the education transformation initiatives
envisioned in this act.
Sec. 45a. FOUNDATION FORMULA; JOINT FISCAL OFFICE; REPORT
   (a) The Joint Fiscal Office shall contract with one or more contractors with
expertise in Vermont’s education funding system to recommend updates to the
cost-factor foundation formula created by this act to move from special
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education weights based on disability categories to a reliance on the provision
of special education services and to update any other weights determined to be
empirically necessary for an adequate and equitable education, taking into
account the cost savings generated by new, larger consolidated school districts.
Additionally, the contractors shall make recommendations regarding the
following:
      (1) suitable geographic measures for determining sparsity within the
foundation formula;
      (2) whether it costs more to educate a secondary student than an
elementary student in Vermont and, if so, an appropriate weight to capture the
cost differential of educating secondary students; and
      (3) how to account for the provision of career and technical education
within Vermont’s foundation formula.
   (b) The contractors shall submit the foundation formula, analysis of
geographic measures, and the other recommendations required under
subsection (a) of this section, along with a detailed analysis to support the
contractor’s recommendations, to the House Committee on Ways and Means,
the Senate Committee on Finance, and the House and Senate Committees on
Education on or before December 1, 2026.
   (c) The sum of $400,000.00 is appropriated to the Joint Fiscal Office from
the General Fund in fiscal year 2026 to hire one or more contractors for the
purposes in subsection (a) of this section.
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   (d) The contractors shall be required to train the Joint Fiscal Office and the
Agency of Education in the methodologies needed to recalibrate and
recalculate the base and weights in accordance with 16 V.S.A. § 4010(f).
Sec. 45b. EDUCATIONAL OPPORTUNITY PAYMENTS; TUITION;
           TRANSITION; FYS 2029–2032
   (a) Notwithstanding 16 V.S.A. § 4001(17), in each of fiscal years 2029
through 2032, the educational opportunity payment for a school district shall
equal the educational opportunity payment for the school district as calculated
pursuant to 16 V.S.A. § 4010(f) plus a yearly adjustment equal to:
      (1) in fiscal year 2029, the transition gap multiplied by 0.80;
      (2) in fiscal year 2030, the transition gap multiplied by 0.60;
      (3) in fiscal year 2031, the transition gap multiplied by 0.40; and
      (4) in fiscal year 2032, the transition gap multiplied by 0.20.
   (b) Notwithstanding 16 V.S.A. § 823(a), in each of fiscal years 2029
through 2032, a school district shall pay as tuition to a receiving school for
each resident student attending the receiving school an amount equal to the
adjusted base multiplied by the sum of one and any weights applicable to the
resident student under section 16 V.S.A. § 4010.
   (c) As used in this section:
      (1) “Adjusted base” means the quotient resulting from dividing the
school district’s educational opportunity payment, as adjusted by the yearly
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adjustment, by the school district’s weighted long-term membership as defined
in 16 V.S.A. § 4001.
      (2) “Adjusted for inflation” means adjusting the school district’s
education spending by the National Income and Product Accounts (NIPA)
implicit price deflator for state and local government consumption
expenditures and gross investment published by the U.S. Department of
Commerce, Bureau of Economic Analysis, from fiscal year 2025 through fiscal
year 2029 and rounding upward to the nearest whole dollar amount.
      (3) “Transition gap” means the amount, whether positive or negative,
that results from subtracting the school district’s educational opportunity
payment as calculated pursuant to 16 V.S.A. § 4010(f) for fiscal year 2029
from the school district’s education spending in fiscal year 2025, as adjusted
for inflation. The school district’s education spending shall be adjusted for
inflation on or before November 15 by the Secretary of Education.
Sec. 45c. 32 V.S.A. § 5414 is amended to read:
§ 5414. CREATION; EDUCATION FUND ADVISORY COMMITTEE
                                      ***
   (e) Meetings.
      (1) The Commissioner of Taxes shall call the first meeting of the
Committee to occur on or before July 15, 2025 2026.
                                      ***
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               * * * Education Property Tax Rate Formula * * *
Sec. 46. 32 V.S.A. § 5401 is amended to read:
§ 5401. DEFINITIONS
   As used in this chapter:
                                      ***
      (8) “Education spending” means “education spending” as defined in 16
V.S.A. § 4001(6). [Repealed.]
                                      ***
      (12) “Excess spending” means:
         (A) The per pupil spending amount of the district’s education
spending, as defined in 16 V.S.A. § 4001(6), plus any amount required to be
added from a capital construction reserve fund under 24 V.S.A. § 2804(b).
         (B) In excess of 118 percent of the statewide average district per
pupil education spending increased by inflation, as determined by the Secretary
of Education on or before November 15 of each year based on the passed
budgets to date. As used in this subdivision, “increased by inflation” means
increasing the statewide average district per pupil education spending for fiscal
year 2025 by the most recent New England Economic Project cumulative price
index, as of November 15, for state and local government purchases of goods
and services, from fiscal year 2025 through the fiscal year for which the
amount is being determined. [Repealed.]
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      (13)(A) “Education property tax spending adjustment” means the
greater of one or a fraction in which:
            (i) the numerator is the district’s per pupil education spending plus
excess spending for the school year, and
            (ii) the denominator is the property dollar equivalent yield for the
school year, as defined in subdivision (15) of this section, multiplied by the
statewide adjustment.
         (B) “Education income tax spending adjustment” means the greater
of one or a fraction in which the numerator is the district’s per pupil education
spending plus excess spending for the school year, and the denominator is the
income dollar equivalent yield for the school year, as defined in subdivision
(16) of this section. [Repealed.]
                                         ***
      (15) “Property dollar equivalent yield” means the amount of per pupil
education spending that would result in a district having a homestead tax rate
of $1.00 per $100.00 of equalized education property value. [Repealed.]
      (16) “Income dollar equivalent yield” means the amount of per pupil
education spending that would result in a district having an income percentage
in subdivision 6066(a)(2) of this title of 2.0 percent. [Repealed.]
      (17) “Statewide adjustment” means the ratio of the aggregate education
property tax grand list of all municipalities to the aggregate value of the
equalized education property tax grand list of all municipalities.
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      (18) “Adjusted equalized education property tax grand list” means the
equalized education property tax grand list after removing the value of
homestead property exempted from the statewide education property tax and
the supplemental district spending tax pursuant to section 6066 of this title.
      (19) “Per pupil supplemental district spending” means the per pupil
amount of supplemental district spending resulting from dividing a school
district’s supplemental district spending by its long-term membership as
defined in 16 V.S.A. § 4001(7).
      (20) “Recapture” means the amount of revenue raised through
imposition of the supplemental district spending tax pursuant to subsection
5402(f) of this chapter that is in excess of the school district’s supplemental
district spending.
      (21) “School district with the lowest taxing capacity” means the school
district other than an interstate school district anticipated to have the lowest
aggregate adjusted equalized education property tax grand list of its municipal
members per long-term membership as defined in 16 V.S.A. § 4001(7) in the
following fiscal year.
      (22) “Supplemental district spending” means the spending that the
voters of a school district approve in excess of the school district’s educational
opportunity payment, as defined in 16 V.S.A. § 4001(17), for the fiscal year,
provided that the voters of a school district other than an interstate school
district shall not approve spending in excess of 5 percent of the product of the
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base amount, as defined in 16 V.S.A. § 4001(16), and the school district’s
long-term membership, as defined in 16 V.S.A. § 4001(7).
      (23) “Supplemental district spending yield” means the amount of
property tax revenue per long-term membership as defined in 16 V.S.A.
§ 4001(7) that would be raised in the school district with the lowest taxing
capacity using a supplemental district spending tax rate of $1.00 per $100.00
of equalized education property value multiplied by the statewide adjustment.
Sec. 46a. SUPPLEMENTAL DISTRICT SPENDING; CAP; TRANSITION;
           FYS 2029–2037
   Notwithstanding 32 V.S.A. § 5401(22), in each of fiscal years 2029 through
2037, the voters of a school district other than an interstate school district shall
not approve spending in excess of the following percentage of the product of
the base amount, as defined in 16 V.S.A. § 4001(16), and the school district’s
long-term membership, as defined in 16 V.S.A. § 4001(7):
      (1) in fiscal years 2029 through 2033, 10 percent;
      (2) in fiscal year 2034, 9 percent;
      (3) in fiscal year 2035, 8 percent;
      (4) in fiscal year 2036, 7 percent; and
      (5) in fiscal year 2037, 6 percent.
Sec. 47. 32 V.S.A. § 5402 is amended to read:
§ 5402. EDUCATION PROPERTY TAX LIABILITY
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   (a) A statewide education tax is imposed on all nonhomestead and
homestead property at the following rates:
      (1) The tax rate for nonhomestead property shall be $1.59 per $100.00
divided by the statewide adjustment.
      (2) The tax rate for homestead property shall be $1.00 multiplied by the
education property tax spending adjustment for the municipality per $100.00 of
equalized education property value as most recently determined under section
5405 of this title. The homestead property tax rate for each municipality that is
a member of a union or unified union school district shall be calculated as
required under subsection (e) of this section. a rate sufficient to cover
expenditures from the Education Fund other than supplemental district
spending, after accounting for forecasted non-property tax revenues and any
funds unreserved in the Education Fund following the process under 16 V.S.A.
§ 4032(c). It is the intention of the General Assembly that the statewide
education tax rate under this section shall be adopted for each fiscal year by act
of the General Assembly. If the General Assembly fails to adopt a statewide
education tax rate for a fiscal year, the statewide education tax rate for the
fiscal year shall equal the product of 110 percent and the statewide education
tax rate for the preceding fiscal year. The statewide education tax rate shall be
adjusted for homestead property and each general class of nonhomestead
property provided under section 4152a of this title as follows:
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      If the tax classification of the     then the statewide education tax rate
      property subject to taxation is:  is multiplied by a factor of:
      Homestead  1.0
      Nonhomestead Nonresidential  1.0
      Nonhomestead Residential  1.0
   (b) The statewide education tax shall be calculated as follows:
      (1) The Commissioner of Taxes shall determine for each municipality
the education tax rates under subsection (a) of this section divided by the
number resulting from dividing the municipality’s most recent common level
of appraisal by the statewide adjustment. The legislative body in each
municipality shall then bill each property taxpayer at the homestead or
nonhomestead applicable rate determined by the Commissioner under this
subdivision, multiplied by the education property tax grand list value of the
property, properly classified as homestead or nonhomestead property and
without regard to any other tax classification of the property not authorized
under this chapter. Statewide education property tax bills shall show the tax
due and the calculation of the rate determined under subsection (a) of this
section, divided by the number resulting from dividing the municipality’s most
recent common level of appraisal by the statewide adjustment, multiplied by
the current grand list value of the property to be taxed. Statewide education
property tax bills shall also include language provided by the Commissioner
pursuant to subsection 5405(g) of this title.
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      (2) Taxes assessed under this section shall be assessed and collected in
the same manner as taxes assessed under chapter 133 of this title with no tax
classification other than as homestead or nonhomestead property those
required by this section; provided, however, that the tax levied under this
chapter shall be billed to each taxpayer by the municipality in a manner that
clearly indicates the tax is separate from any other tax assessed and collected
under chapter 133, including an itemization of the separate taxes due. The bill
may be on a single sheet of paper with the statewide education tax and other
taxes presented separately and side by side.
      (3) If a district has not voted a budget by June 30, an interim homestead
education tax shall be imposed at the base rate determined under subdivision
(a)(2) of this section, divided by the number resulting from dividing the
municipality’s most recent common level of appraisal by the statewide
adjustment, but without regard to any spending adjustment under subdivision
5401(13) of this title. Within 30 days after a budget is adopted and the
deadline for reconsideration has passed, the Commissioner shall determine the
municipality’s homestead tax rate as required under subdivision (1) of this
subsection. [Repealed.]
   (c)(1) The treasurer of each municipality shall by December 1 of the year in
which the tax is levied and on June 1 of the following year pay to the State
Treasurer for deposit in the Education Fund one-half of the municipality’s
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statewide nonhomestead tax and one-half of the municipality’s homestead
education tax, as determined under subdivision (b)(1) of this section.
      (2) The Secretary of Education shall determine each municipality’s net
nonhomestead education tax payment and its net homestead education tax
payment to the State based on grand list information received by the Secretary
not later than the March 15 prior to the June 1 net payment. Payment shall be
accompanied by a return prescribed by the Secretary of Education. Each
municipality may retain 0.225 of one percent of the total education tax
collected, only upon timely remittance of net payment to the State Treasurer or
to the applicable school district or districts. Each municipality may also retain
$15.00 for each late property tax credit claim filed after April 15 and before
September 2, as notified by the Department of Taxes, for the cost of issuing a
new property tax bill.
   (d) [Repealed.]
   (e) The Commissioner of Taxes shall determine a homestead education tax
rate for each municipality that is a member of a union or unified union school
district as follows:
      (1) For a municipality that is a member of a unified union school
district, use the base rate determined under subdivision (a)(2) of this section
and a spending adjustment under subdivision 5401(13) of this title based upon
the per pupil education spending of the unified union.
      (2) For a municipality that is a member of a union school district:
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         (A) Determine the municipal district homestead tax rate using the
base rate determined under subdivision (a)(2) of this section and a spending
adjustment under subdivision 5401(13) of this title based on the per pupil
education spending in the municipality who attends a school other than the
union school.
         (B) Determine the union district homestead tax rate using the base
rate determined under subdivision (a)(2) of this section and a spending
adjustment under subdivision 5401(13) of this title based on the per pupil
education spending of the union school district.
         (C) Determine a combined homestead tax rate by calculating the
weighted average of the rates determined under subdivisions (A) and (B) of
this subdivision (2), with weighting based upon the ratio of union school long-
term membership, as defined in 16 V.S.A. § 4001(7), from the member
municipality to total long-term membership of the member municipality; and
the ratio of long-term membership attending a school other than the union
school to total long-term membership of the member municipality. Total long-
term membership of the member municipality is based on the number of pupils
who are legal residents of the municipality and attending school at public
expense. If necessary, the Commissioner may adopt a rule to clarify and
facilitate implementation of this subsection (e). [Repealed.]
   (f)(1) A supplemental district spending tax is imposed on all homestead
and nonhomestead property in each member municipality of a school district
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that approves spending pursuant to a budget presented to the voters of a school
district under 16 V.S.A. § 563. The Commissioner of Taxes shall determine
the supplemental district spending tax rate for each school district by dividing
the school district’s per pupil supplemental district spending as certified by the
Secretary of Education by the supplemental district spending yield. The
legislative body in each member municipality shall then bill each property
taxpayer at the rate determined by the Commissioner under this subsection,
divided by the number resulting from dividing the municipality’s most recent
common level of appraisal by the statewide adjustment and multiplied by the
current grand list value of the property to be taxed. The bill shall show the tax
due and the calculation of the rate.
      (2) The supplemental district spending tax assessed under this
subsection shall be assessed and collected in the same manner as taxes
assessed under chapter 133 of this title with no tax classification other than as
homestead or nonhomestead property; provided, however, that the tax levied
under this chapter shall be billed to each taxpayer by the municipality in a
manner that clearly indicates the tax is separate from any other tax assessed
and collected under chapter 133 of this title and the statewide education
property tax under this section, including an itemization of the separate taxes
due. The bill may be on a single sheet of paper with the supplemental district
spending tax, the statewide education tax, and other taxes presented separately
and side by side.
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       (3) The treasurer of each municipality shall on or before December 1 of
the year in which the tax is levied and on or before June 1 of the following year
pay to the State Treasurer for deposit in the Education Fund one-half of the
municipality’s supplemental district spending tax as determined under
subdivision (1) of this subsection.
       (4) The Secretary of Education shall determine each municipality’s net
supplemental district spending tax payment to the State based on grand list
information received by the Secretary not later than the March 15 prior to the
June 1 net payment. Payment shall be accompanied by a return prescribed by
the Secretary of Education. Each municipality may retain 0.225 of one percent
of the total supplemental district spending tax collected, only upon timely
remittance of net payment to the State Treasurer or to the applicable school
district.
Sec. 48. 32 V.S.A. § 5402b is amended to read:
§ 5402b. STATEWIDE EDUCATION TAX YIELDS RATE;
            SUPPLEMENTAL DISTRICT SPENDING YIELD;
            RECOMMENDATION OF THE COMMISSIONER
   (a) Annually, not later than December 1, the Commissioner of Taxes, after
consultation with the Secretary of Education, the Secretary of Administration,
and the Joint Fiscal Office, shall calculate and recommend a property dollar
equivalent yield, an income dollar equivalent yield, and a nonhomestead
property tax rate the statewide education property tax rate pursuant to
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subsection 5402(a) of this chapter and the supplemental district spending yield
for the following fiscal year. In making these calculations, the Commissioner
shall assume: the statutory reserves are maintained at five percent pursuant to
16 V.S.A. § 4026, the amounts in the Supplemental District Spending Reserve
are unavailable for any purpose other than that specified in 16 V.S.A.
§ 4032(b), and the statewide education property tax rate is divided by the
statewide adjustment
      (1) the homestead base tax rate in subdivision 5402(a)(2) of this title is
$1.00 per $100.00 of equalized education property value;
      (2) the applicable percentage in subdivision 6066(a)(2) of this title is 2.0;
      (3) the statutory reserves under 16 V.S.A. § 4026 and this section were
maintained at five percent;
      (4) the percentage change in the average education tax bill applied to
nonhomestead property and the percentage change in the average education tax
bill of homestead property and the percentage change in the average education
tax bill for taxpayers who claim a credit under subsection 6066(a) of this title
are equal;
      (5) the equalized education grand list is multiplied by the statewide
adjustment in calculating the property dollar equivalent yield; and
      (6) the nonhomestead rate is divided by the statewide adjustment.
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   (b) For each fiscal year, the property dollar equivalent supplemental district
spending yield and the income dollar equivalent yield shall be the same as in
the prior fiscal year, unless set otherwise by the General Assembly.
                                        ***
   (d) Along with the recommendations made under this section, the
Commissioner shall include:
      (1) the base amount as defined in 16 V.S.A. § 4001(16);
      (2) for each school district, the estimated long-term membership,
weighted long-term membership, and aggregate adjusted equalized education
property tax grand list of its municipal members;
      (3) for each school district, the estimated aggregate adjusted equalized
education property tax grand list of its municipal members per long-term
membership;
      (4) the estimated school district with the lowest taxing capacity; and
      (5) the range of per pupil supplemental district spending between all
districts in the State for the previous year.
                                        ***
Sec. 48a. HOMESTEAD PROPERTY TAX RATE; TRANSITION; FYS
           2029–2032; REPORT
   (a) Notwithstanding 32 V.S.A. § 5402, in each of fiscal years 2029 through
2032, the homestead property tax rate for a school district shall equal the
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homestead property tax rate imposed pursuant to 32 V.S.A. § 5402 plus a
yearly adjustment equal to:
      (1) in fiscal year 2029, the transition gap multiplied by 0.80;
      (2) in fiscal year 2030, the transition gap multiplied by 0.60;
      (3) in fiscal year 2031, the transition gap multiplied by 0.40; and
      (4) in fiscal year 2032, the transition gap multiplied by 0.20.
   (b) As used in this section, “transition gap” means the amount, whether
positive or negative, that results from subtracting the uniform homestead
property tax rate for fiscal year 2029 were it calculated assuming no tax rate
transition under this section from the homestead property tax rate for the
school district in fiscal year 2028.
   (c) On or before December 15, 2027, the Department of Taxes, in
consultation with the Joint Fiscal Office and the Agency of Education, shall
submit a written report to the House Committee on Ways and Means and the
Senate Committee on Finance with recommendations and an implementation
plan to ensure that education property tax rates do not increase as part of the
transition to the new foundation formula.
         * * * Conforming Revisions; Statewide Property Tax Rate * * *
Sec. 49. 32 V.S.A. § 5404a(b)(1) is amended to read:
   (b)(1) An agreement affecting the education property tax grand list defined
under subsection (a) of this section shall reduce the municipality’s education
property tax liability under this chapter for the duration of the agreement or
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exemption without extension or renewal, and for a maximum of 10 years. A
municipality’s property tax liability under this chapter shall be reduced by any
difference between the amount of the education property taxes collected on the
subject property and the amount of education property taxes that would have
been collected on such property if its fair market value were taxed at the
equalized nonhomestead rate for the tax year.
Sec. 50. 32 V.S.A. § 5405(g) is amended to read:
   (g) The Commissioner shall provide to municipalities for the front of
property tax bills the district homestead property statewide education tax rate
before equalization, the nonresidential tax rate before equalization, and the
calculation process that creates the equalized homestead and nonhomestead tax
rates. The Commissioner shall further provide to municipalities for the back of
property tax bills an explanation of the common level of appraisal, including
its origin and purpose.
      * * * Statewide Property Tax Credit Repeal; Homestead Exemption
                                   Created * * *
Sec. 51. 32 V.S.A. § 5400 is amended to read:
§ 5400. STATUTORY PURPOSES
                                       ***
   (c) The statutory purpose of the exemption for qualified housing in
subdivision 5404a(a)(6) of this title is to ensure that taxes on this rent-
restricted housing provided to Vermonters of low and moderate income are
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more equivalent to property taxed using the State as a homestead rate property
and to adjust the costs of investment in rent-restricted housing to reflect more
accurately the revenue potential of such property.
                                       ***
   (j) The statutory purpose of the homestead property tax exemption in
subdivision 6066(a)(1) of this title is to reduce the property tax liability for
Vermont households with low and moderate household income.
Sec. 52. 32 V.S.A. chapter 154 is amended to read:
      CHAPTER 154. HOMESTEAD PROPERTY TAX EXEMPTION,
     MUNICIPAL PROPERTY TAX CREDIT, AND RENTER CREDIT
§ 6061. DEFINITIONS
   As used in this chapter unless the context requires otherwise:
      (1) “Property Municipal property tax credit” means a credit of the prior
tax year’s statewide or municipal property tax liability or a homestead owner
credit, as authorized under section subdivision 6066(a)(2) of this title, as the
context requires chapter.
                                       ***
      (8) “Annual tax levy” means the property taxes levied on property
taxable on April 1 and without regard to the year in which those taxes are due
or paid. [Repealed.]
      (9) “Taxable year” means the calendar year preceding the year in which
the claim is filed.
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      (10) [Repealed.]
      (11) “Housesite” means that portion of a homestead, as defined under
subdivision 5401(7) of this title but not under subdivision 5401(7)(G) of this
title, that includes as much of the land owned by the claimant surrounding the
dwelling as is reasonably necessary for use of the dwelling as a home, but in
no event more than two acres per dwelling unit, and, in the case of multiple
dwelling units, not more than two acres per dwelling unit up to a maximum of
10 acres per parcel.
      (12) “Claim year” means the year in which a claim is filed under this
chapter.
      (13) “Homestead” means a homestead as defined under subdivision
5401(7) of this title, but not under subdivision 5401(7)(G) of this title, and
declared on or before October 15 in accordance with section 5410 of this title.
      (14) “Statewide education tax rate” means the homestead education
property tax rate multiplied by the municipality’s education spending
adjustment under subdivision 5402(a)(2) of this title and used to calculate taxes
assessed in the municipal fiscal year that began in the taxable year. [Repealed.]
                                       ***
      (21) “Homestead property tax exemption” means a reduction in the
amount of housesite value subject to the statewide education tax and the
supplemental district spending tax in the claim year as authorized under
sections 6066 and 6066a of this chapter.
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§ 6062. NUMBER AND IDENTITY OF CLAIMANTS; APPORTIONMENT
                                       ***
   (d) Whenever a housesite is an integral part of a larger unit such as a farm
or a multi-purpose or multi-dwelling building, property taxes paid shall be that
percentage of the total property tax as the value of the housesite is to the total
value. Upon a claimant’s request, the listers shall certify to the claimant the
value of his or her the claimant’s homestead and housesite.
                                       ***
§ 6063. CLAIM AS PERSONAL; CREDIT AND EXEMPTION AMOUNT
         AT TIME OF TRANSFER
   (a) The right to file a claim under this chapter is personal to the claimant
and shall not survive his or her the claimant’s death, but the right may be
exercised on behalf of a claimant by his or her the claimant’s legal guardian or
attorney-in-fact. When a claimant dies after having filed a timely claim, the
municipal property tax credit and the homestead exemption amount shall be
credited applied to the homestead property tax liability of the claimant’s estate
as provided in section 6066a of this title.
   (b) In case of sale or transfer of a residence, after April 1 of the claim year:
      (1) any municipal property tax credit amounts amount related to that
residence shall be allocated to the seller transferor at closing unless the parties
otherwise agree;
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      (2) any homestead property tax exemption related to that residence
based on the transferor’s household income under subdivision 6066(a)(1) of
this chapter shall cease to be in effect upon transfer; and
      (3) a transferee who is eligible to declare the residence as a homestead
but for the requirement to own the residence on April 1 of the claim year shall,
notwithstanding subdivision 5401(7) and subsection 5410(b) of this title, be
eligible to apply for a homestead property tax exemption in the claim year
when the transfer occurs by filing with the Commissioner of Taxes a
homestead declaration pursuant to section 5410 of this title and a claim for
exemption on or before the due date prescribed under section 6068 of this
chapter.
                                       ***
§ 6065. FORMS; TABLES; NOTICES
   (a) In administering this chapter, the Commissioner shall provide suitable
claim forms with tables of allowable claims, instructions, and worksheets for
claiming a homestead property tax exemption and municipal property tax
credit.
   (b) Prior to June 1, the Commissioner shall also prepare and supply to each
town in the State notices describing the homestead property tax exemption and
municipal property tax credit for inclusion in property tax bills. The notice
shall be in simple, plain language and shall explain how to file for a homestead
property tax exemption and a municipal property tax credit, where to find
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assistance filing for a credit or an exemption, or both, and any other related
information as determined by the Commissioner. The notice shall direct
taxpayers to a resource where they can find versions of the notice translated
into the five most common non-English languages in the State. A town shall
include such notice in each tax bill and notice of delinquent taxes that it mails
to taxpayers who own in that town a residential property, without regard for
whether the property was declared a homestead pursuant to subdivision
5401(7) of this title.
   (c) Notwithstanding the provisions of subsection (b) of this section, towns
that use envelopes or mailers not able to accommodate notices describing the
homestead property tax exemption and municipal property tax credit may
distribute such notices in an alternative manner.
§ 6066. COMPUTATION OF HOMESTEAD PROPERTY TAX
         EXEMPTION, MUNICIPAL PROPERTY TAX CREDIT, AND
         RENTER CREDIT
   (a) An eligible claimant who owned the homestead on April 1 of the year in
which the claim is filed shall be entitled to a credit for the prior year’s
homestead property tax liability amount determined as follows:
      (1)(A) For a claimant with household income of $90,000.00 or more:
             (i) the statewide education tax rate, multiplied by the equalized
value of the housesite in the taxable year;
             (ii) minus (if less) the sum of:
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                (I) the income percentage of household income for the taxable
year; plus
                (II) the statewide education tax rate, multiplied by the equalized
value of the housesite in the taxable year in excess of $225,000.00.
         (B) For a claimant with household income of less than $90,000.00 but
more than $47,000.00, the statewide education tax rate, multiplied by the
equalized value of the housesite in the taxable year, minus (if less) the sum of:
             (i) the income percentage of household income for the taxable
year; plus
             (ii) the statewide education tax rate, multiplied by the equalized
value of the housesite in the taxable year in excess of $400,000.00.
         (C) For a claimant whose household income does not exceed
$47,000.00, the statewide education tax rate, multiplied by the equalized value
of the housesite in the taxable year, minus the lesser of:
             (i) the sum of the income percentage of household income for the
taxable year plus the statewide education tax rate, multiplied by the equalized
value of the housesite in the taxable year in excess of $400,000.00; or
             (ii) the statewide education tax rate, multiplied by the equalized
value of the housesite in the taxable year reduced by $15,000.00.
      (2) “Income percentage” in this section means two percent, multiplied by
the education income tax spending adjustment under subdivision 5401(13)(B)
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of this title for the property tax year that begins in the claim year for the
municipality in which the homestead residence is located.
      (1) An eligible claimant who owned the homestead on April 1 of the
claim year and whose household income does not exceed $115,000.00 shall be
entitled to a homestead property tax exemption in the claim year in an amount
determined as follows:
      If household income (rounded  then the claimant is entitled to a
      to the nearest dollar) is:  homestead property tax
                                                exemption against the first
                                                $425,000.00 in housesite value
                                                of this percent:
      $0.00 — 25,000.00  95.00
      $25,001.00 — 40,000.00  90.00
      $40,001.00 — 50,000.00  80.00
      $50,001.00 — 60,000.00  70.00
      $60,001.00 — 70,000.00  60.00
      $70,001.00 — 80,000.00  50.00
      $80,001.00 — 90,000.00  40.00
      $90,001.00 — 100,000.00  30.00
      $100,001.00 — 110,000.00  20.00
      $110,001.00 — 115,000.00  10.00
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      (3)(2) A An eligible claimant who owned the homestead on April 1 of
the claim year and whose household income does not exceed $47,000.00 shall
also be entitled to an additional a credit amount from against the claimant’s
municipal taxes for the upcoming fiscal year that is equal to the amount by
which the municipal property taxes for the municipal fiscal year that began in
the taxable year upon the claimant’s housesite exceeds a percentage of the
claimant’s household income for the taxable year as follows:
      If household income (rounded  then the taxpayer is entitled to
              to the nearest dollar) is:      credit for the reduced property
                                              tax in excess of this percent of
                                              that income:
      $0.00 — 9,999.00  1.50
      $10,000.00 — 47,000.00  3.00
      (4) A claimant whose household income does not exceed $47,000.00
shall also be entitled to an additional credit amount from the claimant’s
statewide education tax for the upcoming fiscal year that is equal to the amount
by which the education property tax for the municipal fiscal year that began in
the taxable year upon the claimant’s housesite, reduced by the credit amount
determined under subdivisions (1) and (2) of this subsection, exceeds a
percentage of the claimant’s household income for the taxable year as follows:
      If household income (rounded  then the taxpayer is entitled to
      to the nearest dollar) is:  credit for the reduced property tax
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                                             in excess of this percent of that
                                             income:
      $0.00 — 9,999.00  0.5
      $10,000.00 — 24,999.00  1.5
      $25,000.00 — 47,000.00  2.0
      (5)(3) In no event shall the homestead property tax exemption provided
for in subdivision (1) of this subsection reduce the housesite value below zero.
In no event shall the municipal property tax credit provided for in subdivision
(3) or (4)(2) of this subsection exceed the amount of the reduced municipal
property tax. The credits under subdivision (4) of this subsection shall be
calculated considering only the tax due on the first $400,000.00 in equalized
housesite value.
      (4) Each dollar amount in subdivision (1) of this subsection shall be
adjusted for inflation annually on or before November 15 by the Commissioner
of Taxes. As used in this subdivision, “adjusted for inflation” means adjusting
the dollar amount by the National Income and Product Accounts (NIPA)
implicit price deflator for state and local government consumption
expenditures and gross investment published by the U.S. Department of
Commerce, Bureau of Economic Analysis, from fiscal year 2025 through the
fiscal year for which the amount is being determined, and rounding upward to
the nearest whole dollar amount.
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   (b)(1) An eligible claimant who rented the homestead shall be entitled to a
credit for the taxable year in an amount not to exceed $2,500.00, to be
calculated as follows:
                                       ***
   (c) To be eligible for an adjustment exemption or credit under this chapter,
the claimant:
      (1) must have been domiciled in this State during the entire taxable year;
      (2) may not be a person claimed as a dependent by any taxpayer under
the federal Internal Revenue Code during the taxable year; and
      (3) in the case of a renter, shall have rented property for at least six
calendar months, which need not be consecutive, during the taxable year.
   (d) The owner of a mobile home that is sited on a lot not owned by the
homeowner may include an amount determined under subdivision 6061(7) of
this title as allocable rent paid on the lot with the amount of property taxes paid
by the homeowner on the home for the purpose of computation of credits the
municipal property tax credit under subdivision (a)(3)(2) of this section, unless
the homeowner has included in the claim an amount of property tax on
common land under the provisions of subsection (e) of this section.
   (e) Property taxes paid by a cooperative, not including a mobile home park
cooperative, allocable to property used as a homestead shall be attributable to
the co-op member for the purpose of computing the credit of property tax
liability of the co-op member under this section. Property owned by a
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cooperative declared as a homestead may only include the homestead and a pro
rata share of any common land owned or leased by the cooperative, not to
exceed the two-acre housesite limitation. The share of the cooperative’s
assessed value attributable to the housesite shall be determined by the
cooperative and specified annually in a notice to the co-op member. Property
taxes paid by a mobile home park cooperative, allocable to property used as a
housesite, shall be attributed to the owner of the housesite for the purpose of
computing the credit of property tax liability of the housesite owner under this
section. Property owned by the mobile home park cooperative and declared as
a housesite may only include common property of the cooperative contiguous
with at least one mobile home lot in the park, not to exceed the two-acre
housesite limitation. The share attributable to any mobile home lot shall be
determined by the cooperative and specified in the cooperative agreement. A
co-op member who is the housesite owner shall be entitled to a property tax
credit in an amount determined by multiplying the property taxes allocated
under this subsection by the percentage of the exemption for which the
housesite owner’s household income qualifies under subdivision (a)(1) of this
section.
   (f) [Repealed.]
   (g) Notwithstanding subsection (d) of this section, if the land surrounding a
homestead is owned by a nonprofit corporation or community land trust with
tax exempt status under 26 U.S.C. § 501(c)(3), the homeowner may include an
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allocated amount as property tax paid on the land with the amount of property
taxes paid by the homeowner on the home for the purposes of computation of
the credit property tax liability under this section. The allocated amount shall
be determined by the nonprofit corporation or community land trust on a
proportional basis. The nonprofit corporation or community land trust shall
provide to that homeowner, by January 31, a certificate specifying the
allocated amount. The certificate shall indicate the proportion of total property
tax on the parcel that was assessed for municipal property tax and for statewide
property tax and the proportion of total value of the parcel. A homeowner
under this subsection shall be entitled to a property tax credit in an amount
determined by multiplying the property taxes allocated under this subsection
by the percentage of the exemption for which the homeowner’s household
income qualifies under subdivision (a)(1) of this section.
   (h) A homestead owner shall be entitled to an additional property tax credit
amount equal to one percent of the amount of income tax refund that the
claimant elects to allocate to payment of homestead statewide education
property tax under section 6068 of this title.
   (i) Adjustments The homestead property tax exemption and the municipal
property tax credit under subsection (a) of this section shall be calculated
without regard to any exemption under subdivision 3802(11) of this title.
§ 6066a. DETERMINATION OF HOMESTEAD PROPERTY TAX
          EXEMPTION AND MUNICIPAL PROPERTY TAX CREDIT
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   (a) Annually, the Commissioner shall determine the homestead property
tax exemption and the municipal property tax credit amount under section
6066 of this title, related to a homestead owned by the claimant, based on the
prior taxable year’s income and for the municipal property tax credit, crediting
property taxes paid in the prior year, and for the homestead property tax
exemption, exempting the housesite value in the claim year. The
Commissioner shall notify the municipality in which the housesite is located of
the amount of the homestead property tax exemption and municipal property
tax credit for the claimant for homestead property tax liabilities on a monthly
basis. The municipal property tax credit of a claimant who was assessed
property tax by a town that revised the dates of its fiscal year, however, is the
excess of the property tax that was assessed in the last 12 months of the revised
fiscal year, over the adjusted property tax of the claimant for the revised fiscal
year, as determined under section 6066 of this title, related to a homestead
owned by the claimant.
   (b) The Commissioner shall include in the total homestead property tax
exemption and municipal property tax credit amount determined under
subsection (a) of this section, for credit to the taxpayer for homestead statewide
education property tax and supplemental district spending tax liabilities, any
income tax overpayment remaining after allocation under section 3112 of this
title and setoff under section 5934 of this title, which the taxpayer has directed
to be used for payment of property taxes.
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   (c) The Commissioner shall notify the municipality of any claim and
refund amounts unresolved by November 1 at the time of final resolution,
including adjudication, if any; provided, however, that towns will not be
notified of any additional credit amounts after November 1 of the claim year,
and such amounts shall be paid to the claimant by the Commissioner.
   (d) [Repealed.]
   (e) At the time of notice to the municipality, the Commissioner shall notify
the taxpayer of the homestead property tax credit exemption amount
determined under subdivision 6066(a)(1) of this title, the amount determined
under subdivision 6066(a)(3) of this title,; any additional municipal property
credit amounts amount due the homestead owner under section subdivision
6066(a)(2) of this title,; the amount of income tax refund, if any, allocated to
payment of homestead statewide education property tax liabilities,; and any
late-claim reduction amount.
   (f)(1) For taxpayers and amounts stated in the notice to towns on or before
July 1, municipalities shall create and send to taxpayers a homestead property
tax bill, instead of the bill required under subdivision 5402(b)(1) of this title,
providing the total amount allocated to payment of homestead statewide
education property tax liabilities and notice of the balance due. Municipalities
shall apply the amount of the homestead property tax exemption allocated
under this chapter to current year property taxes in equal amounts to each of
the taxpayers’ property tax installments that include education taxes and the
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amount of the municipal property tax credit allocated under this chapter to
current year municipal property taxes in equal amounts to each of the
taxpayers’ property tax installments that include municipal taxes.
Notwithstanding section 4772 of this title, if a town issues a corrected bill as a
result of the notice sent by the Commissioner under subsection (a) of this
section, issuance of the corrected new bill does not extend the time for
payment of the original bill nor relieve the taxpayer of any interest or penalties
associated with the original bill. If the corrected bill is less than the original
bill, and there are also no unpaid current year taxes, interest, or penalties, and
no past year delinquent taxes or penalties and interest charges, any
overpayment shall be reflected on the corrected tax bill and refunded to the
taxpayer.
      (2) For homestead property tax exemption and municipal property tax
credit amounts for which municipalities receive notice after November 1,
municipalities shall issue a new homestead property tax bill with notice to the
taxpayer of the total amount allocated to payment of homestead property tax
liabilities and notice of the balance due.
      (3) The homestead property tax exemption and municipal property tax
credit amount determined for the taxpayer shall be allocated first to current
year housesite value and property tax on the homestead parcel, next to current-
year homestead parcel penalties and interest, next to any prior year homestead
parcel penalties and interest, and last to any prior year housesite value and
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property tax on the homestead parcel. No homestead property tax exemption
or municipal credit shall be allocated to a housesite value or property tax
liability for any year after the year for which the claim or refund allocation was
filed. No municipal tax-reduction incentive for early payment of taxes shall
apply to any amount allocated to the property tax bill under this chapter.
      (4) If the homestead property tax exemption or the municipal property
tax credit amount as described in subsection (e) of this section exceeds the
property tax, penalties, and interest due for the current and all prior years, the
municipality shall refund the excess to the taxpayer, without interest, within 20
days of the first date upon which taxes become due and payable or 20 days
after notification of the exemption or credit amount by the Commissioner of
Taxes, whichever is later.
   (g) The Commissioner of Taxes shall pay monthly to each municipality the
amount of municipal property tax credit of which the municipality was last
notified related to municipal property tax on homesteads within that
municipality, as determined by the Commissioner of Taxes.
§ 6067. CREDIT CLAIM LIMITATIONS
   (a) Claimant. Only one individual per household per taxable year shall be
entitled to a homestead exemption claim or property tax credit claim, or both,
under this chapter.
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   (b) Other states. An individual who received a homestead exemption or
credit with respect to property taxes assessed by another state for the taxable
year shall not be entitled to receive a credit under this chapter.
   (c) Dollar amount. No taxpayer claimant shall receive a renter credit under
subsection 6066(b) of this title in excess of $2,500.00. No taxpayer claimant
shall receive a municipal property tax credit under subdivision 6066(a)(3)(2) of
this title greater than $2,400.00 or cumulative credit under subdivisions
6066(a)(1)-(2) and (4) of this title greater than $5,600.00.
§ 6068. APPLICATION AND TIME FOR FILING
   (a) A homestead property tax exemption or municipal property tax credit
claim or request for allocation of an income tax refund to homestead statewide
education property tax payment shall be filed with the Commissioner on or
before the due date for filing the Vermont income tax return, without
extension, and shall describe the school district in which the homestead
property is located and shall particularly describe the homestead property for
which the exemption or credit or allocation is sought, including the school
parcel account number prescribed in subsection 5404(b) of this title. A renter
credit claim shall be filed with the Commissioner on or before the due date for
filing the Vermont income tax return, without extension.
   (b)(1) If the a claimant files a municipal property tax credit claim after
October 15 but on or before March 15 of the following calendar year, the
municipal property tax credit under this chapter:
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      (1)(A) shall be reduced in amount by $150.00, but not below $0.00;
      (2)(B) shall be issued directly to the claimant; and
      (3)(C) shall not require the municipality where the claimant’s property
is located to issue an adjusted homestead property tax bill.
      (2) If a claimant files a homestead property tax exemption claim under
this chapter after October 15 but on or before March 15 of the following
calendar year, the claimant shall pay a penalty of $150.00 and the municipality
where the claimant’s property is located shall not be required to issue an
adjusted property tax bill.
   (c) No request for allocation of an income tax refund or for a renter credit
claim may be made after October 15. No homestead property tax exemption or
municipal property tax credit claim may be made after March 15 of the
calendar year following the due date under subsection (a) of this section.
                                      ***
§ 6070. DISALLOWED CLAIMS
   A claim shall be disallowed if the claimant received title to his or her the
claimant’s homestead primarily for the purpose of receiving benefits under this
chapter.
§ 6071. EXCESSIVE AND FRAUDULENT CLAIMS
   (a) In any case in which it is determined under the provisions of this title
that a claim is or was excessive and was filed with fraudulent intent, the claim
shall be disallowed in full and the Commissioner may impose a penalty equal
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to the amount claimed. A disallowed claim may be recovered by assessment
as income taxes are assessed. The assessment, including assessment of
penalty, shall bear interest from the date the claim was credited against
property tax or income tax or paid by the State until repaid by the claimant at
the rate per annum established from time to time by the Commissioner
pursuant to section 3108 of this title. The claimant in that case, and any person
who assisted in the preparation of filing of such excessive claim or supplied
information upon which the excessive claim was prepared, with fraudulent
intent, shall be fined not more than $1,000.00 or be imprisoned not more than
one year, or both.
   (b) In any case in which it is determined that a claim is or was excessive,
the Commissioner may impose a 10 percent penalty on such excess, and if the
claim has been paid or credited against property tax or income tax otherwise
payable, the municipal property tax credit or homestead exemption shall be
reduced or canceled and the proper portion of any amount paid shall be
similarly recovered by assessment as income taxes are assessed, and such
assessment shall bear interest at the rate per annum established from time to
time by the Commissioner pursuant to section 3108 of this title from the date
of payment or, in the case of credit of a municipal property tax bill under
section 6066a of this title, from December 1 of the year in which the claim is
filed until refunded or paid.
                                      ***
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§ 6073. REGULATIONS RULES OF THE COMMISSIONER
   The Commissioner may, from time to time, issue adopt, amend, and
withdraw regulations rules interpreting and implementing this chapter.
§ 6074. AMENDMENT OF CERTAIN CLAIMS
   At any time within three years after the date for filing claims under
subsection 6068(a) of this chapter, a claimant who filed a claim by October 15
may file to amend that claim with regard to housesite value, housesite
education tax, housesite municipal tax, and ownership percentage or to correct
the amount of household income reported on that claim.
Sec. 53. DEPARTMENT OF TAXES; HOMESTEAD EXEMPTION;
         REPORT
   (a) It is the intent of the General Assembly to transition the way income-
based property tax relief is provided to homestead property owners from the
existing credit system towards an income-based homestead exemption.
   (b) On or before December 15, 2026, the Department of Taxes, in
consultation with the Joint Fiscal Office, shall submit a proposal to the House
Committee on Ways and Means and the Senate Committee on Finance
designing a homestead exemption structure that minimizes the:
      (1) property tax impacts for homestead property owners under the new
education tax structure established in this act; and
      (2) benefit cliffs compared to those in the existing credit system.
   (c) The Department of Taxes shall additionally include with its proposal:
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      (1) recommendations for an inflationary adjustment measure suited to
the income sensitivity and housesite value measures of the proposed
homestead exemption;
      (2) an analysis of the implications of moving to income sensitivity
measures that provide benefits to households with household income of up to
$175,000.00 a year; and
      (3) updates to the homestead declaration under 32 V.S.A. § 5410 to
address the implementation of the proposed homestead exemption, which may
be provided as a sample form.
         * * * Conforming Revisions; Property Tax Credit Repeal * * *
Sec. 54. 11 V.S.A. § 1608 is amended to read:
§ 1608. ELIGIBILITY FOR PROPERTY TAX RELIEF
   Members of cooperative housing corporations shall be eligible to apply for
and receive a homestead property tax adjustment exemption and municipal
property tax credit under 32 V.S.A. § 6066, subject to the conditions of
eligibility set forth therein.
Sec. 55. 32 V.S.A. § 3102(j) is amended to read:
      (j) Tax bills prepared by a municipality under subdivision 5402(b)(1) of
this title showing only the amount of total tax due shall not be considered
confidential return information under this section. For the purposes of
calculating credits the homestead property tax exemption and the municipal
property tax credit under chapter 154 of this title, information provided by the
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Commissioner to a municipality under subsection 6066a(a) of this title and
information provided by the municipality to a taxpayer under subsection
6066a(f) shall be considered confidential return information under this section.
Sec. 56. 32 V.S.A. § 3206(b) is amended to read:
   (b) As used in this section, “extraordinary relief” means a remedy that is
within the power of the Commissioner to grant under this title, a remedy that
compensates for the result of inaccurate classification of property as homestead
or nonhomestead pursuant to section 5410 of this title through no fault of the
taxpayer, or a remedy that makes changes to a taxpayer’s homestead property
tax exemption, municipal property tax credit, or renter credit claim necessary
to remedy the problem identified by the Taxpayer Advocate.
                * * * Education Fund Advisory Committee * * *
Sec. 57. 32 V.S.A. § 5414 is amended to read:
§ 5414. CREATION; EDUCATION FUND ADVISORY COMMITTEE
   (a) Creation. There is created the Education Fund Advisory Committee to
monitor Vermont’s education financing system, conduct analyses, assist with
the transformation of Vermont’s education finance system, and perform the
duties under subsection (c) of this section.
                                      ***
   (c) Powers and duties.
      (1) Annually, on or before December 15, the Committee shall make
recommendations to the General Assembly regarding:
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           (A) updating the weighting factors using the weighting model and
methodology used to arrive at the weights enacted under 2022 Acts and
Resolves No. 127 for the foundation formula, which may include recalibration,
recalculation, adding or eliminating weights, or any combination of these
actions, as necessary;
           (B) changes to, or the addition of new or elimination of existing,
categorical aid, as necessary;
           (C) changes to income levels eligible for a property tax credit
homestead exemption under section 6066 of this title;
           (D) means to adjust the revenue sources for the Education Fund;
           (E) means to improve equity, transparency, and efficiency in
education funding statewide;
           (F) the amount of the Education Fund stabilization reserve;
           (G) school district use of reserve fund accounts; and
           (H) national best practices for addressing intra-school district effects
of a foundation formula, including through the use of weighting factors;
           (I) how to maintain intra-district equity under Vermont’s foundation
formula;
           (J) whether weighted foundation formula payments lead to improved
outcomes across all populations; and
           (K) any other topic, factor, or issue the Committee deems relevant to
its work and recommendations.
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                                       ***
Sec. 58. [Deleted.]
Sec. 59. [Deleted.]
                         * * * Property Classification * * *
Sec. 60. 32 V.S.A. § 4152 is amended to read:
§ 4152. CONTENTS
   (a) When completed, the grand list of a town shall be in such form as the
Director prescribes and shall contain such information as the Director
prescribes, including:
      (1) In alphabetical order, the name of each real property owner and each
owner of taxable personal property.
      (2) The last known mailing address of all such owners.
      (3) A brief description of each parcel of taxable real estate in the town,
including a classification assigned pursuant to section 4152a of this title.
“Parcel” As used in this subdivision, “parcel” means a separate and sellable lot
or piece of real estate. Parcels may be combined to represent all contiguous
land in the same ownership, together with all improvements thereon.
                                       ***
Sec. 61. 32 V.S.A. § 4152a is added to read:
§ 4152a. PROPERTY TAX CLASSIFICATIONS
   (a) The grand list of a town shall include one or more tax classifications for
each parcel of real estate. A parcel shall be classified using one of the general
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classes of real estate listed under subsection (b) of this section and based on the
considerations set forth in this section and by guidance provided by the
Division of Property Valuation and Review. The listers and assessors shall
annually update the grand list to include a tax classification not later than June
1 of every year, using information submitted to the Department of Taxes
pursuant to this section. The tax classification may be updated after June 1
when a taxpayer files, or corrects an erroneously filed, homestead declaration
after June 1.
   (b) A parcel shall be assigned one or more of the following general classes:
      (1) Homestead;
      (2) Nonhomestead nonresidential; and
      (3) Nonhomestead residential.
   (c) As used in this section:
      (1) “Homestead” means a parcel, or portion of a parcel, declared as a
homestead on or before October 15 in accordance with section 5410 of this
title for the current year.
      (2) “Nonhomestead nonresidential” means a parcel, or portion of a
parcel, that does not qualify as “homestead,” or “nonhomestead residential”
under this section.
      (3) “Nonhomestead residential” means a parcel, or portion of a parcel,
for which a homestead was not declared in accordance with section 5410 of
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this title for the current year and that has a residential property, as defined by
the Commissioner by rule.
   (d) A parcel with two or more portions qualifying for different tax
classifications under this section shall be classified proportionally based on the
percentage of floor space used.
      (1) In the case of a homestead with 25 percent or less of floor space used
for a business purpose, the parcel shall be classified as a homestead pursuant to
subdivision 5401(a)(7)(F) of this title.
      (2) If a portion of floor space is used for more than one purpose, the use
in which the floor space is most often used shall be considered the primary use
and the floor space shall be dedicated to that use for purposes of tax
classification.
   (e) The Commissioner shall amend existing forms, and publish new forms,
as needed to gather the necessary attestations and declarations required under
this section.
   (f) Nothing in this section shall be construed to alter the tax treatment or
enrollment eligibility of property as it relates to use value appraisal under
chapter 124 of this title.
   (g) Persons aggrieved by a decision to classify property for taxation
purposes under this section may appeal in the manner provided for property
valuation appeals under this title.
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Sec. 61a. PROPERTY TAX CLASSIFICATIONS; TRANSITION; DATA
           COLLECTION
   For calendar year 2027, the Commissioner of Taxes shall amend and create
forms so that taxpayers report information on the use of their property for such
property to be classified as homestead, nonhomestead residential,
nonhomestead nonresidential, or a proportional classification of those uses.
The information collected, and classifications determined, shall align with the
definitions and requirements of Sec. 61 of this act. The Commissioner shall
use the information to determine and assign a tax classification for every grand
list parcel and, on or before October 1, 2027, the Commissioner shall provide
that information to the Joint Fiscal Office.
Sec. 61b. PROPERTY TAX CLASSIFICATIONS IMPLEMENTATION
           REPORT
   (a) The Commissioner of Taxes shall study the implementation of new
property tax classifications under this act and identify any further actions
required by the Department of Taxes, Vermont municipalities, and the General
Assembly to successfully implement the new tax classification system on the
timeline established by this act. The issues considered by the Commissioner
shall include any adjustments to the statutory definitions, any needed changes
to existing forms, whether new forms or taxpayer filings are needed, and how
the Department could identify parcels with dwelling units that do not have an
affiliated homestead declaration or landlord certificate on file.
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   (b) The Commissioner shall additionally recommend sets of tax rate
multipliers to be applied under 32 V.S.A. § 5402(a) as amended by this act.
      (1) The Commissioner shall recommend a multiplier set that would
ensure any new revenue derived from the nonhomestead residential
classification would cover the cost to the Education Fund caused by the
homestead property tax exemption under 32 V.S.A. § 6066(a) as amended by
this act.
      (2) The Commissioner shall recommend a different multiplier set that
would ensure that any new revenue derived from the nonhomestead residential
classification would mitigate forecasted property tax increases on homestead
property taxpayers caused by the implementation of this act.
   (c) On or before December 15, 2025, the Commissioner of Taxes shall
submit a study report detailing the Commissioner’s findings under this section
to the House Committee on Ways and Means and the Senate Committee on
Finance.
Sec. 61c. TAX CLASSIFICATIONS; RATE MULTIPLIERS; INTENT
   It is the intent of the General Assembly that the creation of a tax
classification system, and the specific tax classifications to be used by that
system, will be reevaluated at the same time as any further amendment of the
tax rate multipliers created under 32 V.S.A. § 6066(a) as amended by this act.
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Sec. 61d. PROSPECTIVE REPEAL OF TAX CLASSIFICATIONS
   In order to ensure successful implementation of education finance reform as
set forth in this act, in the absence of legislative action on or before July 1,
2028 that creates a new tax rate multiplier to be used in a tax classification
system, subdivision (f)(10) of Sec. 70 of this act is repealed on July 1, 2028.
                    * * * Regional Assessment Districts * * *
Sec. 62. 32 V.S.A. chapter 121, subchapter 1A is added to read:
         Subchapter 1A. Statewide and Regional Property Assessment
§ 3415. LEGISLATIVE INTENT
   It is the intent of the General Assembly in adopting this subchapter to create
regional assessment districts so that:
      (1) properties on grand lists are regularly reappraised;
      (2) property data collection is consistent and standardized across the
State; and
      (3) property valuation is conducted by trained and certified individuals
and firms.
§ 3416. REGIONAL ASSESSMENT DISTRICTS; ESTABLISHMENT
   (a) There are hereby established 12 regional assessment districts, whose
member municipalities shall fully and jointly reappraise their grand lists every
six years pursuant to subsection 3417(b) of this subchapter. Member
municipalities shall contract jointly with one or more third parties to conduct
reappraisals.
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   (b) Each county shall constitute one regional assessment district, except
that Franklin and Grand Isle Counties shall constitute one district and Essex
and Orleans Counties shall constitute one district.
§ 3417. STANDARD GUIDELINES; PROCEDURES; RULEMAKING
   (a) The Director of Property Valuation and Review shall establish standard
guidelines and procedures, and may adopt rules, for regional assessment
districts, including:
      (1) guidelines for contracting with third parties to conduct or assist with
reappraisals, including standard reappraisal contract terms;
      (2) standards for the collection and recordation of parcel data;
      (3) requirements relating to information technology, including standards
for data software contracts and computer-assisted mass appraisal systems; and
      (4) standardized practices for a full reappraisal, including cases in which
physical inspections are unnecessary and how technology is to be utilized.
   (b) The Director of Property Valuation and Review shall establish a
schedule for each regional assessment district to fully reappraise every six
years. The Director, at the Director’s discretion, may alter the reappraisal
schedule for a regional assessment district or for one or more of a regional
assessment district’s member municipalities.
             * * * Transition to Regional Assessment Districts * * *
Sec. 63. TRANSITION; ANNUAL PROGRESS REPORT
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   (a) Notwithstanding 32 V.S.A. § 4041a or any other provision of law to the
contrary:
      (1) the Director of Property Valuation and Review shall not order any
new municipal reappraisals of grand list properties that is not part of a
regionalized reappraisal system on and after January 1, 2027;
      (2) a reappraisal order for which a municipality does not have a contract
in place before January 1, 2030 shall no longer have the force and effect of law
on and after January 1, 2030, except for those that are part of a regionalized
reappraisal system; and
      (3) a municipality shall not enter into a new reappraisal contract on or
after January 1, 2027, except for those that are part of a regionalized
reappraisal system.
   (b) On or before every January 15 from January 15, 2027 to January 15,
2030, the Commissioner of Taxes shall submit a report to the House
Committee on Ways and Means and the Senate Committee on Finance relating
to the progress made in preparing for the implementation of regional
assessment districts pursuant to this act.
Sec. 64. REGIONAL ASSESSMENT DISTRICT STAKEHOLDER
            WORKING GROUP
   On or before January 15, 2026, the Department of Taxes, in consultation
with relevant stakeholders, shall submit recommendations to the House
Committee on Ways and Means and the Senate Committee on Finance
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advising on the implementation of regional assessment districts and on the
development of guidelines, procedures, and rules needed to effectuate a
regionalized reappraisal system. The recommendations will include an
analysis of the advantages and disadvantages of having the State take full
responsibility for regionalized appraisals. In making its recommendation, the
Department of Taxes shall provide suggestions for legislative language that
address:
      (1) the authority or authorities who will contract for and conduct
reappraisals;
      (2) the authority or authorities who will hear and decide property
valuation appeals;
      (3) amendments necessary to conform statute to the change from an
April 1 to January 1 grand list assessment date; and
      (4) any other recommended revisions to achieve a regionalized
reappraisal system.
                          * * * Miscellaneous Tax * * *
Sec. 65. 32 V.S.A. § 6066a(f)(1) is amended to read:
   (f)(1) For taxpayers and amounts stated in the notice to towns on or before
July 1, municipalities shall create and send to taxpayers a homestead property
tax bill, instead of the bill required under subdivision 5402(b)(1) of this title,
providing the total amount allocated to payment of homestead education
property tax liabilities and notice of the balance due. Nothing in this
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subdivision, however, shall be interpreted as altering the requirement under
subdivision 5402(b)(2) of this title that the statewide education homestead tax
be billed in a manner that is stated clearly and separately from any other tax.
Municipalities shall apply the amount allocated under this chapter to current
year property taxes in equal amounts to each of the taxpayers’ property tax
installments that include education taxes. Notwithstanding section 4772 of this
title, if a town issues a corrected bill as a result of the notice sent by the
Commissioner under subsection (a) of this section, issuance of the corrected
new bill does not extend the time for payment of the original bill nor relieve
the taxpayer of any interest or penalties associated with the original bill. If the
corrected bill is less than the original bill, and there are also no unpaid current
year taxes, interest, or penalties, and no past year delinquent taxes or penalties
and interest charges, any overpayment shall be reflected on the corrected tax
bill and refunded to the taxpayer.
Sec. 66. 32 V.S.A. § 5252 is amended to read:
§ 5252. LEVY AND NOTICE OF SALE; SECURING PROPERTY
   (a) When the collector of taxes of a town or of a municipality within it has
for collection a tax assessed against real estate in the town and the taxpayer
owes a minimum of $1,500.00 and is delinquent for a period longer than one
year, the collector may extend a warrant on such land. However, no warrant
shall be extended until a delinquent taxpayer is given an opportunity to enter a
written reasonable repayment plan pursuant to subsection (c) of this section. If
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a collector receives notice from a mobile home park owner pursuant to 10
V.S.A. § 6248(b), the collector shall, within 15 days after the notice,
commence tax sale proceedings to hold a tax sale within 60 days after the
notice. If the collector fails to initiate such proceedings, the town may initiate
tax sale proceedings only after complying with 10 V.S.A. § 6249(f). If the tax
collector extends the warrant, the collector shall:
                                       ***
Sec. 67. 32 V.S.A. § 4465 is amended to read:
§ 4465. APPOINTMENT OF PROPERTY VALUATION HEARING
         OFFICER; OATH; PAY
   When an appeal to the Director is not withdrawn or forwarded by the
Director to Superior Court pursuant to subsection 4461(a) of this title, the
Director shall refer the appeal in writing to a person not employed by the
Director, appointed by the Director as hearing officer. The Director shall have
the right to remove a hearing officer for inefficiency, malfeasance in office, or
other cause. In like manner, the Director shall appoint a hearing officer to fill
any vacancy created by resignation, removal, or other cause. Before entering
into their duties, persons appointed as hearing officers shall take and subscribe
the oath of the office prescribed in the Constitution, which oath shall be filed
with the Director. The Director Commissioner of Taxes shall pay each hearing
officer a sum not to exceed $150.00 per diem for each day wherein hearings
are held $38.00 per hour plus a cost-of-living adjustment in an amount equal to
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any adjustment approved for exempt employees by the Secretary of
Administration, together with reasonable expenses as the Director
Commissioner may determine. A hearing officer may subpoena witnesses,
records, and documents in the manner provided by law for serving subpoenas
in civil actions and may administer oaths to witnesses.
Sec. 68. 32 V.S.A. § 5402(c)(2) is amended to read:
      (2) The Secretary of Education shall determine each municipality’s net
nonhomestead education tax payment and its net homestead education tax
payment to the State based on grand list information received by the Secretary
not later than the March 15 prior to the June 1 net payment. Payment shall be
accompanied by a return prescribed by the Secretary of Education. Each
municipality may retain 0.225 of one percent of the total education tax
collected, only upon timely remittance of net payment to the State Treasurer or
to the applicable school district or districts. Each municipality may also retain
$15.00 for each late property tax credit claim filed after April 15 and before
September 2, as notified by the Department of Taxes, for the cost of issuing a
new property tax bill.
Sec. 69. 32 V.S.A. § 5401(13) is amended to read:
      (13)(A) “Education property tax spending adjustment” means the
greater of one or a fraction in which:
            (i) the numerator is the district’s per pupil education spending plus
excess spending for the school year, and
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            (ii) the denominator is the property dollar equivalent yield for the
school year, as defined in subdivision (15) of this section, multiplied by the
statewide adjustment.
         (B) “Education income tax spending adjustment” means the greater
of one or a fraction in which the numerator is the district’s per pupil education
spending plus excess spending for the school year, and the denominator is the
income dollar equivalent yield for the school year, as defined in subdivision
(16) of this section.
                             * * * Effective Dates * * *
Sec. 70. EFFECTIVE DATES
   (a) This section and the following sections shall take effect on passage:
      (1) Sec. 1 (findings; intent; plan);
      (2) Sec. 2 (Commission on the Future of Public Education);
      (3) Sec. 3 (School District Redistricting Task Force);
      (4) Sec. 4 (School District Voting Ward Working Group);
      (5) Sec. 28a (State Board of Education tuition fee rules);
      (6) Sec. 32 (Agency of Education transformation support);
      (7) Sec. 33 (Agency of Education positions);
      (8) Sec. 44 (transportation reimbursement guidelines);
      (9) Sec. 45 (inflationary measures; prekindergarten; reports);
      (10) Sec. 45a (foundation formula report);
      (11) Sec. 45c (Education Fund Advisory Committee; delay);
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     (12) Sec. 53 (homestead exemption report);
     (13) Sec. 61b (property tax classifications implementation report);
     (14) Sec. 61c (tax classifications intent);
     (15) Sec. 61d (prospective repeal);
     (16) Sec. 63 (regional assessment district transition; progress report);
     (17) Sec. 64 (RAD stakeholder working group);
     (18) Sec. 65 (inadvertently removed language);
     (19) Sec. 66 (minimum debt for tax sales);
     (20) Sec. 68 (property tax credit late fee); and
     (21) Sec. 69 (statewide adjustment correction).
  (b) The following sections shall take effect on July 1, 2025:
     (1) Sec. 5 (scale; intent);
     (2) Sec. 8 (SBE rules; report);
     (3) Sec. 9 (AOE report; school calendar; graduation requirements);
     (4) Sec. 10 (SBE rule review; appropriation);
     (5) Sec. 14 (16 V.S.A. § 3443);
     (6) Sec. 15 (School Construction Advisory Board sunset);
     (7) Sec. 21 (16 V.S.A. § 828);
     (8) Sec. 22 (tuition transition);
     (9) Sec. 23 (state-level governance; intent);
     (10) Sec. 24 (16 V.S.A. § 161);
     (11) Sec. 25 (SBE appointments transition);
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      (12) Sec. 26 (16 V.S.A. § 162);
      (13) Sec. 29 (special education report);
      (14) Sec. 30 (AOE special education strategic plan);
      (15) Sec. 31 (AOE position); and
      (16) Sec. 67 (PVR hearing officer pay).
   (c) The following sections shall take effect on July 1, 2026:
      (1) Sec. 6 (class size minimums);
      (2) Sec. 7 (failure to comply with class size minimums);
      (3) Sec. 12 (school construction policy);
      (4) Sec. 13 (16 V.S.A. § 3442);
      (5) Sec. 16 (16 V.S.A. § 3444);
      (6) Sec. 17 (16 V.S.A. § 3445);
      (7) Sec. 18 (16 V.S.A. § 3446);
      (8) Sec. 19 (transfer of rulemaking authority); and
      (9) Sec. 20 (repeals).
   (d) Sec. 48 (December 1 letter) shall take effect on July 1, 2027.
   (e) Sec. 61a shall take effect on January 1, 2027, provided that the General
Assembly has enacted new school district boundaries between the enactment
of this act and January 1, 2027.
   (f) The following sections shall take effect on July 1, 2028, provided that
the new school districts contemplated by this act have assumed responsibility
for the education of all resident students and that the expert tasked with
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developing a cost-factor foundation formula has provided to the General
Assembly the report pursuant to Sec. 45a to provide the General Assembly an
opportunity to enact legislation in consideration of the report:
      (1) In Sec. 27, 16 V.S.A. § 823(a) and (d);
      (2) Sec. 28 (tuition repeals);
      (3) Secs. 34–43 (transition to cost-factor foundation formula);
      (4) Sec. 45b (educational opportunity payment transition);
      (5) Secs. 46, 47, 49, and 50 (statewide education tax; supplemental
district spending tax);
      (6) Sec. 46a (supplemental district spending tax; cap; transition);
      (7) Sec. 48a (tax rate transition);
      (8) Secs. 51, 52, and 54–56 (property tax credit repeal; creation of
homestead exemption);
      (9) Sec. 57 (Education Fund Advisory Committee; review of foundation
formula); and
      (10) Secs. 60 and 61 (property tax classifications).
   (g) In Sec. 27, 16 V.S.A. § 823(b) and (c) shall take effect on July 1, 2028,
provided that the new school districts contemplated by this act have assumed
responsibility for the education of all resident students and that the cost-factor
foundation formula report required pursuant to Sec. 45a contains evidence that
it costs more to educate students in grades nine through 12 but the General
Assembly has failed to enact legislation to add a secondary student weight.
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  (h) Sec. 62 (regional assessment districts) shall take effect on January 1,
2029.
Date Governor signed bill: July 1, 2025
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