The Other Half
by Maggie Lenz and Gwynn Zakov (on behalf of Atlas Government Affairs and Garnet Government Relations)
Lawmakers returned to the State House on January 6 to gavel in for the 2026 Legislative Session. As Act 73, the so-called education transformation initiative moves into its first full legislative session since passage, most of the public conversation continues to focus on governance and redistricting.
After months of study and hearing widespread public opposition to forced consolidation, the Redistricting Task Force declined to propose new maps. Instead they recommended a model built around shared services and cross-district collaboration, all voluntary. Governor Scott has made no secret of his (to put it mildly) dissatisfaction with this outcome. The administration, including Education Secretary Zoie Saunders continues to push for a significant reduction in Vermont’s 119 districts.
It will be interesting to see how legislative coalitions form around this issue. The debate may not divide cleanly along party lines. Rural communities, often the Republican’s bread and butter, have organized a focused lobbying effort in opposition to school closures and forced mergers through the Rural School Alliance. As lawmakers approach an election year, many will likely be weighing the Governor’s preferred policy outcomes against pressure from their local school leaders back home.
While governance continues to drive headlines, far less attention has been paid to another central feature of Act 73: the move to a foundation formula. Though enacted last year, the formula does not take effect unless the Legislature approves a redistricting plan. This was written into statute deliberately. Funding and governance are linked by design, though lawmakers always have the authority to decouple them through legislation.
The new formula would shift Vermont from the current yield system to a statewide base amount of $15,033 per pupil. (Side note: In today’s House Education Committee meeting, someone pointed out that the base amount in the foundation formula has no automatic inflation adjustment under Act 73. Whoops.) Additional weights would be applied for poverty, English language learners, and students with disabilities. Local budgets would be capped with a maximum of 10 percent above the calculated formula amount, tightening over time to six percent.
No modeling has been released to show how the new funding system under Act 73 would impact individual districts. Because the formula is tied to new district lines which have yet to materialize, the absence of projections may seem understandable. Still, many at the State House believe the Legislature is likely to pursue the formula regardless of what happens on governance and district lines. If that happens, districts in their current form will need to know what it means for them.
Another possible reason for the lack of public modeling is the painful political memory of the so-called “Spreadsheet Wars”. During the rollout of Act 60 in the 1990s following the Brigham decision, spreadsheets showing which districts would gain or lose funding created an immediate backlash. Wealthier “gold towns” saw their education dollars redistributed, and the fallout was swift. Decades later a similar dynamic played out during Act 127 which updated the pupil weights for certain categories of need, once again redistributing education dollars to high-poverty districts. Once projections were published, many lawmakers took sides immediately based on the impact to their district, and the debate became highly charged. Legislative leadership may be holding off this time to avoid reliving those battles before final decisions are in place.
Meanwhile, the December 1 letter from the Department of Taxes has projected an average 11.9 percent increase in homestead education tax rates. That estimate reflects current budgets and yield assumptions. It is not final. As in prior years, the Legislature may choose to offset the impact through general fund transfers. Governor Scott has already indicated that he will propose such an approach.
While Act 73 includes multiple goals, many policymakers have framed the foundation formula as a way to rein in costs over time. Vermont’s latest reform was driven in large part by rising property tax pressure and concern about long-term education spending. Using a foundation formula primarily for cost containment would place Vermont outside the national norm. In most other states, foundation formulas have been adopted to expand investment in lower-wealth districts. Massachusetts, California, and Minnesota all implemented such systems alongside substantial increases in state education funding.
As the session begins, much of the attention will remain on the question of governance and redistricting. Even so, the design and implementation of Vermont’s future education funding model will determine how public dollars are distributed, who makes budgeting decisions, and what level of resources schools can expect in the years ahead. That part of the law deserves careful and sustained scrutiny, regardless of what happens on the map.
Critical Condition
Vermont’s healthcare system remains under immense stress. Costs continue to rise, hospitals are running deficits, and patients across the state face growing access barriers. Last year, lawmakers began taking serious action. In June, three major bills became law.
H.482 expanded the Green Mountain Care Board’s authority to adjust hospital rates. S.126 created a framework for Medicare-based price regulation and global budgets. H.266 capped outpatient hospital-administered drug costs. These bills marked a first step toward systemwide cost control and structural reform.
In 2026, more proposals are expected. Some lawmakers are considering emergency affordability measures or targeted state funding to offset the loss of federal subsidies. Broader questions will also resurface: Should global budgets be expanded? Should certain services be consolidated regionally? How much care should be delivered outside hospital settings?
This is a structural challenge. Lawmakers will need to decide what services can be preserved, where access can be maintained, and how to manage costs that remain among the highest in the nation. In a stroke of good luck, Vermont was recently informed it will receive $195 million in a federal grant for rural health care reform, but it remains to be seen how this will impact the path forward - if at all.
Landlocked
Land use and housing are also back on the table. Act 181, signed in 2024 over the Governor’s veto, created the most significant changes to Act 250 in fifty years. It introduces a three-tier system: Tier 1 exempts designated downtowns and village centers from Act 250 permitting. Tier 2 maintains the traditional process. Tier 3 applies stricter protections to environmentally sensitive areas.
The goal is to direct development to areas with infrastructure and prevent scattered sprawl. Implementation, however, has been complex. The new Land Use Review Board has been working with every town in Vermont to develop Future Land Use Maps and recently asked for an extension through September.
The upcoming “road rule,” which triggers Act 250 review for projects more than 800 feet from an existing road or requiring over 2,000 feet of new road construction, is already drawing concern from rural property owners. Local officials report confusion and uncertainty about how the rule will be applied and what it means for land values.
Meanwhile, the Community Housing and Infrastructure Program continues to promise up to 200 million dollars annually for housing-related infrastructure. Key debates this session will include appeals processes, notice requirements for landowners, and whether timelines for implementation need to shift. Lawmakers are being asked to balance housing demand, environmental protections, and Vermont’s rural identity all at once. Easy peasy, right?
1.6.2026. Atlas Government Affairs
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