Gov. Phil Scott proposed a sweeping overhaul of what he called Vermont’s “broken and failing” education funding and governing systems during his inaugural address Thursday.
In his first major speech since voters overwhelmingly reelected him and booted Democrats up and down the ballot from office, Scott focused on the topic that most infuriated Vermonters in November: affordability.
“When it comes to politics, I know it can be hard to admit when you’ve gone down the wrong path and need to turn around,” Scott told House and Senate lawmakers during his fifth inaugural address at the Statehouse in Montpelier. “But we’re not here to worry about egos. We’re here to do what Vermonters need. And they just sent a very clear message: They think we’re off course.”
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As is typical for an inaugural speech, Scott did not delve into specifics on Thursday — the details of his plan will be unveiled later this month during his budget address.
But in the broad strokes, Scott teased a plan that would overhaul Vermont’s byzantine school governance structure and see the state assume a direct role in deciding how much districts spend.
“The bottom line is our system is out of scale and very expensive,” Scott said. “And as obvious as these challenges are, we haven’t been able to fix it.”
At the heart of Scott’s vision is a transition to a so-called foundation formula, whereby the state would calculate how much districts should spend on their schools and provide them corresponding grants.
Currently, local voters decide how much their school districts should spend when they approve or reject budgets during Town Meeting Day in the spring. Whatever the amount, the state must pay. To calculate each town’s fair share into Vermont’s more than $2 billion education fund, residential property tax rates are adjusted based on how much each district is spending per pupil.
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While potentially explosive in a state where local control is jealously guarded, a foundation formula is fairly typical across the country. And in Vermont, a bill to transition over to such a system even passed the House in 2018 with Democratic support. The architect of that 2018 legislation, then-GOP Rep. Scott Beck, was just elected to the Senate and named Republican minority leader for the chamber — where he is working closely with administration officials on their education plans.
Sophie Stephens
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Vermont Public
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Senators including Senate Minority Leader Scott Beck (center) on the first day of the 2025 session on Wednesday, Jan. 8.
“I think what we’re going to see [from the governor] here in a couple, three weeks is something that is far beyond just education finance,” Beck said in an interview Thursday. “I think it’s going to get into governance and delivery and outcomes.”
Beck said the transition to a foundation formula would force a series of questions, including whether districts would be allowed to approve any spending beyond the state’s base foundation grant.
“And in that case, where do they get that money from? And under what conditions can they access that money?” Beck said. “There’s a myriad of decisions that go into that whole thing. None of those decisions have been made. But I think in various circles, we have committed to going down the road of building a foundation formula in Vermont.”
Beck said he expects Scott’s education proposal will also include provisions that are designed to reduce staffing in the public education system.
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When Scott first took office in 2016, the state spent about $1.6 billion annually on public schools. This year, that number will exceed $2.3 billion.
Vermont schools now have one staff person for every 3.63 students, the lowest ratio in the United States. In 2018, Scott pushed hard, and unsuccessfully, for legislation that would have instituted mandatory caps on staff-to-student ratios.
“With what we’re spending, we should not be in the middle of the pack on any educational scorecard,” Scott said. “And our kids should all be at grade level in reading and math. In some grades, less than half hit that mark. While educators, administrators, parents and kids are doing their very best to make things work, the statewide system is broken and failing them.”
Inaugural and state-of-the-state speeches tend to include a laundry list of policy ideas. But Scott’s 43-minute speech was focused almost entirely on education and housing — he renewed calls to trim development regulations and to bolster funding for rehabbing dilapidated homes.
Scott only briefly discussed last summer’s floods, and made glancing mentions of public safety, climate change, and health care. The governor, who voted for Vice President Kamala Harris in November, made no mention of President-elect Donald Trump or national politics.
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Seeking to highlight some successes, the governor noted that overdose and traffic fatalities have declined recently, the state has welcomed more than 1,000 refugees in the past few years, and that the state park system saw near record visitation last year.
The governor has long argued that Chittenden County is prospering at a rate disproportionate to the rest of Vermont. He intensified that rhetoric in Thursday’s speech.
“As the rest of the state struggles to catch up, they carry the same burden of increasing taxes and fees and navigate the same complicated mandates and regulations,” the governor said. “And regardless of how well-intentioned these policies are, they’re expensive and require resources that places like Burlington, Shelburne and Williston may have, but small towns like Chelsea, Lunenburg, Peacham, Plainfield — and even Rutland, Newport or Brattleboro — do not. Too many bills are passed without considering the impact on these communities.”
Early in his speech, Scott paid tribute to several veteran legislators who died in the past year, including senators Bill Doyle and Dick Sears and representatives Don Turner, Bill Keogh, and Curt McCormack. Scott choked up and was visibly emotional when his recalling “my dear friend and mentor,” Sen. Dick Mazza, who died in May.
Former Governors Peter Shumlin, Jim Douglas and Madeleine Kunin attended the speech.
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A person holds a giant penny at a mock funeral for the coin, which was discontinued in 2025, in front of the Lincoln Memorial in Washington. AP Photo/Julia Demaree Nikhinson
What good is a penny at this point? Penny candy is a thing of the past, and a modern-day penny-pincher wouldn’t get very far if this were their get-rich strategy.
(This newsletter, though, costs you less than a penny. Chip in if you can.)
U.S. mints no longer make pennies, a decision that saves taxpayers an estimated $56 million annually. When the U.S. Treasury Department announced the country would stop minting them, it marked the end of an era — sorta.
Though those pesky copper-colored coins remain in circulation, some businesses, both in Vermont and nationwide, have begun experiencing penny shortages.
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Enter H.837. The bill outlines a plan that could allow retailers to phase out the penny by rounding up or down cash transactions to the nearest nickel.
Other states, including Arizona and Indiana, have passed rounding legislation, and a handful of others are considering it. As written, Vermont’s bill wouldn’t require rounding, a similar approach favored in other jurisdictions.
Some Vermont businesses have already adopted rounding. But lobbyists for Vermont businesses say some of their members fear the practice — without explicit state blessing — could open a business up to a lawsuit over alleged unfair and deceptive practices.
Worried or not, rounding will likely become more necessary as pennies get harder to find, Maggie Lenz, a lobbyist for the Vermont Retail and Grocers Association, told the House Commerce and Economic Development Committee Tuesday. She encouraged the state to create a rounding framework, but discouraged lawmakers from making such a program mandatory.
Rep. Tony Micklus, R-Milton, agreed that rounding should be optional, but said the state should mandate a specific rounding framework for the businesses that choose to round.
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H.837’s approach, which would round down totals ending in 1,2,6 and 7 cents, and round up totals ending in 3, 4, 8 and 9 cents, would seem to be the fairest to consumers and businesses, those who testified agreed.
But the change is likely not net neutral. Zachary Tomanelli, a consumer protection advocate for the Vermont Public Interest Research Group, cited a Federal Reserve study that indicated rounding could cost consumers $6 million annually nationwide. That’s because businesses price goods in ways that tend to lead to rounding up.
He called the cost modest and said he generally supported the bill.
Despite H.837 not making it past the crossover deadlines, there’s still hope that pennies might make it into Vermont’s currency cemetery. Rep. Michael Marcotte, R-Coventry, the commerce committee’s chair, said his committee could stick the rounding legislation in the Senate’s economic development bill.
That said, you might not want to ditch your pennies quite yet.
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In the know
Here are some numbers for you: Between 2012 and 2022, Vermont’s primary care workforce declined by 13%. In that same time period, the specialist workforce grew by 23%. That’s according to testimony Jessa Barnard, with the Vermont Medical Society, gave to lawmakers in the House Health Care Committee Tuesday. She said the numbers are reflective of a trend in medicine nationwide, attributed to the fact that primary care docs often make less but pay the same high cost for medical school as their peers in more specialized roles.
In Vermont, Barnard said that this widening gap is leading to a particularly acute shortage. According to a report her organization put out in 2022, the state needs 115 primary care providers to meet the national benchmark for our population size. That figure includes OBGYNs, pediatricians and family medicine docs. By 2030, as our state’s population grows even older, the Vermont Medical Society expects the state to need 370 more primary care physicians to meet the national benchmark.
— Olivia Gieger
Sen. Alison Clarkson, D-Windsor, spoke with members of the House Commerce and Economic Development Committee Tuesday afternoon about S.327, an economic development bill that supports a number of public resources for business owners across the state.
The bill has had a tough go of it so far.
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Clarkson handed out copies of what she referred to as “the actual bill,” which meant the package voted out by her own Senate Economic Development Committee before being “pretty much fully gutted” on its way through the Senate Appropriations Committee.
In a tight budget year, she said, this bill’s focus was on “supporting what works really well” for Vermont businesses. For Clarkson, that means continuing to invest in the initiatives like the Vermont Economic Growth Incentive program, a set of grants to help businesses expand in the state, which is scheduled to end in January. The Senate, she pointed out, has voted to extend the program for several years in a row, most recently through S.327.
“I am charging the House with doing the same thing,” she said.
Clarkson is also in favor of deepening the state’s relationships with outside investors by funding state delegates abroad. Vermont, she argued, should have more well-placed representation in areas like Québec — which this bill would provide for — and in the future Taiwan, which recently pledged to invest heavily in U.S. tech industries.
“We need somebody whose hand is up saying ‘yes, over here!’” Clarkson said.
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House commerce members met informally with a delegation from Taipei later Tuesday.
— Theo Wells-Spackman
On the move
The Senate advanced a bill Tuesday that would allow parents in Essex County to pay tuition to send pre-K students to New Hampshire schools.
In Vermont’s most rural county, families struggle to access pre-K programs, at least on this side of the border.
But S.214, legislation originally proposed by Sen. Kesha Ram Hinsdale, D-Chittenden Southeast, would allow for a handful of families near the New Hampshire border in Essex County to tuition their pre-K-aged children to New Hampshire schools, Sen. Steve Heffernan, R-Addison, said on the Senate floor.
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Kindergarten through grade 12 are already able to tuition to New Hampshire schools.
The Senate will need to vote on the bill once more before sending it to the House.
Vermont and the federal government faced off Monday over the state’s first-in-the nation law aimed at forcing polluters to pay for the effects of climate change with the Trump administration warning it would spur “the type of chaos that the Constitution is designed to prevent.”
The hearing before Judge Mary Kay Lanthier of the U.S. District Court for the District of Vermont comes as the administration has unleashed a broad assault on state-based climate efforts, including suing to invalidate the Vermont law establishing a “climate superfund” to recoup money from the oil and gas industry.
The Biden appointee did not tip her hand, pressing attorneys for the state and the federal government over whether the state is within its rights or stepping on federal authority. The administration is challenging a similar law in New York, and a ruling against Vermont would likely jeopardize that law and chill efforts in other states to adopt climate superfunds.
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Vermont argued the law — “a modest action” — was passed by state lawmakers in 2024 to help raise money to deal with climate change.
RUTLAND, Vt. (WCAX) – Attorneys defended Vermont’s landmark climate superfund law on Monday, as it faces a lawsuit filed by the Trump administration.
Vermont lawmakers passed the Climate Superfund Act in 2024 after devastating flooding in 2023 and other extreme weather events.
The law requires certain large fossil fuel companies to help cover the costs of climate-related damage linked to their emissions between 1995 and 2024.
It is being challenged by the federal government, along with the American Petroleum Institute, the U.S. Chamber of Commerce and attorneys general from 24 Republican-led states.
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They argue Vermont is overstepping and that climate policy should be handled at the federal level.
Attorneys for Vermont and environmental groups asked a federal judge in Rutland to dismiss those challenges, arguing the state has the right to hold companies accountable.
“It was an intense and technical day of legal arguments over whether the Climate Superfund Act passes muster under federal law, and whether it is appropriate under our Constitution and other doctrines, and is going to survive this series of lawsuits that have been filed against it,” said Christophe Courchesne of the Vermont Law and Graduate School.
Vermont was the first state to pass a law like this. New York followed, and more than 10 other states are considering similar measures.
This case could help decide whether those laws move forward.
