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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.”

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.

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.

“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.

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.

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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