Explainer: Education cuts needed to stay under penalty threshold in FY 28 State tightens spending through 2032

By Shawn Cunningham
© 2026 Telegraph Publishing LLC

At the Oct. 15 meeting of the board of the Green Mountain Unified School District, Superintendent Layne Millington laid out the obstacles the district faces in budgeting as the State of Vermont begins to turn the screws on schools to cut budgets using the “excess spending threshold” and the minimum classroom sizes mandated by Act 73, passed in 2025.

The excess spending threshold is a tool that the state government has used for years. To decide the threshold, the state picks a recent school year. In this case, that’s 2025. Then it takes the average of per-pupil spending across all districts for that year, includes an inflation calculation then adds 18 percent for an overall threshold of 118 percent.

That final number is the threshold and any school district that spends more than that is penalized by double tax on the amount over the threshold.  And those penalties are only on local taxpayers since the non-homestead property is taxed at the same rate across Vermont.

Millington told the board that the threshold for this school year is $16,470 per equalized pupil while the GM District spends $16,060 per pupil. That leaves a cushion of around $473,000 if the budget was level-funded going into the 2027/28 school budget, when Act 73 mandates that the threshold will be reduced by 2.5 percent. In other words, the threshold that is 118 percent of the 2025 average per pupil spending will be 115.5 percent next year.

The administration calculates that spending would not go over the threshold if all costs stay the same. However,  teacher pay hikes and increases in healthcare costs and heating fuel are inevitable. So cuts will be necessary in the FY 28 budget. Millington told the board these cuts could be in the range of $250,ooo to $400,000. To put that in context, the supervisory union uses $105,000 per year as an average in pay and benefits for a teacher including a family healthcare plan. An average support staff member’s compensation including benefits is about $65,000.

Millington told the board that since the districts run on very tight budgets, there’s not a lot to cut except staff. He said he would prefer to work out the reductions through attrition. But on Tuesday, he told The Telegraph that he knew of a few faculty members who are planning to retire and is hoping to work up a letter of agreement with the teachers’ union to allow the district to eliminate positions of those who retire or move away rather than replacing every one, as the contract requires.

And pain won’t be over anytime soon. State law mandates that the threshold be cut each year through 2032. Budgets will have to drop to avoid the threshold. This will be in preparation for the state taking over the decision of how much money districts will receive each year through a Foundation Formula.