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Jul 12, 2026
Read the full story at VT Digger: https://vtdigger.org/2026/07/10/vermonts-public-schools-could-benefit-from-a-new-federal-school-choice-tax-credit-program-but-skeptics-abound/
This is Ken & Greg's testimony to Senate Finance:
Memorandum To: Senate Committee on Finance
From: Ken Fredette, Wallingford Greg Hughes, Bethel Friends of Vermont Public Education
Date: March 10, 2026
Topic: Testimony regarding S. 161 - An act relating to the Governor’s list of scholarship granting organizations
[Ken Part 1]
Thank you, Madam Chair; good afternoon, everybody. I'm Ken Fredette, from Wallingford, and this is my friend, Greg Hughes, from Bethel. We are both on the board of Friends of Vermont Public Education, and you can learn more about our backgrounds at savevtpubliced.org, but for now let it suffice to say that we both were longtime school board members here in Vermont. We appreciate the opportunity to share some thoughts with you today.
Let me begin by clarifying that we are not "against" private and independent schools, as it has been occasionally said by those who aren't really familiar with our mission. To the contrary, we appreciate the important role they have played in the education landscape of Vermont, not only historically - some for nearly 200 years - but also carrying forward to present day in providing quality educational opportunities for students in areas that don't have a public school. We simply contend that all schools that receive tax dollars must play by the same overarching rules, akin to how it was prior to 1991, and in concert with the Common Benefits Clause of the Vermont Constitution. We currently support two distinct education systems, and the playing field must be leveled before we can have any productive conversations on transformation. We see the Federal Voucher program as moving in the wrong direction, tilting that field even further away from properly supporting our public school system.
[Greg Part 1]
Good afternoon, Madam Chair and members of the committee. As Ken said, my name is Greg Hughes, I live in Bethel where I was a long-time school board member, and I am also a Friend of Vermont Public Education.
This afternoon I would like to review the background of S.161 and Scholarship Granting Organizations, identify concerns we have with the federal voucher program and make some recommendations regarding S.161.
Background of S.161 and Scholarship Granting Organizations
Part of the One Big Beautiful Bill that passed Congress last summer was The Education Choice for Children Act which establishes a federal tax credit program designed to incentivize donations to Scholarship Granting Organizations (SGOs). Under this framework, individuals receive a dollar-for-dollar federal tax credit for contributions to SGOs, which, after retaining a 10% administrative fee, distribute the funds to families as school vouchers. Proponents argue that opting into this federal program provides "free money” for education without depleting state or local budgets. However, a closer fiscal and social analysis suggests that until federal IRS guidelines are issued, participation in this program may not be in the best interest of Vermont students and could result in hidden costs to taxpayers.
Key Concerns Regarding Program Implementation
• Where is the benefit to public schools?
S.161 does not offer any incremental benefits for public school students. S.161 is intended to provide “educational opportunities to economically underprivileged students through after school, summer tutoring, and similar programs.” When I showed this to the superintendent of the White River Valley Supervisory Union, he confirmed that S.161 offers nothing new to students in the WRVSU. We are already doing this.
• Lack of IRS Guidelines: The U.S. Treasury Department has already sought public comment and are scheduled to issue proposed regulations and guidance in Early Spring 2026. Final Regulations will be issued in Summer 2026. The extent to which states can regulate this program will depend on these federal regulations. Until these regulations are released, it is not possible to determine what constraints may be placed on states.
• Fiscal Impact and Revenue Loss: The premise that these vouchers constitute "free money" is economically flawed. By offering dollar-for-dollar tax credits, the federal government deliberately reduces its tax revenue. These are funds that would otherwise support public infrastructure, including Title I school funding, healthcare, and social safety nets.
• Total Cost of the Federal Voucher Program: Estimates for the cost of the federal voucher program vary significantly due to the lack of a budgetary ceiling and uncertainty regarding how many taxpayers will claim the tax credits. While the Joint Committee on Taxation projects a 10-year cost of $26 billion (roughly $2.6 billion annually), the Institute on Taxation and Economic Policy (ITEP) warns the annual cost could reach $51 billion if backers successfully mobilize large numbers of contributors. At this higher estimate, the program would dwarf the government’s two largest current K-12 investments: Title 1 Grants ($18.4 billion) and IDEA Special Education State Grants ($14.6–15 billion).
• Status of Civil Rights Protections: Will the IRS affirm that these scholarships are federal dollars and that nondiscrimination requirements apply to any entity that receives them? Schools that take these scholarships dollars should be required to comply with all federal nondiscrimination laws. In Vermont, we must ensure that students of color, students with disabilities, and LGBTQ+ students will continue to be protected.
• Lack of Educational Accountability: Unlike public schools, the federal program lacks mandates for curriculum, standardized testing, or teacher certification. Without these quality benchmarks, taxpayer dollars may be diverted to institutions that are not held accountable for student outcomes or academic proficiency.
• Economic Inequity: The program’s eligibility thresholds—up to $389,400 in Vermont for a family of four in FY2025—suggest that these vouchers will subsidize tuition for wealthy families, rather than expanding access for the underserved.
• Risk to Federal Grant Funding: Current federal budget priorities suggest a shift away from direct K-12 public education funding in favor of private tax credits. This transition threatens the stability of essential programs such as IDEA, Pell Grants, and Medicaid, upon which the most vulnerable Vermont students rely.
Conclusion and Recommendation Regarding S.161
Significant regulatory questions remain regarding state sovereignty and oversight. It is currently unclear whether the Internal Revenue Service will grant states the authority to regulate SGOs, mandate inclusive admissions policies, or prioritize low-income applicants. Until there is a clear legal determination that Vermont can enforce its own standards of equity and accountability within this program, the state should decline participation.
[Ken Part 2]
Which brings us to what we see as a major problem with even considering opting in to the program at this point, when there are so many unknowns: It is quite clear that the overarching verbiage, or at least the intent of it all, would confer even more unilateral authority to the Governor over education policy than is already in place here in Vermont. And please be clear, I am not referring to Phil Scott with that concern, but rather to the system that allows the education ship to be steered by political winds, which can vary widely from administration to administration. Please consider this as a hypothetical but entirely possible scenario: Phil Scott either decides not to run for a sixth term, or decides to, but does not prevail in November. In either case, taking this hypothetical one step further, what if his successor retains Zoie Saunders as Secretary of Education, but has a considerably different view of how we can best ensure a Free and Appropriate Education for all students in Vermont than Governor Scott? This would mean Secretary Saunders would have to either opt to redirect her passions for student achievement into a different direction from what she is currently advocating - as is required of her due to the current statutes - or resign because she doesn't agree with the philosophies of her new direct supervisor. And I would be remiss to not point out that this is exactly what happened when Mr. Scott was elected governor.
Point being, education policy must be left to educators, not politicians.
On that, if it pleases the committee, I would like to provide a very brief review of events from the past couple of centuries - just about a minute long - in hopes of providing some historical context to better inform your deliberations.
It seems to be often overlooked that school board members are duly elected officials in their own right and should be respected as such. In the 1700-s, school board members were merely subcommittees of selectboards, and hence were appointed by, and vacancies were filled by, town leaders. When the former was no longer true, the latter was not corrected in Vermont until 2005, when authority to fill vacancies on school boards rightly went to school boards. This recognized the fact that voters entrusted these people to oversee education, including hiring dedicated career education professionals to apply their depth and breadth of knowledge to drive solid outcomes, and crafting budgets taxpayers could support. Yet some other duly elected officials - Selectboards, Town Clerks, members of the Administration, and others, still seem to think education falls under their purview. I implore the Committee to please consider the obvious merits of H.770: Unequivocally opt out of the Federal Voucher program at this point, when we don't even know what we are saying yes to, beyond the fact that there will most assuredly siphon potentially billions of dollars from federal coffers that might support Vermonters and all Americans in other ways. But perhaps more importantly, do not afford the call to opt in or out of the program every year, as is required, to any one person, but rather to the bodies that were elected to thoughtfully deliberate such hugely important matters.
[Greg’s closing]
Based on the above it does appear that S.161 is putting the cart before the horse. We are attempting to pass legislation prior to the IRS issuing the relevant guidelines. The prudent thing to do would be to wait to see what the guidelines say and then determine if we wish to opt in. This decision of whether to opt in should be made by the General Assembly. Accordingly, it does appear that the state would be far better off enacting H.770 rather than S.161.
Thank you for the opportunity to be heard this afternoon. We would be happy to answer any questions you may have.
References:
https://edlawcenter.org/wp-content/uploads/2025/09/Federal-Vouchers-FAQ-9-15-2025.pdf
https://pfps.org/assets/uploads/Debunking_USED___Treasury_Fact_Sheet_Final.pdf
https://www.youtube.com/watch?v=y7ygAwIlhq4