Vermont challenges federal high-risk label on $41 million grant

Vermont is asking the U.S. Department of Education to reconsider its high-risk designation for the state’s Title I, Part A grant, a designation tied to a school-identification error. The Vermont State Board of Education unanimously backed the state Agency of Education’s position on Oct. 8.

The state’s challenge is to the timing and application of the designation, not to the federal corrective actions or deadlines. The Agency says Vermont intends to meet those requirements. The designation and reported deadlines remain in effect.

State says it reported the error and began corrective work

The Agency says it identified an error in its method for selecting schools needing support through an internal review on Feb. 25, 2026. It says it notified federal officials within 24 hours, submitted an investigative report on April 4 and sent an action plan on July 22.

The state argues the high-risk label was premature because Vermont identified and reported the problem itself and had begun corrective work. The Agency also says the federal department approved Vermont’s accountability methodology in 2018. That earlier approval concerned the methodology then in use; it does not establish that federal officials approved the 2026 corrective plan.

VTDigger reported that federal officials designated Vermont high risk in September, after the Agency says it had identified the error and submitted its plan. VTDigger reported the grant’s value as $41 million and distinguished this designation from a separate high-risk designation Vermont received in 2024 over grant-reporting issues.

Federal deadlines and possible funding consequence

According to VTDigger’s account of a letter from federal Assistant Secretary Kirsten Baesler, Vermont must create a new school-identification method by Dec. 15 and apply it for the 2025–26 school year by January. The report did not specify the year for that January deadline. Baesler said the state’s proposed timeline would leave Vermont out of compliance for several years; the report described the proposed correction as extending to fall 2028.

The federal concern centers on which schools the method identified for support. VTDigger, citing Baesler’s letter, reported that the method sometimes directed resources to schools that needed them less, while schools with widening performance gaps were not identified. Title I, Part A supports economically disadvantaged students, but the number of schools and students affected by the error has not been established.

Vermont Education Secretary Zoie Saunders said missing federal deadlines could lead to $100,000 in Title I funding being withheld, along with additional administrative burdens. The Agency described that amount as a proposed withholding. It is a possible consequence, not an imposed penalty; no suspension of Title I payments or loss of funds has been established.

The dispute concerns Vermont’s statewide school-identification methodology and its Title I, Part A grant. The Agency says its request does not seek to change the corrective requirements. It also says it plans to submit a comprehensive amendment to the state plan in May 2027.