How to Fight Act 173 Budget Excuses at Vermont IEP Meetings

Act 173 does not change your child's right to a Free Appropriate Public Education under IDEA. It cannot. IDEA is a federal entitlement law, and no state funding mechanism overrides the obligation to provide FAPE. When your Vermont school district says "we don't have the budget" for a 1-on-1 paraeducator, additional speech therapy minutes, or a private reading program, they are conflating a state accounting change with a legal defense. It is not one. What follows is the specific language, written demands, and escalation path to enforce that right when the district invokes Act 173 at the IEP table.

What Act 173 Actually Did (And Didn't Do)

Act 173 was passed in 2018 and shifted Vermont from a categorical reimbursement model — where districts were funded based on the number of students with IEPs — to a census-based block grant. Under the old system, each IEP-eligible student generated additional state dollars. Under census-based funding, the district receives a flat amount regardless of disability status.

The intent was to expand Multi-Tiered Systems of Support (MTSS) and reduce the financial incentive to over-identify students. Vermont's special education identification rate of roughly 19.6% — one of the highest in the country — suggested the categorical system had created perverse incentives.

But Act 173 created a different perverse incentive. The district now receives the same amount whether your child has an IEP or not. There is no financial reason to evaluate, identify, or serve. Every IEP costs the district money from a fixed pool with no additional state reimbursement. This is why you hear "we don't have the budget" at IEP meetings across Vermont, why evaluations are delayed, and why districts push families toward 504 Plans with weaker enforcement.

Act 173 changed how districts get paid. It did not change what districts owe your child.

What to Say When the District Invokes Act 173

The following are the most common Act 173-related excuses heard at Vermont IEP meetings, and the specific responses that redirect the conversation back to federal law.

"We don't have the budget for that service."

Your response: "I understand the district is managing a fixed funding pool under Act 173. But IDEA is a federal entitlement — my child's right to FAPE exists regardless of the district's internal budget allocation. If the team is proposing to deny or reduce this service, I'm requesting Prior Written Notice under 34 CFR 300.503 documenting the refusal, the data the team relied on to make that decision, and the other options the team considered. I'd like that issued before the end of this meeting."

This names the federal law that supersedes the budget argument and triggers the Prior Written Notice obligation — forcing the district to put their reasoning in writing, where "we don't have the budget" is not a legally defensible reason to deny FAPE.

"Act 173 means we need to try MTSS interventions first."

Your response: "MTSS is a general education framework. Under 34 CFR 300.311(a)(8), a district cannot use a response-to-intervention process to delay or deny a parent-initiated evaluation request. If I am requesting a formal special education evaluation in writing, the district has 15 calendar days under Vermont Rules Series 2360 to convene an Evaluation Planning Team meeting and either seek my consent or issue Prior Written Notice of refusal. The MTSS tier my child is on does not change that timeline."

Districts use MTSS as a gatekeeping mechanism — cycling a child through intervention tiers for months while the parent assumes specialized help is underway. The EST process is general education. A parent-initiated evaluation request triggers a federal timeline that MTSS cannot override.

"We can offer a 504 Plan instead — it covers the same accommodations."

Your response: "A 504 Plan and an IEP are not interchangeable. If the team believes my child does not meet eligibility for an IEP under the 13 IDEA categories, I need Prior Written Notice documenting that determination and the evaluation data that supports it. If the team is suggesting a 504 because it's less costly to the district, that is not a legally permissible basis for the recommendation."

A 504 Plan provides accommodations but not specialized instruction, measurable goals, progress monitoring, or the procedural safeguards of an IEP. It is cheaper for the district to administer. That cost difference is not your child's problem.

"We're working on staffing — the services will start when we fill the position."

Your response: "Under IDEA, the district is responsible for ensuring IEP services are delivered as written. If the district cannot staff the position internally, options include contracting with a private provider at district expense, arranging telehealth, or contracting with another Supervisory Union. I'm requesting Prior Written Notice documenting what alternative delivery methods the district has considered and why each was accepted or rejected."

A staffing shortage is an operational problem, not a legal defense. The district cannot wait indefinitely to fill a position while your child goes without mandated services.

Prior Written Notice: Your Primary Weapon

Every response above ends with a demand for Prior Written Notice. This is deliberate. PWN is the mechanism that converts a verbal excuse into a documented legal liability.

Under 34 CFR 300.503 and Vermont Rules Series 2360, the district must provide PWN whenever they propose or refuse to change your child's identification, evaluation, placement, or provision of FAPE. The notice must include what action is proposed or refused, why, what data was used, what other options were considered, and why they were rejected.

When a district says "we don't have the budget" verbally, it costs them nothing. When they have to write it down in a PWN — explaining that they denied speech therapy because of Act 173 budget constraints, and listing the evaluation data that supports that denial (there won't be any) — the calculus changes. PWN creates the paper trail that wins state complaints.

You can demand PWN at the IEP table in real time. You say: "I'm requesting Prior Written Notice for this proposal." The district is legally obligated to produce it.

The Escalation Path When PWN Doesn't Fix It

Step 1: Document Everything at the Meeting

Record who said what, what was proposed and refused, and what data was cited. Vermont is a one-party consent state — you may legally record the IEP meeting without the school's permission.

Step 2: Follow Up in Writing Within 48 Hours

Send an email to the Special Education Director and Supervisory Union superintendent summarizing what was proposed and refused, and reiterating your PWN demand if it hasn't been issued. Written follow-up creates a second documentation layer before a formal complaint.

Step 3: File a State Complaint with the Vermont Agency of Education

A state complaint is free and does not require an attorney. The Vermont AOE must investigate and issue findings within 60 calendar days. Your complaint should include the PWN (or documentation that you requested one and the district failed to issue it), your communication log, service delivery records showing missed or reduced sessions, and a clear statement of the IDEA violation. The paper trail from Steps 1-2 is what makes the complaint compelling — organized evidence gets a fundamentally different response than "my child isn't getting services."

Who This Is For

• Parents who have been told at an IEP meeting that the district "doesn't have the budget" for requested services
• Parents whose child's evaluation has been delayed while the district cycles through MTSS/EST tiers despite a written parent request
• Parents who were steered toward a 504 Plan when they believe their child qualifies for an IEP
• Parents whose child's IEP service minutes were reduced at the annual review with budget cited as the reason
• Parents in any Vermont Supervisory Union — Act 173 affects every district, not just rural ones
• Parents who want to self-advocate effectively without hiring a $100-to-$250-per-hour advocate or an attorney

Who This Is NOT For

• Parents whose child faces immediate safety threats (restraint, seclusion, serious disciplinary action) — these require emergency legal consultation, and Vermont Legal Aid's Disability Law Project should be contacted immediately
• Parents already in due process proceedings — at that stage, legal representation is strongly recommended given the burden of proof under Schaffer v. Weast
• Parents whose dispute is about the quality or methodology of services being delivered, rather than a denial or reduction of services — those are substantive FAPE disputes that may require expert testimony

The Honest Tradeoff

Act 173's intent was not malicious. Expanding MTSS so more students get support in general education — before they fall far enough behind to need an IEP — is a defensible goal. Some Vermont districts have used Act 173 funding to build genuinely effective tiered intervention systems that serve more students earlier.

The problem is that a subset of districts use Act 173 as cover for cost-cutting. When a district cites "census-based funding constraints" to deny an evaluation or reduce service minutes, they are exploiting a reform designed to help more students — not fewer. Your approach should match the reality. If your district's EST process is robust and your child is genuinely progressing through tiered interventions, the timeline may be appropriate. If the EST process is a holding pattern with no data, no progress monitoring, and no clear exit criteria — that is not MTSS. That is delay.

Frequently Asked Questions

Can the school legally deny IEP services because of Act 173 budget constraints?

No. IDEA is a federal entitlement law — your child's right to FAPE exists regardless of the state's funding mechanism. Act 173 changed how Vermont distributes special education dollars but did not change any federal obligation. If a district denies or reduces services and the reasoning is budgetary rather than educational, that is a FAPE violation. Demand Prior Written Notice and file a state complaint if the violation is not corrected.

What is Prior Written Notice and why does it matter so much for Act 173 disputes?

PWN is a written document the district must provide whenever they propose or refuse to change your child's identification, evaluation, placement, or provision of FAPE — explaining what, why, and what data they relied on. In Act 173 disputes, PWN is powerful because a verbal "we don't have the budget" evaporates after the meeting, while a written PWN stating the same thing becomes evidence in a state complaint. Most districts will reconsider a denial rather than document a budgetary justification in writing.

How long does the state complaint process take, and do I need a lawyer?

The Vermont AOE must investigate and issue findings within 60 calendar days. You do not need a lawyer — state complaints are free, and the AOE assigns an investigator. For clear procedural violations like service denials with no educational data to support them, state complaints frequently produce faster results than due process. The key is filing with organized documentation: PWN requests, communication logs, and evidence that the district's reasoning was budgetary.

What if the district says MTSS must be tried before an evaluation?

They cannot. Under 34 CFR 300.311(a)(8), a district may not use response-to-intervention to deny a parent's evaluation request. When you submit a written referral, the district has 15 calendar days under Vermont Rules Series 2360 to convene an Evaluation Planning Team meeting — regardless of MTSS tier. If the district tells you to "wait and see how interventions work" after you've submitted a written referral, they are in violation of the timeline.

Is a 504 Plan really worse than an IEP?

Not inherently — a 504 is appropriate for some students. But it provides accommodations only, not specialized instruction, measurable goals, or the same procedural safeguards (PWN, stay-put rights, dispute resolution timeline). When a district steers a family toward a 504 because it costs less under census-based funding, the recommendation is budget-driven. If your child needs specialized instruction, a 504 is insufficient regardless of the funding model.

Where can I get the meeting scripts and letter templates for these situations?

The Vermont IEP & 504 Blueprint includes meeting scripts for Act 173 budget excuses, fill-in-the-blank PWN demand letters citing Vermont Rules Series 2360, state complaint filing templates, and a communication log for building the paper trail. The full toolkit is under — less than a single hour with a Vermont special education advocate.

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