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Does a school bus "garaged" in Vermont need to be registered in Vermont, or is it acceptable to have out-of-state plates?

If the bus is garaged in Vermont it must be registered in Vermont. Vehicles incidentally in Vermont are not required to be registered in Vermont if they are here temporarily and will soon be returning to their home garage.

Do buses transporting Vermont students to and from school (or in connection to school activities) need to be registered in this state?

There is no requirement that a school bus registered and garaged out-of-state, used for transportation of Vermont students, be registered in Vermont.

What is the appropriate use of school buses that are registered as municipal vehicles?

In order for a school bus to obtain a municipal registration it must be owned by a municipality and used entirely by that municipality or any other municipality. A municipality may allow one of its buses to be used by another municipality. Compensation is not relevant.

Does the name of the municipality need to be on a bus?

The name of the municipality is not required to be painted on the bus.