Congratulations and kudos to the Vermont library folks. The state governor signed a bill on May 13, 2008 that substantially strengthens library user privacy. It changes the law from permissive protection (a library MAY keep records confidential), to a mandatory protection (a library MAY NOT disclose records unless certain conditions are met.
It seems to assume that FERPA requires disclosure of student library records to parents, though this is not known for sure. It does allow parents of children under 16 to look at their kids' records, though IMHO it's not clear that this is always in the child's best interest.
But the best part is that it allows a private right of action. That is, a patron whose records have been wrongly disclosed may bring a civil action against the library.