The legislature was busy this week moving bills onto the floor in both chambers to meet the looming cross-over deadline (all bills must pass from one chamber to the other before crossover in order to be acted upon this year). Many last-minute requests were denied and a number of bills saw floor action. This includes the ethics bill we have been working on, which was passed by the Senate this week.
Other bills we have been following, including the workforce development, housing, and economic development are all slated for the floor of the House and Senate early next week.
Quote of the Week:
“We don’t see becoming a mini Institutions Committee here today.”
CFV President, Pat McDonald
Message of the Week:
I am so excited to read the plan presented by the Agency of Education that is comprehensive, thorough and right to the point about ensuring our children get a quality education. I was excited to read their handout this week and they will receive all the support they need to execute this plan.
Vote for Vermont:
Senator Joe Benning joined Pat and Ben to talk about his race for Lieutenant Governor and his work in the Vermont Senate.
NOTE: if you are a candidate for statewide office and want to do a show with us. Please send us an email!
Chairwoman Cummings noted that the Senate Finance Committee will probably spend considerable time reviewing H.510. There were questions from the Committee about why the House had changed what they did last year (they will need to have someone from the House Ways & Means Committee come testify).
The Joint Fiscal Office (JFO) shared that many states already have child tax credits in their laws, which is what this bill creates. Much of the languages mirrors the federal child tax credit law. It creates a new tax credit of $1200 per child under six. Taxpayers with adjusted gross income (AGI) of $200K or less would be eligible for the credit regardless of filing status. Taxpayers will be eligible for the credit for tax year 2022 when they file in the Spring of 2023. The credit would be paid out in two installments: half will be paid out in September and the other half upon tax filing at the conclusion of the tax year.
The Committee reviewed the fiscal impact of this bill. JFO estimates this will decrease state General Fund revenues by $49.7M in FY2023 (this is known as a tax expenditure). The cost of this program is expected to increase by around $100K per year thereafter.
According to the Department of Taxes, in 2020 the average tax paid by income group is $1,200 or less for taxpayers with AGI less than $60K. This means that for most families with young children under this income level, this tax credit will likely reduce their Vermont tax liability to zero as a result of this program.
The second change this bill makes is to increase the threshold for social security income (SSI) that is exempted from state income tax. Under current law, Vermont exempts SSI under a certain threshold from taxation. For single taxpayers, the first $45K of SSI income is exempted and $60K for joint filers. This bill would increase those thresholds to $50K for single filers and $65K for married filers.
The Senate Appropriations Committee reviewed the pension benefits bill, S.286, which reflects an agreement reached by Pension Task Force, Senate Government Operations, and Senate Education. Teacher health care benefits are one of the primary focuses because they have never been prefunded. According to the Joint Fiscal Office, this bill establishes a framework from which we can do additional work if necessary.
The Committee added some statistics around pension underfunding to the findings section of the bill. While these are immaterial, they are symbolic of the legislature understanding the scope of the issue.
The bill is expected to reduce Vermont’s long-term unfunded retirement liabilities for state employees and teachers by roughly $2.3B by prefunding other post-employment benefits (health care, etc.), modifying the pension benefit structure, and requiring additional state and employee contributions into the retirement system. This bill contains a $200M one-time general fund appropriations in FY2022 to the pension system to pay down unfunded liabilities. The bill also contains a $13.3M one-time Education Fund appropriation in FY2022 to begin prefunding health care benefits for retired teachers.
There is also an adjustment to the cost-of-living adjustment formula for all employee groups, plus changes to other terms of the pension benefits for some state employees. The proposed changes area expected to yield a reduction of approximately $58M savings for the state employee pensions. Another $35M in unfunded liability reduction is expected for teachers.
The contribution rates from employees are also increasing (phased in over the next few years):
|Less than $40K
One downside is that the state is potentially committing to ongoing additional payments toward the unfunded liability in perpetuity, which means that unless there are additional inputs from employees taxpayers could be shouldering the brunt of the unfunded liability.
The Committee voted the bill out and it is set to appear on the Senate Floor Tuesday.
While the steps the legislature has taken so far are important and we support them, it does not solve the entire liability (only about half). To fully address the $4.6B deficit, we should also be looking at benefits for new hires. Our report from the Fall indicates that our public employee benefit packages may not need to be as rich as they are currently. This gives us an opportunity to reduce the liability WITHOUT impacting current employees.
With 97% of districts reporting in, the Agency of Education reported to the House Ways & Means Committee this week that they are expecting a statewide education spending increase of 5.4%. This equates to roughly $16M more that school districts decided to spend over what the Tax Department had predicted in December.
The proposal introduced this week would use $55M in the surplus from last year to buy down the tax rates for FY2023. This would lead to a reduction in the statewide tax rate from $1.523 to $1.369 for those that pay on property values and 2.5% to 2.29% for those that pay based on income. However, it is important to note that the statewide grand list values have increased 7.5% so many taxpayers are like to see an increase in the actual amount of tax liability they would owe under this proposal.
The Committee decided to allocate the remaining $36M Education Fund surplus from FY2022 for a universal school meals program. We would advise against funding ongoing programs with one-time funds like surpluses.
Sections he reviewed included measures for:
- Immediate strategies and funding for expansion of the labor force - increasing the number of participants and participation rates.
- $5M to the UVM Office of Engagement to administer a statewide forgivable loan program of $5,000 per student who commits to work in Vermont for two years after graduation.
- Re-investing in CTE with a focused on reaching a 70% goal for working age Vermonters holding a credential of value by 2025.
- $180K allocation for a study of the funding structures for CTE education centers, how these structures impede or promote the state’s educational and workforce development goals, examine the alignment of early college and dual enrollment, and integrating a coherent adult education system.
- $3m allocation of ARPA funds in VSAC scholarships for educators in trades internships (dubbed the "Internship Cost Offset Program"). VSAC would disburse initial licensing fees, exam fees and tuition payment under the program – students must demonstrate financial need and be enrolled in an industry recognized training and certification program that leads to initial employment or career advancement in a building, mechanical, industrial, or medical trades; or in the clean energy, energy efficiency, weatherization or clean transportation sectors.
- Additionally, a "Vermont Trade Loan Reimbursement Program" would be administered by VSAC to reimburse recent graduates up to $5K in student loans who are working full time in the trades. Currently only $500K is allocated to this program for FY2023.
- $15M allocation for a new CTE construction and rehab revolving loan fund. This is meant to expand the experiential and educational opportunities for high school and adult CTE students to work directly on housing construction and rehab projects. These funds are also meant to increase available housing stock by bringing more units online.
There are also provisions in the bill to expand health care workforce, young adult learning, learn-while-you-serve programs. Finally, there is a study on adult basic education that is due in 2024 to review internships and apprenticeship opportunities and analyzing barriers to continuing education.
The bill was referred to the House Appropriations Committee on Friday and will likely appear on their schedule next week.
The Senate Education Committee reviewed H.456 with Representative James on Thursday. The bill would require the Vermont State Colleges (VSC) and the Vermont Student Assistance Corporation (VSAC) to make a recommendation to the legislature by the Summer of 2023 around an affordability standard for accessing higher education in Vermont.
One interesting thing that the bill would do is work with high schools to help students fill out FAFSA applications. Mandatory FAFSA completion is a growing trend in higher education. A lot of federal aid money gets left on the table each year because students don’t apply. The House didn't want to go the mandatory route – truly not relevant for some families who might have objections. The Committee discussed having legislative counsel add a sentence to allow parents to opt-out of filling if they so choose. VSAC is very supportive of provisions in this bill, as is VSC.
The Senate Finance Committee looked at the Act 250 bill (S.234) on Tuesday. They received a brief overview from the legislative council and reviewed the density requirements, changes to bylaw modernization, the new permitting requirements that we covered a few weeks ago. One of the major changes is that Act 250 appeals need to be addressed within 90 days or it is assumed there are non-issues.
The Committee was a little confused about why the bill was referred to them and voted it out unanimously with no recommendations.
They also reviewed S.226 this week, which deals with provisions for additional housing development. See our full review of this bill from last week. The Committee voted in favor of the bill and it will likely appear on the Senate Floor next week.
Matt Dunne (Founder, Center on Rural Innovation) reviewed Springfield Innovation Campus & Project for the Senate Economic Development Committee on Tuesday. The accelerator project has 80,000 square feet under re-development. Currently they are developing a gym and theater with projects designed for affordable housing, mixed use, and permanently affordable housing.
Dunne pointed to housing availability near the creative space as a key area they are lacking. He wants a pilot project where housing is the economic stimulus to draw folks to the incubator where they have ultra high-speed broadband, rapid prototyping, podcast production, and other capabilities for entrepreneurs. He suggested that housing will be the draw to fulfill the promise and capacity for growth in the utilization of these facilities.
The Committee was not receptive to his request. Chairman Sirotkin told him to appeal to the housing authorities to get access to funding, saying ”we don’t see becoming a mini Institutions Committee here today.”
The Committee also discussed an old proposal to form a Vermont Film Commission (similar to the Vermont Arts Council). Dunne suggested that it’s a very aggressive marketplace, where we would be competing with larger states with similar backdrops, such as Massachusetts. He supports the concept but also pointed out the challenges that would face a small two-person office (which is apparently what has been proposed). They seem likely to proceed with a study. Later in the week they decided to put together a collaborative study between the Agency of Commerce, the Vermont Arts Council, and the business community to look at what other states.
The Senate Economic Development Committee apparently decided on Tuesday to ditch S.263 as a vehicle, and instead move their language into a bill that the House passed last year - H.159. This was likely an effort to get around Friday's crossover deadline.
A few changes that came forward this week include:
- Capital Investment Grant Caps lowered from 50% to 20% of total project costs.
- Projects related to arts and culture, travel, lodging, tourism and childcare sectors will be flagged for prioritization under certain ACCD reviews.
The Committee questioned Heather Pelham (Commissioner, Department of Tourism & Marketing) about her about $3.5M base budget for tourism promotion. Specifically, they were interested in data on “return on investment” for the economy. Pelham noted that the needs of local businesses become part and parcel of the outcomes strategy. There was some confusion about where people would have come from during the pandemic and if whether or not that was money well-spent.
There are competing priorities for funding. The Committee also wondered if there was any nexus with efforts to relocate workers to the state and tourism advertising (something we have wondered about as well).
How to best target businesses needing the most help was a major topic of discussion. Some businesses did better in 2020 than 2021 and vice versa. Looking over a one or two-year period may not tell the whole story as there is variation even within the same industries. Additionally, how to calculate losses did not appear to be that straight forward either. The Committee was not able to arrive at a consensus on Tuesday.
The Committee came back to H.159 on Wednesday. Joyce Manchester (Senior Economist, Joint Fiscal Office) provided some economic analysis requested by the Committee around reimbursing employers for Covid-related sick time. Such a program would cost an estimated $21M for 2022. There is also new data showing that increases in inflation and taxes will mean that the jump from a $13.75 to a $15 minimum wage in 2024 will be largely negligible. Workers will not see more money in their pockets. Economic pressures have forced faster wage growth in accommodations, food services, and health care sectors.
The Committee allocated $200k for study on paid family medical leave. They want to see what models exist for making this happen and whether it should be an opt-in program or not. There is also an additional $400k allocated for the formation of downtown economic development organizations in communities around the state.
This bill has $76M in ARPA funding and leaves $6M from the Governor's budget to "play with." Plus, another $18M in General Fund revenues that the Governor had budgeted for economic development.
The bill creating a statewide code of ethics, S.171, was brought up for second reading on Thursday and was approved by a voice vote. The third and final reading of the bill is scheduled for Tuesday.
The Senate Education Committee took up S.248, a bill dealing with UVM and VSC governance, on Tuesday. Dr. Alan Ray, an education governance consultant, provided testimony on the bill. He noted that shared governance does not mean that everybody does everything. There needs to be clear divisions of labor and the university Board of Trustees should be honest brokers. Faculty, staff, and the board should all be working together but respect each other's areas of expertise not try and micromanage the others - keeping in your lane but working together.
The institutions that he has worked for have not had faculty or staff on the board of trustees. It was hard for staff to take a high-level view because of their personal investment and the main goal of the board is to avoid conflicts of interest. With staff on the board, they will represent people who put them on the board, not the institution at large. He was also not sure what the value of having union members on the board is as the business of the union is not the business of the board.
Senator Chittenden asked how do we foster transparency in the board process? Ray noted the first goal is to communicate the mission of the board. Have people sign up for email newsletters so the board can stay in communication with them. Most of the time, people just want to be in the loop. It is very common to have legislative appointees on a state college board, however he did not seem to think that this was good solution. Ray's main argument was for keeping people in their proper communication channels. Chittenden asked what systems could be put in place to limit top-down decision making, forming a more collaborative process? Ray responded that bylaws can be used to structure this.
The Committee did not seem concerned about having conflicts of interest on the boards of trustees and generally accepted the arguments from AFT members.
The American Federation of Teachers (AFT) provided testimony on S.248 on Friday - surprise, they support the "intent" of the bill because they feel strongly that faculty and staff (union members) should be on the new Vermont State Colleges (VSC) board. They are advocating for the union to have a voting seat on the board. They also took issue with Dr. Ray's testimony earlier in other week, saying that asserting union members cannot set aside their own interest if put on the board of trustees is "insulting to teachers."
AFT asserted that 26% of colleges across the country have some faculty representation on the board of trustees. Having board representation would cost nothing but would mean a lot to faculty and staff. Many of the decisions around deciding to "close" NVU and Castleton lead to staff turnover (we suspect that is really what this push for board representation is about), and they claim that staff members need to be on the board to help combat staff burnout given the recent turmoil over the VSC system.
Representative Dickenson provided testimony on behalf of the VSC board of trustees. There is a diverse range of views and experiences. Dickinson noted that they have had many meetings with staff and students over the proposed changes to the VSC system.
Sophie Zdatny provided testimony on these meetings; noting that she became Chancellor just after the decision to combine the Lyndon and Johnson campuses. That transition fostered a lot of mistrust among staff, but there has been a lot of work to help the transition to a new university, such as looking for reductions in course duplication. She has been holding bi-weekly translation updates on the efforts to consolidate and create the new university.
Zdatny and her general counsel noted that the VSC has been trying to listen to more voices and are looking to broaden the approach. They are interested in fostering faculty input but are unsure of the value of having them on the board. There are issues with labor relations and the board makes managerial decision which would violate the labor agreement that bars staff from making management decisions. Having a trustee who is a faculty member could create a conflict of interest.
Will Senning (Director of Elections, Secretary of State) testified on an education governance bill being reviewed by the House Government Operations Committee on Wednesday. The Secretary of State's office strongly supports the bill as it goes a long way towards bringing clarity to school districts elections. The bill largely addresses issues that pre-dated the Covid-19 pandemic, for example the counting and co-mingling of ballots. It allows the count to be done over a 24 hour period and doesn't require an official count until the next day. It also requires that two election officials must now oversee the transfer of ballots, storage, etc.
It also brings great clarity to the responsibilities of the school district clerk vs town clerk. Separation of duties will be much clearer under this bill, as will responsibilities around where school district articles need to be warned, the number of signatures required, and where petitions are filed.
Senning noted that the bill gets rid of some rules as well, for example the need for polls to be open the same hours for each voting purpose. However, there are still outstanding issues, such as whether local ballots can be mailed to homes or not. Act 60 last year allowed local ballots to be mailed temporarily in response to the pandemic, but this law expires after this year (and a renewal is not currently planned). There is concern about capacity for printing facilities and the impact to town clerks.
Patrick Halladay (Director of Professional Standards, Agency of Education) shared with the House Education Committee on Thursday that "education quality standards" were passed through rulemaking in 2013, but they were aspirational in nature. Current school quality standards mostly just provide an actual checklist for supervisory unions to follow.
Halladay provided a handout which reviews education quality in five different categories:
- Investment priorities – how well do our schools provide quality experiences at a price that the community believes is appropriate?
- High-quality staffing – how well do our schools deploy educators who are well trained and qualified to meet the needs of all students?
- Safe and healthy schools – how well do our schools provide environments where students feel healthy, safe, and supported in achieving their goals?
- Personalization – how well do our schools provide students with authentic engagement and opportunities to shape their own learning?
- Academic proficiency – how well do our schools provide students with opportunities to develop their skills and knowledge to be career and college ready?
Each Supervisory Union will be required to deliver a coordinated and well-written curriculum that is aligned to the standards approved by the State Board of Education that enables all students to engage in rigorous, relevant, and comprehensive learning opportunities. Additionally, they will develop and implement a comprehensive assessment system that employs a balance of assessment types, including but not limited to, teacher or student designed assessments, portfolios, student performance (including both formative and summative assessments). The intent is to enable informed decisions about student progression and graduation.
Also of note, is that each supervisory union will need to develop and implement a system of needs-based professional learning for all staff involved in student instruction. Staff evaluation programs and policies shall be designed and implemented with the goal or improved outcomes for all students. Other pieces of this plan include flexible pathways, tiered academic and behavioral supports, school construction designs, continuous improvement, and data collection.
The Senate Education Committee reviewed H.716 on Friday, miscellaneous changes education law sent over by the House. The bill mostly deals with changes to special education, there is a "smoothing" provision to the 2018 special education block grant funding model to better reflect what is going on in school districts today.
There is also a delay in the State Board of Education 2360 rule series (which deals with rules around the delivery of special education), to allow educators and staff time to adequately prepare.
Jay Nichols (Executive Director, Vermont Principals Association) represents the people who have to administer the changes in rules. Staff needs to have the time to learn, implement, train, etc. The Agency of Education (who is opposed to the delay) may be ready but it’s a question of whether the schools will be ready.
Oliver Olsen (Chair, state board of education) added that it was wise for the legislature to find a way to ease the transition. Perhaps the implementation should not be delayed but some adjustments for districts that have a problem and may need additional time. Perhaps there is a middle ground to be had.
Things to watch for next week:
Creation of the Statewide Code of Ethics (S.171) - Senate Floor on Tuesday for final reading
UVM and VSC Governance Changes (S.248) - Senate Education on Tuesday
Child and SSI Tax Credits and Exclusions (H.510) - Senate Finance on Tuesday
Strike All Amendment: Workforce Development Bill (H.703) - House Commerce on Tuesday
Act 250 Changes (S.234) - House Natural Resources on Wednesday
We reviewed many hours of legislative testimony to bring you this report, please consider supporting our work.