The pension bill is now in the Governor's hands after the Senate gave final approval on Friday. He will be faced with a choice to approve a bill he has criticized in recent weeks as not going far enough to address the pension deficit or accept the incremental progress that the bill offers.
We are also, by the way, waiting for the Governor to sign the ethics bill which passed over a week ago...
After the House more or less accepted Governor Scotts plan to return half of the $95M property tax surplus to taxpayers, the Senate may not be so quick to jump on the bandwagon. After testimony this week they seem inclined to reject the 20 cent decrease to property taxes in favor of providing funding for both PCB remediation and universal school meals.
Quote of the Week:
“Campaign for Vermont is a much needed non-partisan addition to the extremes on either side of the Democratic or Republican parties. I read their newsletter to give me an unbiased analysis of what is going on in the State House and in-depth explanations of issues. Thanks for the good work." - Mary Evslin, Stowe
CFV President, Pat McDonald
Message of the Week:
Kudos to the legislature for passing the pension bill. It’s a great first step but it doesn’t go far enough – and they know it. A number of possibilities were left on the table. For instance, offering new hires a defined contribution plan like the one we currently offer to exempt employees, a simple solution. Another thing they could do is to offer a less generous plan to new hires. If they did both of these things the public pension plans would still be very competitive and attractive to new hires.
The Governor is right in his opposition to the final bill and he knows, as we do, that this issue will be back before the legislature in just a couple years. It would have been much easier to address the entire liability issue now when everyone focused on the problem on finding solutions. CFV will keep focusing on pensions in the hope of addressing the outstanding liability situation next legislative session when the topic is still on everyone’s mind.
Vote for Vermont:
Ericka Redic, a Candidate for US Congress, joined Pat and Ben in studio to talk about why she is running for statewide office.
S.286 - Public Pension and Other Postemployment Benefits
- Expands definition of total earnable compensation to include stipends and part time compensation. Also provides a process to recalculate working from full time to part time and visa versa.
- Makes some additional changes to make sure that digital services is prepared for the payroll changes in FY2025.
- Makes changes to dates throughout the bill to ensure consistency.
- A few minor Group G changes along with a change to judges retirement date.
- Date for election of Group G was changed as recommended by the Department of Human Resources.
- Will hold teacher's contribution rates flat for FY2023 and FY2024 before switching to a marginal rate in FY2025.
- Asks the state’s Digital Services to work with superintendents to provide whatever support they need to begin using marginal contribution rates.
A new fiscal note was prepared by the Joint Fiscal Office which indicated minimal financial impact.
A role call was requested and sustained 144-0, 3rd reading was ordered. One member voiced concern that a 7% assumed rate of return on investment was too optimistic and that the legislature would be back dealing with the same issues in a few years. Several other members also noted they were not happy that the bill did not go further.
The bill was delivered to the Governor on Friday after final approval from the Senate. He has five days to sign or veto it.
H.737 - Homestead Property Tax Yields and Non-Homestead Tax Rates
Representative Webb introduce her Committee's version of H.737 to the Senate Finance Committee on Thursday. While they claimed to be cognizant of using one-time funds for ongoing expenses, they prefer to use part of the Education Fund surplus for universal school meals instead of other initiatives. The Senate has already voiced that their preference would be to use these funds for PCB remediation in schools, which will be a one-time cost that the state will need to front over the next several years. However, the House would prefer to wait until the facility reviews are completed and we have a stronger sense of how much remediation will cost. To that end they would extend testing until 2026 instead of the current 2024 deadline.
There are a number of reasons for why universal school meals is valuable, everything from addressing food insecurity to reducing stigma. It was noted that 40% of food insecure children do NOT qualify for income-based aid. This program would help them get access to nutrition during the school day. Rural areas in particular are seeing a spike in child hunger. Hunger Free Vermont has launched a letter campaign targeting legislators on these points.
While school meals may be important, representatives from the Superintendents Association pointed out that school meals will not "generate the panic" that would ensue if PCB's were found in a local school. The results of the testing regime that is already underway could well force schools to close indefinitely, which is simply just not an option.
The Committee seems tempted to take the money allocated for property tax buy-down and fund both programs. However, this is likely to draw an veto from Governor Scott and also contradicts the House's priorities. The House Version of the bill includes $36M in property tax pay-back (about 1/3 of the surplus from this year). The bill also includes $15M for Career and Technical Education facility construction and another $15M in new ongoing teacher pension obligations.
To put some of these moves in perspective. The Governor asked for half of the $95M property tax surplus from FY2022 to be returned to taxpayers and the other half invested in education initiatives, he suggested CTE. Surpluses such as these are very rare, and are best explained as overpayments from taxpayers, meaning that the legislature set the tax rate too high and collected more money than they had allocated. That is why the Governor recommended returning a portion of it and making financially beneficial investments with the rest. We agree this approach makes sense. Both PCB's and school meals fit the bill as worthwhile investments, but the the one-time nature of PCB's make them more appealing for this particular funding source. Likewise is true for the CTE construction funding.
S.226 - Expanding Access to Safe and Affordable Housing
The House General Committee took up S.226 again on Wednesday despite the bill currently residing in the Appropriations Committee. Representative Cina submitted letter to the Committee about including a Land Access and Opportunity Board in the bill. This was deemed controversial because a similar board had been pursued through H.96 to deal with racial and social imbalances in areas that included housing policy. After a heated debate over whether or not this new board would be duplicative if more testimony should be taken on this concept. Representative Murphy was upset by what she sees as a move to dilute the legislative process. She believes they engaged on another vehicle for this type of language and they should stick with it.
The Committee will come back to this later on, as they are struggling to reach consensus. Some members of the Committee want to take further testimony as well. All of this being said, the Committee no longer holds the bill so any action they take would likely need to be as a floor amendment.
The bill was referred to Ways and Means Committee on Friday.
S.234 - Changes to Act 250
Also worth noting here is that S.234 is expected to be on the House Floor on Tuesday. While dealing with Act 250, the bill largely focuses on housing and housing-related issues.
H.703 - Workforce Development
When the Senate Economic Development Committee took up H.703 on Tuesday, they expressed frustration at the lack of direction in the overall system (something CFV has pointed to for years). Senator Clarkson called it an "octopus without a head" and an "orchestra with no conductor." While they are impressed with the Department of Labor (DOL) stepping up to coordinate many of these new programs, they still feel a "conductor" is needed at this time.
Kendal Smith acknowledged their concerns and noted that the House also suggested a similar concept previously. She asked the Committee to be more specific about the goals and outcomes they want to see prioritized by the new programs offered in the bill. She and others in the Governor’s office coordinate directly with DOL and others involved.
Clarkson argued we should have seen these needs before and we should “be setting goals and pulling these people all together to address this workforce shortage." She is concerned that “there is no one holding peoples toes to the fire except [the legislature] and we only have 4-1/2 months per year." We agree with this, there seems to be little to no accountability for all the workforce dollars we spend and programs we offer.
Chairman Sirotkin strongly agreed. He almost gave up on workforce efforts because of the "potpourri" of programs. He asserted that “if the private sector had all this money they would find a way to maximize these dollars and these people." He feels very strongly they need an appointed directed person or entity who that can get this straightened out (yes!).
Senator Brock also agreed the lack of accomplishment is difficult but worried that “adding another body to this circus of confusion… will just add to it.” His preference is for the administration to appoint someone to oversee this better, perhaps even a professional consultant, but it is incumbent on the Administration to further this.
Smith agreed the Governor could do that under current laws and executive authority. The funds come and go, so consistency has been hard to come by. The Administration would prefer the funds be used adequate flexibility to ensure they can be used effectively under changing conditions. She suggested that the burdens come from the legislature and that they need to step up the staffing behind their demands for results. Currently Sara Buxton is leading the Administration's workforce development efforts and Dustin Degree is deputy Commissioner of DOL.
While it is well known that medical professionals, such as nurses, are in short supply, last week EMS providers also raised the alarm about dwindling ranks. They are asking for additional funding for training programs because despite the nearly $1M allocated last year they still lost over 100 EMS providers statewide. Additionally they want more supplemental operating funds for EMS services as most operate a loss. They are asking the legislature for $1.2M in training funds, plus supplemental wages for EMS workers.
Christine Hallquist (Executive Director, Vermont Community Broadband Board) pitched the Committee on a revolving "pay it forward" workforce development fund that they initially developed for fiber technicians, but could be used in a number of workforce development areas. The Committee did not have time for discussion on Wednesday but wants to come back to this concept.
S.100 - Universal School Meals
S.100 passed the House floor on a voice vote Wednesday. This will turn into a controversial issue on the Senate side because it uses one-time funds (a surplus in Education Fund revenue) for what is clearly an ongoing program. The Senate Education Committee has already determined they would prefer to spend the money on PCB testing in schools instead.
The bill would simply reimburse what schools spend on meals as long as they provide them to students for free. These funds would be layered on top of whatever funds the school district draws down through the federal free or reduced lunch program. The bill appropriates $29M from the Education Fund for this program, but no one quite knows how much it will cost. The bill asks the Agency of Education to come back next year with a report on the performance of the program, how many students utilized it, and what the actual cost was.
Representative Donahue was concerned about the privacy issues that a universal income declaration form potentially poses. Currently such forms are optional. It was noted that this was a ‘massive public policy issue, and the bill says nothing about protecting the information that would be collected on the form. The form has yet developed or reviewed by the legislature.
S.287 - Adjusting the School Funding Formula (student weighting)
Representative Kornheiser presented S.287 on the House Floor Wednesday. She highlighted that Vermont's education funding system is notoriously complex but that this bill ensures our constitution obligation to provide "substantially equitable funding" to each district in the state is met. In somewhat of a clever policy decision, the bill has no phase-in. Instead, tax rate increases are capped at 5% for the next five years to create a "soft landing" for districts who will see increases under the new formula. However, this allows districts who would see lower tax rates to realize those savings immediately.
Like S.100, this bill would require a universal income declaration form in order to calculate the poverty rate in each school district. A few legislators gave passionate speeches supporting the bill or warning that the work here is not done yet. Some legislators were concerned that this bill did not tie tax rates to local decision-making more directly or that quality standards were not in place to hold schools accountable.
The bill passed on a vote of 132-11 and will now head back to the Senate for final approval.
H. 727 - Formation, Organization and Dissolution of Union School Districts
The Joint Fiscal Office representative reviewed a new draft of H.727 on Wednesday with the Senate Education Committee. Most of the changes were technical (really the whole bill is quite technical), however they mostly dealt with the school district withdrawal process sections. The first step when considering a withdrawal from a unified or union school district is the convening of a study committee. The report of the committee then goes to the Secretary of Education after consultation with the Supervisory Union (a new addition in this draft). The Secretary then has 90 days in which to render a decision, but the timeline can be extended with the concurrence of the study committee.
Some towns, like Starksboro, are already following the old process and may need to be transitioned to this new process. The way the language is currently written, these towns would be straddling between the two processes. Legislative Counsel was asked to draft a solution for the Committee to review.
Also added to the bill is language about school closures which prevents individual schools from being closed unless it is approved by voters and the impact is reflected in the district budget (this is a win for many small schools fighting to stay open as they neighbors attempt to close their doors).
The Committee continued discussion the next day on the bill. Legislative Counsel reviewed the new language as requested by the Committee. Towns who have previously started the process but have not yet voted will receive a notice from the Secretary of State to make arrangements for a vote in towns impacted by the proposed withdrawal. The Committee agreed to this language and voted the bill out 6-0-0. The will will now go to the Senate Government Operations Committee to review the voting processes contained in the bill.
S.285 - Health Care Reform, Data Collection, and Access
The bill appeared on the House Floor Friday with members of the Committee reporting in favor of passage. Representative Yacovone reported for the Appropriations Committee and recommended that the payment and delivery system reform be changed from $1.4M to $900K. The bill was amended and third reading was ordered for this coming Tuesday.
Things to watch for next week:
Signature/Veto Pending - State Employee and Teacher Pension Funds (S.286) - Delivered to Governor on 4/29
Student Weighting in the Education Funding Formula (S.287) - Senate Floor on Tuesday
Universal School Breakfast and Study of Universal Lunches (S.100) - Senate Floor and Senate Education on Tuesday
Expansion of Affordable Housing (S.226) - House Ways and Means on Tuesday
Rewriting the Rules on Act 46 Mergers and Divorces (H.727) - Senate Education and Senate Floor on Tuesday
Goals and Reporting Requirements for the Vermont State Colleges (H.456) - Senate Floor on Tuesday
Homestead Property Tax Yields and Rates (H.737) - Senate Finance on Tuesday
Retirement Allowance for Interim Educators (H.572) - Senate Finance on Tuesday
Housing-Related Changes to Act 250 (S.234) - House Floor on Wednesday
Vermont Child Tax Credit and SSI Exclusion (H.510) - Conference Committee TBD
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