SmartTranscript of House Appropriations - 2025-02-21 - 10:15AM

[Chair Robin Scheu]: Morning. This is the House Appropriations Committee. It is Friday, February twenty first twenty twenty five. It's just after ten fifteen. We're continuing our tour of the f y twenty six budget, and we're delighted to have with us the Public Utility Commission. And I think you have not been before this particular group of committee members before. We have a few that are hot here, but it's a we have six new members this year. So let's go around and introduce ourselves and then we can have you do the same. [Member David Yacovone]: Good morning. I'm Dave Jacoboni from Morrisville, and I represent the Lemoille Washington district. Greetings. Thank you, John. [Member John Kascenska]: Good morning and welcome, John Krasenska from Burke, and I represent the Essex Caledonia district. [Member David Yacovone]: I'm Mike Nigro, represent Bennington and Health. [Member Michael Nigro]: Tom Stevens from Waterbury representing the Washington Chittenden District. [Member Thomas Stevens]: Thomas, good evening. Jim Harrison from the town of Chittenden. Also represent Menden, Killington, and Pittsfield. Thank you. [Chair Robin Scheu]: Okay. And I'm Rob Chai from Middlebury. Pittsville. Mike from Burlington? Trevor Squirrel from Underhill Jericho. [Member David Yacovone]: I don't [Vice Chair James Harrison]: know much. I get Frank from Berkshire and Richfield. [Chair Robin Scheu]: And then we also have Mike Maricchi, who's from Putney and Dumberston, and Lynn Dickinson from Saint Albans Town. That's that's us and that was [Speaker 6 ]: the back of the bar. [Chair Ed McNamara]: Thanks, Sue. Ed McNamara, chair of the Public Utility Commission. [Finance Director Karen Hutchinson]: Karen Hutchinson, business manager of Public Utility Commission. [Operations Director Ann Bishop]: And I'm Ann Bishop, founding, Public Utility Commission's operations director. Welcome. [Chair Ed McNamara]: Alright. So we've sent over a yeah. Thank you. So you all have that. So just sort of walk him through, and please interrupt with any questions as we go through. And I also know if we're scheduled for an hour, obviously, take whatever time you can move me along quicker if you want. Whatever. So quick overview of who we are. We're a quasi judicial independent regulatory body. We've been around in various forms since eighteen fifty five. We started off regulating, railroads, and then over hundred something years, evolved to start regulating electric utilities, natural gas, various forms of telecommunication companies. And I will sorry. I can't do two notes at the same time. So what we're really structured for, and every state has some version of a public utility commission. When you have a monopoly utility, and you don't have competition, you need some sort of mechanism or function to ensure that customers are paying reasonable rates. And so the regulatory, function basically steps in in place of competition to ensure is that to ensure that captive customers of the utility are, not being taken advantage of, economically. So we'll also say there's a federal statutory overlay on all our work. We regulate electric, natural gas, telecommunications in some form, some water companies. It's primarily electric and natural gas that we regulate. There's Federal Power Act, Federal Gas Act that limits to some degree our regulation. And then on the telecommunications side, we actually do not have as much regulatory authority on telecommunications and cable. From the federal perspective, they're much more focused on competition. They're ensuring adequate competition. They don't want a lot of state regulation getting in the way of competition. And water companies, we used to do a lot more, regulate a lot more water companies, but only private water companies. So we don't regulate municipal water systems. And there have been there's something called fire districts that are essentially cooperatives on the, water level. We don't regulate fire districts, and so a lot of companies water companies we used to regulate decide to become fire districts. So we did not take it personally. We we understood. [Chair Robin Scheu]: That's if you had enough other work to do. I didn't know that. Interesting. [Chair Ed McNamara]: Alright. In terms of who we are currently, so there's about twenty eight of us, but classified folks, and the rest are exempt. Twenty five exempt includes the three commissioners. So his chair and then two additional commissioners were appointed for six year firms, approved by the senate. And let's see. Looking at f y twenty four numbers, we received a lot of, sort of new cases, petitions cases, but so over three thousand. A lot of those are actually registrations, and a couple of years ago, we moved to a system where people can essentially submit an online form, and this is primarily net metering. So the small rooftop solar projects, we get a lot of those. And so we streamline the process so people can submit an online form unless there's an injection that just sort of goes through. So even though we have over three thousand cases a year, a lot of those are actually registration, and that was a lot of upfront work and some I decent amount of IT costs as well to set up the system and maintain that system. We routinely sorry. EPUC is I I noticed on the slide here. EPUC is our online case management system that went into effect within the last ten years. [Operations Director Ann Bishop]: Twenty seventeen, we started. [Chair Ed McNamara]: Great. Thank you. And used to be that all our everything was kept track of, you know, old file cabinets and the list of cases were on a yellow pad in somebody's desk drawer, literally. And we have moved to anybody can actually go online, find a case that they're interested in, and see all the filings associated with it. So it's also great from not just from the perspective of people who actually practice in front of us, but from a public records perspective. If anybody wants to understand what Green Mountain Power said in a rate case and then what the Department of Public Service said in response, it's easy to find that. So EPUC has been a fantastic tool for us. My apologies. I'm gonna back up one second. I discussed who we are. Department of public service, I'm not sure if they've been in yet. There is we get confused with Department of Public Service a lot. They are the state's energy planning office. They also do telecommunications planning, and they're the public advocate. So they represent the public interest in proceedings in front of the public utility commission. So completely separate. They're part of the administration. We're independent. But just wanna make sure when you hear if I say DPS department of public service, it really is a separate entity entirely. [Chair Robin Scheu]: It's not the same as the department of public safety. [Chair Ed McNamara]: That's correct. [Chair Robin Scheu]: You're DPS. I know. I thought I thought it was the public service department, the PSD, to to differentiate it from the PSD. [Chair Ed McNamara]: PSD so I've been around long enough that I it it was only called EPS for the longest time because in statute, it's department of public service. Or or it's actually department of public service in statute. Right. Somebody had the good idea to differentiate that. And because apparently I'm stubborn, I still think of it as DPS because they started when they weren't DPS. [Chair Robin Scheu]: Many acronyms. Okay. Continue. [Chair Ed McNamara]: Alright. Sorry. So looking at slide three, the f y twenty six budget summary. So we made a point of saying of including this, pie chart here on the left. We're a hundred percent special funded. We don't receive any general funds, whatsoever. So our funding comes primarily from, it's called a gross receipts tax on the regulated utilities or sorry. The utilities that we actively regulate, so electric cable, telecommunications, natural gas. And then to a much smaller degree that I'll get into later, there's application fees. So if Green Mountain Power, for example, is gonna propose a solar project, because they pay the gross receipts tax, they don't pay any additional fee when they submit an application to build a solar project or a transmission line. However, what's called merchant generators, and that includes independent companies that come in, just build solar projects, and then sell the power to create massive power, or for net metering. Those folks pay an application fee because there's no other funding source that we have that covers the work that we do to review those applications. So, like, couple of years ago, I think it was, twenty nineteen is when we first put into place application fees. So you'll see in the numbers, f y twenty six is technically a decrease, compared to f y twenty five, and that's actually a history that you need to back up about two years. F y twenty four, I believe, is when we received, general funds, probably the first time in a long time in decades that we received general funds, if ever. And that was for us to develop a clean heat standard. We had to design the program, design the rules, and provide a report to the legislature. So that work carried over through two fiscal years, and so we're finishing up We finished the clean heat report, submitted that, but f y twenty five included some of the general funds that we had to carry over from f y twenty four to finish up the work. So even though our f y twenty six budget is technically lower, if you discount clean heat standard and the general funds that came in, our budget has actually increased. Double checking. [Chair Robin Scheu]: Okay. Yeah. That's that. Yeah. [Chair Ed McNamara]: K. So, also, we're not we're not really, like, we're not like agency and natural resources where we own all sorts of parks and have capital maintenance programs, things like that. We've got an office with some copiers, bunch of laptops, but almost all of our costs are, related to salaries. About eighty seven percent of commission's budget represents salaries. I will note that health insurance premiums, and I'm sure you've heard from everybody else, increased significantly. Internal service funds, basically, what we're paying to BGS, ADS, other folks, that has also that takes up about six percent of our budget. Another important component for folks to be aware of, our f y twenty six revenues do not cover the full cost of the commission. So we've had, for about the last fifteen years, a reserve fund. And that reserve fund, we're able to draw down to compensate for having a a gap in our, in our revenues. [Chair Robin Scheu]: What's the balance in your reserve fund? Your special yeah. Your reserve fund. [Operations Director Ann Bishop]: Approximately four point two million. [Chair Robin Scheu]: K. And how does that compare to last year? [Operations Director Ann Bishop]: Last year, we used about [Speaker 6 ]: a hundred and fifty thousand [Operations Director Ann Bishop]: of our reserve fund in FY twenty [Speaker 6 ]: four. We're anticipating that we're gonna need leave its eight hundred [Operations Director Ann Bishop]: and ten thousand in f y twenty five, which includes funding some of the and you're at the clean heat costs that we didn't receive any any additional money for in f y twenty five. [Chair Robin Scheu]: And then f y twenty six, you're also gonna be Another eight hundred and [Vice Chair James Harrison]: It was [Speaker 6 ]: thirty thirty four thousand, I believe, to figure. [Chair Robin Scheu]: And so has the reserve fund you're spending it down, but is there money going into the reserve fund? No. There's not. So you're just it's a one way street. Right? [Chair Ed McNamara]: At the moment, it is. And I'll get into a little bit later. We are asking to increase application fees. And, also, we are going to take a look at long term stability, long term revenue stability, and this would apply for both us and department of public service, which is largely funded by, gross receipts tax. And I'll just flag right now. So the gross receipts tax can vary. That's the basically, it's a tax on the overall revenues of the utility, and the revenues can vary significantly from year to year. If you think of Vermont gas, for example, a particularly cold year, the revenues are gonna be a lot higher than a very mild year. And same with electric as well. So the revenues vary, and therefore, the Right. What we receive through the gross receipts tax varies. On the electric side in particular, we have state policy that's pushing for more electric vehicles, more heat pumps. That is expected to fairly significantly increase the overall load and, therefore, the revenues for the electric utilities that would then also increase the gross receipts tax. We've been hearing about this for years, and we're not quite seeing that the increase in gross receipts tax making up for the budget or the revenue shortfall. And so one of the things that we intend on looking at is doing a deeper dive and when what what are reasonable estimates for when gross receipts tax revenues are going to actually start significantly increasing to the point where we're not going to need to draw down on reserve funds. [Chair Robin Scheu]: Okay. So there's some projections based on [Chair Ed McNamara]: Exactly. [Chair Robin Scheu]: Assumptions on. [Vice Chair James Harrison]: Yep. You probably just answered my question. But so the clean heat standard wasn't all wasn't fully funded, which required you to get some money out of your reserve fund. [Chair Ed McNamara]: That's correct. [Vice Chair James Harrison]: And given what? And now you're doing analysis to see whether or not your receipts through time are gonna be able to keep it stable. That's correct. Not require that you continue [Chair Ed McNamara]: to draw down on that. [Chair Robin Scheu]: I don't think the clean heat work is the sole reason that you're drawing from not not to mislead people. We gave them money to do that specifically, but their costs are [Chair Ed McNamara]: The cost. [Chair Robin Scheu]: The cost to run the PUC are coming in at a higher rate than what the revenues are coming in at. [Chair Ed McNamara]: Yes. And just to be clear, there was for f y twenty five. We were short some money in part because of clean heat standard, but not entirely. And so even in f y twenty six with clean heat not included, any work included, any budget included, we're still running a shortfall. [Chair Robin Scheu]: Need to borrow eight hundred and thirty five thousand from the reserves Yes. Have anything to do with the clean heat standard? [Vice Chair James Harrison]: No. But how much of it was the the unfunded part of the clean feed standard? [Chair Ed McNamara]: I'm not sure. I don't believe [Operations Director Ann Bishop]: Approximately, we're expecting to use about approximately four hundred thousand dollars out of our reserve in FY twenty five because of the bleed needs to [Member David Yacovone]: be done. [Operations Director Ann Bishop]: We received general a general fund appropriation, a one time general fund appropriation in f y twenty four. We did not spend all of it in f y twenty four. We were allowed to carry over the unspent portion to f y twenty five, but that was not sufficient to that original appropriation is not sufficient to [Member Michael Nigro]: Right. Yeah. [Vice Chair James Harrison]: Yeah. So about four hundred thousand in your twenty eight, terms of debts come from the premium standard. [Chair Ed McNamara]: From the initial general fund appropriations associated with cleaning standard. Yes. [Chair Robin Scheu]: But not this not for f y twenty six? [Chair Ed McNamara]: Not for f y twenty six. Yep. [Member Michael Mrowicki]: Okay. When you have people come before you, they have you have dockets. Yep. Those is that do they are extra funds that are created by going into a docket, or is that just the gross receipts gross receipts tax and the application fees paid for that work? Because that's most of what you do from what I gather. [Chair Ed McNamara]: It is most of what we do, and gross receipts tax pays for, let me just back up a little bit higher. It's twenty nineteen. Gross receipts tax paid for a hundred percent of our work. There were no application fees. So and, also, I would say that prior to twenty or two thousand five even, almost all of our work was a result of petitions from electric utilities, water companies that were paying the gross receipts tax. Somewhere around two thousand five, a little bit after is when we started seeing these, merchant solar projects. So independent power producers coming in proposing, and it has been primarily solar, projects. They're not paying the gross receipts tax, and so that became an issue of we're spending resources to review those projects but without any associated revenue. So twenty nineteen, we put in application fees in place. And the application fees, first time we'd ever done them, were meant to cover the full costs or at least a decent portion of our costs associated with revealing those independent power producer petitions. The application fees are not covering the full cost of the review. [Member Michael Mrowicki]: K. So the docket, it's not like you go and you pay a court fee. You pay the gross receipts tax, that takes care of you regulated. Then, you know, there's no applications for these other new entities that didn't exist before. Exactly. Okay. So so the question becomes, you had a reserve fund that you had to develop from excess revenue somewhere. Yep. And now you're drawing it down. Yep. That's correct. So the question becomes, should you increase what you what you charge? I mean, if the example which it seems to me if the grocery streets tax was supposed to take care of all the regulated people a hundred percent and up until twenty nineteen, they did that. These applications for these new things, you're either understaffed or you're trying to add staff and you just can't cover your cost. I mean, those application fees should go up. [Chair Ed McNamara]: I agree. [Member Michael Mrowicki]: You know? So you break even. I mean, all you need [Speaker 6 ]: to do is break even. [Chair Ed McNamara]: Yes. Yeah. We're not looking to make a profit. Yeah. Even with the application fees that I'm gonna talk about later, it still wouldn't cover the full cost. It's the full cost of the review. I'm sorry. The application fees, when we look at it, is covering only a portion of staff time. We also have EPUC, the case management system. We're not assigning a portion of our review of this independent power producers. We're not trying to set the application fee at the moment to cover the cost of, for example, our offices, our laptops. [Chair Robin Scheu]: They don't have anything [Member Michael Mrowicki]: we would have to [Chair Ed McNamara]: We would be doing anyway. [Member Michael Mrowicki]: So why wouldn't you just raise it to cover all those costs? Get a you know, get yourself back to zero. [Vice Chair James Harrison]: Yep. Because [Member Michael Mrowicki]: you I mean, you can reserve you can use the reserve fund, but it's gonna go away at some point. [Chair Ed McNamara]: Yes. It will over the [Member Michael Mrowicki]: And you'll have to raise the fees [Chair Ed McNamara]: Yep. [Member Michael Mrowicki]: The application fee. [Chair Ed McNamara]: Yes. [Member Michael Mrowicki]: Carla Cox are doing business. [Chair Ed McNamara]: Completely agree. And then there's also the question of, is it politically palatable to raise fees on certain companies? [Vice Chair James Harrison]: And we're trying [Member Michael Mrowicki]: regulated utilities. I mean [Vice Chair James Harrison]: I I [Chair Robin Scheu]: So alright. We we we need we [Member Michael Mrowicki]: need to move on from Okay. [Chair Robin Scheu]: We need a lot of things where we have fee issues. There's no question about it. [Vice Chair James Harrison]: This is yet another We will. Please. So my question is I mean, we've seen other organizations come in with refill funds and need trying to maintain a certain minimum amount in the majority of primary to maintaining operations. We need to have a number we have some referral that you'd like to know not overload, which we're fine in order to make sure that things don't go south one way or the other? [Chair Ed McNamara]: Yep. Part of the issue that we have and part of what's really helpful for us with the reserve fund because we are general funded, we get the gross receipts tax the end of the year. So we're sort of carrying the costs all throughout the year. Ideally, we're not ideally, the reserve fund is buffering that. I'm not entirely sure what that number is. We've talked internally, but I don't think that we I I can't tell you right now the number is x. We have in mind of it would be start getting more dangerous if we got below x, but we are not there yet in terms of providing an offer. [Chair Robin Scheu]: So did I just hear you say you get the gross receipts tax at the end of the year? [Chair Ed McNamara]: That's correct. [Chair Robin Scheu]: Okay. Is there a possibility of getting it more frequently? [Operations Director Ann Bishop]: So the gross receipts tax is paid once a year. It's due [Speaker 6 ]: to April fifteenth. It's collected by the public service department. [Operations Director Ann Bishop]: And then the public service department on the last day of the fiscal year transfers commission's [Chair Robin Scheu]: share of the [Operations Director Ann Bishop]: monies it collected into our account. [Chair Robin Scheu]: So you have some idea maybe in April? Yes. This is sort of like tax. Okay. Alright. Thank you. I can continue. [Chair Ed McNamara]: Moving on to slide four, commissions workload and performance, and we're starting to go through sort of a request that the committee has had. Yeah. Sorry. We did not put slide numbers on here. It's commissions workload and performance at the very top. So how much did we do more than three thousand new cases in f y twenty four? More than fourteen thousand filings made in those cases collectively. Seventy five hearings and workshops that our staff held, and over fifteen hundred orders and certificates of public good, were issued. So the time frames we do have we worked, at Otter's office, had a fairly recent report on this as well. We looked at other courts, other similar bodies to what a reasonable expectation is for issuing orders for completing our cases. Generally, we are we actually are meeting all of those. I think there might be, like, one percent more short here and there. And I will just say also that these are not widgets we're issuing. When you put in, for example, a hundred megawatt or sorry, a hundred acre solar project, the metric should not be how fast can you process it. It is what is the impact on the community and everybody surrounding you as well. So the metrics are very useful. I don't think that they should be a hundred percent of the story, though, because we are supposed to issue a certificate of public good saying this project actually benefits Vermont, not we did this as fast as possible. Right. [Chair Robin Scheu]: So something like information request a time [Chair Ed McNamara]: Yes. Absolutely. [Chair Robin Scheu]: And what's the established time frame for that? Because that seems like number. Straight. [Operations Director Ann Bishop]: It's statute for a time frame. [Chair Robin Scheu]: Yeah. I don't know what that is. [Chair Ed McNamara]: It's three days, if it's a relatively straightforward, and then I think it's nine days. Okay. It's more complicated. Yep. [Member David Yacovone]: Okay. Great. Okay. [Chair Ed McNamara]: Slide five, major cases in twenty twenty four. This is just to give you an example of what we do. Twenty twenty four, most large portion of our time was, clean heat standard, but we also have, rate increase cases that come in, Green Mountain Power, Vermont Gas. Green Mountain Power also proposed what's called a zero outage initiative with major storms. They want to reduce the storms. They want to get ahead of capital costs, and therefore, either underground, strengthen some of their sub transmission lines and distribution lines. We look at electric vehicle charging rates as well, the the rates that the utilities offer, not being sort of independent [Chair Robin Scheu]: Charge point. [Chair Ed McNamara]: Exactly. We don't do charge point, just the utilities' electric vehicle charging rates. And then so seventeen electric utilities overall. Green Mountain Power is about eighty percent of customers, but we do also receive a fair amount of, rate increases as well from the municipal and cooperative, the smaller electric utilities. There was a telecommunications, acquisition related case, And then just we have a fair amount of rules and need to update those periodically as well. Next slide. Known cases for twenty twenty five. We have a couple of reports due to you folks. One on thermal energy exchange networks and basically geothermal. Another on basically low income rates and how we can stabilize low income rates, especially given the move to electrification as people switch off from heating fuels, for example, to heat pumps or gasoline to, electricity. It's gonna become more important and more interesting as well. So electric vehicle charging rates, we get trickles of those in occasionally. Integrated resource plans, our utilities, our electric and natural gas utilities are required to look out over a ten to twenty year period and say, here's how they're going to provide least cost service to their customers. So we review those plans. We just had a public hearing last night for Green Mountain Power's integrated resource plan. Sorry. I'm not gonna go through all of these. There's a couple of twenty megawatt solar projects. Those are the hundred acre projects that we have. And then the supreme court overturned us recently and told us to review portions of the Addison natural gas pipeline. [Chair Robin Scheu]: Oh, okay. So I'm from so they they overturned the [Member David Yacovone]: I I didn't know that, but I [Chair Ed McNamara]: Specific provision on our review process. Okay. [Member Michael Mrowicki]: When did that happen? [Chair Ed McNamara]: Supreme Court decision, I believe, was the summer, and there's been a lot of procedural back and forth. The first scheduling conference was just yesterday afternoon. So [Member Michael Mrowicki]: Yeah. Can you tell me what the Steve Burlington Electric Department negative electric EEU fund balances? What is the EEU? [Chair Ed McNamara]: Yeah. Sure. Sorry about that. Electric efficiency utility or sorry. Energy efficiency utility. And that is efficiency Vermont is the statewide energy efficiency utility. The city of Burlington Electric Department sort of carved was carved out of efficiency Vermont. So it provides its own efficiency services. And the revenue is raised for efficiency Vermont and for Burlington Electric through energy efficiency charge. It's a line item on everyone's bill. Burlington Electric department had a negative fund balance, and we're trying to understand how it got to that point. So that's the investigation. [Member Michael Mrowicki]: So they spent more than my collector. Mhmm. Sort of. [Chair Ed McNamara]: There's some issues associated with the accounting that we're looking at, And I'm not suggesting Yeah. Sorry. I'm not [Member Michael Nigro]: That's why you're investigating. Yeah. Exactly. [Member Michael Mrowicki]: Thank you. [Chair Ed McNamara]: Ongoing potential cases. I've already mentioned rate increases, Renewable energy standard, there is just a law change last year, so we need to update our rules. Energy efficiency utilities, we have regular cases that show up as a result of those. Alternative regulation is simply a different way of regulating Vermont Gas and Green Mountain Power's electric rates. It's a different way of, rate regulation. And then smaller electric generation facilities, so more than twin twenty three hundred net metering petitions in f y twenty four. While I did say earlier, we don't have a lot of regulatory sort of control in this the telecom space. We are responsible for, citing telecommunications towers, and that can vary significantly over the years. I think last Yeah. Five twenty four might have been only sixty five, but telecom towers that we saw. And those are either new towers or modifications to existing towers. Sometimes they're not even towers. They're just panels inside a church steeple. It's about a hundred of those a year on average for what we see, though. And then also just to know, we have no control over our work or we have some control but not complete control. Somebody can just show up and say, we're going we are proposing to build, you know, sixty mile transmission line or a twenty megawatts to the project. We don't control the timing associated with when people people file those petitions. So we just have to respond and try to manage as best we can. And then, of course, there's things like what happens if there's a tariff on imports from Canada. We're gonna have to we while we are not actively investigating something like that, we would see the results show up through rate increases, other things, and would be additional work. And then, almost every year, we have a new report for you folks to read. Alright. Slide eight act eighteen. This is the clean heat standard. So we've already talked about this a little bit. We're directed to develop a rule and a report. So we submitted that. Have not heard anything at all since January fifteenth. And we're highlighting this in large part because it's a great example of when we have this external factor come in, when we're told to do significant amount of work, especially in this area where we did not really have much regulatory authority or any even understanding of, the propane distributors, fuel distributors. It was a lot of work, a lot of work done in eighteen months. And even though there was general fund money appropriated for staffing, it still required a lot of more senior people in the organization to jump in, work on it, disrupted a lot of things sort of throughout, slowed down some other things elsewhere. So that's just a very concrete example. We mentioned this a little bit already. Funding for clean heat standard. Essentially, we had general fund appropriation. We're able in f y twenty four that carried over through f y twenty five. For today, though, what's most relevant, our funding for f y twenty six, we have three clean heat standard related positions that were appropriated for us, two permanent, one limited service. We are not proposing to fund those positions because we have no funding. [Chair Robin Scheu]: Okay. I see [Member David Yacovone]: a [Member Thomas Stevens]: question. Alright. My turn? [Chair Robin Scheu]: Yes. Go for it. [Member Thomas Stevens]: Thank you. If the legislature does not act on the proposed rules for the clean heat standard, will you still incur any ongoing cost with whether it's the registration system or anything else that might happen? [Chair Ed McNamara]: So the commission just sent a letter to Senate Natural and House Energy. I think it was last night specifically on this issue. Short answer is the statute would require work that would require, some funding. But, honestly, that's it's a rabbit hole I'd suggest that we pass over for today, and that's just the energy committee. If you're interested in that aspect, I think the energy committees or relevant committees are probably the better location, respectfully. [Member Thomas Stevens]: Okay. Thank you. And then as I'm looking for the funding, the legislature initially appropriated eight hundred and twenty five thousand if I'm reading this right. You've spent through January, essentially all of that plus a few dollars. And then, I'm looking at, an additional of approximately three hundred and ninety five thousand for the rest of this fiscal year? And where where does the funding for that come from? [Chair Ed McNamara]: From our reserve funds. So we had to draw down the reserves for that. [Chair Robin Scheu]: So if you're done, why is this is this reimbursement for Chris Spence has already occurred? This is three ninety five? [Chair Ed McNamara]: The three ninety five is for f y twenty five. Right. [Chair Robin Scheu]: But your report is in. [Chair Ed McNamara]: Report is in. [Chair Robin Scheu]: And so is so there's theory. If we do nothing in the legislature, you don't have any more work to do with that because that was the end. Just turning it. [Chair Ed McNamara]: That's correct. [Chair Robin Scheu]: What's the three ninety five for? Is that work that's already happened that you have? That's already happened. That's what I'm trying to get. Okay. [Finance Director Karen Hutchinson]: My goodness. Salaries for those three positions. [Chair Ed McNamara]: Does that include through the end [Vice Chair James Harrison]: of that month? That are not [Member Michael Nigro]: filled? Sorry. [Chair Robin Scheu]: The three positions that aren't filled? [Chair Ed McNamara]: Three positions two of those positions are still filled. The three hundred ninety five includes in part the work that's already been done and in part the fact that those positions are still on our books and funded. We had in f y twenty five put in funding for those positions through the end of FY twenty five. In other words, we did not know when we put the order FY twenty five what was gonna happen, so we kept those positions funded. [Chair Robin Scheu]: So are people still in those positions? Yes. And if they aren't doing work on a clean heat standard, what's happening? [Chair Ed McNamara]: There's some personnel issues that we won't discuss. [Speaker 6 ]: Right. It's good to meet you. [Chair Ed McNamara]: Great. So with clean heat standard, nothing happening. So with those positions vacant for f y twenty six, the commissioned employees will return to the level that we've been at for about the last twelve years. So slide ten, f y twenty four actual compared to budget. Sorry. I skipped over this one. I was talking. So, essentially Anne, can you jump in here? Sure. Sorry. [Member David Yacovone]: Essentially, the [Operations Director Ann Bishop]: main point is that our FY twenty six budget is showing a decrease of about nine point two six percent below our FY twenty five budget. That is solely the result of backing out and not funding anything related to the clean needs standard in FY twenty six. And that decrease wouldn't have been higher except for the increases in salaries and benefits and internal service funds that are related to our traditional usual work. And you'll see near the bottom of the page, you know, our benefit costs increased two hundred thousand dollars. Right. And internal service funds increased about fourteen thousand. You're on [Chair Robin Scheu]: the same pay scale and all that the rest of the state employees are. You know? [Chair Ed McNamara]: I mean, there is a public utility commission exempt, pay plan, but it's generally consistent. Gotcha. [Member Michael Nigro]: K. Thank you. [Chair Ed McNamara]: So FY twenty six funding sources, again, no general fund. We estimate that gross receipts tax will be will raise about four million dollars. That's about ninety five roughly ninety five percent of, risk the revenues that we expect. And then the application fees would be about three point seven percent, so a hundred and sixty thousand dollars. We build back certain costs associated with this is primarily to develop transcripts for cases, things like that. We build back those costs. And then the remainder, the eight hundred and twenty four thousand from the reserve fund. So that's how we're covering [Vice Chair James Harrison]: our budget. So [Chair Ed McNamara]: we've talked a little bit already about the budget challenges that we have. Application fee revenues, we did discuss. Next slide is what our proposal is there. I do wanna say, though, that the staff time, it's about thirty six percent of our time is spent on applications on the these independent power producers, applications that are not funded to reverse receipt stacks. And as you note on the previous slide, only three point seven percent of our revenues actually come from those applications. I take about a third of our time. So we have done a a lot of work, especially on the net metering registration to reduce the preview cost or to make it as simple as possible, while still ensuring that projects meet the public good criterion that we have. But review is still a review. So next slide, proposed application fee increases. And this is sort of the cost causer pays approach of these independent power producers are causing costs. Currently, they're being subsidized, through gross receipts tax and the reserve. So we're proposing to address the inequity by seeing the application fees. We have statutory authority, thirty BSA two forty eight c to impose these application fees, but they're set in statute. So net metering registration, the current fees are a hundred dollars. We've proposed doubling that to two hundred dollars. The next one, modifications, net metering registration, this is the biggest jump. Twenty five dollars currently, it would increase to two hundred. Part of this is not having done application fees previously, up until twenty nineteen. Now we're looking back and saying, okay. [Vice Chair James Harrison]: Is this application [Chair Ed McNamara]: is the fee actually commensurate with the level of work modifications? Sometimes it actually take more time than new new registrations. Just things get more convoluted. So we proposed to increase from twenty five to two hundred. And that's primarily the the smaller scale net metering, sort of the rooftop things. Larger projects, you know, the ones out in the field, they currently paid five dollars a kilowatt, increase that to eight, and any modifications, again, because modifications can be fairly complex, increase from one hundred to four hundred. [Chair Robin Scheu]: So did you say that the actual dollar amounts are in statute? [Chair Ed McNamara]: That's correct. [Chair Robin Scheu]: So we would have to write legislation to increase the fees. That's correct. Has the governor weighed in on that? [Chair Ed McNamara]: Governor's office is not supportive. [Chair Robin Scheu]: I know they haven't been supportive of any fees, so I just wondered if it Yeah. So they are not? Okay. [Operations Director Ann Bishop]: I I wanted to just make one additional point related to this. The statute provides that the Public Utility Commission only receives forty percent of the amount of fees. The remaining sixty percent funds the work of the public service department in in their work in reviewing these same applications. So these dollar amounts, the commission only gets forty percent [Chair Robin Scheu]: of what it is. Then sixty percent goes to [Chair Ed McNamara]: Public service department. Okay. [Vice Chair James Harrison]: And heat for that. Yep. [Chair Robin Scheu]: Let's write that down. [Operations Director Ann Bishop]: And so when you look at, for example, the modifications to the small systems, the commission gets ten dollars. Right. Okay. [Chair Robin Scheu]: Okay. So that would raise your revenue to three hundred and forty five thousand [Chair Ed McNamara]: That's correct. [Chair Robin Scheu]: Estimate based on that. [Chair Ed McNamara]: Yeah. And it would not cover all of the costs. It helps out. And it still just wanna be really clear. This is not a panacea. We do not. Even with an application fee increase, we still have longer term budget issues, and we'd still need to draw down on reserves, which brings us to I'm actually just gonna jump right to slide fifteen, sustainable funding study. And so I talked about a little bit earlier. We did something similar in twenty eighteen, I believe, twenty eighteen, twenty nineteen. When we looked at gross receipts tax, what portion of our work is actually funded by gross receipts tax? What portion is unfunded? That's what led to the application fee. So what we're going to look at is every state has a PUC. Most states have a PST equivalent as well. We're gonna look at the funding sources and funding formulas for other states, and I'm not proposing this. This is just cure just an example. State of Maine, for example, sets its budget, and then it has its own authority to adjust the gross receipts tax to meet that. So there's no statutory requirement. Obviously, the Maine legislature can jump in and say we don't like that. But the main legislature, I believe, does not really have the direct control over the budget. Again, I'm not actually proposing that. Simply saying that there's different ways of funding. So we're looking at different ways of funding. And, also, when do we expect to see the electrification truly happen? When is there gonna be enough electric vehicles that the gross receipts tax is going to produce the revenues necessary to keep us sort of Right. Yeah. Sorry. I'm recognizing that we've gone a little bit over time. In terms of last set of questions for questions or sorry. Last set of responses to the questions that you had asked for everyone to address, we're not really proposing any changes to delivery of service. Obviously, depending on what legislature does with clean heat standard, that can be a significantly significant change. We've looked at trying to reduce costs as much as possible since staff costs are about eighty seven percent. It's pretty difficult, but we're finding, like, little margins here and there. We have reached out to BGS to explore reducing office space. We're just talking this morning about with Green Mountain Care Board now in the same building, maybe they can share our hearing room, like, those kind of things. Like, what's ways to be more efficient? Let's see. And we're not proposing any new initiatives for f y twenty six. And last, in terms of federal funding, we don't receive any direct federal funding at all. We're unlike most others. We have had a full time energy and innovation fellow sponsored by US Department [Vice Chair James Harrison]: of [Chair Ed McNamara]: Energy. He actually just finished up yesterday. So and we don't expect to have anybody in the near future. [Chair Robin Scheu]: So you're at the moment okay with all of those things. Right? [Chair Ed McNamara]: So I'll stop there. I know recognize we're forward. [Chair Robin Scheu]: Thanks. Well, this has been very interesting. And, yeah, now we have the rest of the details. And, John, this is yours. Right? [Member John Kascenska]: Yes. Okay. [Chair Robin Scheu]: And I'm sure you've been spending some time up in the energy and visual perspective. Yeah. We'll be getting more presentations from them. Well, thank you. Thanks for all you're doing, and we appreciate it. And it's been really interesting to learn about what you're up to. Yeah. [Chair Ed McNamara]: Thank you very much. Thanks for the time. Much. [Member Michael Mrowicki]: Take care. [Chair Robin Scheu]: Hey. I think we'll just go right into VSAC. [Member David Yacovone]: Thank you. Welcome. [Member Michael Mrowicki]: Education. [Member David Yacovone]: And do I need to bring my PowerPoint up, or can I just talk? [Member Michael Mrowicki]: I think we have copies of your testimony. So [Chair Robin Scheu]: we should introduce ourselves if we have a bunch of new people. And then you can introduce yourselves and and Nigel. Good morning. Lovely. Thank you. [Member David Yacovone]: Good morning. I'm Dave Yacarone from Morrisville, [Vice Chair James Harrison]: and I work with the Lamar Washington District. [Member David Yacovone]: Good to see you, Vivian. Yeah. Good morning. It's good to see you both again. [Member John Kascenska]: John from birth and representative from Massachusetts Kellogg and District. [Member Michael Nigro]: Hi. I'm Mike Magro. I represent Bennington and Powell. [Chair Ed McNamara]: Tom Stevens from Waterbury representing Washington Chittenden District. Tim. [Member Thomas Stevens]: Good morning. Jim Harrison from Chittenden representing Killington, Mendon, and Pittsfield as well. [Chair Robin Scheu]: And I'm Rob Shai from the ferry, and, [Member Michael Mrowicki]: next to [Chair Robin Scheu]: me is Tip Loomley from Burlington. [Member David Yacovone]: Trevor Squirell under Helen Jericho. [Vice Chair James Harrison]: Michael Rush, I gave Franklin Berkshire in Richmond. Mike from the Windham Ford District. That's Buckland Hills. [Member Michael Mrowicki]: Glenn Dickinson, I represent St. Olaf's town. [Member David Yacovone]: Could this be seen? Good to be seen. My name is Scott Jai. I'm the president and CEO of the Vermont Student Assistance Corporation, and I'm accompanied by Patrick Leduc, her vice president and chief operating officer. So thank you very much. We've kind of provided a fairly robust deck. It's not my intention to go through all of that. Many of you are familiar with our programs and and as you know, we are a very data and outcomes driven organization. And, John reminded me when we met with him that the committee is always interested in the data to support the the programs and decisions that, that you've supported. And we are we have provided those in accompanying slides. So my intention is to do a very brief and a recap of last year, a brief overview for those who are not familiar with our programs, and then jump right into our budget and then treat the additional slides as material that we can turn to if members of the committee have, you know, have particular questions. If that works for you. I'll open up by saying this has been an exceptional year within education period, but in the higher education. And I'm reflecting on last year, not just the exceptional year that we're experiencing this year right now with all the uncertainty at the federal level. Two observations I'll make. Some of you that have been living in the higher education space, I know Lynn and others are familiar with this, but what we thought was gonna be a normal year last year started off with the Department of Education completely fumbling the launch of the core financial aid system that every student in the country relies on as their first gateway, you know, for financial aid. And as a result of that, you know, we really had to divert a significant portion of our time and resources to helping students, kind of get back on track, because we knew that the students that were most vulnerable were those students that lacked the parental support, to be willing to sit on a call center line for two and a half hours, waiting for the possibility that somebody would answer your question regarding whether or not your file had had gone through. And I'm proud to say that our team has, you know, probably outperformed almost every other state in the nation. We went into May and we were down roughly seven thousand student applications, which is devastating from a workforce perspective, but particularly devastating for our institutions. And in that period between June and September, we captured almost all of them. And it was a a tribute to what I would describe as kind of unprecedented collaboration both within the higher education community, but also with our partners in the k twelve community and with our community partners because this was a this was really a team effort. And if I were to try and, encapsulate, you know, kind of our approach to work, it's really about building teams within the community to serve to serve Vermont students. The programs that you all have supported, I just wanna highlight a couple. Eight zero two Opportunity, which is the program that this committee helped launch during the pandemic that allows any student, currently coming from a household earning seventy five thousand dollars or less to attend CCB tuition fee free has been transformative both for students and for CCB. And as I know Joyce has probably been in to share this, but to put things in perspective, this program really did three things. During a period when nationwide community college enrollment dropped by thirty percent, CCV saw tuition saw enrollment increases. I'll talk a little bit about who those students were. But even more importantly, from our perspective, we saw something happen sooner than we were expecting, which is growth increase in retention, graduation rates, and in transfer to additional four year programs, particularly from low income students that were not receiving the wraparound services that some of our programs normally, you know, would provide. So it was really exceptional. And then with your support, we expanded the workforce programs that we offer. And I'm just gonna highlight the trades forgivable loan program. This is I think of it as a scholarship with a work requirement. We will pay for an individual who's interested in pursuing the education or training needed to enter into the trades. If they commit to work in Vermont for one year for each year of financial support that we have provided them, this program is now part of our base and it has proven to be really exceptionally transformative in a whole variety of places. We launched two years ago a teacher program that was modeled after this. We support a nursing program which is funded with global commitment dollars, which is why we're highlighting it at this moment. And also two years ago, we launched a mental health counselor program all based on the same model and that is that we will provide tuition support in exchange for commitment to work in Vermont as a licensed professional for each year of support that we have have received. And these programs have been kinda really exceptional. So for those of you who are, only familiar with part of ESAC, we often experience that people know us based on the program that we, that they have encountered. I'm gonna do just a brief rundown and then jump right into the budget. So we were created to be the one stop shop for career and education finance and counseling. We partner closely with the Department of Labor who are really close and important partners with us. We administered the Vermont five twenty nine plan, which some people think of as the college savings plan and that is what most people use it for. But a change in federal law allows you to use that also for registered apprenticeships, which is a powerful and important new tool for us. We provide career education counseling to nearly six thousand students across the state. These counseling programs are supported almost entirely with federal funds and then with some resources matching resources that VSAC is able to provide through our loan revenue. We provide financial aid and forms nights both personally and in virtually virtually every high school in the state. We administer the state grant program, which is the largest of the programs that you support. Eight zero two opportunity, I've mentioned. Interest free workforce incentive programs, we just talked about several of them, though not all of them. And in addition, we administer about one hundred and forty private scholarship programs for donors around the state who are taking advantage of our financial aid knowledge, our ability to assess need. But just as importantly they're taking advantage of our ability to braid all of the financial aid programs that we administer public and private together. And it is that ability to braid all of this aid together that allows us to come to the committee with what I would describe as very cost effective and efficient program requests and, eight zero two Opportunity being one of the most recent examples of that. And then last, we do provide a state supplemental student loan program. This is a program that is designed to meet the gap between what a student can borrow in the federal student loans program and the cost of the attendance at in at a particularly a Vermont institution, but a a Vermonter can go anywhere and a non Vermonter can borrow from us if they are attending a Vermont school. It's kinda part of the support that we provide. We use tax exempt financing for that, which means that the amount of interest that we can retain is capped at two percent on an any given loan, and that two percent can be used for the administration of all of our programs. So it has allowed us, even though we have and continue to ask for permission, to be able to draw a portion of our appropriation for administration. Thus far, we'd be able to use the loan revenues so that a hundred percent of the dollars that you provide to us are actually going to the hands of students. [Chair Robin Scheu]: Scott, have you had any of your grant programs frozen? [Member David Yacovone]: I am spending almost as much time in DC these days as I do here in the state house. At this point, the answer is no. And but timing, I say this facetiously, is everything. All three of our our career and education outreach grants are actually up for renewal this year. We just submitted our largest one, which is a seven year, four and a half million dollar a year gear up grant to the department on February. Well, the due date was February third. We did it before. Yeah. We did it the week before because we weren't taking any chances. And we're working with the governor and the delegation and our friends on the hill to watch those closely. [Chair Robin Scheu]: What and what are the grants for? What are the programs? [Member David Yacovone]: Well, they are for career and education counseling. So they are the way that we are able to put counselors in every middle school in the state. Yeah. And also, we have I'm trying to think how many EOC counselors. AEOC counselors who live around the state who provide the same support to adults. So these yeah. So I I I appreciate that question because this is the, you know, this is obviously top of mind for us where Sure it is. Period when there's a lot of disruption in our space. And, what I will say about these programs that gives me some hope is that there is strong bipartisan support, you know, in congress for all of them. They're not one party or the other. Kentucky is one of the biggest beneficiaries of the GEAR UP program. Mitch McConnell has been a long time strong supporter of it, so his role has changed. The chair the Republican chairs of both appropriations committees have been strong supporters of these programs. But we are in unprecedented times where procedural norms I'm a veteran of DC, for better or worse. [Chair Robin Scheu]: Maybe that's helpful. [Member David Yacovone]: I I I worked I worked on the hill for fifteen years and [Chair Robin Scheu]: Although I imagine it's a little bit different now, but that's great. Alright. Well, we'll keep our fingers crossed for your three grand programs. [Member David Yacovone]: I will say that those changes that we're describing do make it more important that we continue to receive the authority to have permission to draw funding. Yeah. [Chair Robin Scheu]: The language that's in there now. [Member David Yacovone]: Yes. We're not asking for any changes, just the continuation of language that has been there. So let me jump right into the budget request. There are four components that I'd like to touch on in as much time as the committee is interested. So, Governor Scott has proposed, increasing VSAC's base appropriation, by three point six percent. This would result in an FY twenty twenty six base of twenty seven million eighty four thousand nine hundred and forty six dollars For those I know that UVM and the state colleges have testified, we are the financial aid student component of the higher education investment, and we are the smallest of those pools. So though our increase was slightly larger on a percent basis, the dollar amount is substantially less than the others. Importantly, the governor we requested and the governor, supported allowing us to use this increase increase the income threshold on eight zero two opportunity to a hundred thousand, which is where we think the resting space should be, for the foreseeable future. This would allow us to pick up probably about seventy to seventy five percent of Vermont households, and it would fill a hole that we are seeing for dependent students, of families that are earning between seventy five and a hundred thousand dollars who don't have the resources in order to be able to kind of cover the costs of CCB. I know that, cancer Mavut's testifying this morning, and she mentioned our next graduates. Based on the really successful experience that we have had with eight zero two Opportunity, We are proposing the creation of a new scholarship program called Freedom Immunity that would allow students attending Vermont State University coming from, income families earning incomes of seventy five thousand dollars or less, the ability to attend their programs tuition and fee free. We are also requesting and I will say that this request was not included in the governor's budget. So this is a All [Chair Robin Scheu]: three of these were not All [Member David Yacovone]: three of these are not included. I'll make one note about the the third one. Two years ago, this committee with, really, the leadership of the House Education Committee created a forgivable loan program for teachers. We have one of the biggest teacher shortages in the country. We've had more resignations and retirements. And in our rural communities, we've got a greater number of folks there in some form of temporary licensing. This program was funded with one time money that was intended to cover two years of that. The program has really taken off. We've I I can share some charts. But this past year, we were unable to fund what would have been equivalent of three point nine million dollars in total of of the [Chair Robin Scheu]: So you could have actually funded that much if you had the money [Member David Yacovone]: If we had the money if we had the money last year, we would have funded. It would have been three point nine million dollars. And to put this in perspective, I need to check the numbers with [Chair Ed McNamara]: Two hundred and seventy students. [Member David Yacovone]: Two hundred and seventy future nurses are now kind of committed to Vermont to ensure this program. Kinda very excited about that. And then the last one is a program that was created, again, really with pandemic dollars. Two years ago, they were transferred to revenue dollars so that we would hit carry forward ability. And this was a million dollar a million and a half at the time that was designated, to allow us to try and grow the mental health counselor, community. It's a this is program is a little bit unique in that in order to become a licensed clinical mental health counselor, you need a graduate degree. So this program is predominantly supporting students that are obtaining the graduate credential they need to become licensed professionals in Vermont. We have now fully extended those funds and are suggesting given the fact that this is one of the biggest challenges our education system faces and also one of the largest challenges any of us are encountering encountering within our communities, that funds be, obtained for that. One note that I do wanna make was that we did have the opportunity to testify before senate appropriations and the question was asked, as you know, the nursing program that we also administer on behalf of the agency health receives global commitment dollars for that. That's grown to about three point two million dollars that's contained in the base of this the the governor's budget request. Senate appropriations is asking whether the mental health counselor program actually would fit in global commitment as well. And, we've not heard back from them, but I know that's being explored. [Chair Robin Scheu]: So you're talking to human services about that? [Member David Yacovone]: Okay. [Vice Chair James Harrison]: Right. So around the country, is a better degree required for mental health professionals, not all states Yes. [Member David Yacovone]: In all countries. Yeah. Yeah. [Chair Robin Scheu]: Or, like, you need to get one to be a doctor. [Member David Yacovone]: Yeah. And it it there are some variations on that. So for short certain addiction support programs do not require a graduate degree but to become a licensed clinical mental health counselor be eligible to build Medicaid all of those things requires licensure, which requires a master's degree. [Chair Robin Scheu]: How many, counselors went through the program using the initial one [Chair Ed McNamara]: five nine? [Member David Yacovone]: I have a chart. [Member Michael Mrowicki]: I'm gonna [Chair Ed McNamara]: About a hundred and sixty [Vice Chair James Harrison]: Okay. [Chair Ed McNamara]: On slide thirteen. [Chair Robin Scheu]: Same numbers [Member David Yacovone]: are are some [Vice Chair James Harrison]: of them. [Member David Yacovone]: At slide thirteen, we have a chart that has Yes. We're showing both the schools and the and the total awards. Yeah. [Chair Robin Scheu]: And when somebody's using the funds for out of state, are they expected to come back to Vermont? [Member David Yacovone]: They're obligated. Yes. If you if you do not you sign a contractual obligation. If you do not return, this turns into a loan, and then we begin the process of collecting the dollars. [Chair Robin Scheu]: So we've pretty much tried to do that with most of these loan programs, haven't we, when we started this? [Member David Yacovone]: Yes. I think as you may recall, the model for this was the original a smaller nursing program that's now grown, and our experience had been that somewhere between eighty five and ninety percent of the recipients paid off their obligation through service in Vermont. [Chair Robin Scheu]: That's great. Right? [Vice Chair James Harrison]: The capacity of the there's a educational focus programs in the state provide enough capacity in order to provide for what we need for kind of health the masters level. Yeah. I think that's been one [Member David Yacovone]: of the challenges and why we have been seeing, students that are pursuing those degrees in part out of state. But, I know that the Vermont State University has made a real commitment to kind of expanding its capacity there much as they have with nursing because this nursing is the other area where we have seen this. And we've seen Saint Michael's College in particular, which has a master's degree in psychology, which is a little different program expanding its capacity and UVM stepping up as well. If I might, I know I'm I'm just, you know, mindful of time and happy to come back. What we did do, I think, at the request of the committee last year was we have a series of charts which shows where language is located. So I'm on page three of our kind of three kind of three of our presentation. All of these it really kind [Vice Chair James Harrison]: of additionally do a couple [Member David Yacovone]: of things. We historically received permission to use up to three hundred thousand dollars of of our appropriation for what we call our aspirations initiative. This is a program where we partner with a high school that has a a a pretty significant gap in the college and training going rate between first and second generation students. These programs have been very, very successful. The model is that you go in, work with the school, help them design a program that will be self sustaining, that meets their local needs, and then at the end of three or four years, our goal is to go on and work with another group. We have slides in here that show some of these outcomes. We can talk about that, but it's been a powerful it's been a powerful tool. And I wanna say we are at a time when we think this tool is more important than ever. We are seeing declining college going rates, particularly amongst first generation men and women, that are happening nationwide but even more dramatically in Vermont. And this allows us to essentially pilot some locally designed strategies for making sure that those students are actually gonna get the education or training only and be successful members of our of our workforce. [Chair Robin Scheu]: You know, where you're working right now? What school? [Chair Ed McNamara]: We have four schools we're working with right now. The most recent is Missisquoi, I believe Harwood, Brattleboro, and Oxbow. Those are the four schools and the I can't remember the exact order, but the one that's been there for four years will roll off. Right. We'll seek applications for a new school that's ready to do the same exploration. [Speaker 11 ]: K. [Chair Robin Scheu]: Thanks. [Member David Yacovone]: Flexible pathway stipend, this is for those who aren't familiar with it, this is associated with dual enrollment mainly, but also early college. We learned pretty early on in the launch of the dual enrollment program that free and reduced lunch eligible students could not always afford the textbooks, the travel, or in many cases, they were giving up a meal to participate in dual enrollment. And so, really, this committee took the leadership in launching what we call the it's the dual enrollment stipend. Half of that money comes from the general fund, half comes from the education fund, and it just goes to free and reduced lunch eligible students. It's a small hundred and fifty dollar stipend to offset some of the costs, and encourage those students, the ones we really wanna make sure are participating in these programs. Right. [Chair Robin Scheu]: So you will see committee in the budget. We see forty one thousand two fifty in the ad fund and and the same in six hundred. [Member David Yacovone]: And and this is really the same work. We think that the funding is adequate. We have a on page four, we have what we call other VSAC administered programs. The you're really for you to focus on. These are programs that we are administering largely on behalf of other agencies. The Vermonters Forgivable Loan program, I think we've discussed. There is a dental hygienist program that we are administering that's contained within the global commitment base. Teacher forgivable loan program, that is ours that we've talked about. Psychiatric mental health nurse practitioner, this is a relatively new program. We believe that we've got sufficient carry forward funds to be able to fund that fully this year. Similarly, the Office of Engagement, we partner with UVM on the what is that grad retention program where Right. You know, we'll pay a portion of of loans. That is their program, so they'll they will probably end talking about that this morning. [Chair Robin Scheu]: Yeah. I don't do you know how much is expended or [Member Michael Mrowicki]: how much you're carrying forward [Chair Robin Scheu]: at the one and a half million? [Member David Yacovone]: Let me let me check on that because they would have the numbers. [Chair Robin Scheu]: Okay. And we did not get into that level of detail with them this morning. I would like to know how much you're caring for. [Member David Yacovone]: Okay. We'll we'll check-in with them. And then I did wanna mention one of our most important partnerships is with the Vermont card. We do administer their programs, you know, for them. And I know that if they've not been in already, they will be able to talk about that program. [Chair Robin Scheu]: And has that been fully expended? [Chair Ed McNamara]: I don't believe so. [Member David Yacovone]: I don't believe so. [Chair Robin Scheu]: No. I'd like I'd be interested to know. And I guess they're coming in maybe this afternoon. I can't remember, but, how much we've expended because I know we've had a few years of that now, and it'd be good to know what's where we should be [Member David Yacovone]: Yeah. Basing it on. Yeah. And I know that they are also seeking to expand the programs that are eligible. Okay. To utilize that. Right. Those ones. Yeah. And then the I've already mentioned a page five. We've just got two more programs. We've mentioned the Vermont mental health professional forgivable loan program. And then nurse faculty forgivable loan incentive program, we've got sufficient carry forward to run that program this year. This actually goes to the the Vermont education nursing capacity question. One of the things that we I think learned pretty quickly was that if there were the nursing programs were having a challenge hiring faculty members with the academic credentials they needed in order to be able to expand their nursing programs. This program is a way for us to partner with our Vermont nursing schools to identify those individuals and grow them so that we can expand capacity. So with that, I know I'm I think at the end of my time, I have lots of things that I would love to say about these programs, but, I will take any questions or would be happy to meet other individually or come back as the committee might. [Chair Robin Scheu]: Your biggest ask is the five something. Five point two for the Freedom and Unity Scholars. That's correct. And is that similar to the eight zero two? Just remind me quickly of the parameters of that. [Member David Yacovone]: It it is. And if I'm late, you never wanna negotiate against yourself. But if I would take you to page seven, when we were creating it into opportunity in the beginning, just because of the fiscal realities that we were facing, you know, we we we came up with a number of options in order to allow us to launch that initially as a pilot, prove its success, which the program proved itself many times over. And so I wanna share share that we have a range of options. So as the committee gains interest in this program, I will say I really do wanna say two things about this. The creation of this program will be transformative for Vermont students, particularly those coming from families that are that need education but are questioning whether they can afford it. But just as importantly, we have all of both resource but really time and energy in the Vermont State University because that's such a critical part of our educational infrastructure, but also of our economic infrastructure within the state. What we learned from a major two opportunity was that it increases enrollment, it increases retention, which is even more important, and it increases graduation rates. Yeah. That's important from a student success perspective, but that's also transformative for the institutions that experience it. So we think this could be a very powerful tool for the long term. [Chair Robin Scheu]: So what's the difference between standard and online budgets and all budgets? What are [Member David Yacovone]: Sure. So if you remember, as part of their restructuring, they kind of broke their programs into, I'll say, roughly two buckets. There was the group of programs whose tuition was reduced to a little over ten thousand dollars. Those tended to be the, you know, kind of the arts, the humanities, the nontechnical programs, things excluding nursing and engineering. And so those programs are less expensive, so it's why there is a smaller dollar amount. We're recommending the seventy five thousand dollars threshold looking for income and five point two million, and that would cover all of their programs. So that would include nursing, the engineering, and tech programs that, otherwise, would be excluded if you went with the smaller pilot. [Chair Robin Scheu]: But we have a nursing [Member David Yacovone]: program. We do, which is why we offered up both options because we are acknowledging that we're supporting roughly a hundred nursing students at Vermont State University through the forgivable loan program. [Member Michael Mrowicki]: Okay. Thank you. You always have great information, and you [Chair Robin Scheu]: definitely dated her. And one more question, Linda. I just [Member Michael Mrowicki]: wanna clarify. I don't know if you know the details. I don't know. I don't have all the details, but I do know that if you're taking a standard liberal arts type thing Yeah. [Speaker 6 ]: This is different than certificates or credentials or [Member Michael Mrowicki]: the what you get mostly in CCB is the non technical stuff. You know, you have more standard liberal arts or coupled pre and into it on the associate's degrees. The the allied health, the engineering, the radiology, some of those kinds of related things, they have an extra surcharge on their tuition. And those are often the ones that are in the most demand. You know? The the technical engineering, all of the allied health, and learning something else in there. But they add a bit more to the tuition, but that is one of our those are those are the areas that people are looking the most aggressively towards filling. Those are the people who don't have enough of them. [Speaker 6 ]: Then you can have your regular, you know, I live outside school. [Chair Robin Scheu]: And if you if you did the lower amount just for the more expensive ones. Mhmm. We'll work on it. We're not gonna solve it now, but I think it's really helpful to know. [Member Michael Mrowicki]: The only [Member David Yacovone]: reason that I put this chart in is we believe we are asking for the five point two million, But we are we acknowledge with experience that budget constraints being what they are. The most important message I wanna leave with you is that we believe that this is really critically important, and that we would work with you to design a program that fit the budget box that we had to operate. [Chair Robin Scheu]: Okay. We appreciate the options. Thank you for all the work you do. You're making a real big difference in a lot of people's lives, so we appreciate that. Yeah. Thank you. [Member David Yacovone]: We couldn't do any of this without the support that you all have provided, so thank you. It's a [Chair Robin Scheu]: Team effort. [Member David Yacovone]: It's a breath of fresh air to come here. I don't enjoy my trips to DC quite as much. Most of the brands [Chair Robin Scheu]: cross on your brands too. Yeah. Thank you. [Member Michael Nigro]: Oh, here. Let me make you feel [Chair Ed McNamara]: at home. It's like, no. [Chair Robin Scheu]: Okay. Thank you. And we're gonna go right into our last group before lunch. And we have the Department of Financial Regulation who have, I think are all here now. And whoever is gonna be speaking, come on up to the table and, we can add more chairs if needed. There's some more over there. So I think some of you were in for budget adjustment. Right? So we won't do the introductions again. [Member David Yacovone]: Another busy day. [Finance Director Karen Hutchinson]: It's Friday. [Member David Yacovone]: It's Friday. Right? Okay. [Chair Robin Scheu]: Mister and Chrissy, we have here board, and we have till twelve fifteen to [Member David Yacovone]: Okay. [Chair Robin Scheu]: So if you would introduce yourselves for the record and take your order, please. [Finance Director Karen Hutchinson]: Sandy Bigglestone, current acting commissioner of the Department of Financial Regulation and also deputy commissioner of the captive insurance solution. Pleased to be here today. Thank you for having us. [Speaker 11 ]: David Cameron. I'm the administrative services director for Department of Financial Regulation. [Speaker 6 ]: Welcome. [Finance Director Karen Hutchinson]: Thank you. And, also, we have our deputies to, are over Zoom and in case there are questions specific to their individual divisions, and also Emily Brown, deputy commissioner of the insurance division in person. [Member David Yacovone]: Good. All of you. Thanks. [Finance Director Karen Hutchinson]: Presentation popping up Yeah. Shortly. And I guess [Chair Robin Scheu]: Yeah. We can keep it pretty [Member Michael Mrowicki]: high level. [16 seconds of silence] [Chair Robin Scheu]: We also have copies. So while you're getting that set up, why don't we just talk to the patient? [Finance Director Karen Hutchinson]: Sure. Okay. [Chair Robin Scheu]: We got it here. [Finance Director Karen Hutchinson]: So if you turn to slide two, this is the structure of the Department of Financial Regulation, and there's some just highlights there on DFR's mission and overview, which is a reminder to that we protect the financial welfare of Vermont consumers, but we also facilitate strong, stable, and competitive financial markets within Vermont. And those are the entities that we regulate within the DFR. And it's made up of the commissioner's office, which is, the business office, the general counsel's office, the director of policy, and communications. And then the commissioner's office and administration oversees the four divisions, banking, insurance, captive insurance, and securities. And each of those divisions are, headed by led by a deputy commissioner. I did not introduce, deputy commissioner Aaron Ference, who's on Zoom. He is the banking deputy and Amanda Smith, with the Securities Division, Deputy Commissioner Smith. And if you turn to slide three, you'll see that this is a comparison of f y twenty five and f y twenty six and the makeup of our positions within the DFR, and there are no new positions for f y twenty six. So, we're remaining, stable there. And if you turn to slide four, this kind of gives you some highlights, of this year's, budgeting process, and, we've got, obviously, the governor's recommended budget. All of DFR is a hundred percent special funded, so, all of our activities and the revenue that we bring in. [Chair Robin Scheu]: You give us money. So We [Member David Yacovone]: we give you Appreciate it. [Finance Director Karen Hutchinson]: We give you all the money except for what we need to keep to run our Yeah. Position and operations. Thank you. So you'll see some of that on on the next slides, but what I wanna highlight here is and I do have a slide for our employee engagement, but the our employees, all a hundred and ten of them are engaged. They're experienced. They're credentialed, and we we work very hard at employee satisfaction. And these are these are good state employee jobs in the financial services sector, so we need that expertise to regulate the companies. We have national recognition for the strength of our insurance and captive insurance divisions. We are accredited and there's a slide on there, but we we work very hard at, you know, meeting the standards, not only nationally, but within Vermont for having high standards in our regulatory activities, and that that does prove to create stability in in the entities that we regulate. No new initiatives or positions proposed, as I mentioned before, so kind of flat. Saying no new initiatives is a is a little tricky for me. It sounds like, you know, status quo, boring, but that is not the case within DFR. At the bottom, we have a link for you to the programmatic performance measures budget. It's the acronym is PPMB, and that is intended to supplement the budget across state government, and it was published, with that link, noted here in December, and it creates more transparency and accountability and performance management and also continuous improvement. So even though I said there's no new initiatives, we are constantly measuring the activities within our programs that we, are engaged with and then trying to, you know, measure and use those results for improving, in how we do things and and becoming more efficient in what we do as well. So constant improvement, I'd say. So there is a one point four million dollar increase over f y twenty five, which you'll see in the detail, and about ninety percent of that is salaries and benefits, and also the remaining is the internal services fund and rent that we pay. The overall budget breakout, eighty three percent salaries and benefits. Again, we need the expertise within DFR to regulate the entities, and their complexities and emerging emerging, trends. Seven five percent seven point five percent, is consulting services. For the review of our regulated entities, oftentimes especially, and these are billed back primarily to the regulated entities. Oftentimes, we need to, hire outside specialists in terms of examination support, actuarial. We do not have an actuary on staff, and so we we retain contracted services for those. And then, nine point five percent operating, including travel. We often travel to, national meetings and appear at conferences, in our industry sectors, sharing our expertise and sitting on speaking panels. So that is important, I think, for for DFR and and shows the strength of our regulation modeling good regulation, I should say. We are moving into a smaller consolidated space within city center here in Montpelier. And so, you know, it's the same location, but has you know, will have some impact, I think, in future budgets, hopefully, savings. And, BGS is currently, negotiating that lease, which is, runs out June thirtieth of this year. So we are on this was our this is a slide. Slide five is our engagement survey results. And in the categories of, you know, alignment, balance, communication, growth, peers, satisfaction supervisor, this is a employee engagement survey across all state government in the different agencies and and departments. And as you can see, DFR scores higher than the average state department and in really all of the categories. So we we think that we'd like to continue with that and and support having good resources within, but also making them making our employees feel rewarded for the work that they do in their jobs. So just a quick mention on that unless there's questions. Okay. Moving on to slide six. This is our meat and potatoes of what we are, [Vice Chair James Harrison]: what [Finance Director Karen Hutchinson]: we bring to the general fund. There are three revenue streams primarily for DFR. Mostly, for securities, it's mutual fund fees that go directly to the general fund. And then for, insurance, captive insurance, and then there's a bank franchise fee. Insurance and captive insurance bring in premium taxes that go to the general fund. Again, everything is special funded, and then anything left over at the end of the fiscal year goes back to the general fund. [Chair Robin Scheu]: Which we greatly appreciate. [Finance Director Karen Hutchinson]: We do too. This next slide is, the insurance division and their profile and some of the highlights. Again, DFR has a mission, but each division also has a mission. And the insurance division is charged with overseeing companies and individuals who participate in the insurance marketplace, ensuring access to affordable insurance products from financially secure companies. And I'll emphasize that too because, you know, having affordable insurance, but also making sure that there are insurance companies that want to be here and and are financially stable is important to us. So our regulatory activities are intended to bring that to the moment. [Chair Robin Scheu]: This is your homeowners and your car insurance and your health insurance and all of those things that people think about and also make sure we're businesses as well? [Finance Director Karen Hutchinson]: Yes. So these are these are insurance companies here, domestic who are here that have jobs, and they run their operations here in Vermont. [Speaker 6 ]: It's a question. [Member Michael Nigro]: Yeah. So, excuse me. So talking about insurance companies that wanna be here, [Chair Ed McNamara]: forgetting the forget the federal crisis, can we talk a little bit about the climate crisis where we've seen [Member Michael Nigro]: it around the country where private insurance companies are pulling out because the costs, whether it's due to flooding or fire. We feel like those of us, especially in towns [Chair Ed McNamara]: that have been hit hard hard enough, [Member Michael Nigro]: that, federal flood insurance is, while not completely a scam, is very difficult to maintain. It's very expensive. We've seen in other states where regular homeowner insurance is now incredibly expensive because of this. Do you have I don't know. I hope I'm using the word quick update on what the status or what you've heard about other, of of any of these insurance companies as it pertains to Vermont because when we talk about affordability, we already know flood insurance can match your mortgage just like your childcare or just like any of the, you know, your college loans. And the potential, at least intellectually, is that it's untenable. [Finance Director Karen Hutchinson]: Yeah. I think you you described it well. Insurance companies are becoming more disciplined in their underwriting and looking to obviously protect their their financial status and their financial wherewithal. You know, we we do we are members of the National Association of Insurance Commissioners, so we attend, meetings three times a year. There are calls in between those meetings, and, it is a a national issue that we're all kind of watching. In Vermont, there are you consumers, both businesses and individuals, are seeing increases in their premiums, especially for property, and and flood, as you mentioned, is very, very difficult. It's a challenging marketplace, and it's something that we are we are monitoring and and aware of. I don't know if deputy commissioner Brown wants to elaborate on anything. [Speaker 6 ]: Yeah. So I think as far as the national picture you've mentioned, you know, I think states that come to mind oh, I'm a deputy commissioner of insurance. So states that come to mind right now, they're having really challenging issues with their Woolworths insurance department, especially in our Florida and California. California based devastating wildfires. I think when you look at insurance regulation, it's a state by state system. So each state has regulatory authority over their apartments that includes the policies that are sold to the residents of the state as well as the rates that are charged the premiums. So while we've seen in California, those costs of those disasters are largely being worn by the policyholders of that state. There is definitely a pooling of that risk, not necessarily at the the policy level, but then at the reinsurance level. There's insurance companies that essentially reinsure all the risk of insurers that operate nationally and regionally. And it's there that you're seeing a lot of the risk being transferred, and then that cost is then shared, you know, among policy, which is not just in California. As well, but clearly, you know, nationally. And and as commissioner mentioned, the market becomes challenging because you have insurers who then are taking a closer look at the risk that they're taking on, make sure that they know what risk it is. They know how much they cost. But I think in Vermont, while we've seen flooding in a lot [Member Michael Mrowicki]: of things, those types of [Speaker 6 ]: risks are covered by the National Flood Insurance program as well as private flood. Largely, those disasters have not they've impacted indirectly, but not directly a lot of the homeowners insurance coverage because largely because flood is not covered event under homeowners. So when we have hail or other types of events, like a an extreme weather event, that can be borne by the homeowner's insurance policies, but largely the flooding that I think that comes to mind when we think about Vermont has not as greatly impacted our homeowners and availability of our property coverage in the state. [Member Michael Nigro]: Well, thank you for that. I just noticed that Union Mutual has merged a Massachusetts company in order to have more pooled resources. Florida has chosen or has been forced to offer their own statewide insurance, which my minor research has shown that it's incredibly undercapitalized. So it's ensuring, with your fingers crossed, essentially, that your street doesn't get damaged. So I'm just [Member Michael Mrowicki]: Yeah. Those are I mean, [Member Michael Nigro]: are these all things that are because when we do policy work now, not insurance policy, but when we do policy work and we get into conversations about what's affordable and what's on what's in peep what's coming out of people's wallets, This is kind of a necessary and yet hidden cost, a little bit more hidden than, say, health insurance or health premiums, etcetera, etcetera. So I'm just are you is there, like, somebody in a cubicle monitoring this like a weather a a storm, you know, where you're, like, looking at at what may be happening that affects us? We don't have a lot of insurance companies in Vermont that are that have I imagine they have a solid base, but, you know, again, we don't have a lot to lose here. [Chair Ed McNamara]: Mhmm. [Finance Director Karen Hutchinson]: Yeah. Yeah. I think go ahead. [Speaker 6 ]: Well, what I was gonna say is we do have a very strong insurance market in our state. Mhmm. We do have several domestic insurance companies that offer products here, but we also have a lot of national carriers as well. We participate in the normal market. So you mentioned MeetMeInWe show that we have Vermont Mutual, but we also have Travelers, Progressive, Geiger, who are all pretty competitive in that state and operating products. So we haven't seen the same issues of insurers pulling out of our market. Is that kind of what your question is? We're not we're not seeing that. [Member Michael Nigro]: Just well, that's that's the one side for, like, what is state policy, but also for individuals in, you know, the expense going up. So it sounds like to me that there's a base here, a foundation here of still strength. Correct. And that but, like, the weather could change. Yeah. [Finance Director Karen Hutchinson]: Yeah. It's a competitive marketplace, and and and I think, you know, we foresee we'll still have lots of insurance companies to offer products. The fact being that because of the the events and the national events, the prices are going up. And so your the competitiveness is that, you know, you could have a domestic or one of the national companies doing business here offering products to consumers, and the cost will likely be the same from one to the other. It's a it's a it's many factors. It's weather events. It's inflation, inflationary pressures on insurance companies that are rising costs. [Speaker 6 ]: Just to go further, we do monitor the company's growth. We have a checklist. We ask questions. Why are you doing? What are you doing? What is impacting your decision? So we do keep an eye on that to make sure that that started happening in our city, we would know about it and be able to to figure out what to do. Yeah. [Member David Yacovone]: Thank you. Yeah. Great. [Chair Robin Scheu]: Okay. Let's continue. Alright. [Finance Director Karen Hutchinson]: Let's see. The banking division. Yes. [Chair Robin Scheu]: Oh, John. I'm sorry. Checking. [Chair Ed McNamara]: John. Thanks. [Member John Kascenska]: Real quick. So as you're monitoring, you know, changing, and, John, seeing who's here, who's maybe leaving any of those companies to provide products here for us. Increases over time here with premiums. Is there some range that you're you're seeing with increases premiums across all of what's happening here in the state insurance wise? [Finance Director Karen Hutchinson]: Yeah. I would say it depends on the line of business. [Member John Kascenska]: If you're gonna receive things in the health area here. [Finance Director Karen Hutchinson]: Yes. That is absolutely true. [Member David Yacovone]: That's a clear one here. [Finance Director Karen Hutchinson]: Yep. Do you wanna speak to Yeah. If the percentage data. [Speaker 6 ]: We track it, and we go on a quarterly basis. So, insurers don't come in every month. They have a rate increase. [Member Michael Mrowicki]: A lot of times it might be [Speaker 6 ]: once a year or every six months. But we do track that, and we have data that I provide that shows kind of where we're seeing rate increases go. He actually has seen some decreases on how in which was rating Workers which kind of indicated that at least, you know, for some markets that they're seeing, you know, inflation could slow down, severity, frequency, or just part [Chair Robin Scheu]: of the factors they go into, you [Speaker 6 ]: know, how it's helping to determine what rating they have. But we have seen a slowing of not only rate filings, but the rate requests that we're seeing, and then also some decreases. So I'd be happy to provide that data, in your [Member David Yacovone]: information. Yeah. [Vice Chair James Harrison]: Thank you. Yeah. Yep. [Member Michael Mrowicki]: Okay. [Chair Robin Scheu]: Banking. [Finance Director Karen Hutchinson]: Yes. Banking division. And, again, deputy commissioner Ference is attending virtually. But, just an overview of the banking division is to ensure the safety, soundness, and stability of Vermont's banks, credit unions, trust companies, and other licensees while encouraging market competitiveness and availability of the financial services sector across Vermont. So these are some of the highlights and shows the statistics of the number of entities that are regulated by our banking division. And I'll take any questions if you [Chair Robin Scheu]: We have any banking complaints at [Member David Yacovone]: the moment, so we'll move on. [Finance Director Karen Hutchinson]: There's a lot of hot things going on in insurance right now. Yeah. Yeah. That's Our securities division is oversees the investment community and protects investors from fraud. They do a lot of outreach in terms of scams and fraud and educating Vermonters across the country or across the the state, I should say. So it's and also promoting the development and growth of Vermont's capital markets. So again, here are some statistics and highlights, which I think shows you that for a division of nine employees, they're they're busy folks, and they do a lot of outreach again, which we think has a a tremendous impact to Vermonters. [Chair Robin Scheu]: So I noticed that protecting investors from fraud, do you work with the AG's office? I mean, we often hear a lot about scams and the Consumer Protection Bureau has been decimated in Washington. So [Finance Director Karen Hutchinson]: Yes. There is interaction AGP's office, right, to Yes. On a number of matters, not only just, you know, with frauds and security securities issues, but, you know, we may cross over in other divisions in in, engaging with the AGO. Thank you for that question. And then, near and dear to my heart is the captive insurance division. We license and monitor captive insurance companies domiciled here. We are the number one domicile in in the world at the moment, and it and it it was a commitment over forty four years since the Special Insurer Act was passed in nineteen eighty one. And so we are maintaining a regulatory system, much like the insurance division does, that attracts quality business to Vermont, promotes the reputation of the captive insurance industry worldwide, and ensures the solvency. So we have solvency measures, and we conduct analysis and examinations, for our regulated entities. We bring in over thirty three million into the general fund, in terms of premium taxes, and then we have fees, for examinations and, licensing fees and registration fees for our regulated entities. You know, in our conversation earlier about the, challenging commercial insurance market when and and this is not insurance captive insurance is not insurance for consumers. It is insurance for businesses and organizations, just to be clear. And when we talk about a challenging commercial insurance market, it makes captive insurance more attractive for businesses and organizations, and so we often get phone calls about the rising costs of coverage for no, you know, no greater risk, I should say, for an organization. They may not have had claims in twenty years, but their costs are going up, and so it makes captive insurance proposition a little bit more valuable. So we have been growing, forty one new companies, just last year. We, licensed eight at the beginning of this year, and we already have, six new applications that we took in over the past two weeks. So, you know, worldwide, but in particular, the pressures and the inflationary pressures on businesses is causing causing this growth. So Moving on to the next slide, I had mentioned earlier that we are accredited, and and not only, you know, by the National Association of Insurance Commissioners, but there are other national organizations that DFR, uphold standards for, and it's important because it does, give the public confidence in our regulation, and and we uphold a a particular standard through these accreditation programs. So I wanted to quickly mention that. And a lot of the times, these accreditation programs requires our employees to have certain credentials and ongoing training criteria that we have to meet. And so we are we are the regulatory, for the financial, expertise here. [Chair Robin Scheu]: So are you up for all of these in in twenty twenty six? [Finance Director Karen Hutchinson]: I would have to defer to, Erin and and Amanda, but we are up for NAIC accreditation both on the insurance and captive insurance side of the house. This year, it'll be our five year accreditation, and we did a prereview last year, which looked very positive. So That's good. [Member Michael Mrowicki]: Mhmm. Okay. Thanks. Thank you. [Finance Director Karen Hutchinson]: And then moving on to slide, twelve, this is where we get into the budget development a little bit more, and, you know, there were, I guess, some of the things that I'll just point out and then take questions. There were approximate there's approximately six vacancies at any point in time, so we're giving credit for that, for vacancy savings, which is about six point eight percent. In prior years, we did show, this by by division, so the presentation looks a little may look a little inconsistent. But there's again, with the general fund and having the revenue, we're able to request budget adjustments as we need to. [Chair Robin Scheu]: So I think we, you know, we're we know the salaries and benefits, and they are what they are, and you talked about that. I I'm looking at I don't know what page this is. The insurance section, and I see, other personal services of four hundred and fourteen. There's a pharmacy benefit that Yes. Maybe that would be something to let us know about. [Finance Director Karen Hutchinson]: Sure. So, I do not have the the law on the tip of my tongue, but we passed a law last year. Act one twenty seven. Act one twenty seven. Thank you. Mhmm. I had one thirty seven on the mind because that's our omnibus bill this year. So there was a law passed in last year to regulate pharmacy benefit managers, and and we feel that that that is, I guess, increasing and improving our regulation over these entities, and so that has created the need for positions. So there are three positions budgeted here to help with regulating those entities and making sure that they're complying with the law that was passed. So [Chair Robin Scheu]: in your other chart, you said no new positions, and here's three positions. So I'm a little confused. [Finance Director Karen Hutchinson]: Yeah. These were positions that were well, do you wanna explain? [Speaker 11 ]: But they were approved in, say, fiscal year twenty five, but not added to our base. And they weren't the create the positions weren't created in HRs in time for the salaries to for them to be caught up in the salary. [Chair Robin Scheu]: Okay. So that's why it's So [Speaker 11 ]: we just show on the [Chair Robin Scheu]: Next year, it'll be up. [Finance Director Karen Hutchinson]: Yeah. Exactly. [Chair Robin Scheu]: Is there anything [Finance Director Karen Hutchinson]: else I just want to absorb? [Speaker 6 ]: Yeah. I just wanna add that we do expect so all PBMs will Yeah. Subject to pretty hefty licensing fee, which we expect to fully fund those prescriptions. So I [Chair Robin Scheu]: just wanted to Yeah. I I know that's a Thank you for clarifying. Yeah. That's helpful. And it's a challenging area and it's costing consumers a ton of money on prescriptions and things. So we're glad that you're on. [Finance Director Karen Hutchinson]: And we are a handful of states that have implemented these, these laws. So [Chair Robin Scheu]: And I I Very good. I read about more coming online that are looking at this. So Yeah. Issue. [Speaker 6 ]: Yeah. Okay. Thank you. [Finance Director Karen Hutchinson]: It does stick out a little bit, but it's, it's it's been in the works, and I signed up on the job specs, just weeks ago. So they're in recruitment. Okay. [Member David Yacovone]: Great. Okay. Thank you. I don't know if any of the members had an opportunity to go into the performance link. I briefly checked it, though. It's really impressive. Is it? And robustly, I you can get lost in there, though. You think [Chair Robin Scheu]: Yeah. Yeah. [Member David Yacovone]: Never back up. But it is really you've done a great job with that. [Finance Director Karen Hutchinson]: Thank you. And I actually will say, we had a point person that has been working on this for four years, and she's it's not her day to day job, and she took it on. And and I have to give her a lot of credit for pulling together the pieces from all the divisions and actually working even harder to improve our PPMB from prior years. And so what you're seeing is the most improved version, and I think, we'll just continue. It'll continue to get better. [Vice Chair James Harrison]: K. [Finance Director Karen Hutchinson]: And it you know, again, it's it's aiding in the transparency. There are so many opportunities, that I have had to encounter with people and that, like, what does DFR do? And I think Here. Let me explain. Yeah. The PPMB, I think, is starting to provide more transparency in all of the activities and how we measure our success. Mhmm. You saw our highlight slides, and then there's an appendix at the end of this budget document that, you know, we set goals. But the PPMB kind of pulls all those three sort of things together, our goals and how we measure success, the PPMB, and and then our budget, and what the value that we give to Vermont and through the general fund. [Vice Chair James Harrison]: Standard for other departments. Correct? [Chair Robin Scheu]: So I was gonna ask you, David, is that seem like something that we that other departments ought to be encouraged to have similar kind of There's benefit from. [Member David Yacovone]: Asking that, Dave, or may [Chair Robin Scheu]: not No. You just [Speaker 6 ]: Yes. Incorporate. Think [Member David Yacovone]: so. Yes. It's it's a good idea. Impressive. [Finance Director Karen Hutchinson]: Alright. Secretary of administration Clark is doing a good job. Her staff is encouraging. And through the offices Office of Continuous Improvement, they're they're very encouraging to all the departments [Member David Yacovone]: to And, [Finance Director Karen Hutchinson]: take this on. Oh, good. So you [Chair Robin Scheu]: can be the role models to do it. [Member David Yacovone]: And good luck with your office move. [Finance Director Karen Hutchinson]: Thank you. I think it'll be well improved. Yeah. [Chair Robin Scheu]: Were there any other big items in here? Nothing's looking big in the budget. [Speaker 6 ]: No. It's, you [Finance Director Karen Hutchinson]: know Okay. It's pretty flat, [Member David Yacovone]: I would say. K. Great. [Chair Robin Scheu]: Any other questions for [Operations Director Ann Bishop]: the of our folks? [Chair Robin Scheu]: If not, it's good. Thank you very much for coming in and for all the work you're doing to, protect us, help us out and [Finance Director Karen Hutchinson]: And right back to you for all the work you're doing. [Chair Robin Scheu]: Thank you. Yeah. Great. Alright. Thanks so much. Okay. A committee, it's lunchtime, and, we're starting back up at one o'clock with the e nine one one board. I may be at a meeting, but Chip will have the run of show there at at one. And then at one thirty, we have office of child needs and family advocates. The advocates in generals coming in at two o'clock, and that'll be our last for the day. So enjoy the lunch. And

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