Vermont Legislature SmartTranscripts:

[Speaker 0]: Good morning, this is the House Appropriations Committee, it is Wednesday, January 28, and we have several budgets to look at this morning. Our first guests are the Vermont Veterans Home, and we certainly welcome you here this morning, Melissa Jackson and Steve McLafferty, is that correct? Okay. Please

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: go ahead and give

[Speaker 0]: us your information today. Thank you.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Morning. I also wanted to point out that Gary DeGasta, board president is also joining us as well. Great,

[Speaker 0]: morning. Thank you very much.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Looking at the budget development form, our budget has increased $337,439 over last year. Our general fund ask for this year is $10,033,214 We are adjusting to the new budget development form with all the new category designations. I don't know if you have any specific questions on that form for us. We can hopefully answer them for you, especially in the operating expenses now that all of that detail is now provided to you. Any specific questions on that form?

[Speaker 0]: Questions from the group who in our group works with that? That Wayne? Okay. Sorry.

[Rep. Wayne Laroche (Member)]: No. So, I've already checked against last year.

[Rep. Thomas Stevens (Member)]: The

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: next several pages obviously talk about personal services and our detailed line by line of the budget. Any questions in there, let me know. Otherwise, I'll move down to the PowerPoint that provides more detail. I think

[Speaker 0]: that's probably what we're most interested in. Thank you very much. Okay.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Great. So, starting on the second page of the PowerPoint, just reminding everyone why we're here, to fulfill the promise of caring for our veterans, and just reminding everyone that although we are a healthcare institution, we remind everyone that we're a home first. I remind our staff on a regular basis that we work in our veteran and members' homes. They do not live where we work, and we strive really hard to provide patient centered care. If it's something that you would do at your home, it's something that our veterans can do here. Just a little bit more about the promise coming from Abraham Lincoln's second inaugural address to honor he who had borne the battle, his widow and his orphan. It's also the VA's was the VA's model, so they recently changed it. The third slide of the PowerPoint talks about how we became about from 1884. We are the second oldest state veterans home in the country.

[Rep. Eileen Dickinson (Member)]: Oh, isn't that?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Yeah, yep. Connecticut is the oldest. Property owned by Treynor Park was a self contained working farm. We still have some of the original buildings and what is the saying, everything old is new again, and the Board of Trustees has leased some land to the Veteran Farming Initiative through the Bennington Conservation Corps. They are working to stand up a veteran farming co op with the goal of bringing newly discharged veterans to Vermont to teach them farming. Farming has been shown as one of the non pharmacological interventions for PTSD. Out West has had a great success with this program. I actually saw one of these programs in West Virginia. So, not only does it help veterans with PTSD, but hopefully it'll bring younger veterans into Vermont, be a great benefit to Bennington County. The farm is, once up and running, will provide our home produce, the high school, the hospital, as

[Rep. Eileen Dickinson (Member)]: well as a community market, so we'll have some great community impact. We're leasing the land, not running the program.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: So just a reminder as to what is a state veterans home. I've been here fifteen years and I still get faced with, aren't you part of the VA? We are not. Gary giggles, so does Steve. Obviously, we're a state agency. To be a state veterans home, the facility must be owned, operated, and managed by the state. Being a state veteran's home allows us to access funding from the VA in the form of a basic per diem, as well as a daily rate for veterans who are 70% or more service connected disabled. It also allows us, when we're doing capital construction projects, to apply for VA grant funding, which we have done on several occasions. When we do this, the VA will pay 65% of a grant project, and the state pays 35%. So we've leveraged this on several occasions, and in the past where the state has fully bonded a program or a project, and we've been on the VA waiting list and the funding has finally come through, we have reimbursed the state that 65%. So it does help the state with some cost savings, especially as construction prices get more and more expensive, and we all have to do more with less.

[Speaker 0]: Can you hold on just a second, Tom? You have a question?

[Rep. Thomas Stevens (Member)]: Yeah. Hi, Melissa. Representative Stevens, we've we've I've worked with you for such a long time. So I just wanna and and and for Gary and Steve as well in in a different committee. But the I just wanna clarify for the committee. I'm glad you pointed out that you are a state agency, but you have a unique setup as well. And I just wanna make sure people understand that, that that you have a board of directors, you have a, you know, you have a kind of a half a step away from the state with when it comes to the organization. Is that right? And and can you just explain how that works a little bit? Because that's because you're not a state agency like the Department of Mental Health. You are state employees, etcetera, etcetera down the line, but there is that half a step away from state oversight. And I don't mean that in a negative way, just put that you run home through your board. So can you explain that to us a little bit?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Yes, yep. So I report to a board of trustees. So they're my boss. I am appointed by the governor. That's basically the only difference. All the other state rules and regulations, if we were a state agency, we are a state agency, apply to us. It's just that reporting mechanism is a little different, but we follow every other rule, regulation that a state agency follows. The land is owned by the board of trustees, so that's the two big differences. The land is owned by the trustees, and I report to the trustees.

[Rep. Thomas Stevens (Member)]: And the land portion of it, and when it comes to over the years, you've done a lot of either there's been a lot of work done down there, but there's limitations from just because it's owned by the board and you're working off of your original when you mentioned it was a farm, was just reminded that that goes way back and how that land and how precious that land is to the institution.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Yep. What we're limited to doing, because we accept VA funding for our grant projects, is anything that is done within the existing building that has been a benefit of VA grant funding can only be used for veterans, veteran services. At one point in time in the past when we took beds offline, we thought, well, the DMV here in Bennington was looking to relocate. We were going to close a wing. Could they use it? And if we were going to do that, we would have had to pay back the VA a certain percentage of grant funding. We are very protective of our open space because our veterans enjoy our open space. In the summertime, actually yesterday, even in the snow, our veterans enjoy our 84 acres. We are the largest green space in Bennington, and we are very protective of how that's used. Yes.

[Rep. Thomas Stevens (Member)]: No, thank you for that.

[Rep. Eileen Dickinson (Member)]: Yes,

[Speaker 0]: Thank you.

[Rep. Wayne Laroche (Member)]: On that topic, were there other original deed restrictions of that property at the time that it was, you know, part of this purpose? Were did they are there specific deed restrictions?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: So if it ceases to be a state veterans home, it has to be returned to the family. So if we can find descendants, which would be a very interesting task to do, but yes, it would have to be returned to the family.

[Rep. Wayne Laroche (Member)]: Thank you.

[Speaker 0]: Thank you. To you please. Sure.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Moving on to the next slide that talks about is entitled DVH Today. So we are a premier residential community campus where we can take care of veterans, their spouses or widows, and Gold Star parents. We always get asked about National Guard members. If National Guard members are federally activated, or in our slang, Title 10, they may come here. And that is a federal regulation, that's not a state regulation, it's not a VBH regulation. Obviously, as you know, our Vermont National Guard has served federally quite often, so most of our Vermont National Guard, if they should ever need us, are eligible. Once in a great while we come across somebody who would like to come here who has not met that requirement, but that is why National Guard may or may not be able to join us. We are still licensed at 130 beds, but our max capacity right now is 99 beds. We do have that one unit, A Wing, offline. That is because it needs some substantial life safety improvements and also because of staffing. We do have design work completed for A Wing. The estimated cost for that is close to $50,000,000 So this is where the sixty fivethirty five would come into play. We had initially put in a grant application when we started the design work, making our best guess. Our guess was a little bit lower. Steve, Greg Cruzan, our finance, excuse me, our facilities director, and Sabrina from Buildings and Grounds are going to be meeting to talk about, do we pull that grant back and reapply to make sure that we're getting the full 60 fivethirty 5, or are there ways that we can cost save to make sure that we're not asking the state to bond the 35% and then coming up short? Spare our eight bed assisted living, which the VA calls the domiciliary, or as we say the dom because domiciliary is a mouthful. We are budgeted for 192 state employees and 50 temp employees. So when I say temp employees, I mean our part time employees, and we still use agency staff. I am happy to report that there has been a reduction in agency staff use since we met last year, and I owe that to our new Director of Nursing, Sarah Sitzberry. She joined us in, I keep saying January, but it was July, and she's really been focusing on hiring. So since she joined us in July, she's hired 16 nurses, and we've had two successful LNA classes where we've hired four LNAs. Tomorrow, we have eight LNAs graduating from an LNA class who will be joining us, and we'll be starting a new class late, winter, early spring.

[Speaker 0]: Okay. Thanks. Representative Nigro?

[Rep. Michael Nigro (Member)]: Hi, Melissa. It's Mike Nigro, and I appreciate any, shout out for Sarah Sigsberry. I agree with you. She's terrific. Just I mean, I think maybe maybe you were answering this, but, you know, it looks like on the budget, it's calling for almost a 50% reduction in temporary, employment agencies.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: I

[Rep. Michael Nigro (Member)]: mean, is that, how optimistic is that, or to what degree do you feel you're really trending towards that?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: We are it's a little bit overly optimistic, but Sarah is a go getter. The first thing she does when she comes in every morning is get on SuccessFactors, which is the state hiring system. What new applications have come in? Getting on the phone, can you come in for an interview? When I say she's a go getter about getting new employees in the hiring realm, she does it. The hiring process is a little lengthy, but she is all over it. Gary has his hand up.

[Rep. Michael Nigro (Member)]: Melissa, you may want to add the fact that you are negotiating contracts with those organizations at a lesser rate too, which really does help the bottom line.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Yep, thank you. Steve and I will be meeting with all of the nursing agencies to renegotiate our contracts down to a lower per dollar rate. Word on the street is we are one of the higher payers, so it is time to have a conversation and renegotiate our rates. In the coming months, we'll be doing that as well. Great, thanks. Additionally, we're looking at new scheduling software, which will definitely help. One of the nice things about this software is, so if we have a call out where a nurse calls and says, I can't come in today, right now it's basically up to the supervisor to kind of figure out who's available. This scheduling software will say, Okay, out of Melissa, Gary, and Steve, Melissa doesn't have any overtime, so we're going to call Melissa first and see if she's available. So it's really leveraging who's available, going to our staff first who don't have overtime, our staff that have overtime, and then the last people they would contact would be the agency staff who would be most expensive. So that's leveraging software to help us use our resources more economically. We're looking forward to that.

[Speaker 0]: How long have you had that already?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: We haven't. We haven't. We're just in the process of we've looked at several, so we're in the process of making a selection. We haven't rolled that out yet. I'll be able give you more information when we meet next year, but it's nice to have that technology that takes that guesswork out of it because I always know that Gary's willing to work. I'm going to go to Gary first, regardless of how much overtime he has, if he's agency or our staff, but this will say, you can only ask these people first.

[Speaker 0]: Great, thanks.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: You're welcome. Our next slide has three of our staff members. As I mentioned when I did our budget adjustment, this is our staff receiving the Silver Award for our National Quality Award in 2025. We are working with the consultants going through all of our systems, and this time next year we will have applied for the GOLD National Quality Award, which is the highest quality award a facility can apply for. Very excited about working towards that. We work with Activated Insights, which is pinnacle. Oh, skipping, sorry. This is The US News and World Report. As I mentioned before, when I did our budget adjustment, we are the only nursing home in the state of Vermont to receive best in class from US News and World Report for both long term and short term care. Very proud of that. This is the second year in a row we've received this recognition. Now Pinnacle. Pinnacle interviews our residents and or their family members and asks them numerous questions that fall into the various categories that you see to the left of the graph, and these are 16 customer service categories. So for 2025, we received customer service awards in all of these categories, which means we are in the top 15% of all nursing homes nationwide. Staff continue to provide top notch care. And then the following page just gives you some comments, and I love the first one on the page that says, I appreciate the fact that they walk their walk and they don't even talk about it. I know they communicate and talk with each other, it just isn't about having expensive materials, it's spending time with them to make them feel they belong and matter. So I always tell people when they're doing a tour that you can walk into the nursing home down the road that looks like the Hilton or the Ritz. We may not have the flashiest new furniture, we may not look like the Ritz, but what you get in return is that personalized care and that feeling of home that you're not going to get down the road. The next couple pages when you get a chance are just comments right from the people who've done this survey. We received our January survey yesterday, and our average score is a five, and the highest you can get is a five. So, proud of my team.

[Rep. Eileen Dickinson (Member)]: Thank you.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: So, we're hoping not to be back for a budget adjustment, but they're, just in case. Just put this in here because our agency staff, but we are going to work really hard not to do that.

[Speaker 0]: Hold on a second. We have a quick question from Thank

[Rep. Eileen Dickinson (Member)]: you. Encouraging that you have really achieved such high achievements for the veterans home. And I know that this year you came in with no adjustment to the BAA. I'm just curious on this page where it says that your increase is from current year to '27 is 1.9%, And it's related to a reduction in your agency staff. But it says you will be returning for a budget adjustment request, and that amount is currently estimated at $2,200,000 And the question I have is, that's a lot of money. And what is it that shouldn't be in this budget right now? This was an issue previously and I just want to make sure that whatever it is, plan for it early.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Yes. So we initially put this cost in our budget. Steven, would you like to further explain this? We've had the lengthy conversations.

[Steve McLafferty (CFO, Vermont Veterans’ Home)]: Yeah. To try to simplify, as Melissa had just mentioned previously with, Sarah, we, you know, are actively, you know, recruiting, but when we, created the budget of in discussion with finance and management, the decision was to remove expenses, to meet the guidelines. And here, you know, we're just hedging. We do hope that we we do not have to come back for budget adjustment, but, however, we may be back in there. We do not want this to be a surprise to anybody. And we were just looking at figures, and right now it's about 2,200,000.0. I don't know how better else to explain. I mean, there is a lot of moving parts in our budget this year and with our discussions with finance and management.

[Rep. Eileen Dickinson (Member)]: So again, follow-up. Does that mean that you've taken it out of personal services? Taking the money out of your operating expenses, hoping that you have put it in your personnel services for the hiring. In the meantime, you're going to be short on your expenses, your regular fixed cost expenses. Is that correct?

[Steve McLafferty (CFO, Vermont Veterans’ Home)]: We may be, if our hiring does not come through, we still have to maintain agency staff, then, yes, we, would be back for budget adjustment. I believe we've hired like 16, employees since, as compared to budget to budget, so which helps out tremendously, if you look at the next one, salaries and benefits, the $992, was due to those, those employees being hired, which means I have less vacancy savings and then more staff.

[Rep. Eileen Dickinson (Member)]: And you're taking that, you're shifting that cost down to your expenses so you're not funding your expenses the way you anticipate you should?

[Steve McLafferty (CFO, Vermont Veterans’ Home)]: We're moving you look at and I have to find what page it is on the presentation. I believe it's on page two, right after the ups and downs. There's a line item there within salaries and wages called vacancy turnover. This year, it was roughly 6,300,000.0. Next year, because of the hiring of employees, it reduced almost a million dollars. But yet we picked up, expenses and salaries and market factor adjustments. And then we still need agency staff because we still have around 48 open positions. And I think the other day when I looked, I think it was like 44 open, which will be on another slide. But like coming back, we reduced our temporary agencies by about 2,300,000. And again, that's in with discussions with finance and management. And we do hope that we are successful in recruiting Eight new LNAs coming out tomorrow, you know, they will be hopefully working. They all said they're going to work second shift here.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Which is our biggest use of agency staff. That would be a big impact. We have

[Speaker 0]: a question for representative Laroche, please.

[Rep. Wayne Laroche (Member)]: Budget adjustment. You've come in in the past, and the reason for your coming into the past for budget adjustments is because your federal Medicaid money was was coming in at the end, and you were having to build a budget without knowing how much that was going to be. And so after the fact, we were finding out how much that was, and we were coming into the VA to adjust it. Last year, the governor's budget actually accounted for much more of your budget. So this year when you came in for BAA, it's almost a much smaller amount. Now correct me if I'm wrong, that problem is never going to go away. So on a year to year basis, we should expect you to always come in for the BAA one way or the other because you're never gonna be able to anticipate exactly what you're gonna get. I think the reimbursement. Is that correct?

[Rep. Eileen Dickinson (Member)]: We make

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: our best Steve makes his best guess. Like, this budget has 3 point yeah. 8,000,000

[Rep. Eileen Dickinson (Member)]: We have 3,800,000.0

[Rep. Wayne Laroche (Member)]: for it to be perfect.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Yeah. Yeah. We have $3,800,000 built in for the Medicaid settlement in this budget. So if it comes in more than that, we'll be back like we did this year to say, okay, we're gonna shift money.

[Rep. Wayne Laroche (Member)]: So okay. So has anything else changed that would result in a request for BAA in terms of operations? Because that's a slight rate there. If you don't get your Medicaid, if you can't anticipate how much you're going get from Medicaid, you can't properly build a budget. You're always going to have to adjust it at the end. But if you have other things, hiring or other kind of pressures that are outside of that, what can you are there is there anything there that we need to anticipate for next year's BAA?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: No.

[Steve McLafferty (CFO, Vermont Veterans’ Home)]: This time, I unless if something extraordinary happens to us down here.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Right. Unless it's an emergent something emergent comes up? No.

[Rep. Wayne Laroche (Member)]: That's what I thought. Thanks. Yep.

[Steve McLafferty (CFO, Vermont Veterans’ Home)]: I mean, like Melissa said, we in discussion with finance management, there's about $3,800,000 in the 'twenty seven budget for what we feel is going to be a reasonable settlement amount for fiscal 'twenty five received during 'twenty seven. If it's higher, if it comes in higher, our cost comes in higher, we'll be back to, you know, say, hey, we received $4,800,000 instead of 3.8 and move monies over.

[Rep. Wayne Laroche (Member)]: Right. So representative Dickinson was asking you about this 2,200,000.0 on this page. Yep. Where did that come from? Because that that's not

[Steve McLafferty (CFO, Vermont Veterans’ Home)]: is from looking at our actual expense. And let me I'm gonna refer back to you on to slide or on page three. If you look at under the category contracted and third party service, there is five o's account number temporary employee agencies. It's a reduction of 2.3. Again, with our discussions in finance and management and then being aggressive on our hiring, we put in what we think is a good reduction. However, we wanna hedge our bet. We don't want to come back for BAA or to surprise you saying that we need $2,200,000.

[Rep. Wayne Laroche (Member)]: So the $2,200,000 that you get on on this other slide here, that's a reduction. That's a reduction, not an increase.

[Steve McLafferty (CFO, Vermont Veterans’ Home)]: But we would be coming back for budget adjustment if all of our hiring does not come through and we still need agency staff.

[Rep. Wayne Laroche (Member)]: So

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: basically, if all of our hiring efforts fail, we may be back asking for this budget adjustment. We're just putting it out there so you guys were aware. Next December, you're like, Well, why are you here with this number? We probably should have worded it a little different to say, In the event our hiring efforts fail, we may be back with a budget adjustment up to request up to this amount.

[Speaker 0]: That's a clarification. And we are squeezing here on time. We can probably take another ten minutes and squeeze our neck from

[Rep. Eileen Dickinson (Member)]: my vest.

[Speaker 0]: Representative Kascenska, do you have a question?

[Rep. John Kascenska (Member)]: Good morning. Thanks for joining us here today and looking ahead the best we can here with that. So the 2.29 is that we identified into the 40 openings you have, is that correct?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: It's not a one for one.

[Rep. Wayne Laroche (Member)]: Just wanna make

[Rep. John Kascenska (Member)]: sure I clear that.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Yeah, it's not, so we don't, it's not a one for one. It's not like we have one, so it's not one DVA staff member to one agency staff member, Because a few slides down, the cost of an agency staff member is substantially more than a state employee. So it behooves us to to do our own staffing.

[Speaker 0]: K. Thanks. Let's go on further.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Okay. So after that, it just there's a slide that shows that 72.9% of our budget is basically fixed costs, and we have minimal control over about 27% of our expenses, which is food, other operating costs. Although if you've gone shopping, know, food costs are all over the place these days.

[Speaker 0]: Representative Yacovone has a question. Excuse me.

[Rep. David Yacovone (Member)]: Yes. Thank you. And you may need to get back to me on some of these.

[Rep. Eileen Dickinson (Member)]: Could

[Rep. David Yacovone (Member)]: could you share with us what your current Medicaid reimbursement rate is per day?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: It's 475 per day. That's our interim rate.

[Rep. John Kascenska (Member)]: Yep, that's your rate.

[Rep. David Yacovone (Member)]: And can you tell me what your case mix score is?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: That I'll have to get back to you on.

[Rep. Wayne Laroche (Member)]: Pardon?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: I will get back Yeah, to you on

[Rep. David Yacovone (Member)]: that would be fine. Can you tell me what your nursing hours per day are? You could get back to me on

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: that. And

[Rep. David Yacovone (Member)]: do you have on staff physical therapists?

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Yeah, we contract out.

[Rep. David Yacovone (Member)]: You contract out, okay. Thank you. And you can just email that to me and I'll share it with the committee. Thank you so much.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Writing myself a note. There is a slide that talks about our salaries and benefits history in the past that's been asked for by the committee. We put that in there in case it was asked for again. And then we have our general fund request history. And obviously from '25 to '26 is the big difference because of '26 being the first year where we really built in the anticipated Medicare, excuse me, Medicaid settlement. That's why there's a stark difference. From '26 on, you should see a fairly consistent trending. The next slide talks about our key budget factors, how each of the major spending is. Obviously, 64.2% of our budget is salaries and benefits, almost 20,100,000. Our state allocations are at 3.5% at 1,100,000. 3.2% is our utilities at 1,000,000, and then 2% is our Fed tax. So we have 32% of our budget being our general funds, and then 67% being from Medicare, Medicaid, private funds, and VA funding. So we have the two forms of funding from the VA, our basic per diem, which is for all veterans who are not 70% or more service connected disabled, which is the $146.98 And then our DOM residents at $63.26 per day. Then the remainder of those residents costs are Medicare, Medicaid, private pay, long term care insurance, and our DOM residents are paid via private funds. Full cost of care for our veterans who are 70% or more service connected is $567 per day, and this is an all inclusive rate. One of the big factors on this rate is the cost of medications, especially your oral chemotherapy medications. If you are a private for profit nursing home and have a contract with the VA, they do a carve out for these medications. Any medication that is 8.5% of the daily cost of care, private nursing homes are paid for those medications. I am part of the National Association of State Veterans Homes. We have legislation in process at the national level to receive the same reimbursement. Representative Congresswoman Bailant has signed on to that legislation, so we are pushing for that because these medications can be upwards of 40,000 or $50,000 a month. We've denied people admission for that medication, but if you have a veteran who is already here and they go on that medication, you can't pick them out for that, and that can be really detrimental. The next slide just lets you know that we're receiving $8,600,000 in revenue from the VA for FY27. We are basing our budget on an average daily census of 90, with a private rate of $345 a day for a private room, semi private three twenty five. Our board meeting is February 11, and these private room rates, we're going to be making recommendations for them to go up slightly, but it will only have a minimal impact on our budget. There's our Medicaid interim rate of four seventy five, and the other rates that I just talked about. Just really quickly, our average age is 81, youngest vet is 55, oldest is 98. We have 80 males, 18 females, 83 veterans, including three females. We represent all branches of the service except the Space Force. We still have one World War II veteran with us, and we continue to have higher acuity needs, obviously PTSD, mental health. I am happy to continue to report that we do not have anyone on continuous one on one, but it's intermittent one on one as behaviors are required. So our financial challenges continue to be meeting our financial goals, agency staff use, our open positions. One of the other things we're watching from the Veterans Administration is they're attempting to do a lot of cost shifting for things that the VA should be paying for they suddenly want state veterans homes to pay for, custom wheelchairs, custom durable medical equipment. This is another topic that the National Association of State Veterans Homes is trying to address on a national level. Veterans shouldn't be losing their benefits because they're coming to reside with us. The staffing challenge slide talks about gives you the cost difference between using agency staff and our staff, just that's been asked for in the past. Talked about budget challenges. Really quickly, I'll talk to you about what we're doing to reduce expenses, ensuring costs are in line with our census. We've eliminated our podiatry contract. Our podiatrist was just coming here, I don't want to say just, but was coming here to trim toenails. So, our advanced practice nurse practitioner, as well as our wound care nurse can do that. That is being done here. Steve and I and our director of nursing will be meeting with Doug Klein to talk about the possibility of bringing a lot of our contracted providers in as either temporary or full time state employees to see if it's cheaper to have them as a temporary staff by contracted in an attempt to save money. And then we talked about our L and E class. We do have a waiting list, and we were close to 90 the other day, and within twenty four hours we had four guests. So it's a push me pull you with admissions. So, and then I have some of our community events there.

[Speaker 0]: Thank you very much for this presentation. Will review the following slides, but I think discussion of the budget certainly was very informative and very helpful. And I have no doubt some committee members will have some additional questions. We'll get to you on that. But we appreciate your being here today and these very thorough materials. Thank you for your time. Thank you very much. We will be in touch as necessary.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: Thank you.

[Rep. John Kascenska (Member)]: Thank you.

[Speaker 0]: Bye And commissioner, treasurer, I'm sorry. We ran a little late on that one, but we would welcome you to

[Rep. Eileen Dickinson (Member)]: come and take a seat. Thanks.

[Mike Pieciak (Vermont State Treasurer)]: Thank you, Pat. Vice Chair, it's good to be with the committee this morning. Thanks for having me. Hope everybody's doing well and made it safely to Montpelier today. Things are still a bit messy from here.

[Speaker 0]: Have you heard of them?

[Rep. John Kascenska (Member)]: Yeah, but the Patriots are.

[Speaker 0]: It's

[Mike Pieciak (Vermont State Treasurer)]: a Patriots much are. Happier week, couple of weeks. Yeah. Yeah. I don't know who was snowing harder there

[Rep. John Kascenska (Member)]: or here.

[Mike Pieciak (Vermont State Treasurer)]: I appreciate everybody's time. We have a presentation that we sent along. We'll send along also our ups and downs today so you can get a line by line of sort of how things are changing in our budget. But I did provide just sort of a broad overview on the first page of the slide deck that shows the overall increase that we're seeing on our budget, which you'll get in one second. But in total, our budget's 9,000,000. The governor's recommended budget is $9,343,823. So that represents about a 5.7% increase over last year's budget. That total increase is about $500,000. And then you'll see the breakdown there of where are things increasing within our budget, about 4%, 4.4% in the general fund, 9.4% retirement, 11.5% unclaimed property. And then we have this interdepartmental transfer fund that is down. And largely, it's down because we had one time funding for our Vermont Sage program that was provided by the legislature and the committee a few years ago of $750,000. And in this fiscal year that we're currently in, we will have exhausted that one time appropriation. And we have a little bit about that later in the presentation. But you'll see that's explaining why that's a negative number. We'll talk about Vermont saves here in just a minute. That's sort of the overall in terms of sort of how things are moving. I'll just note that probably like a lot of the budgets you're seeing, the drivers of all of these numbers are things like COLAs, the step increases that are in the contract. Health insurance is another driver. Things like increases in internal services costs, insurance that's separate from health insurance, other types of insurance, workers compensation and the like, and then pension and retirement increases as well. So a lot of those cost pressures that you're seeing across the board. But we were happy that, at least as it relates to the general fund, we're able to keep that number relatively low and tried to keep things tight throughout the budget overall. On the next page, wanted to talk about something that's not directly in our budget, but it is something that will show up on the ups and downs, which is the ADAC, the actuarially determined employer contribution. So this is the amount that state of Vermont puts into the basically four systems, the teachers pensions, the state employees pensions, the teachers OPEB their health insurance and the state employees OPEB their health insurance. And just to start here, which is sort of how is the system doing? The systems are continuing to make progress. Just about five or six years ago, we were in this situation where we had that really dramatic downturn in 2008 when the markets were severely impacted from the Great Recession. You can see where the funded ratios were. The state system was basically 100% funded. The teachers was over 80%, and then they had that dramatic drop. And then we had this decade where things were going down even though we were fully funding the pension systems. So that was causing everybody concern. And there's a lot of explanations for that. But I think the simplest one to understand is that some of our assumptions were too rosy. So even though we were putting in the amount the actuaries were telling us, we weren't hitting the assumptions, particularly on the investment, how much we're going get in investment returns. So that meant that the funded ratio kept dropping even though we were meeting our obligations. So in 2000 and then onward, there are a number of pretty significant changes that happened with the system. One was that the assumption around investment returns dropped. We lowered it under Beth Pierce, which was a good decision by the retirement boards, But down to 7%, I think that's a much more likely and reasonable number, and we've been hitting that number the last five or six years. But then there are also the significant pension reforms that occurred as well that put more money into the system. The state put more one time money, individuals that, contributed more in terms of their paycheck, all the people that are in the system. And then the state on top of that has the ADEC plus payments, the $15,000,000 into both systems. So we calculated last year sort of what does this mean, all of this extra money that we're putting in up front? And we determined it's just under $6,000,000,000 in taxpayer savings over the life of these two pension systems until they get to fully funded, the pensions in 2038 and the OPEB's in 2048. So putting that money in early is a huge win for taxpayers. It's a huge win for the system. It gets the system on a stable track, which we're seeing here. One, two, three, four, five years of increased funding ratios. So the teachers system is up from a low of about 50% up to 63%. That's their highest level since 2011. And then the vSERs, the state system is up to 73%, its highest since 2016. So both of these systems are at their highest point in about a decade for the teachers more than a decade. So it's moving in the right direction. If you go on the next slide, you'll see what it costs to continue to move it in the right direction. And I wanted to break them out into each of the systems. So you'll see, the the state employees pension. So we're contributing about 55,000,000 $155,000,000 in fiscal year twenty seven. So that is a 2.63% increase over last year. And then BSTRS, the teachers, three is 235,000,000. That's an increase of about 3.58. You put those together, it's about a 3% increase on the pension side. So that's a pretty good story. The pensions in the past had gone up much more considerably in terms of their year over year increase. That 3% is almost consistent with inflation. When we look at the pension system, which is set to be fully funded by 2038, you know, the years that are in front of us, we are projected and everything can change. But the projection is that, you know, it'll continue to go up. But from an inflationary standpoint and a budgetary pressure standpoint, it will actually get easier to make those payments because they won't be rising as quickly as they had in the past. The other thing to point out is that 3% is increasing on a pretty significant number. You know, when you increase 3% on a big number, it still increases a big. So those numbers have gone up a bit over the last five years, but it's now gotten to the point where it's much more manageable increases. And you're not seeing these huge numbers on the pension side for the appropriations committee in terms of the increases. Now the OPEB is a little bit different story. You can see the increases here, about a 100,000,000 for the state, about a 100,000,000 for the teachers. But those are up 12% and then up 25%. And I think the story here is pretty consistent with what we're hearing across the board. When you talk to anybody about health care, health care costs are rising dramatically. In Vermont, they're rising dramatically across the country. So this is largely a reflection of what's happening in our health care system rather than something that's fundamentally off in our OPEB or pension system. It is something obviously we need to address not just for the pension system, but for individuals that are struggling with their premiums and small businesses as well. The one thing I'll mention, which I'm really proud of our team in the retirement division, that number is significant. That increase is about $20,000,000 from last year for the teachers, but it could have been even worse. We got a a rate renewal from Blue Cross Blue Shield in July of 50%, five zero, which would have meant a significant increase for individual teachers, would have meant significant increase for the state of Vermont. We didn't really think we had a lot of options because it was a Medicare Advantage plan. There weren't a lot of those group plans offered in the state. If they went back to their system that they had before, it would have represented close to 100% rate increase. So we were sort of stuck. But our team really worked really hard to find alternatives. And there were two alternatives. One of them was much more viable than the other, and that was a company called HealthSpring. HealthSpring is a Medicare Advantage plan. They used to be part of a much larger insurance company, but they've split off. They still have a million members nationwide, so they're really big in terms of their footprint. And they offered us a 16.8% increase. So 50% versus 16.8%. And I guess it also speaks to the moment we're in with health care that we were really excited with a 16.8% rate increase. We're also excited that we have two years additional to this year where they cannot go more than 15%, and it can't go more than 5% depending on certain parameters that are hit. So we locked in with Elfspring for three years. We feel good about that. And had we gone the other way, which we thought was our only option, had our retirement team not worked really hard to find another option, do the due diligence, do the contract, and they really had to work overtime on this. It would have been an additional $22,000,000 in the Beasters ADEC. So that $100,000,000 number would have been a $122,000,000. That would have been a significant pressure on the budget. And that's not just a one time thing. That would have been felt every year. That would have been the base going forward. So I just want to compliment our team on being able to find a really high quality insurance provider that is very stable financially, is providing the same level of benefits. That was obviously really important to us and the same access to retirees as well. So that's sort of the story with the pension systems. Again, they'll be on our ups and downs, but they're not part of our our core budget.

[Rep. Eileen Dickinson (Member)]: Yes. Yeah. I just want to ask you the when you look at the cost of the OPEB

[Mike Pieciak (Vermont State Treasurer)]: Yeah.

[Rep. Eileen Dickinson (Member)]: And health insurance in general, state employees are self insured.

[Mike Pieciak (Vermont State Treasurer)]: Yeah.

[Rep. Eileen Dickinson (Member)]: Teachers are not. Does that have an impact? Does that happen?

[Mike Pieciak (Vermont State Treasurer)]: Well, so just to break it out just a bit. The current state employees and the current teachers are both self insured. The current teachers are with BIHI. That is its own sort of It exists to provide health insurance to teachers. It's actually a regulated entity. VFR regulates it. And then the state of Vermont has its own self insured plan administered through Blue Cross Blue Shield. We go through Medicare Advantage for the teachers. The state of Vermont goes through the state of Vermont contracts handled by HR. I actually don't. Think they were self insured. Yeah, might also be self insured for retirees, but administered through Blue Cross Blue

[Speaker 0]: Shield. Representing the sense.

[Unidentified Committee Member]: That's okay. Great. Thanks.

[Mike Pieciak (Vermont State Treasurer)]: So does it make a difference? I mean, I think at the end of the day, when we're talking about this bucket of financing healthcare and then what the underlying cost of healthcare is, you can make some difference over here on the financing healthcare when you're talking about leverage and size. That's what we got with HealthSpring. We had a much larger insurer that has a better rating with CMS. They get better reimbursement from the federal government. They have some leverage and some scale that they're able to bring to us. But that's kind of around the edges, right? Like it's really this cost of care thing that fundamentally is going to drive the outcomes that you're going to have in terms of costs.

[Rep. John Kascenska (Member)]: So you may not even know anything about this looking ahead too far here, but being locked in for three years is a good thing.

[Unidentified Committee Member]: Yeah, we're happy with that. Lower double digit.

[Rep. John Kascenska (Member)]: We can call it that. Do you anticipate that jumping up to a higher percentage? After three years? It may not.

[Mike Pieciak (Vermont State Treasurer)]: Yeah, it's hard to That's okay. I mean, it's certainly possible, right? Because just the way that healthcare is going, At the end of the three years, again, it will be sort of a competitive process. One of the reasons we didn't want to change from Blue Cross Blue Shield is that many of these teachers have been with Blue Cross their entire lives. And even if they hadn't been, if they'd just been with Blue Cross for ten years or five years, changing health insurance companies brings a lot of concern. Not only did we have to work a lot on finding the new health insurer, doing due diligence on them, getting a contract in place, working with UVM and Dartmouth and other hospital systems to make sure they had appropriate contracts with HealthSpring. There was a lot of work on that. But we also had to do a lot of work with the teachers to give them information about this, to answer their questions. There were things that came up that we couldn't anticipate. So there's a huge time cost of switching carriers. So our preference would be to, you know, at the end of the three years, not have to be out for a competitive trying to get another contract that was reasonable. But you have to keep that in your back pocket because, you know That's kinda why I'm asking. Yeah. Yeah. So, I mean, you know, we showed that we at the end of the day, we will move if we have to. I mean but it's not the preferred group.

[Rep. John Kascenska (Member)]: Yeah. So

[Rep. Thomas Stevens (Member)]: with all this work,

[Unidentified Committee Member]: it's different than what you did with DFR ten, twelve years ago. But when you keep saying that this is just the way health insurance is, I think we're all for a very long time being dissatisfied with the way that health insurance is. So when you go hunting for new service providers, the personal cost especially to retirees but as we get older, I don't want to work as hard like knowing what the ins and outs are. So I mean I know plenty of constituents who said well my Medicare Advantage program is being canceled right what do I do? I'm like yeah

[Mike Pieciak (Vermont State Treasurer)]: it's like 50,000 people probably

[Rep. Wayne Laroche (Member)]: have their

[Unidentified Committee Member]: 50,000 people, you know, and again with everything else that's gone on in the last year, it's chaos, right? And this is chaos that's related to health insurance. Does your office now break down, we were on a road, we passed legislation, we were on the road, think DFO was a major player in helping shape a move towards a universal health care system that was discarded because we're not a country so we can't print money. Yeah, really what it came down to, but I keep hearing well you know we have to the middlemen are pharmacy benefit managers, there's insurance companies, there's this, there's that. Have you when you go looking for something, do you break down what those costs actually are? I mean, I know I don't think we can just take them out of an equation and say well healthcare would only cost this much, right? We didn't have a pharmacy benefit manager because this obviously there's something has to bounce back in order to make it so. I'm just curious like is

[Rep. John Kascenska (Member)]: the

[Unidentified Committee Member]: treasury involved at all and just at least understanding where the expenses are coming from because the amount of money that it's gone up in the last the amount of money that insurance has cost remind whatever the costs of the actual health care are insurance costs would have been extraordinary. No doubt. Just curious what your homework is.

[Mike Pieciak (Vermont State Treasurer)]: Yeah, when we look, you know, when you talk to insurance carriers, you're looking at our own contracts that we're procuring. You know, there are pretty clear cost drivers. Pharmaceuticals is usually one of the big cost drivers, especially like really specialty pharmaceuticals. People that, you know, there are a handful of people at Blue Cross Blue Shield that are like a million dollars or more with their pharmaceuticals. Right? Like, it's just a big, big driver. We did propose this year an ArrayRx program, which we'll talk about, which is a pharmacy discount card that helps people money at the pharmacy. It's not a big, huge, systematic change to health care, but it is something that provides affordability at the point of sale to pharmaceuticals. So it's something that will be impactful to Vermonters. But pharmaceuticals is a big one. The other one is just people that have really high health needs. Like that pot of people is growing. When I talked to Blue Cross Blue Shield last and we went through their numbers, that percentage even just went up a few percentage points and it drove a ton of costs in their system. So the amount of people needing a significant amount of medical care. And then overall, just generally people that need a lot of medical care is a really small percentage of their overall population. But it is where 80% of the costs come from. So if you want to think about how do we tackle those things, in my opinion, it's trying to continue to do everything we can on pharmaceuticals as a state to chip away at the cost of pharmaceuticals. And I think it's also on the other side, to do everything we can to invest in primary care, to make more primary care doctors want to practice in Vermont so we can expand access and then expand the availability of people going and getting preventative care through their primary care doctor. We didn't get universal healthcare, but something like universal primary care, I think is something that Vermont should seriously consider exploring because it's a much more manageable step toward providing access and coverage than trying to have the entire system be a universal system. And I think it also would encourage primary care doctors to come to Vermont or stay in Vermont. And I think it also would encourage them to be in more rural parts of the state. Is a better sort of cost structure for them than the current system. So that would just expand access. It would get people in to see their primary care doctor earlier so things don't cost as much money in terms of treatment, but also obviously better health outcomes for people, too.

[Rep. Thomas Stevens (Member)]: Going back,

[Unidentified Committee Member]: baby boomers are now all over stuff, so that's not going to change that you know it's senior citizens cost more than five year olds, so we know that. But the question I have about the investments in the system it showed a very you know if we were putting in just enough money that they actually reset it but that rate went down, that a miscalculated I mean and I know that when we talked about this five or six years ago, was a question, did we have the right vestments? Did we do that? Were we aggressive enough? All of those things and that was changed in the last battle over the pensions. But was there fault in the actuarial because that matches baby boomers starting to enter the retirement force and I'm just curious to and then and so more money was going to be going out as that generation was going going in. So I'm just curious to know whether there's any parallels to that. Was it a miscalculation based on

[Mike Pieciak (Vermont State Treasurer)]: what the effect of having everybody retire? When they do those assumptions, there's usually there's definitely like investment assumptions. Like what's the rate of return? Are you going to get 7%? Are you going get 7.5? Are going get 8%? And then there are a whole host of assumptions about people, like how many people are going to retire? What are their health care needs? All of that sort of thing. So there's always sort of recalibration on the people side. We might get it a little bit under on one side, might get it a little bit over on the other. But the big thing was more of the investment piece. And the actuary does help us determine if it's a reasonable assumption, but the state of Vermont is who sets that rate of assumption. So I would just put it on us for having a little bit more aggressive assumptions. Now everybody was having aggressive assumptions. It wasn't like we're an outlier, but a lot of systems were running into this challenge. But now it's at a more reasonable level. And it's also a more reasonable level given sort of where fixed income investment are right now. It's where inflation is, where interest rates are. It's easier to get that 7% at a little bit reduced risk. You don't have to have it all in stocks and equities to get to 7%. If you have it in just a Yeah. Allowance, you can get to 4% right out of the grid. Then have to clear that last 3%. So it's an easier environment to hit that 7% as well. So it's just a we're just in a much better assumption position. And the last thing I'll just mention on the pension reforms is that we used to, you know, truing up those assumptions. We used to do that every five years. And now we do it every three years. So just make sure that if things are off base, they don't stay off base for five years. They stay off base for a couple of years, and then we recorrect them moving back in the right direction. So that was another important thing from the pension reforms.

[Speaker 0]: Thanks. Keep moving.

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: All right.

[Speaker 0]: Representative Laroche and Kascenska have a couple of quick questions.

[Rep. Wayne Laroche (Member)]: So out of total care, primary care, what proportion is primary care?

[Mike Pieciak (Vermont State Treasurer)]: Yeah, I've seen numbers that are certainly less than 5% of our overall health care spend. That's sort of the range.

[Rep. Wayne Laroche (Member)]: Primary care is less than

[Mike Pieciak (Vermont State Treasurer)]: five How much we spend on it? Yeah. So a lot of it is being spent on specialty care and pharmaceuticals. So even if we got that number up to 10, I think it would make a If we were investing in primary care and that's where more of our money was going in the health care system, even if we didn't add money to our health care system, we just tried to shift it to primary care, I think you'd see a pretty significant impact.

[Rep. John Kascenska (Member)]: I have another question about HealthSpring here.

[Mike Pieciak (Vermont State Treasurer)]: Oh, Part

[Rep. John Kascenska (Member)]: of that piece there too. It's an advantage plan here. So we're on Cigna here for a long

[Mike Pieciak (Vermont State Treasurer)]: time. Right.

[Rep. John Kascenska (Member)]: I'll screen here. But when you get into that third year being locked in, is there a point in time that you know, anticipate being notified about any kind of a change?

[Mike Pieciak (Vermont State Treasurer)]: Yeah.

[Rep. Eileen Dickinson (Member)]: Just asking a kind of

[Rep. John Kascenska (Member)]: a proactive kind of you're actually monitoring that.

[Unidentified Committee Member]: Yeah. For sure. So like similar

[Mike Pieciak (Vermont State Treasurer)]: with our Blue Cross Blue Shield contract, there's a requirement that they give us a rate renewal by Jan, July 1 of the year before the plan year. So that gives us time to look at it, sort of kick the tires on it, negotiate with them and then accept it or alternatively find another carrier. So we definitely have time. That's what happened this year. Yeah. Now, this was a tough year for Medicare across the board. So there weren't a lot of other options for us, but we're happy that we're able to find help from a different curve. Yeah. Yeah, no doubt. And it's confusing. Mean, I helped my dad. I helped him. He's an accountant. He advises businesses. He's older now. But he needed help figuring out his health insurance. Right. And we had to go through it with him. And I had to spend a lot of time myself as a former insurance commissioner trying to understand what were his best options. Was not easy to think about Vermonters that are just out there trying to navigate this.

[Rep. Eileen Dickinson (Member)]: Thanks. Let's go on to your Thank you. Step.

[Mike Pieciak (Vermont State Treasurer)]: Thank you very much. So those are the things that are in the governor's recommend. I also wanted to point out the things that will hopefully come to the committee through two other bills that we have out our treasurer's omnibus bill and then also an array Rx bill, both of them starting in the house. This omnibus bill is currently in government operations, and there are four things that touch the appropriations committee. First is this mechanism to temporarily fund Vermont saves, which I'll get into. There's a pension task force request for $75,000 for onetime money. This is for actuarial costs. I'll get into that in a minute as well. The retirement division has a request for one position and then the unclaimed property division has a request for two positions. Both the retirement division and the unclaimed property division are funded by the assets of the retirement division in that case or the unclaimed property division in the other case. So in both instances, there's not a direct general fund impact, and we don't anticipate there being either an indirect general fund impact as well. So just wanted to call that out. Actually, for all four of these items, they wouldn't have a base general fund impact, and that was important for us when we move these forward. So on the Vermont save slide, you'll see that I just wanted to provide some highlights. This is something that we passed in 2023. We were able to get it up and running at the end of 2024. So in about a year, we were really excited about that. We partnered with Colorado and a number of states are now with Colorado. The only way that we could have got it up and running is through that state partnership and that state collaboration. It allowed us to do it more quickly, have less headaches, and then also ultimately do it at a lower cost as well. So the program fully launched less than a year ago. It fully launched in March. And currently, we have about 5,400 funded accounts. So these are 5,400 Vermonters, most of whom have never saved for retirement before that are now saving for their future. Collectively, those 5,400 people have put aside over $5,000,000 in retirement savings. And both of those numbers continue to go up every week. We get weekly reports. You know, just that, you know, when I had when I did this presentation to the administration in November, that collectively saved number was 3,500,000. So it just gives you a sense of the growing amount that is collectively being saved. And then these next two bullet points is the thing that I'm most excited about with the program. 55% of savers are 40 and thirty percent of the savers are 30. So a lot of young people that previously were not saving for retirement are now putting away money. And when you're putting away money, you'll see that on the next slide, in a minute here, we have like, the breakdown of the age group. When you're putting away money at age 22, a couple $100 a month, that means hundreds of thousands of dollars by the time you reach retirement age. So so many Vermonters, 5,400 now, but we estimate that we'll get up to about 25, 20,000, 25,000 over the next five to seven years. So that number will continue to grow and more and more people will be building a stronger future for themselves. And I just also wanted to mention this point at the bottom employers that we have spoken with. We've gone out and talked to employers that are in the program. We've heard from chambers of commerce. We do a lot of engagement from our saves and they viewed it as a valuable employee benefit. A lot of employers we've talked to have said, you know, our employees said, what's the thing you want that we don't provide you? And they say, we want retirement benefits. And they're saying, well, they're too expensive. I can't figure out how to do it. And then Vermont Safes came along and they were able to provide this benefit at no cost to their employees. So we've had good feedback from employers as well. When we went around the Vermont Saves tour, the employers we talked to said, you know, this is great. Now, can you do health insurance? It's just, you know, that's a little bit bigger bite of the apple. And then on the next slide, you'll just see the breakdown. This data is a little bit old, but it gives you a sense of just where people fall on the demographic scale. So each one of those lines is an age. So 18, 19, 20, 22, 23, 24, all the way up to in the eighties. But you can see how it's skewed toward younger people, particularly people in their twenties that are saving for their retirement. So just couldn't be happier with that progress, specifically with young people and also overall the progress that we're seeing in the Vermont Saves program. So on the next slide, just a little bit of background of the funding. So I mentioned to pass the legislature in '23, we had a one time appropriation of $750,000, the authority to establish the program and hire for two positions. We got the $750,000, which will run out in this fiscal year. It was a relatively modest amount that we asked for. The state of Maine, for example, was about double that amount. Other states that have implemented the program have had more significant upfront asks than that. So I think we came in a little bit low as to what we needed to get it to a sustainable point. And I think that is emphasized on that last bullet there. A one time appropriation exhausted in '26. There's about $300,000 in program expenses. And this year, we'll have about 57,000 in expected fee revenue, leaving a gap of about 242,000. If you go to the next page, it just shows sort of how that will play out over time based on our projections. So our revenue will continue to go up as basically two important things happen. One is that the number of accounts we have here in Vermont continue to go up. So I mentioned we had 5,400. We expect in five years for a number of different things we're rolling out that they'll get to 20,000. So we have an account based fee, then there's also an asset under management fee. So as the accounts get more, we bring in more revenue. As the money that is in that, as that 5,000,000 becomes 10,000,000, becomes 20,000,000, becomes 40,000,000. You know, that will increase the revenue into the program. But then this partnership with Colorado, another important thing happens over time is right now we're sharing that fee revenue with our vendor, BestWell. But as the number of accounts grows with all of those states, the portion of the fee revenue that comes to us will grow both on the account side and on the asset side. So there are a number of ways that the revenue is going to increase over the next five to seven years. And then also our expenses will increase as well. But when we net that out, you can see that our expectation is that that gap will continue to shrink, continue to shrink, continue to shrink until it is pretty minimal. Then it's in green and self sustaining.

[Rep. John Kascenska (Member)]: The program in Colorado, are they doing exactly what we're doing in terms of how they're set up? Have a couple of bigger state here, but they have relatively comparable.

[Mike Pieciak (Vermont State Treasurer)]: Yeah, exactly right. Categories. We like Colorado. Yeah, exactly right. Yeah, other states are seeing younger people too. I think like Colorado as a partner because they're a bigger state, they have a bigger economy, but they also have some similarities. They have the hospitality and skiing and tourism based economy. They also figured out how to handle all the cannabis related businesses, and was something that we were able to take advantage of in terms of how they could get onboarded. So we liked them as a demographic model for us, but also just as an overall partner. So we have a proposal that's in the omnibus bill to cover those temporary shortages. If you add it all up, it's about $700,000 that we would need over those six years or so. And right now, our unclaimed property fund transfers about $150,000 on average, right around there. The number keeps growing to something called the higher education trust fund on an annual basis. So we calculate claims that are over ten years old that are under $100 and we calculate what that is, and we send that money to the higher education trust fund. People always have the right to claim that property, but it's just a calculation that we do to support the Higher Education Trust Fund. The Higher Education Trust Fund this past year had a pretty significant windfall. This is a fund that has existed for twenty five years. And for twenty five years, it had contributions from the estate tax. It had relatively minor contributions from unclaimed property. And it grew to about $30,000,000 over those twenty five years. And then overnight from one really significant windfall from the estate tax last year, it doubled in size to $60,000 So it is sitting really pretty in terms of its assets that it has. So we think this was a, from a policy standpoint, a good way to divert this money temporarily to support another program, Vermont Saves. Although it won't divert all of the money, they'll still continue to get some money and then it will all go back to them once Vermont Saves is fully established and on its feet and sustainable. So the Higher Education Trust Fund is just in such a good financial position that they won't really miss this relatively small amount of money for those six years.

[Rep. Eileen Dickinson (Member)]: Is I think being claimed by everybody. Did you say 150,000 or 150?

[Rep. John Kascenska (Member)]: Oh, right now?

[Unidentified Committee Member]: About 100?

[Rep. Eileen Dickinson (Member)]: Unplanned.

[Mike Pieciak (Vermont State Treasurer)]: So right now, the last year, I think it was like 100 and there's like around 150 or 1 and 60,000 went into it.

[Rep. Eileen Dickinson (Member)]: So roughly 150,000.

[Mike Pieciak (Vermont State Treasurer)]: And the number has been growing. So if you looked five years ago, it's probably only like 80,000. But the number's been going up.

[Rep. Eileen Dickinson (Member)]: You have two positions for the plant property. My understanding is that is a potential fraud issue. We think we had a couple of positions last year for this as well. Yeah. How does the net and the gross come out of all this?

[Mike Pieciak (Vermont State Treasurer)]: So we asked for two positions last year. We didn't get those positions. So for the unclaimed property positions, what we're hoping to hire those for, if you look at our numbers, the claims numbers last year or two years ago, was about 18,000 claims. This past year is about 31,000 claims. So we have this dramatic increase in claims. The amount of money we're paying back to Vermonters is equally gone up. And the amount of money we're getting from businesses to us has also gone up. So everything is just more of everything. The general fund transfer is going up. It's just more. So our team just needs more resources to be able to do the normal work that comes with this increased claims, the increased volume. But putting that to the side, there's also this increased fraud risk that almost any government agency that is handling money and making payments to the public is dealing with. When you have that increased volume in claims, it's harder for our team to spend the necessary time on the claims that they really want to focus on to make sure we're paying the right person. So we worry about that. And then we also worry about all the businesses, particularly the national businesses. Are they turning over all the money to us that they should be turning over to us? And we just have really limited bandwidth to go and do those investigations or audits. So if we had more capacity, not only would we be continuing to sort of handle this increased workload, but we'd feel better about the fraud prevention. And we think we'd also have the ability to shake the tree a little bit and get even more money into the unclaimed property system by making sure these businesses are turning over to us what they're supposed to.

[Rep. Eileen Dickinson (Member)]: So the next the general fund would theoretically increase.

[Mike Pieciak (Vermont State Treasurer)]: Yeah, exactly right. Exactly. And even just naturally, the general fund transfer is increasing because the amount of money coming into us just naturally, not even from us going out and making sure everybody's turning over what they should, has been going up pretty consistently over the last ten years.

[Speaker 0]: Okay, you explained three slides that were ahead, which is good.

[Mike Pieciak (Vermont State Treasurer)]: Maybe we can skip a little bit.

[Speaker 0]: We are getting close on time. There's an amortization course. Would you explain that, please?

[Mike Pieciak (Vermont State Treasurer)]: Yes, of course. So this is the $25,000 I mentioned. Sorry. The $75,000 I mentioned for actuarial services. So what we want to do here, all of that good news that we mentioned with the pension system, it's it's created a good problem for us, which is that between now and 2038, we're gonna become fully funded because we are required to, you know, basically recalibrate and put the amount of money that's required to get us to fully funded by 2038. But the problem is, as you get closer to 2038, if something goes dramatically wrong, if you have a 2008, if you have health assumptions or retirement assumptions that are way off, that unfunded liability can get really significant overnight. And then you have just fewer years to spread it over. So it's a good problem to have again, because it means we're getting closer to the end point. But we wanna make sure we land the plane in a way that we can sustain on the budget and eliminates risk that's somewhat unnecessary. So we're not suggesting an outcome here, but what we want is all of the stakeholders that participated in the pension reform in 2022 to come together for this very specific issue of how do we deal with the amortization period between here and 2038 for the pensions and here in 2048 for the OPEB. And then come back with that recommendation to the committee, to the legislature at the start of next year. I think it's a really important exercise for us to engage in. At the very least, I want everybody to come in with their eyes wide open and say, this is the risk. Maybe we don't change anything, but everybody should sort of understand what comes with not changing anything. But I think more realistically, we'll probably come up with a way of balancing that risk and getting the pensions to maybe the same 100% funded or nearly funded 100% on those same timelines. So that's the purpose of the task force. And it'll just need a little bit of one time money to help with those actuarial cost to run scenarios as we develop over the summer.

[Rep. Eileen Dickinson (Member)]: How does this work in with BPIC?

[Mike Pieciak (Vermont State Treasurer)]: So BPIC I'm trying to think of BPIC. BPIC was not a member of the pension task force. So they certainly will be somebody that we would consult. Yeah. BPIC, just so you know, BPIC as a commission has talked about this issue and they're worried about it because they don't want to It also could impact how they have to invest a portfolio if all of a sudden they're expected to have even greater returns because there's this unfunded liability. So they've been talking about it amongst themselves. And should they how should they address it or what should they do? I just think this is the approach. I think let's not come up with the answer on our own. Let's get everybody together, come up with a universal answer with the stakeholders, and then come back to the legislature with what everyone's best sort of, you know, best thinking is.

[Speaker 0]: Okay. There were two last items in your Yeah.

[Mike Pieciak (Vermont State Treasurer)]: Thank you.

[Speaker 0]: I'm sorry. I'm trying to

[Mike Pieciak (Vermont State Treasurer)]: get No. Of

[Speaker 0]: course. Because we need to take a break before our next person comes in. But a retirement So position is a rate

[Mike Pieciak (Vermont State Treasurer)]: the retirement, we talked about the unclaimed. The retirement position is for a single position. I talked a little bit at the beginning about HealthSpring and that work that the retirement division did. It's just an example of their good work, their great work, really. But also it can get pretty taxing on them because they are really lean system. We don't have very many employees in our retirement system relative to other systems. And these are the stats on that. In a national average, there is one employee per 1,300 members. So you have one employee in the retirement division and 1,300 members. In a state that's comparable to Vermont in our size, it's one employee per 1,200 members. And in Vermont, in our pension system, it's one employee per 2,800 members. So it's more than double. So we're really lean shop. They do a great job, but they're just worried that their capacity now will mean that they aren't always looking ahead at issues and able to confront issues and save money and be more efficient. So, you know, we've talked to all the stakeholders on this, basically the public pensions and the boards of retirement. And they're all in supportive of the retirement division getting this position because they know that it will just add to their capacity. And again, this is funded out of the retirement funds, not unclaimed property. They're not the general fund.

[Rep. Eileen Dickinson (Member)]: And

[Mike Pieciak (Vermont State Treasurer)]: then the last item, this is a different bill, H577. This is the pharmacy discount card program that I mentioned earlier. So this card has been implemented between Washington and Oregon. They were the first two states to come up with this program. Now Nevada and Arizona and Connecticut are all part of this state collaborative. It's no cost to Vermonters. There's no cost to the state to join. There will there will be a cost in the future for other states to join. But Vermont, because we've been talking to this collaborative, they're gonna not impose that on us. That's a new fee that will be paid by others if we go forward. But the benefit is you'll see the discount card program saves about 80% on generic drugs and 20% on name brand drugs. In Connecticut, an average person that's using this card is saving about $200 per month on their pharmacy needs. So not insignificant. So it's a pretty significant savings at a really basically insignificant cost. What we're asking for is one time general fund money, $50,000 to help with the initial outreach and marketing of the program. So the program is as successful as the number of people that sign up. Unlike Vermont stays where we need to get a critical mass to get sustainable, this doesn't require that. It's just the more people that are in, the more people that benefit. So if we can even get 5,000 Vermonters on this discount card and they use it regularly, it'd be millions of dollars of savings for them on their pharmacy needs. And that's sort of the last item on our agenda.

[Speaker 0]: Appreciate your giving us a thorough review. Everybody always has questions.

[Mike Pieciak (Vermont State Treasurer)]: That was great. No, we appreciate it. If you have other questions, feel free to reach out.

[Speaker 0]: I guess one last question.

[Rep. Wayne Laroche (Member)]: Oh, yeah. Three questions. One, how much money is in the Unclaimed Property Fund?

[Mike Pieciak (Vermont State Treasurer)]: Yeah. So there's about $150,000,000 that is owed to Vermonters. There's another 20,000,000 or so that's in mutual funds and other equities that separate from the 150,000,000. Now, what do we actually have in our office? We have about $20,000,000, let's just say, because what we do is we send excess money to the general fund to help with the budget every year. That's some portion of that each year. Yeah. And that's and that number has been going up you know, every every year for the last decade or so. And we expect it to continue to go up. But that's the way we've been running the program for the last, you know, for as long as the program has existed from my understanding.

[Rep. Wayne Laroche (Member)]: Under the higher ed trust fund, how does how does money come out of that?

[Mike Pieciak (Vermont State Treasurer)]: So every year, if we have an investment return that allows us to make a distribution, so we invest the money at the treasurer's office, and we've had really good years, last few years, we can distribute up to 5% to VSAC, to UVM and to the state colleges. And then we can do an extra 2%, I think it is, to UVM and to the state colleges if the investment returns are particularly good. So we have a committee that sort of makes that determination. We've been trying to be a little bit more conservative. There was one year we didn't pay anything out because the market was bad. And we wanted to be a little bit more conservative with our payout because then we can assure that there'll be a smoother payout even if there's a bad market year.

[Rep. Eileen Dickinson (Member)]: So we're actually gonna maybe get you to come back in and talk to us

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: about Vermont Higher Ed Trust. So let's hold our questions

[Rep. Wayne Laroche (Member)]: That's on my last one's back on card. Any downsides? I don't

[Mike Pieciak (Vermont State Treasurer)]: them as whims because it's a win to the consumer, to the state of Vermont, there's no ongoing cost. To pharmacies, this card, because there's no profit motive. There are other cards that exist out there, but this has a better reimbursement rate for pharmacies because it's a state run program. And this is a card that doesn't sell consumers data. Other cards do, and that's obviously a significant privacy concern. So I think it's a win for consumers, for the state and for the pharmacy as well.

[Speaker 0]: Thank you very much. We appreciate it.

[Mike Pieciak (Vermont State Treasurer)]: Yeah, of course.

[Speaker 0]: Thank you. If we have other questions, we'll get it done.

[Mike Pieciak (Vermont State Treasurer)]: Of course, please do. Thank you.

[Rep. Eileen Dickinson (Member)]: So why don't we do

[Melissa Jackson (CEO/Administrator, Vermont Veterans’ Home)]: nine minutes and get back

[Speaker 0]: at