Vermont Legislature SmartTranscripts:

[Michael Marcotte (Chair)]: Good afternoon, everyone. This is the Vermont House Committee on Commerce and Economic Development. It is Tuesday, 01/27/2026 at 03:00 in the afternoon. And so we are joined, this afternoon by state auditor Doug Hoffer, who would like to just fill us in a little bit about more, information about the Vermont Training Program. So Doug, thank you for coming in this afternoon. We certainly appreciate your time.

[Doug Hoffer (Vermont State Auditor)]: Well, thank you for having me. And and just as background, performance measurement has been an interest of mine for a long time. The first job I did under contract for then state auditor Ed Flanagan was about the state's initial efforts in performance management or performance measurement. So I've been on this a long time, and I enjoy it. I think it's an interesting subject. And I'm not picking on the Vermont training program, but just for your information, now include performance measurement in most of our audit objectives for almost every job we do, and we'll continue to do that. But for this exercise, I kind of got curious about what is increasingly better than it has been. The state's efforts in this regard are are better than they were. They've made some progress after some false starts over the years. But there is something that the the administration's office that does this work, I think his name is Justin, he just doesn't have the time for it. So when an agency or a department submits information about their performance measures, he pretty much takes it as he finds it. And he doesn't have the resources to review it and check its validity and accuracy. So I thought, that sounds like fun. Well, maybe not to most people, but to me. So I looked at six programs in the Department of Economic Development where I have some history and knowledge, and one of them was VTP. And it happens that I saw that the first couple of minutes of your guest, mister Zott, was it late last week maybe, who came in to testify about the VTP and, was a good fit. So I thought I'd share this with you, and I'll get you the rest of the memo down the road. So, basically, as as he said, it's kind of interesting, the one that he started with was their annual reporting on wages, which is kind of interesting because the the one key thing about performance measures is that they should reflect the goals of the program, quite obviously. And no one's gonna argue with the value of better wages for Vermont workers. But the question at this point in time may be a little bit different about whether wages is the the critical element. We hear considerable talk all over the place about the labor force and how the labor force is short. And we and it's not just here. It's happening in other parts of the country. So I I just leave you with that. I'll get back to it at the end. But this question about wages, which he presented, is an unusual kind of approach because what they're presenting to you in each annual report is the median of the aggregate income increases for trainees, for those workers at all the companies who were benefiting from the different programs that the BTP has, some in the company's own facilities and some outside. And they wanna compare that to the statewide average of income increase over the same term. And that sounds reasonable to people who aren't number geeks, but it's got some weaknesses. And that's what I wanted to mention to you today. And I and I do that not to pick on VTP again, but in this case, it's a little unusual because the statute, the enabling statute for VTP, includes these particular measures and asks for them to report them to you, which is kind of interesting. So I hope after you hear what I have to say, you might give some thought to making some revisions to those measures for a number of reasons, not just the questions about the methodology. The first is that this work generally on their behalf is done by the Department of Labor, Matt Barowitz, who's a smart guy, good guy. I I trust him. But he can only do what the methodology will allow, and it has some limitations, I think, is fair to say. First of all, they don't report on hourly wages. They report quarterly changes in quarterly income over a five quarter period, which is another oddity, which I'll get back to. So we're really not getting, wage data. You're getting income data, and they assume forty hours. Now that is probably true for a lot of the trainees, but no doubt, not all. And by only measuring income and not hourly wage, you might get some fluctuation because of changes in the number of hours. So that's a you know, not a serious risk, but when you hear what I have to say, there's half a dozen of these little things that add up to some uncertainty about the outcome. Second, the median is a great number for a lot of purposes. It's the midpoint, 50% above, 50% below. But I think if I were in your seat, I I would wanna know what's the distribution to tell me that the fiftieth percentile, there was an increase of 4% or 5% is sounds good. But how many people were at the low end on the low side and at the high end on the high side? You don't know that if all you get is the median. Second third, I should say, that the wage data for, the comparison is not apples to apples. The trainees and the BTP does a good job of well, a pretty good job of reporting on the the occupational titles and industries, that are represented by all the trainees. In in this case, the last year was just under 1,000 for the whole year. And to give you an example of why it's important, 67% of all of the people who were trained through the program were in what they refer to as advanced manufacturing. And that's great. That's just a data point. It's not good or bad. The point is, though, that the statewide numbers for manufacturing, not just advanced, because I don't know what the NAICS codes are for that. I'd have to get that from Matt, is only 11%. So already, we have an enormous difference in the two, you know, apples and oranges. And another example is that no trainees came from, tourism and recreation, whereas that represents 12% of all the jobs in Vermont. So it's not apples to apples. And I say that it's not just that, you know, some jobs pay better than others and have better benefits and that sort of thing, but it's certain that the rate of growth is very different for all the different industries in Vermont. And that's a lost element in this process, which is too bad. It seems to me if you're going to do something like this, which is to say compare an outcome of the trainee's change in wages, you should do it where you're comparing the occupational titles with similar or like occupational titles. That that makes more sense. That's obviously a lot more work for the Department of Labor, and I'm sure they're not looking for more work, which may be one of the reasons why they don't report on, you know, hourly wages because that would be immensely complicated. The income by quarter is a little bit easier for Matt and his team. Also, it's true that, they for for reasons I don't understand, the comparison is over five quarters. Now you guys on this committee probably are accustomed to hearing about labor data, employment data, wage data, so forth. And you are aware that what the Department of Labor and BLS and all the people who work in this field do is make adjustments so that when you can compare quarters over time, you know that December can be compared to December. But for a lot of reasons, December can't easily be compared to June. Different things happen in the economy over different quarters. And they know that because they have so much data. But for five quarters, it's an odd choice. You know, Matt and his team, they do all the labor market information. They routinely adjust for four quarters, but not for five. So I'm I'm not quite sure why that's in there, but it is. And also as we get near the end of the the bullet points, they report the information about the comparison of the trainee wage increase and the statewide increase with no caveats, which would lead a reader, a layperson generally who wasn't deep into this stuff to think, oh, well, the program is responsible for all that they're telling me, whatever the difference is between one percent and five percent, something to that effect. When in fact, there's lots of other factors that are undoubtedly contributing to whatever that outcome is, even if we take it at face value and not compare apples to apples. And and some of those include things like, well, a fair number of trainees each year are new hires. So when you're a new hire, it's entirely possible that you're coming from a lower paid job, and now you have a better job. That might be the motivation for the transition. Furthermore, it's also not uncommon, to be hired as a, you know, an employee until it's determined that you're a good fit. Maybe six months in, you become a permanent employee and you get a raise and more benefits and all that sort of stuff. And since this goes over five quarters, that would happen in that period of time. So there's a bunch of things like that that can impact the outcome, but then it's not discussed in the report. And I think it would be fair to do so if you're gonna report on wages. And a couple of final thoughts unrelated to the methodology. You know, there's no but for in the BTP. Nobody's asking anyone, you know, do you really need this money? But it's not an unfair question when you look at the history, and I have over time. You know, there were years when Green Mountain Coffee, which became Keurig and and dealer.com, were growing very fast. And they were basically awarded, you know, a $100 every two or three years to help them train their new employees when in fact that's just a regular cost of doing business. I mean, you can applaud their success, but the question is, did we really need to spend taxpayer money supporting billion dollar companies? And both of them were sold for multibillions of dollars. And currently, we have beta, which is another tremendous success story, both in South Burlington and up in, I guess, St. Albans. And they're doing a great job and they're growing. And they also recently became a billion dollar company, but we're using taxpayer money for them. So I mentioned that only because it's not related to the performance stuff, but it does raise a question about what are you trying to accomplish with this program? And it looks like with some exceptions, it's effectively a reward for being a good employer and and for sticking around and contributing to this economy and these communities. And that sounds good, but when we have a critical need in the labor force for people who may benefit from workforce education and training to get into the labor force, maybe that's a higher goal. That's up for you to decide, but that occurs to me. So all that stuff aside, the general question for you is, you know, how do you evaluate a program? Because, you know, you guys have people coming in, as as mister Zap did and telling you about their programs, and they're generally gonna try to be as positive as they can because why not? And and they believe it. And unless they have a problem that you're aware of, they're gonna tell you a happy story for the most part because they want to keep going. There's no reason not to as far as they're concerned. But this thing about performance measure deserves a little more attention, in my opinion. That's why we've added it to most of our audit reports as well. In some cases, you know, it gets odd. Two of the Department of Economic Development programs that I looked at actually send information to the administration for their annual performance report, but it's not outcome data. It's taken from the applications of the people who are asking for taxpayer money. They say, well, I think I'm gonna create five jobs. That's what they report. That's not an outcome. That's not a performance measure. I was shocked when I read that. There's another one that assists businesses working with federal, state, and local government contracts, which is a lot of money and a big deal. And there are those who've never been in that space and can use their help, and that's all good. But for companies that have been doing it for years, I wonder, is it appropriate to report every single federal, state, and local contract, which they did, The implication being we, they, that program, was instrumental in or participated in the outcome, which was another contract. So there's a lot of stuff going on inside performance measurement. We're going to try to do some more work in that area, at least before I leave. I'm out the door in January, next January. But I'm sure it's tough for you guys, but I hope that, you you don't have a lot of free time, but I hope you will consider going forward asking yourselves and the administration officials who come before you know, good questions. What what's the methodology on the information that you're presenting? And and have some fun because, you know, we don't have a lot of money for this stuff. As I've said to you guys well, certainly to the chair and some of you over the years, it's all important. But choices, as I said before about, it sounds great to say that we think the program is increasing the wages of the trainees faster than everybody else. That sounds good. But is that adding to the labor force? Are those people new to the labor force? Did we bring any new people into the labor force with this program? And because I say that with some respect because I know that that's not their that hasn't been their primary goal over the years. That's the Department of Labor. But we did some audit work on that, and they're not having a lot of success for a bunch of reasons. So anyway, that's all I've got today. I didn't want to take a lot of your time. But I think this is an interesting example of how if you dig in just a little bit below the surface, find yourself asking some good questions.

[Michael Marcotte (Chair)]: Appreciate that. Questions for Doug?

[Doug Hoffer (Vermont State Auditor)]: It's late in the day. See, give me 03:00, everybody's tired.

[Michael Marcotte (Chair)]: It's better than 03:30. Yeah.

[Herb Olson (Member)]: Thanks for your testimony. Herb Olson, you asked a good question, I think, how do you evaluate the program, right? And I'm thinking specifically of training programs that this committee has jurisdiction over. Are there any materials that you could point to that would help us understand how to fulfill that role properly? Yeah.

[Doug Hoffer (Vermont State Auditor)]: For what it's worth, about, I don't know, five or six years ago, we did a job looking at the literature on major strategies for economic development. And there's no question that targeted workforce education and training has a great return on investment. One of the questions for you guys is who should pay for that? If you're a billion dollar company and you're growing, then you have no choice but to train them. I don't care if you're working at McDonald's or Beta. You have to be trained. And by the way, there's an there's an oddity about the statute, an inconsistency. It says very clearly that the money in DTP may not be used to pay for training that would have occurred anyway. So it's not a real but for, it's just up to the program managers to do that. But it also says that the money can be used for other types of training that would allow new hires, and they proudly report the number of new hires that they pay for. Now, you know, some of the categories, upskilling. This is great stuff, but it's generally the result, I think, of you know, Herb, if it's your company and you have new equipment that became available and you have to spend a bunch of money, it's an investment, and people need to be trained for this new equipment. You have no choice. You gotta do it. It's a good investment, but is it necessary for taxpayers? And always, the question for me is, I'm not necessarily passing judgment on one or the other. I'm saying, where are gonna get the biggest bang for the buck? Which problem are you most likely to solve with this program versus the other? But I can get you some of that literature on the question of workforce education and training.

[Herb Olson (Member)]: Yeah, yeah, because my question is more technical, I think, which was, you know, are there some established standards that you're aware of that would help guide committee and insurmounting how to evaluate a particular program? So that would be very helpful if you could send that to me.

[Michael Marcotte (Chair)]: Sure. Yep.

[Doug Hoffer (Vermont State Auditor)]: Thank you. I can also send you I don't think we shared it with you guys at the time, but I can also share that report we did on the DOL programs, which is mostly federal money. But it it they weren't really having a lot of success. Just too bad.

[Edye Graning (Vice Chair)]: Doug, thank you. I appreciate thinking about the program a little bit differently. Edye Graning from Jericho. I don't know how well you can see me. One of the things that I've been thinking about a lot is that our unemployment rate is so low and employers are hiring people and thinking, if it's a good fit, I can train them to do the job, which may or may not be training, which would otherwise, which would be necessary or wouldn't be necessary. It might be a really good fit. This program might be a really good fit for the economy that we have today because of that, notwithstanding a lot of things that you brought up in understanding how wealth is actually doing. Because I think you're right. I think a lot of that's obfuscated. And when you were talking about income data versus hourly wage data, if we're looking at hourly wage data, these could be people getting ten hours of overtime a week. And that's not taken into account either. They could be working thirty hours. We don't know. So I think that you're right that we might not be able to evaluate the program very well with the information that we have. And also, it might be a really good program for the economy that we're in today. We just may need to understand where we do and don't have gates on the program and how they're being used. So I appreciate the thought experiment that you're really giving us here. And I'm looking forward to seeing more performance measure, ways to understand. If we're not measuring it or if we're measuring it badly, we don't know how we're doing. So I appreciate that. Thank you.

[Doug Hoffer (Vermont State Auditor)]: It's my pleasure. Thank you. By the way, you know, it's fair to say that this program is not does not take a lot of money. It's usually about 1.2 a year, something in that neighborhood. So it's not as if it's tens of millions of dollars at risk. And I'm aware of that. But over time, I've had legislators say to me, Doug, why are you making such a big deal out of this? These programs are pretty small. Well, they are, but if there's 10 of them, before you know it, you've got a vested interest, you've got, you know, people and companies and districts and counties and representatives and senators who are vested. And once it's in, it's really hard to get things changed. You know better than I. So it isn't about the money for the program. And I'm happy that the people who are participating or benefiting, I should say, both the employers and the employees, I'm sure that the program is adding value through this investment. The question is, would it have happened without the program and what are the alternative investments you can make? That's all.

[Michael Marcotte (Chair)]: I think the other question is, the companies that can afford to do it and should be, you know, if they're putting equipment on, like you said, they should be providing the training for that. But I think for me, the question that I think I might ask now is how many companies that needed the money were left behind because we funded we funded them.

[Doug Hoffer (Vermont State Auditor)]: Fair enough. And by the way, there's a the the report includes a little information about the number of employers assisted by the size of the company. But they don't tell you how many employees by the size of the company. So even though there may be, whatever the number was, seven or eight that had over 100 employees, the bigger firms in the state by Vermont standards anyway, likely represented a significant percentage of the total amount spent.

[Michael Marcotte (Chair)]: So

[Doug Hoffer (Vermont State Auditor)]: in fairness, though, smaller companies are less likely to need this kind of assistance. But that gets us back to, well, what do they need? You know, I've I've got some friends. You probably know Ellen Kaler. I've known her forever. And she's been a big advocate of technical assistance for small and mid truly small and midsized companies for a long time. And the literature is very clear about that as well. Tremendous return on investment for that kind of, money, very strong. And it's not uncommon. I mean, I think about you know, he's gone sadly, but a guy named like Will Rapp. You know, he founded Gardner Supply, and he was very successful. Had a great idea, and he shepherded it through. But at some point, because I heard this from him, I knew him. He said he realized, he said, I had the idea. I know how to do the stuff at the outset. But when it got to be 15 or 20 employees, I didn't know about HR. There were a lot of things he didn't know that he needed to reach out and get help with that would have made the transition easier. Now he made it, but they don't all make it. So the TA could be is a great investment as far as it goes for the smaller companies in particular, certainly the mid sized ones for sure.

[Michael Marcotte (Chair)]: Yeah. I think that's a good point. I think that's something that, you know, Abbey had been working on as well. And, you know, when Randy was Randall was in here, we kinda planted that seed of how could training program assist in those technical areas that companies need to grow, and how can we provide that how could we provide that through the training program?

[Doug Hoffer (Vermont State Auditor)]: It it's hard. I would not wanna be in your chair. It's very hard to sit back and say, let's have a 25,000 foot level discussion about strategy because everybody's gonna come in. Randy, all every every interest group that is already benefiting from existing programs is gonna say, well, we need that program. And at the end of the day, you say, well, we don't have any more money. We can't make new programs. Well, at some point, an administration, the administration has got to assist you and say, we're open to suggestion. We can make changes if need be, because there are some people benefiting from these programs who clearly do not need the money.

[Michael Marcotte (Chair)]: Yep.

[Doug Hoffer (Vermont State Auditor)]: No disrespect. I I couldn't be happier that a company like Beta is growing as quickly as it did. And dealer, you know, in the heyday and and Keurig and all these other guys, that's fantastic. They're employing Vermonters and paying good wages.

[Michael Marcotte (Chair)]: Understood.

[Doug Hoffer (Vermont State Auditor)]: By the way, my my chief auditor's husband has worked for SBA for a long time. And SBA, I'm not quite sure why, but in the early days of the Trump administration with Doge and all the cutting, they've been hurt. So the the technical assistance thing through the small business development centers who do good work, I don't think they're getting the money they used to, and there certainly aren't as many bodies in the region doing that work for SBA. So that might be you know, you could invite him and others like him in and say, how have the cuts affected your capacity, your ability to serve Vermont businesses? And I don't think it'd be a happy story. Actually, he may not wanna come and talk publicly. I don't know. It's dangerous.

[Abbey Duke (Member)]: Only this is Abbey Duke from Burlington. I just wanna say I do I also appreciate the highlighting that we really need to look at what are the performance metrics we're using, especially with legacy programs that have been around for a long time and the metrics were set up a long time ago. And that idea of looking at currently what do businesses need, how do we track it. I push back a little bit in terms of Vermont Training Program and some of those larger businesses that I think that there are arguments for why that is a significant economic benefit for helping some of the larger businesses. Like when they're putting in equipment and part of the financing package may be being able to help pay for some of the training in order to be able to purchase the equipment. Anyway, I won't go too much into that. But I agree in terms of that we need to take a look at our performance metrics and also look at a program and make sure that it's serving our current needs and our future needs and not just what was created in the past. And I think the Vermont Children's Program is a great example of a program that we can improve.

[Doug Hoffer (Vermont State Auditor)]: Well, thank you. And I will be giving you, particularly your committee and your counterparts across the way, more information about programs that I'm looking into over the course of the session

[Michael Marcotte (Chair)]: Great. For what it's worth.

[Jonathan Cooper (Member)]: Thank you very much. I sort of wanted to so Jonathan Cooper, representative out of Southwestern Vermont, the Bennington 1 district in Powell. And I wanted to join just for a little bit. Thank you to let you know that I really appreciated that five quarter highlight. I think that's really important for us to hear from some individuals about, like, how that came to be and what value, if any, there is there. I think it does sort of recommend suspicion that, you know, it can obfuscate some things that we might otherwise wanna get a clear look at. I also want to make it my personal opinion that reporting exists not so that we know everything that happened. I believe that that's a standard that that can't be reached by any report. And one that allows us, though, to make an informed decision about whether what we see from the program is what we get from the program. What I see the program providing is increased wages for Vermont families and, as a result, increased economic activity, increased spending from Vermont households, which flows back to the states. And it would be worthwhile knowing it to the extent that we can, that economic impact, at least in terms of direct wages, and how that may and how much of that is retained by Vermont residents, knowing that we share borders with three other states. But thanks very much, Mr. Hoffer. I do appreciate the effort you've given and intention you've given to the program.

[Doug Hoffer (Vermont State Auditor)]: Well, thank you. All good points.

[Michael Marcotte (Chair)]: Any other questions for Doug?

[Doug Hoffer (Vermont State Auditor)]: I certainly appreciate your time today. Thank you We very

[Michael Marcotte (Chair)]: appreciate yours as well. Thank you.

[Doug Hoffer (Vermont State Auditor)]: I'll get back to you. Thank you. Great. Thank you. Take care.

[Michael Marcotte (Chair)]: You too. Okay. So now if you look on today's page, there's a letter of support sent over from institutions and corrections that should take a look at and see if we want to. Yeah. Sure. Yeah. You wanna put it up. Great. Which is expressing support for the Corrections Education Development and Reentry Center, which we heard about last week or whenever we had our joint hearing. I don't know if people had a chance to take a look at it or not. Just take a few minutes to take a look at it and if there's places where you think we make any changes or if everybody's good with the letter,

[Herb Olson (Member)]: then I can Yeah. I remember the discussion at our joint meeting. I thought it was a good discussion. It sounded like a very strong way to approach the thing. I would certainly do it. And I just met the mother. Think so. Good. That's great. I would support that. Good. I must be ready.

[Abbey Duke (Member)]: Yeah. Think it's great.

[Michael Marcotte (Chair)]: Good to be. Read it. Good with it. Jonathan, have you had a chance to look it over?

[Jonathan Cooper (Member)]: Still catching up and nothing nothing objectionable yet.

[Michael Marcotte (Chair)]: Okay. Give you a few more minutes. Committee member sign it? Mhmm. Well, they'll need to put it on letterhead. I'll probably make a suggestion that the chair and vice chair sign on behalf of the Yeah. Probably insert date should be changed. Unless

[Jonathan Cooper (Member)]: you wanted to wait for Friday, I can put pen to paper in person. I'm I'm happy with it. Thank you.

[Michael Marcotte (Chair)]: Okay. Okay. I don't think we need to vote on this. I think everybody's in the affirmative. We just haven't heard we don't know about Emily, but send her an email just asking her to take a look at it and get back to us on what she's doing. Okay. Alice now the Chair of the Institutions and Corrections, would be a wrap for today. Everybody driving, going home. So tomorrow, back on at nine again. Another look at 02:05. We have a number of people coming in. 02:05, we took the mention of the franchise as well. Right? Okay. So we can let that person know that wanted to testify. It'll make a stay. It's out of there. Anyway, we can deal with that after. So we have that, and we're doing 02:11 in the end. And we will then see we'll hear from more of Collins who wants to talk to us about the first time homebuyer credit. Then we'll have the floor tomorrow. So and it looks like $6.48 will be out.

[Abbey Duke (Member)]: Alright.

[Michael Marcotte (Chair)]: Beyond notice tomorrow, so we have Thursday, Friday, along with BAA.

[Abbey Duke (Member)]: You're gonna have a BAA this year. Yeah. Thir Thursday, Friday.

[Michael Marcotte (Chair)]: Yeah. When when is it gonna be in action? Thursday, Friday, because they voted to end today. Yeah. So we have both on on schedule for Thursday, Friday. Okay. We can go off live.