Vermont Legislature SmartTranscripts:

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Here we are in Ways and Means. It is Tuesday, February 17, at 02:30. We are talking about school district debt. I've asked John to put together some language that we're going to walk through. It is like an idea of an idea that John put words to. The word draft is not drafty enough for what this is. It's just a conversation starter about a way we can structure a solution, but it is not the solution. And there's two different pieces of this conversation. There's the conversation about what do we do with existing school district debt when we move to a foundation formula. And then there's a separate but related conversation about what does future school construction debt look like, and how is that structured and supported by the Education Fund. In an ideal world, that could be one seamless system. And that's what this language from John does. Don't know if it will work or not, and there's still no revenue source attached to it. And then we have Michael here from the Bond Bank, who took us through a presentation a couple weeks ago that we might need a little bit of a refresher on, Michael, thank you for your patience with us, to think about sort of how existing school district debt is structured. And so I think we're going to start with John, though it might have made more sense to start with Mike. What's your timing, John?

[John Gray, Office of Legislative Counsel]: I think

[David (Deputy State Treasurer)]: it's great. Okay.

[Rep. Carol Ode]: Cool.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Michael, can you start us by taking us through what the current state of school district debt is?

[Chris Rutland, Joint Fiscal Office]: Yeah, sure.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Thank you.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Great. Michael Gaughan, Executive Director of the Vermont Bond Bank. Nice to see everyone again. So I will share my screen. And this will be a little bit repetitive for you all, but sounds like that's kind of the of the idea. So that

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: is very much the idea. Thank

[David (Deputy State Treasurer)]: you. Yeah,

[Michael Gaughan, Executive Director, Vermont Bond Bank]: you don't live in every day like I do. So, yeah, just quick reminder, the orange numbers here are those that are adjusted for inflation. And the blue numbers or bars are the nominal amount of borrowing. So you see kind of a huge spike in the 70s, some action in the late 90s, and then more recently as we deal with the huge backlog in deferred maintenance. This translates into this debt service. This is this shows debt service per year. All bond bank borrowers as well as and Burlington combined with the caveat that to the extent. School district might have debt with a with a banker or something like that. That's not you know, that we have data on. But for the most part, I think this represents the full picture of things. The 2026 payment is a little bit misleading as Burlington has some great recession era bonds that have a payment associated with them for which they have a sinking fund. So the 2027 number is really a more normalized number in terms of the amount of the Ed fund that's going to pay debt service. Kind of bottom line is it's just under $50,000,000 per year. And then sort of light blue line are Chittenden County Schools. And then, you know, Franklin is also notable in there in green as well. So you see kind of after 2043 is really when we more or less retire outstanding district except for some residual chittenden, which I think is really just when the Burlington bond pays off pretty I think that

[David (Deputy State Treasurer)]: was a twenty year amortization, a twenty year bond that they issued for the majority of the school construction need there.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Same numbers, but per depiction, but the actual per county. So it gives you just a sense of scale here. Little chance to pat ourselves on the back, but also talk about the future. The weighted average cost of capital in the bond banks portfolio is 3.74%. And so that is quite favorable. And, you know, I think, I don't know that we'll be able to achieve the same efficiency, the same low rates going forward. So it's something to note as we contemplate, you know, several billion dollars worth of new construction borrowing. I included this slide. Had this had not been in your previous presentation, but I thought it worth highlighting every year the bond bank takes every borrower that we have in our loan portfolio and reviews their financial statements, puts those numbers into a database and produces medians. And this is the way that the rating agencies look at financial benchmarks as well. So just as a comparison, our portfolio and the bond banks portfolio, sort of the state overall, the median amount of debt service as a percent of revenue, which is how the rating agencies look at it, is 1.5%. That compares to 5.4% nationally. And for school districts between 1,005 students, 5.5%. So, I mean, this doesn't tell us anything we don't know about deferred maintenance, but I think it is an interesting benchmark as to what a healthy level of debt service might look like if you're keeping up with capital needs. I think you also are considering in the next few days, you know, looking at reserves as well, and I just highlight that that number's in here as well. We look at assigned and unassigned reserves in the bond banks portfolio are about 6% compared to between 1028% nationally. Because of the strength of the Ed Fund, our real underwriting as it relates to school districts is sort of liquidity and ability to manage expenses and pay debt service on a timely basis. So having some of that liquidity on hand is helpful in our analysis. So I just note that for your future considerations.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: Michael, does that, I mean, this chart shows that it's way under the median in terms of cash reserves as a percent of revenue, right?

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Yeah, and school districts are quite diverse, as you all have learned nationally. Some have foundation formulas, some do not, some are fully tax supported. And so for those that are collecting taxes directly, you'd expect those to be a little bit higher to, you know, handle the ebbs and flows of tax receipts. And but certainly included in that in those meetings are our districts that have debt that do have foundation formulas. I think the consequence I would just highlight is having some level of reserves, some unrestricted funds to obviate the need for cash flow borrowing and to ensure liquidity is is helpful from our perspective.

[John Gray, Office of Legislative Counsel]: I don't know what

[Michael Gaughan, Executive Director, Vermont Bond Bank]: the right number is necessarily, but it is helpful.

[David (Deputy State Treasurer)]: And

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: in. Do you have data on minimums and maximums or just minimums?

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Yeah, we would have minimums and maximums, I believe, in the in the database. It's not something we publish, but if we did a little digging, we could probably figure that out.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Okay, that would be super helpful if you're able to.

[David (Deputy State Treasurer)]: Okay.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: And so I think that so I'm a little bit guessing as to what the topics that you all want to discuss. I think that handles it. And then I have, you know, a comparison of outstanding debt per county to show how it's overweight or underweight school age population in that county. I don't

[Rep. James Masland]: know if that's as relevant for this discussion.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Then the amount of debt just by the vintage. Debt generally being better because those assets have not depreciated as much as older debt.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: One thing I like the idea of the vintage of debt. The amount of the debt that is really very close to being finished or the number of districts carrying debt that is going that they are going to be finished with soon was very striking to me when I looked at it earlier this year. And I think that's sort of hard to see in the totals because we have a few districts who have taken on significant new debt.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Yeah, I think this chart helps a little bit. Yeah. So like I said earlier, that 2,042 number is quite significant for most counties. And in fact, Yeah, in fact, 2030 through 2032 is also kind of a looks to be a bit of a break point as you go from '38 to, 33,000,000. Yeah.

[John Gray, Office of Legislative Counsel]: But I

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: understand it's sort of hard to separate it out. It doesn't mean that that debt doesn't matter. It's sort of like two very separate trends to some degree.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Right. I think that's right. Think that, yeah, certainly the newer debt is going to have a longer period in which it pays off sort of by definition. So, yeah.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: And is most of the newer debt not through the bond bank?

[Michael Gaughan, Executive Director, Vermont Bond Bank]: No, I would say all of it except for Winooski and Burlington is through the bond bank.

[David (Deputy State Treasurer)]: Okay.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: So for example, in Franklin County, BFA there went through the bond bank and then Milton and Colchester

[Rep. James Masland]: have both gone through the bond bank as well. More recently Hartford as well.

[Rep. Bridget Burkhardt, Committee Clerk]: Thank you.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Anybody else? Yeah.

[Rep. Bridget Burkhardt, Committee Clerk]: Sorry, Representative Ode has a question.

[Rep. Carol Ode]: I don't know when to ask this, but there have been places, a colleague said to me, there have been places that have been keeping up with their repairs. And so going forward, how do we, questions, how do we recognize that these are the places that will have to have a whole new school or do construct, like a lot of catch up maintenance that they haven't been doing over time. A question for me? No, I would say a question generally to consider that's been brought to my attention

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: is that question. Yeah, I think that's the question that we're to some degree reckoning with. How do we manage the existing district debt? And then how do we manage future debt for districts that have not been able to incur debt up until this point?

[Rep. Carol Ode]: Yeah, and I was not even building a home in high school. I met places that over time, over the past, how many decades have been investing in their buildings. So they're not really in a position where they'll need to do an enormous investment. And yet, so they'll kind of have been doing the right thing.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: I think the same way I was really trying very hard to make value judgments about who is spending and why. I think similarly, the reasons a district might or might not have been able to invest in their existing infrastructure is a place I'm not sure it's useful to value judgments about those decisions. Well, this person that I know, but that person's not in this room. And so I'm gonna speak to you, Representative Ode.

[Rep. Carol Ode]: I'm just one to bring forward concern.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: No, I think it's a real concern about existing debt versus new debt. I just wanna make sure that we're not blaming districts who, for whatever reason, weren't able to invest in their infrastructure.

[Rep. Carol Ode]: No, it's yes. Either way, just how would we handle that? They may not have debt anymore. They may have been putting it into their yearly school, I don't know.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: If there are no

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Is that Michael?

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Well, I didn't know if there were any questions on these slides. I do know just to, I realize it's a draft of a draft of a draft, but just had two quick observations on the language. These slides helpful? Is there anything else to to be reviewed?

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: I think that's it on the slides. And I since the committee has not looked at the draft language yet, I wondered if you minded waiting around a minute for us to understand the language so we can have context for whatever you're about to say.

[Rep. James Masland]: Sounds good.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Is that okay? Mhmm. Okay. Feel free to do something else at your computer and ignore it.

[David (Deputy State Treasurer)]: I think

[Michael Gaughan, Executive Director, Vermont Bond Bank]: very good. Thank I'll listen attentively.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Thanks.

[John Gray, Office of Legislative Counsel]: John Gray, Office of Legislative Counsel. My soapbox. Very bad way to start nonpartisan testimony. We'll screen share. Here we are. This is a draft. I think the chair set this up quite well, quite concept level that touches the award piece of the section of statute in title 16 that deals with state aid for school construction. If it's helpful just to orient a little bit about the section that we're in, I'm happy to do that, but I'm also happy to just talk about this because I think the focus today is just on the award. So the basic thing that you should be aware is this doesn't otherwise disrupt the scheme for approval, school construction projects that was enacted in act 73. So the preliminary application, the final application, prioritization, all of those pieces continue to exist. And then this is a proposal, or this is language that addresses how that award is dealt with. Under act 73, what you may recall is that it was proposed or enacted a debt service subsidy model, and it would grant to eligible school districts that have gotten approval for particular projects a debt service subsidy of between 2040% depending on if they meet certain bonus incentives. So all projects that met eligibility conditions were prioritized and received an annual appropriation for funding would have received a base amount of 20%. And if they met certain bonus incentives, they could get up to 40% in aid for eligible debt service costs. So just worth noting, eligible is a restriction on what those costs are. You could imagine someone pursuing a facility that might also have community benefits, for instance. Maybe not all aspects of that project would be deemed eligible, but that's like the existing structure has been for years and years, even pre moratorium, we had an eligibility condition. So that brings us to this particular section, which is just about the award piece, and this is replacing that 20 to 40% debt service subsidy model with a different rates. So what you see here, starting on line three, this is your award of construction aid, a school district that receives final approval for construction aid, so that is it's gone through the preliminary application process, and it's also received final approval, it submitted a final application. That school district shall be eligible to receive construction a of a 100% of the eligible debt service cost of the approved project. And it's key that it says eligible to receive because as we'll come down to in a little bit, this will be subject to an annual appropriation for these purposes. So it's not an outright entitlement, it's just that if you've made it through the approval process, you've been prioritized, you'd be eligible to receive this 100% eligible debt service cost coverage. And again, I just wanna flag that word eligible, which I noted before, because there is a distinction against the next subsection. So that's how a school district that goes through the approval process would be dealt with.

[Rep. Carol Ode]: Just a language question. When you read that, you added a different an additional eligible. You said eligible to receive construction aid of 100%, I think you said, of the eligible debt service.

[David (Deputy State Treasurer)]: Mhmm.

[Rep. Carol Ode]: But here in the language, there's that second eligible isn't there.

[John Gray, Office of Legislative Counsel]: Oh, I think you're in b, maybe.

[Rep. Carol Ode]: Oh, okay. Sorry. I was reading the

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: wrong part.

[John Gray, Office of Legislative Counsel]: But but you are pointing out the exact distinction that I wanted to throw out, which is that for school districts in the future, that's what you see under a, those that are going through the application process, it's a 100% of eligible debt service costs. So that means there's an eligibility determination as the components, like we think about typically under the school construction program, certain components are eligible for coverage, certain are not. It's unrelated to

[David (Deputy State Treasurer)]: if you

[John Gray, Office of Legislative Counsel]: can get a kick in to the program. It's just about our components coverable, it's dealt within rule. I would need to do a lot more digging to know what is actually eligible under existing rules that have been transferred to the agency. But yes, that's an important distinction, eligible versus just straight up debt service costs. So A is dealing with projects that go through the program in the future.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: And I guess what I would say is big picture, idea here is that districts have debt, that those debt payments are not included in the foundation formula as it's been conceived in any iteration. And so the debt payments need to be handled somewhere else. So that's sort of A. And then B is that essentially the same thing. The state cannot hold that debt as a state because of bond rating things and other things like that. And so the district would need to hold the debt, but the source of the payments for the debt would come as a categorical grant. And that's sort of the big picture framework that John's put around. I'm sorry, didn't leave with that.

[Rep. Carol Ode]: Representative Ode. Thanks. You've said prioritize a few times and that it would be depending on what is appropriate in each year to help. Do we envision a list and then each of those things is funded 100 percent till it gets to money's out, or is there gonna be a percentage?

[John Gray, Office of Legislative Counsel]: I think that's a good question as to how it would be dealt with. In this case, this is specifying you've made it through the process, you get 100% debt service coverage. But as you might imagine, that could result in a first in, right? Like once you've met a particular cap, how do you add more to that pool until the bonds have been dealt with? So I think you raise a good concern just to speak about the prioritization piece. You're not gonna see that in this draft because that's elsewhere in the section itself, but we will come to the language about the cap in just a moment. So I think there's a policy question up here. How do you deal with the cap? What should a cap be? And how will prioritization work if you have a limited set of funds in each year and you're guaranteeing 100% coverage? The prioritization language is from language that passed 12

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: times already. It's the branch structure that is the new piece here.

[John Gray, Office of Legislative Counsel]: And it would be built out in rural solar.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: And there are lots of different ways to do prioritization. Like, VHCb has a quarterly meeting where all projects come and are sort of approved. So just by way of there's lots of ways to do it with a cap that still is not first come, first served. Representative Higley?

[Albert (Al) LaPerle, Director of Unclaimed Property, Office of the State Treasurer]: Could you tell me currently how that works if a town boasts a bond for new addition or whatever, and they bond for, let's say, for thirty years, is that bond amount the same for that thirty years? And is it in like a line item budget?

[John Gray, Office of Legislative Counsel]: I believe so. So the way that it's currently dealt with is through your education spending. So it'd be part of the budget that you submit to voters, and then you would have your annual amounts that you pay for your debt service over the course of those years. I guess one complexity to note is that there's the exclusion you might have been you could imagine that resulting in relatively high per people spending figures. So it's worth noting that the excess spending threshold excludes capital bond payments that were voted prior to 07/01/2024. But currently, it is dealt with through education spending, and those yearly payments would be part of your budget. Think of that as the answer to your question. In

[Rep. Bridget Burkhardt, Committee Clerk]: future states, if a district goes out and bonds and then money is not appropriated to fully make their debt service payment, how do they go about raising that extra funding? There's supplemental district spending, but is that going to be enough to cover if for some reason money is not appropriated? So I understand that you can't put the full faith and credit of the state on the line. I understood that from Michael's testimony last year. But sort of putting districts on the line with no mechanism for them to actually fulfill their responsibilities for the debt service. And so what I

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: hear you saying is sort of a problem solving in this language is, and I don't want put words in your mouth, so please correct me, that what's happening?

[Albert (Al) LaPerle, Director of Unclaimed Property, Office of the State Treasurer]: Just make it, no worries.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Oh, okay. I was like, Is that in my head? The language about appropriating could maybe be changed to be more aligned with the, we have sort of formulaic language for other appropriations out of the education fund, and that language might be more appropriate than the language that John's interested here.

[Rep. Bridget Burkhardt, Committee Clerk]: I would have that future Yeah, would have to look at that for future state, because it's one thing now where unfortunately there is the thing. But you basically just ask your taxpayers to pay more property tax until you can meet the obligation. But if we're cutting that off and we're saying, you're getting your education opportunity payments and everyone has similar tax rate.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: There's a

[Rep. Bridget Burkhardt, Committee Clerk]: mechanism there to make that money.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: And I'm saying that a possible mechanism might be, say, the language that we use for the payments out of the extraordinary special education or something, like one of the formulaic payments that comes out straight from the education fund rather than from education spending. I see Michael's hand is up.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Yeah, Representative Burkhardt hit on one of the points I wanted to mention in that under the existing, you know, have a couple of comments on this, but one of the most material things is that, you know, despite the Ed Fund, we maintain an unused but legally viable mechanism for the school debt to be a general obligation of that particular district in kind of a break glass situation. So I just highlight that is very important, and it's one of the reasons it's kept off the balance sheet of the state and is something to consider moving forward as well. So, to your point, even though sort of the formula works that you'd be paying more, should there really be a shortfall, that district has the ability to levy a tax on its residents to pay the debt service.

[Rep. Bridget Burkhardt, Committee Clerk]: Yeah, representative. Well then,

[Rep. Carol Ode]: I'm understanding this then the timing has to be such that school district knows. Now, whether it's gonna have to go for supplemental district spending.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: I think they would need to know for the entire life of the bond, actually.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: Of course, Carol Ode's point is when they're voting, will they know that it's an approved project to receive the construction aid?

[John Gray, Office of Legislative Counsel]: And to be clear, you would not know that you had final approval until you had voted the bond itself. Some other complexities to note are is it kind of remains unresolved. You may recall from last year what is subalongetric spending if things were shunted through that route, had a cap in place. Right? But I don't think it was ever resolved what constitutes something like, is school construction part of the thing that would count toward that? Is it its own special process? Different conversations that haven't happened yet. It could be, just that there are many unresolved things in this area.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: The other strange part is that people won't be voting on the school budget and the foundation of That's right. The but they'll be voting on whether or not to defer debt to buy and build a new school.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: And so as we're thinking through the problems, I really want us, when possible, to think about that these are problems to solve, not just problems that are sitting there. So if we feel like that's a problem, then maybe districts should be voting on how their budget is spent, just not the amount that's raised. Or if we want to make sure that districts know that they'd be approved for this before they go to vote on the bond, then we should change the order of operations. Because this is so far from a finished proposal on the table. This is really just a let's work through the problem and solve them.

[John Gray, Office of Legislative Counsel]: And I don't know if it makes it any better, but that time and consideration of final approval requiring bond vote by the voters of the municipality is something that existed under the prior program too. So that's not unique to this structure, but it may still be

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: a problem. It seems like a bigger problem under the future structure. You don't

[John Gray, Office of Legislative Counsel]: have the automatic mechanisms for it.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: And then another question that sort of comes up for me, and Michael, I'd love for you to think about it as well, not answer now, but sort of separate from the supplemental district spending, is there like, I don't understand Banqua well enough to know if it's like the what level of municipality is on the hook and what being on the hook for that means. I'd love to talk about that another time.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Would you like me to comment briefly on that?

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Yeah, if you can. That would be great.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Yeah. I mean, think just an observation, and I don't know that I have it fully worked out, but having served on several of the committees, task force, whatever you want to call them, construction aid, when we all looked at Rhode Island Rhode Island had developed this framework in which it's not being counted against the state's net tax supported debt, those reimbursements amounts were, you know, annually subject to budget and appropriation. So they weren't, you know, forward commitment of the state and were amounts less than 100%. So I don't know from a policy perspective what the right answer is. There were, you know, from Moody's, for example, there was a mental health hospital in which 100% of the reimbursements were coming from the state and therefore the rating agencies said, hey, this is, we're going to count this as net tax supported debt, even though it wasn't even the state that was the issuer of the debt. And so I'm not really making a call on whether it's right or wrong, but I just, I do say that as a risk of this framework where the reimbursement is, you know, 100% of debt service, It may be a distinction that doesn't matter for the rating agencies. So it's something to consider. And then, you know, I think just the two other quick observations are, you know, paragraph B, you know, already we're seeing. You know, we're seeing less school construction spending in most cases than than we have seen over before the moratorium. And so like whatever that date is, you know, we'll have sort of a intentional or unintentional chilling effect unless it's accompanied by the aid on pursuing facilities projects. And then lastly, I just I think and I speak for the I can never remember what we're called now the advisory group, and that there's a material distinction between renovation and new construction and that probably should go into the process as well, particularly if there's such a high level of involvement from the state.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Thanks. And the treasurer's office is sort of talking to the ratings agencies about this construct, and we'll come in afterwards. Representative Ode, and then I'm realizing that we have not

[Rep. Carol Ode]: let John finish his work here. Construction different from renovation different from also maintenance? Or or yeah. You didn't say maintenance, so you don't make me.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: I'm sorry.

[Rep. Bridget Burkhardt, Committee Clerk]: Michael, that

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: was a question for you.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Oh, couldn't, I couldn't quite hear it I apologize.

[Rep. Carol Ode]: Oh, sorry. I was hearing what you're saying. And you said that you have to acknowledge construction and renovation. And what about maintenance?

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Oh, yeah. I think that's certainly important. Guess, requirements for an ongoing facilities management plan, I think that hopefully helps with some of that. But I completely agree. There's some benchmarks out there as to what amount of budget should be contributed to either capital reserves and or ongoing maintenance and operations. That's certainly the last thing we want to do is not take care of these newer assets.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Don, will you finish telling us about the language?

[John Gray, Office of Legislative Counsel]: Let's do

[David (Deputy State Treasurer)]: it. So

[John Gray, Office of Legislative Counsel]: we talked about 6A, which is for those school construction projects in the future that are going through the state for school construction program. Let's talk about b. It's a very similar, but there is a slight difference. So you can think of this as a wiping the slate clean kind of approach, a school district. I'm on line nine, Subdivision B, a school district that has outstanding capital debt as of this is an arbitrary date chosen, but 12/31/2025 shall be eligible to receive construction aid of 100% of the debt service cost cost, so not just eligible debt service cost, of the debt service cost of the district's outstanding capital debt. That's meaning any outstanding capital debt for school districts within that bucket would be eligible to receive this full coverage of debt service cost for all of that outstanding capital debt. Subdivision c, that construction aid shall be awarded annually for annual debt service costs up to a maximum total annual amount of an unspecified figure and is subject to an annual appropriation for the purposes of the program. Just to flag the policy considerations in this piece, this is an award on an annual basis for annual debt service costs. Alternatives are obviously upfront, lump sum approaches to clean the slate. Right? And I think some of that might be addressed as considerations in the advisory board's report from this past December. But the approach taken here in subdivision c is that it's an annual award for annual debt service cost, and it would be subjected to an unspecified cap. And like the Rhode Island model that Michael was speaking to, it would be subject to an annual appropriation for purchase of the program.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: So in that construct, just trying to think this through, if the amount of construction cost, let's say it's 50,000,000 a year, but they're capped at 135 somewhere that 15,000,000 has to be raised. So if it's not coming from the construction aid from the state, it has to come from the borrower, which in that sense is the school district that boats it in. Am I missing something? Is that that's really

[John Gray, Office of Legislative Counsel]: I I think that's one way to think about the I think that's a fair way to think about the problem. There's different ways you might think about the secretary trying to comply with these sections because we're just seeing the award section here. Right? But an application will need to we put aside the existing debt, which will be its own set of problem. Right? You would need to set a cap reflective of what it takes to account for that if you wanna cover all of those at a 100%. But putting that aside for projects that come through the application process for the state aid program, you might ask the question whether it affects the prioritization mechanism with an awareness of a cap. Right? Like, would you be prioritized? So we don't know yet what the priority rules would be, but you could imagine that if you have a cap in place, limited funds available, and you're trying to set which projects should be in that annual legislative request for appropriation for school construction purposes, that that might be something someone thinks about, particularly if you're taking seriously the 100% coverage. So I think there's tensions here is what you're identifying, and there's lots to be resolved. But this is the basic idea, 100% coverage for clean slate for those that have existing shit as of a particular date, 12/31/2025, and then a 100% debt service coverage of eligible debt service costs for those projects that meet all the eligibility conditions go through the state aid program and receive approval. Annual awards up to an annual cap, subject to annual appropriation, and then I'm not gonna go through d, that's from last year. I just to hit a couple of other things. Section two, this is something you could or could not choose to include here, but we still have on the books in title 16 a section that prohibits state aid for construction projects that are attributable to significant deferred maintenance. You might imagine that lots of school construction projects are of that form, including ones that are on the books having outstanding capital debt that you do want to claim the slate for. So just noting that this might be something you would appeal to make sure that those dollars can go to all those projects.

[Tim Duggan, Director of Retirement (State Treasurer’s Office)]: That's a negative.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: It's A negative, negative?

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: It's a negative, negative. So don't worry that.

[John Gray, Office of Legislative Counsel]: So the the I'll just the the section 34 big four is a prohibition on state aid for projects that have resulted from significant deferred maintenance. So if that remains in effect, there's all sorts of projects included in the buckets of things that you're trying to clean up that would not be eligible for

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: By your shielding of prohibition, we are allowing this to cover deferred maintenance.

[David (Deputy State Treasurer)]: Yeah. Affirmative.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Thank you. Representative Masland in the Brooklyn.

[Rep. James Masland]: So we've talked this afternoon about what you've got in post statute changes, and that there will likely be rules on how the funding is eligible, and I would imagine at least there would be a discussion of types of deferred maintenance, maybe or maybe not, or amount thereof, or how significant it is. I'm just splitting that out. So there's, yeah,

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: yes, agreed, thank you. There's significant language in the law already about prioritization. And then we, the agency of education, we thought we're engaging in rulemaking and haven't engaged in rulemaking. We took some testimony about that last week, two weeks ago, whenever it was.

[Rep. James Masland]: Totally right, that all makes sense. Thank you.

[Rep. Bridget Burkhardt, Committee Clerk]: John, I have a quick question about what it means for a school district has outstanding capital debt as of December 31. So I would assume maybe even Burlington, maybe Burlington's a bad example, but some of the Colchester, for example, had a bond vote and has an amount they're gonna draw down over time. My assumption is that they definitely didn't have all of that drawn down as of 12/31/2025. And so do we need to have a few more words in here that describe things that were approved before then to make sure that all of that debt is actually wiped, well not wiped, but clean slate, you were saying. Same thing for things that are potentially being voted on on town meeting day in just a couple of weeks that could potentially not be included in this. And they would be in sort of no man's land between old projects and new projects and maybe not even, who knows, where they would be approved or prioritized in the new funding system. It leaves them in limbo a little bit. So I just don't know if we need more words around that to just be clear about what we mean by outstanding capital debt as of 12/30/2015 or whether the date needs to be different.

[John Gray, Office of Legislative Counsel]: Yeah. Think that is a policy choice. I think you're absolutely right that if the goal was to capture bonds that haven't issued but have been approved, you would want to be clear that that is the case because a strict reading of outstanding capital debt would exclude those that have been voted but not yet issued. So I think the policy choice is to just what are all the kinds of things that you wanna capture in this subjectivity.

[Rep. Bridget Burkhardt, Committee Clerk]: And so things like that, do you need us to be noting down these things? Is somebody keeping a master list of decisions or things that need to I would say for anyone that is, If you wanna keep a list of

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: the things that you're noticing and want to find Texas for, please do. Okay. Thank you.

[John Gray, Office of Legislative Counsel]: Do you

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: wanna pull it back up? Thank you, John. Thank you for pulling it down. The room shifted, didn't it?

[John Gray, Office of Legislative Counsel]: I know. I thought was perfect to leave.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: One last thing about charity.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: No, yes. I was gonna ask Michael if he had anything add. So

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: This is still all contingent on other parts of Act 73.

[John Gray, Office of Legislative Counsel]: So technically this piece, the effective date is 07/01/2026, which is the date that the program itself comes entirely online. So this is technically not contingent on those other piece.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: We could make a contingent if we want. No. Let's just start.

[John Gray, Office of Legislative Counsel]: Yeah. They're not committed to freedom. You guys are the decision makers.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: My other contingency is fine. Where is the money coming from?

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Yes. So if everyone could please think about all the things that have come up today. Really try to do some problem solving around it. Michael, do you have anything that you want to add, though? I imagine you will also be thinking of problem solving.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Yeah, for sure. Love to problem solve. Unauthorized with unissued debt, I think is the term of art for the prior conversation. Agree, it should be contingent to avoid further deferred maintenance and further deterioration of the assets we'll have to renovate. I suppose the last point would just be in this conversation, this is obviously very specific to the funding, but I just think that the new construction is so unique, it's worth really pulling apart a little bit. You know, our disadvantage could also potentially be our advantage. You know, we have a couple billion dollars worth of potentially new construction. Individually, that's significant, but together, those are quite powerful and will attract a market. And, you know, Burlington, for example, I believe 40% of the labor force is from out of state. So we need significant mobilization, particularly on the new construction side. So as you centralize more functions in this analysis, I would just keep that in mind, you know, further centralize it, centralizing the actual procurement, I think alongside the, you know, there's some language about design standards, but I really think centralized procurement, centralized risk management of cost overruns, things of this nature could give some budgetary certainty in the process and really turn this disadvantage into an advantage for new construction specifically. Renovations won't lend itself as easily to, you know, kind of a large scale procurement effort, but new construction certainly would.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Thank you very much, Michael, and I'm sure we'll see you very soon to talk about this.

[Michael Gaughan, Executive Director, Vermont Bond Bank]: Sounds great. Take care. Thank you.

[Rep. Carol Ode]: Thank you, John.

[David (Deputy State Treasurer)]: Yes.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Thank you. Great. Charlie and Bridget, can you

[Rep. Bridget Burkhardt, Committee Clerk]: two be the leads for the steps on this?

[John Gray, Office of Legislative Counsel]: Thank you. I I would I I guess one thing to flag, it's worth looking back if you're just trying to orient yourself at the task force report from 2024, which I'll let up for this. It was 2024 because the working group came out with legislative language that became what essentially passed in Act 73. The predecessor to that was the task force, and it has a big report with a lot of context on the debt service subsidy and

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Margaret, your thoughts. Yes. Thank you, Google. Okay, let us all reorient our brains from brief moments. We are shifting to a bill that came to us from the Government Operations Committee, H567. Yes, that wasn't a question. That was true. It's H567. And there's also a technical ish amendment that is also posted on our page.

[Rep. Carol Ode]: David, are you trying to tell us about the whole bill? Is that your goal?

[David (Deputy State Treasurer)]: I'm preparing to

[John Gray, Office of Legislative Counsel]: go around that for the whole bill.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Okay, great. What we're on. Cameron, you want to go first or second?

[Rep. Carol Ode]: Sorry, didn't ask before leaving you.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: No, it's okay. Go ahead.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: If you could do a big picture, David and Al?

[David (Deputy State Treasurer)]: Yes.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Hi. Nice to see you. There's a second chair that you could pull up.

[Rep. Bridget Burkhardt, Committee Clerk]: And so maybe we could do

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: big picture with you two, and then Cam can take us through the language, and then we can ask you all.

[David (Deputy State Treasurer)]: Thank you, Madam Chair. For the record, David Chair, Deputy Treasurer, along with Albert Laparral, Director of Own Things. And we also have with us in reserve Tim Duggan, our Director of Retirement, should there be questions specific to that area. So, thought what might make sense, but I'm happy to defer to whatever is most useful to the committee, do a very brief overview of each section and then circle back on one section in particular that I think will be is of interest to the particular interest of the committee regarding a shift in an unclaimed property transfer to the higher trust fund that would now come to the Vermont VT saves. So if that makes sense, the committee will do a very quick overview and then circle back on that one piece and dive in a little bit more deeply, but we'll try to keep it concise. Al, can I turn it

[John Gray, Office of Legislative Counsel]: over to you to do the absolutely?

[David (Deputy State Treasurer)]: I'd like

[Albert (Al) LaPerle, Director of Unclaimed Property, Office of the State Treasurer]: to talk about on plane property. Thank you for having us over. Love to talk about on plane property. As you know, on plane property is a consumer protection bill. We take money in from businesses and it's our goal to return it

[David (Deputy State Treasurer)]: to the rightful.

[Albert (Al) LaPerle, Director of Unclaimed Property, Office of the State Treasurer]: It gets a benefit from that, from being able to use these funds until we find the rightful. So we're making some small changes on unclaimed property. The first one is section one, we're asking insurance companies that turn over payments for medical providers to give us an EOB number, an explanation of benefits number. That's gonna help our medical providers identify what patients those payments are. Right now, we get a huge payment from say Blue Cross Blue Shield, it's just a dollar amount. So when we give that to the medical provider, they don't know how to post that. But if we have the EOB numbers, that's going to assist the medical providers to post those to the right patient's accounts. So that's a small change but a worthwhile change that helps get that money to pay those patient's accounts. Section four, we're talking about returning money up to a thousand dollars without a claim form. Right now we can return funds up to $250 without the individual filing claim form and this will help the treasurers. I'm sure everybody's heard the treasurers money back program where we partner with the tax department, they match some of our data, give us updated addresses and we return those funds without a claim. This is going to allow us to return up to $1,000 versus each. Section five, we're asking to raise the estate limit to $10,000 Right now if we have property for a deceased owner that's in excess of $5,000 we may open a small estate and for many people that is, it's a task they don't want it to. So if we could raise that amount to $10,000 again, that's just going to help us return the property to people.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: Yeah, that's it all.

[David (Deputy State Treasurer)]: Thank you. So I'll jump in on Section six. Section six is an addition to our retirement statutes that would The overarching picture is to make sure that everybody who may be required to give employer contributions is subject to some enforcement language. As of right now, the Vermont State Employees Retirement System does not have this type of enforcement language within it. The other two systems do have, if not identical, enforcement language. In one case, FEMA is identical. The other one is similar, but not exactly the same. And the idea being here that it will be a way for our administration to ensure that employers are paying in the required contributions. If this section weren't there, there is a chance that the only remedy remaining or potentially even required would be to remove the employee from the system, which feels like a very unfair outcome. So this is sort of an administrative to avoid that potential outcome and make sure that every employer pay the system is subject to the same language or similar language. Section seven establishes a pension benefits and funding task force. This will review funding and amortization policies for the state and teachers' retirement systems, as well as the retiree health benefits or other post employee benefits. The idea here, the concept here being that as we get the plan under the current statutory scheme is to pay down the unfunded liabilities up until 2038. And the concern being that as you get closer to 2038, there is increased potential volatility. And so, if there were to be a significant market downturn, but you're still required to beat that full payment by 2038, you now face potentially a very large employer contribution that the legislature would be responsible for under current law. We want to gather the stakeholders to look at this issue and make sure that we don't end up in a situation where there may be significant financial pressure, and we want to make sure that these funds, the plan stays fully funded. And the worst case scenario from the fund administration standpoint is that the necessary contributions aren't made in order to bring us to that full funding threshold. So we want to avoid that outcome. We're not prescribing any particular outcome here, which is why we want to put stakeholders together to work on it. Sections eight through 20, I would say are Oh, sorry, Sections eight through 20, this is the piece where we would transfer fiduciary oversight of the other post employee benefit funds from the state treasurer's office to the Vermont Pension Investment Committee. Those funds used to be significantly smaller than they are now, but now that we've started prefunding them in order to and that prefunding will save us significant money in the long term, those funds have grown dramatically. And so it makes more sense. Instead of having a single fiduciary in the person with the treasurer, this would be transferred to the pension investment committee, which is a best practice to have a committee oversight of that. There's other, I will say, there's a number of sections in eight through 20 that are primarily administrative and just changing the statutory sections to meet up with the current VPIC beginning its own independent committee. So it's a bit of like cleanup, I would say, if that's an accurate summary. Sections twenty one and twenty two is a bit of a technical section, but it allows authorizes members of VSTRS and BEAMERS to purchase service credit for time spent serving as president of an employee organization such as the NEA. So they would still be able to get credit for time in which they may not have been in active employment. It would be neutral to the fund because they would be purchasing that after the fact, but it allows them to catch up to where they would have been had they stayed in regular employment through that whole time. Section 23 is technical pieces that members of the SDAC committee would like to see in order to better describe their work. I will leave it there. I don't think it's a dramatic change. And Section 24 authorizes the positions that our office is asking for. So two unclaimed property positions. Al, do you want to briefly state the dramatic work increase that you Sure.

[Albert (Al) LaPerle, Director of Unclaimed Property, Office of the State Treasurer]: So our office has been paying a tremendous amount of claims. In fiscal year twenty three, we paid 18,000 claims, 24,019 thousand and last year we paid 31,000 claims. So our claim numbers are skyrocketing. I give a lot of credit to Treasurer Pichak, He loves talking about unclaimed property. Drives our numbers, know, so which is good. And NAFA, the National Association of Unclaimed Property and Rex Rutland has been working hard at giving national attention on plain property versus just individual states. So it's really pain to have in our office. However, you can see that we're getting, you know, a tremendous pressure of.

[David (Deputy State Treasurer)]: And then the final piece in Section 24, the retirement position. This would be for a new policy and research manager. Our retirement division runs very lean. We serve 2,860 members per staff member. The national median is only 1,300. So we're working very efficiently, I would say, our division does do an enormous amount of work. A portion of what they do is customer service oriented work. That increase in members per staff really does have an impact. And I would also just note the division did extraordinary work this year with the transition, health insurance transition, that will save the state millions, I believe 20,000,000 to the general fund, more to the when you pull into the employee contribution. So it's a division that's working hard, very effectively saving money, but they do have a significant workload in comparison to peer divisions.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Are you seeing an increase in the number of retirees that you are

[John Gray, Office of Legislative Counsel]: working with?

[David (Deputy State Treasurer)]: Can I throw that to the retirement division director?

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: May, yes.

[Tim Duggan, Director of Retirement (State Treasurer’s Office)]: The number of retirees put to peer, when you say working with, if you're talking about active engagement with the way our health insurance is moving and spikes in rates that we're seeing, is driving additional follow-up to this year where we're under transition. The actual people that are actively engaged with all of us in terms of the vision is engaged in table to track. I can't present that to you, but getting to experience with the house.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: So more retirees and higher call volume, and can you identify yourself for the record?

[Tim Duggan, Director of Retirement (State Treasurer’s Office)]: Student Wink, directing voluntary assistance.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Thanks, Tim.

[Rep. Carol Ode]: Yeah, Representative Woodman. Another question about the retirees' first thinking. When we figured out how we were going to pay down the big debt that we had, did we have projections that took into account fewer because of fewer working teachers because of lessening number, the lower enrollment of students, and also, can we figure in with, and do we need to figure in now, would you consolidate if there are fewer teaching positions of current teachers working? Was that figured in, was all this figured in because you were demographics back then or not?

[Tim Duggan, Director of Retirement (State Treasurer’s Office)]: So at the time of Act 114, the substantial pension, I think that's what Jim referred to, most recent pension reform, the education transformation was not split on the table as it is today. So the dramatic reduction in headcount is not something you had that was sort of on the table at that time. Since that time, so every year, sort of all of weeks, every three years we do experience studies, those studies that make all of our assumptions and they say, are our expectations generally in

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: line with what we've

[Tim Duggan, Director of Retirement (State Treasurer’s Office)]: been seeing and what we think will So we'll change those and that'll have an impact on when we pay contributions upfront or not to have your experience goes down. Then every year we do evaluations and that's where we look based on our assumptions. Has our experience proven to be consistent? Has it proven to be different kind of any other? For example, this past year when you did our evaluation, we did capital reduction in active teachers. And then every once in a while, like this past spring, we do risk assessments. So those are of ad hoc every few years, and we say, what are the big things that come out of our system? We can have some volatility in markets. We can have increases or decreases in mortality. There can be some great treatment that increases lifespans that could be another. And one thing we looked at this particular time was what happens if there's a steep decline in headcount in the teacher system, particularly if we're starting to hear conversations about education transformation model, that 2% decline per year for five years, so an ultimate 10% reduction. What we found is not substantial impact on the funding percentage or on the amount we have to contribute in the community as a state. However, that all depends and that presumes that the head count is declining consistent with the average profile of the average teacher. That credit doesn't happen that way, for example, if there are retirement incidents that are encouraging late career teachers to retire early, that impact is different. That may have a negative impact on their practices. If there are risks, then we're going be other than for lower. So I guess it's probably a too long way of saying that things may not have been taken into account at a certain time period, but because we have this cadence of annual and semi annual studies that we look at, I think monitoring it actively and work with the things on the task force that I'm sure we're here to talk about to make sure that our funding policies and others are going to take those kinds of events, other things into consideration that have gone forward adequate advance.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Thank you. I'm going to close off this line of testimony now. I really appreciate you answering that question. We took significant testimony on this last year. I can send around the links from that again. And if anyone wants to refresh from there, we'll pick it back up. But I want to make sure we finish hearing about the bill

[David (Deputy State Treasurer)]: in time. Yes. We have eagle eyed viewers may have noticed that I skipped two sections because I figured those would be the ones that would be the meat of the questions. So we're saving the best for last year. And this is sections two and three. Three is really a sunset, so we'll set that aside for now. Section two. This is a proposal that it is a funding adjustment to support the VT Saves program as it scales towards self sufficiency. And the Vermont Saves program, as you may remember, is a program that allows folks who do not otherwise have access to a retirement savings option to enroll in that retirement savings option. And it does operate under an opt out principle. So if you don't have this, your is supposed your firm is supposed to join it. You may choose to exit if you would like, but it does provide this opportunity. It's been operational for one year, just about. In that year, it's gone from zero assets under management, zero employees enrolled to about 5,500 employees enrolled and a bit over 5,000,000 in assets under management. So in just a year, we have seen a significant growth in this, and we do project that over the next several years, the growth in the number of accounts and the size of the assets under management will lead this program to be self sustaining by 2033. In the meantime, there needs to be a mechanism to sustain it. That is what this fund or this transfer rather proposes to do. Currently, the unclaimed property Actually, I have a few slides that might be helpful to

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: think I might be more Or do

[David (Deputy State Treasurer)]: you wanna just keep flying?

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: More that we get to camp, who has to

[David (Deputy State Treasurer)]: do Great, and Chris also has some Some of our slides are taken from his stuff, so he will give you the full overview here. But that is the projection that the treasurer worked out, and I'm happy to share with the committee to make sure the assumptions behind that increase in revenue over the next several years. Currently, there is an unclaimed property transfer that goes from unclaimed property to the higher education trust fund. The transfer happens currently such that all the funds that are of the unclaimed property that is worth less than $100 and is more than ten years old gets swept into that transfer. The most recent transfer, which is the largest one there ever was, is about $147,000 Just for comparison's sake, the total size of the higher trust fund right now is about $67,500,000 So, it's a really extremely small portion of that fund. What this proposal proposes is to raise the threshold from $100 to $150 So now, all the unclaimed property that is more than 10 years old and is under $150 will be swept in.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: And for folks who are feeling eagle eyed about our own jurisdiction, the two reasons this bill is with us is that unclaimed property is cheated to the state, and that makes it then our jurisdiction. Pension And stuff is peripherally connected to us via the Ed Fund. So back to you.

[David (Deputy State Treasurer)]: Here we are. Yes. So that will raise the amount eligible to be swept in. We are proposing 100,000 a dollars cap on those suites because if we didn't, there would be initial year because everything older than ten years would be and over 150 would now be eligible. All of a sudden you have many years at once coming into eligibility. So you have a potential lead, it's about $2,870,000 that would be eligible. But we're proposing this $300 cap to smooth this transition. And the key piece here is that up to 300,000 would now be eligible first to go to the Vermont Retirement Security Fund, which is the fund that supports the Vermont Saves system. The concept is that we would use only as much as is needed to support Vermont Saves Program. As revenues rise into the Vermont Saves Program, only the amount necessary to meet the budget would be taken from that $300,000 The remainder of the $300,000 would be returned to the Higher Ed Trust Fund as it happens now. Again, Chris has the charts and data on this in fiscal notes so he can talk to you a bit more about this. But our projections do show that by FY twenty nine, we would see more coming into the higher ed trust fund than we do currently. So there would be a bit of a dip for a couple of years, then it would start rising up. FY33 and on to the sunset, we project the full $300,000 transferring directly to the higher ed trust fund. So over the lifetime of this proposal, you would almost certainly see a greater amount going into the higher ed trust fund than you would under current law. So the higher ed trust fund, we believe it's held harmless over the duration of this, and not only held harmless but is advantaged. But there is this transfer that allows BTCs to be funded as it is rising towards self sustainability.

[Rep. James Masland]: Does this place any more burden on the employee? I'm sorry, what was that? Does this place any more burden on the employer?

[David (Deputy State Treasurer)]: This provision will not make any change for the employer. The employer is Well, employers, everybody two and people with two employees and above are required to sign up. We've worked hard to make that as simple and seamless as possible for employers. And this provision, though, would purely be a function behind the scenes that the employer would not ever have to think about or deal with.

[Rep. James Masland]: Okay, because I heard from an employer in my district that was not happy and didn't think it was simple and seamless.

[David (Deputy State Treasurer)]: If you can put us in touch with them, we would be happy to make it as simple and seamless as possible.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: President Masland, you still have?

[Rep. James Masland]: Yeah. You may have partially answered my questions, but when you were talking about the cap, I guess I'll call them policy suggestions as to why you would have a cap like that, and does it have more to do with the higher ed trust fund or just general purposes on benefits and that sort of stuff.

[David (Deputy State Treasurer)]: You mean the cap of 300,000? Yeah, yeah, sorry. I think the general idea there is to make this transition smoother and more seamless. If we were to have no cap in the first year, there'd be a sweep of 2,870,000.00. With the cap, that money that doesn't get transferred stays eligible and it helps to guarantee that over the lifetime of this proposal, we will almost certainly, I can't quite say certainly, but almost certainly reach that $300,000 cap every year because that eligible money is still there. And so it kind of smooths the transition and then nearly guarantees that the $300,000 cap will be hit. Helpful.

[Rep. James Masland]: Yes, Thank you.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Thanks. I'm going to have a shift taking us through the language of the bill if you all can hang out for a

[David (Deputy State Treasurer)]: few minutes. Yes, thank you.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: Madam Chair, the phone call.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Okay, we're going to wrap at somewhere between 04:15 and 04:20, some magic universe are going to vote on this today, but it might be first thing tomorrow morning when we arrive.

[Cameron Wood, Office of Legislative Counsel]: Good afternoon. For the record, Tammy Wood, Office of Legislative Counsel, as I'm plugging in my laptop, which died thirty seconds ago. So forgive me while this boots back up. I'm going to speak about the bill. And I'm not going to walk through each section line by line. It's 36 pages. A lot of it is just administrative deleting language here and moving it somewhere else worth a worth of verbatim. But very quickly, as was mentioned, if you look at the first few sections, it's about unclaimed properties. And I think the treasurer's office mentioned all of the substantive changes that are being made here. If you look at the section one, it's adding some language where when individuals are providing them with unclaimed properties, it's adding some language in under line 20 here to require some explanation of the benefits that are coming through. So it's not just a number that's coming through on the form that the individual fills out when they submit the unclaimed property to the treasurer's office. And then when you look, section two and three, I'm going to skip and come back to just as the treasurer's office did, because it's about where certain unclaimed property funds go. Come back to that. When you get to page four, looking at section four, and then page five, looking at section five, these are some more technical amendments that are being proposed to up thresholds as the treasurer's office mentioned. If you look at section four, the claimant has to verify. So this is the individual who's asking to receive the unclaimed property. The individual has to verify its completeness and accuracy. Looking at the top of page five there in the sub three, unless the property has a value of less than $250, and then the claimant doesn't have to go through these hoops or go through these steps to get access. So this would be upping that threshold to 1,000. So anything less than 1,000, you don't have to kinda go through the the extra steps to access those funds. And source of fuel, let me interview you to get a chance.

[David (Deputy State Treasurer)]: And I can bring

[Cameron Wood, Office of Legislative Counsel]: us up to There we are. Similarly, on section five, which is on page five, this is for how unclaimed property gets distributed when there's an estate and there's kind of certain thresholds where if it's under a certain dollar amount, then it gets distributed either in accordance with the estate agreement or in accordance with state law, etcetera. So it's kind of just updating those thresholds from 5,000 to 10,000 about in these circumstances. Here's how we're gonna deal with distributing the money instead of requiring people to open in the state back up, for example. So So Okay. We are on to page

[Rep. James Masland]: six.

[Cameron Wood, Office of Legislative Counsel]: Okay. That's the unclaimed property section. So again, I'm gonna come back to where the money gets distributed in just a second at the end. We're moving into section six, which is on page six, dealing with the Vermont State Retirement Systems. So the first piece here, moving to the top of page seven. This is for municipalities that participate in the State Retirement System. This language is being added that if the payments are not received within thirty days after their due date, it gives the board the authority to assess interest. The only thing I highlight for you all and I highlight it for the government operations committee is this does allow the board to assess interest and penalties on a political subdivision of the state. Outside of that, I understand the reasoning behind it because there isn't one currently. So a municipal employer can be late. And as was mentioned, the recourses of the retirement system at this point are limited in what they do to address that. So moving to section seven, this is the pension and benefits funding task force that was mentioned. So it creates a task force. You have all your standard boilerplate language here. You have the members of the task force, the chair of both the House and Senate Appropriations Committee, Secretary of Administration, State Treasurer's

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Ask a colleague, etcetera. About that to the treasurer's office. The choice of the appropriations chairs rather than the Pension Oversight Committee chair and vice chair? Was that

[David (Deputy State Treasurer)]: think

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: And I really don't have an opinion. Was just curious.

[David (Deputy State Treasurer)]: Yeah, I believe we were tracking the prior task force, larger task force, but I prefer to Tim Ferriss.

[Tim Duggan, Director of Retirement (State Treasurer’s Office)]: The thinking must be because this is such a funny and symmetric study. The appropriations chair has made sense because it's all written down the house.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: It's all about that gap in those final.

[David (Deputy State Treasurer)]: Yes. Like, wait for me to pay anything.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Sure. Thanks. Overall, I don't. It was just a

[David (Deputy State Treasurer)]: Okay.

[Cameron Wood, Office of Legislative Counsel]: The things I will highlight here, page nine, as were mentioned, this is what the study will look at, long term sustainability of the pension and benefit plans, the total cost of funding the system, the things that were mentioned by the treasurer's office. And I will highlight, I believe it was mentioned the task force, this is line thirteen, fourteen, shall not make recommendations on member benefits, contribution levels, or assumed rates. They have the assistance of the pension investment commission, the state treasurer, joint fiscal office. We have the due date, December 15, all the standard language that's in here. There is an appropriation of $75,000 and there does authorize per diem reimbursement for individuals who participate that are not otherwise paid. Get to section eight, and it is going to be section eight all the way through section 22. So from this page, page 11 all the way through to page 34, all of the sections here are dealing with moving the oversight administrative responsibility of those other post employment benefits for state employees and teachers over to BPIC and out of the excuse me, the office of the state treasurer. So nothing in any of these pages is new language. It's deleting language and then moving it over. So for example and I'll just get you with one example and kind of walk through it with you. I move to page 15. Subsection C, the state treasurer shall be the custodian of the assets in the funds. This is the state employees, other post employment benefit fund. The state treasurer is the custodian. It's moving that over to BPIC. And then you have similarly where the members of the commission, these are standards of conduct for board members of the retirement system and members of the Vermont Pension Investment Commission. You know, they can't have any direct interest in the gains or profits of the investments, etcetera. So that is being struck here in this section, but then it is simply being added over here in page 20. Under policies and limitations of Vermont Pension Investment Commission, except as otherwise provided. No member and no employee of the commission shall have any direct interest in the gains or profits of any investment made by the commission. So again, all of these things are just removing the standard language associated with the investment of these funds and moving them over to BPIC, consolidating their authority over not only the retirement system itself, but over the other post employment benefits for state employees and teachers. Which is going to bring me all the way to the next section. It's gonna be on page 31. Apologies for the scroll. Dealing with pension credits. And as was mentioned, this is for the teachers and the municipal system. So if an individual member becomes the president of one of these organizations here, it authorizes those individuals to receive service credit for the period in which they're serving as the president, as long as those funds are being paid in by the employer. So it's just similar language that's just being added into those two sections.

[Albert (Al) LaPerle, Director of Unclaimed Property, Office of the State Treasurer]: Paid in by the employer or the

[Cameron Wood, Office of Legislative Counsel]: employee? Employer. So it would be the entity itself, not the employee. I wanna make sure yes.

[Rep. James Masland]: So this is only for the employee of the retirement board?

[Cameron Wood, Office of Legislative Counsel]: This is for I want to get to the right page so I get to the right language. So here. So a member who's elected to serve as the president of the employee organization designated as the exclusive bargaining representative for employees in this chapter. So I'm not as familiar with these entities as the treasurer's office. They may be able to more quickly answer your question than I can.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: I don't quite understand what everyone's question is.

[Rep. James Masland]: Well, I was This is teachers retiring. So when a teacher switches to administrator, a principal. That's not what this It doesn't go to their retirement, but that's not this. Correct.

[Cameron Wood, Office of Legislative Counsel]: And this is an individual serving as the president of the exclusive

[Rep. Carol Ode]: Union, basically. Okay.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Wait, will you finish

[Rep. Bridget Burkhardt, Committee Clerk]: that sentence? Was glad that you

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: jumped in. Sorry, Representative Burkhardt, I just have I'll defer to Tim. It's official testimony, yes.

[Tim Duggan, Director of Retirement (State Treasurer’s Office)]: Purchase service. And because the president of the either in the teachers or the municipal system. That's why it's in both.

[Cameron Wood, Office of Legislative Counsel]: Okay. Moving to the last few pieces here is related to capital debt. As was mentioned, you have this capital debt affordability advisory committee. This committee issued a report recently, and they wanted to make some slight tweaks to the language here. So the key words are gonna be here on line six and seven of page 35 and developing. So for this, capital debt advisory committee and developing its annual estimate and preparing its annual report, the committee has to consider a long list of items, including that is the criteria, this is the sub four, the criteria that recognize bond agencies use to judge the quality of issues of state bonds, including, and then the changes down here in the sub d, other metrics and taking away the committee's discretion here, limiting it to other metrics adopted by recognized bond agencies, which is more of a limiting of what the advisory committee can look at just for awareness. And then there's a similar change on the next page. The committee and its report needs to look at capital asset depreciation ratio reflecting unfunded capital maintenance costs, and that's being changed to measures reflecting the remaining useful life of state infrastructure and the potential future capital maintenance and replacement costs. I don't really think there's a lot of substantive change to what's going on in this committee. It's more my understanding is aligning the language as it was proposed to be amended by the committee. I believe it was at the beginning of last year. And then there's the positions, and then we have effective dates. The task force would go into effect on passage so they could begin their work immediately. The task force that comes back with the report on the pensions. And then there is a sunset. Okay. So I'm gonna go all the way back to section two. And I know I'm moving quickly. I apologize. I have to leave you all a little earlier. Okay. So we're back in the unclaimed property section here. This is section two all the way back on page three. Okay. So we have a lot of money coming in each year from unclaimed properties. The treasurer's office is required to maintain a certain amount of unclaimed property funds in order to make sure they're paying out unclaimed property claims that come in. So they have to keep enough cash on hand, essentially, to be able to make those payments. And then some of the money is then transferred over to the general fund every year. They don't keep all the unclaimed property that comes in. They understand that not all unclaimed property is going to be claimed, so they do provide certain transfer to the general funds every year. So before making that deposit, they may deduct certain things. They can deduct their expenses, the cost of publications and mailings, you know, kind of standard things you would expect for administrative costs. And then the key piece is this Subdivision 5 here. Property valued at $100 or less more than ten years after the property was received. So ten years later, no one has claimed it. It's a pretty good assumption that someone's not going to claim it, and so we want to make sure we're utilizing those funds for the best interest of the state. And so those funds can be transferred currently to the Higher Education Endowment Trust Fund. This is the language here on '17 and '18. There is no cap on how much money gets transferred over. Every year, if the property meets this criteria, it's less than $100 and it's more than ten years old, take those monies and we transfer it over here to the Higher Education Endowment Trust Fund. As the bill was introduced, that is raised to $150 the cap, dollars 100 cap to $150 still has to be ten years old. And then there's this provision that the money would go to the Vermont Retirement Security Fund, which is the administrative fund for Vermont SAFES with a $300,000 cap. Any remaining funds after that $300,000 cap would go to the Vermont Higher Education Endowment Trust Fund. My understanding is that's not the intention of what the treasurer's office is hoping to accomplish. So there is an amendment here to review. And I'm just gonna look at the five here. It's a little broken up, but what this would do is it says we're still raising the cap to 150. So this first year, there's gonna be a significant amount of money that's gonna come in over your standard year because you're raising that dollar threshold. So they're gonna go all the way back to everything that's greater than ten years and raise that cap up to a 150. The sub a here and b are what you need to focus on. The administrator shall deposit the funds into the Vermont Retirement Security Fund created. So shall deposit those monies into the Vermont Saves admin account up to a cap of $300,000. Notwithstanding that, the administrator may, in the administrator's sole discretion, I'm on lines eight moving down now, may deposit funds into the Vermont Higher Education Endowment Trust Fund, provided that not more than a combined total of 300,000 shall be deposited into both of those funds in any given year. So what does that mean? The treasurer in the treasurer's sole discretion is going to be able to determine how much of this $300,000 each year to deposit into which of those two trust funds. Could be $300,000 going all to Vermont Saves and nothing going to the Higher Education Endowment Trust Fund. Could be 150,000 and 150,000 As the treasurer's office mentioned, I think their goal, as has been stated, is to continue to support the sustainability of the Vermont Saves program. And then over time, the deposits into the Vermont Saves admin would start to come back down and the deposits going back to the higher education and down the trust fund would start to go up. But either way, it's capped at $300,000 I will highlight for you all, the treasurer's office will maintain the rest of the funds that they will get in this first swoop of these unclaimed property dollars. They will maintain them because it's not directed to go anywhere. But what I what I mean by that is when you go back to the beginning, it says before depositing anything into the general fund, the administrator may deduct these things. So they're not depositing this money into the general fund. You're increasing that cap from 100 to 150. So they're gonna go back beyond ten years. Everything that currently was a 100 has been distributed, but not a 150. So we're going way back, taking a lot of property, pulling it all in at once. What are you doing with it? It's then capped. The the distribution of those dollars is capped at only $300,000 annually. So if the first initial swoop is over $2,000,000 you're capping the distribution at $300,000 What's remaining with the rest of the funds, the treasurer's office would be presumably maintaining those dollars and then distributing each year thereafter up to $300,000 until the funds have been distributed. The maximum hit on the general fund is $300,000

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Technically Chris will answer those questions. And

[Cameron Wood, Office of Legislative Counsel]: then there's a sunset. This is repealed. I believe it's in 2039, 12/31/2039.

[Rep. James Masland]: Yes.

[Cameron Wood, Office of Legislative Counsel]: So it would be repealed 01/01/2040, in which case all of the money every year would go back to the Vermont Higher Education Download Trust Fund, and there would not be a cap. So you can see here kind of deleting all of the new language that was added. And, actually, this does keep the cap at $300,000. So

[David (Deputy State Treasurer)]: okay.

[Cameron Wood, Office of Legislative Counsel]: My apologies for the rush.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: I was the one who put you actually the other way. So please don't get

[Cameron Wood, Office of Legislative Counsel]: You asked if I wanted to go first, and I deferred to you. So yes.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Thank you very much. Really appreciate it. And I think we can ask most of our questions. Anyone have any technical questions for Cam? Because I think we need to great. Okay. Thanks.

[David (Deputy State Treasurer)]: You. You're welcome. And

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: then we can have any final questions for the trigger.

[Chris Rutland, Joint Fiscal Office]: Hello, everyone. Chris Rutland from the Joint Fiscal Office. While I am waiting to get into the Zoom room, I will mention that Sorsha kindly posted a draft fiscal note under my name on the committee page, and I'll walk through that briefly. This is kind of awkward because

[Albert (Al) LaPerle, Director of Unclaimed Property, Office of the State Treasurer]: I asked

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: oh, that's not the press's awkward. Is that the press's awkward? I asked Chris to draft the fiscal notice if we approve the amendment. And if we don't approve the amendment, he'll revise it.

[David (Deputy State Treasurer)]: Don't we mic it

[Rep. James Masland]: here? Audio.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: That better? So yeah. Alright.

[Rep. James Masland]: Okay. So, yeah, that

[John Gray, Office of Legislative Counsel]: blank will get filled

[Chris Rutland, Joint Fiscal Office]: in with an updated link once you all decide what to do. But it didn't make a whole lot of sense to draft the fiscal note as introduced when you know that there could be a technical change happening. So, this speaks to the bill with the technical change included. So, anytime we look at a bill like this, we don't go section by section in a fiscal note if the sections don't have fiscal impact. This really focuses on just the sections that are material to fiscal things. Some of this is more of an appropriations committee jurisdiction, but there are a few things here that I wanted to draw your attention to. The very first section here about the unclaimed property revenues, as you heard from the treasurer's office, the proposal is to increase that threshold on the small dollar over ten year old unclaimed property to up from 100 to to $150. The impact of doing that would bring in about $2,870,000 of additional unclaimed property from raising that threshold up. And as was noted, the amendment proposes putting a cap on the transfers at $300,000 a year to both sources combined. So right now, at the $100 level, this money goes to the Higher Ed Trust Fund, not the general fund. And it's not a huge source of revenue to the Higher Ed Trust Fund. When we were talking about the estate tax a few days ago, you all remember that the Higher Ed Trust Fund received like $26,000,000 this past year. There was like $60,000,000 of accumulated contributions in the Higher Ed Trust Fund. So unclaimed property is a really, really small revenue source to this fund. Vermont Saves, those of you who have been around for a little bit will remember that when it was created, it was funded with a one time appropriation of $750,000 that was intended to sustain the program as it got its legs under and started scaling up. At some point, it will scale up with the intent of being fiscally self sufficient from program fee revenue once you have more accounts open, more participants, more assets under management. These projections that I was delighted to see the treasurer's office use because I use their data in making them. So this truly is a consensus team effort. But figure one will show you that based on the treasurer's office projections of Vermont saves its budget in the future, they expect that by fiscal 'thirty three, the program would be able to sustain itself on program revenue and not need the unclaimed property revenue. So this is intended to be sort of a bridge to keep Vermont saves going as it continues to head toward fiscal self sufficiency. Figure two then shows you with that $300,000 cap, what would that look like over time? And you would see that by 2033, that full 300,000 would be available to go to the Higher Ed Trust Fund if the Vermont Saves program didn't need it. Here's just a little bit of history in Table one that I thought was interesting. This goes back and shows how unclaimed property has how much it's contributed to the Higher Ed Trust Fund in the last few years. And you'll see that it's been growing over time. But the 147,000 that it received in fiscal twenty five is the highest amount it had received. And if that threshold were $150 instead of 100, it would have brought in over $300,000 a year. So based on the fact that more unclaimed property keeps coming into the system, there will always be in addition to this $2,800,000 that would be sort of swept in initially under that higher threshold, there's always going be new unclaimed property aging in to this, hitting the ten year mark. So it is fully likely that under this change, due to those trends in the higher threshold, that the Higher Ed Trust Fund would be receiving more money in the future than it would be under status quo.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: I know we would talk about the higher ed trust fund so much this year.

[Rep. James Masland]: Not me.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: I I think we all knew in the fall that we would be talking about it so much this year. Fall of the

[Rep. Carol Ode]: month? Anyway, continue.

[Chris Rutland, Joint Fiscal Office]: Sorry. I'll just touch on this briefly.

[Rep. James Masland]: This is, don't I know about you, but

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: this was the section I got

[Chris Rutland, Joint Fiscal Office]: the most excited about was the pension and benefits funding task force. I think you all care about this because teacher retirement systems are funded in part by the Ed Fund. But as was mentioned when the treasurer's office was here, at some point, we as the legislature need to figure out what to do about unfunded liabilities after 2038, because that's the target date in statute right now that all of our funding points to. But as you start getting closer to that date, the risk of really wacky things happening in your contribution requirements can go up. And the simple example I think of is if we had a really, really bad investment year in 2033 and the market tanked that year, there's a two year lag built in. So what happens in 2033 informs the ADAC payment beginning in 2035. So you really only have like four years to spread up that impact across between 2035 and 2038. So as you get closer to that target date, the risk of the contributions doing something really unmanageable as a result of something that happens goes up quite a bit. Even if everything worked perfectly between now and 2,038, we still need to have a conversation about what does life look like after 2038? Because pension funds don't stay at a 100% perfectly all the time. Like, reality happens. There's timing issues. So, you know, assumptions change sometimes. Like, we don't hit all of our assumptions spot on every single year. So there's variability. There's risk. It's part of it. It's a really good time to have this conversation when we've got sort of an, for lack of a better word, a blue sky rather than a massive economic crisis that is forcing different fiscal considerations. So if we were trying to close a $300,000,000 budget deficit, that might not be a great time to have this conversation because it might be guided by different objectives than thinking about what makes sense for the long term for the state. So, there is a $75,000 appropriation in this bill to fund this task force, and that would fund actuarial work. And it's sort of a skinny down version of the big pension task force that happened in the 2021, which really excited me to work on. The other thing I really wanted to mention to you all about sections eight through 20 dealing with OPEB. This is not a new issue. We haven't talked about it very much in this committee. But a few years back, think it was in the big bill, the treasurer's office was given some money to do a governance study on OPEC to see the sole fiduciary model currently in place made more sense at a different time when there were fewer assets under management and we are on a pay go basis. This was invested in the trust investment account. Really doesn't make a lot of sense to invest in the trust investment account for refunding OPEB because it's very heavily weighted toward protecting your principal. So, it's more invested in fixed income than you would probably put the rest of your pension funds in. There's now hundreds of millions of dollars in these systems. It's going to be a growing balance over time. I think the two OPEB systems earned like $36,000,000 just in investment income in the last year. So they're growing quickly. The report that came out a few years ago had identified transitioning OPEB over to VPIC as sort of the sole main recommendation. And these twelve secondtions of language published that. There will be and again, this is more of an appropriations thing, but I just wanted to make you aware of that as part of this, there will be some budgetary shifts of costs from the treasurer's budget over to VPIC. Of this VPIC did request and they identified a need for an additional position. There's currently four people at VPIC. They identified a need for another position that is not included in this bill. I did flag it in the fiscal note as an identified need. Should the Appropriations Committee agree to create that position or to go along with all of this, the cost of that would be borne proportionately from the retirement funds. These are not general fund asks. And you'd also see some movements from the treasurer's budget over to VPIC for things like the professional service contracts that they currently manage for OPEB. I think everybody described the retirement credits for the president of an employee organization really well. I've mentioned this in here just in case people ask what this was about, but it doesn't have an expected fiscal impact because it would be done on an actuarially equivalent basis. And then, yeah, there were requests for three positions, two on unclaimed property, one on the retirement division. These are in the bill. The VPIC position I mentioned is not in the bill. I don't know if there's anything else you want to talk about, because I sort of bloss through six pages pretty quickly.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Does anyone have any questions for Chris?

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: Is there any other place where the treasurer or another officer so authorized has the ability to decide which fund gets the money?

[David (Deputy State Treasurer)]: I don't know. I'd have

[Chris Rutland, Joint Fiscal Office]: to ask some of my colleagues.

[Unidentified committee member (possibly Rep. Rebecca Holcombe)]: It's near to me.

[Rep. Bridget Burkhardt, Committee Clerk]: Anyone else? Have a question for Chris? I do not have for Chris, and do have from

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: the Treasury? Yes, okay. Anything else for Chris? Thank you, Chris. Beauty. Some combination of the treasurer's off, I'd like to sit back in the chair again.

[Rep. Bridget Burkhardt, Committee Clerk]: Thank you, David. I think it's a very quick question, actually. And I'm just wondering, and I know we're dwelling on smaller part of this more than the bigger part that Chris really focused on. But with Vermont Higher Education Endowment Trust Fund, is the governor still asking to also shift away the other source of revenue for that fund? Because that was in the proposed budget that we saw before, that he's proposing to take away the revenue stream that has a windfall every few years, which is what happened last year. He's proposing to shift that someplace else. And he's proposing to take $15,000,000 out of it right now for another purpose as well. Do you know if that is still on the table? Because it just sort of feels like all three of these things are kind of happening to that little fund all at the same time. And so I was just wondering if you knew any more about those other plans for the fund.

[David (Deputy State Treasurer)]: I can't speak with certainty to what the governor's current assessment of those things are. Do know that you are correct that both of those things were proposed in the governor's budget. With respect to our proposal, I can add that we did have agreement from the three higher interest fund beneficiaries as of the fall when we went to them to ask about this, they were all in agreement with this. And we explained the fiscal impact, as Chris did and we did briefly as well, that at least our piece of this would ultimately end up have the effect of transferring more money into the Higher Ed Trust Fund, and they were in agreement with this.

[Rep. Bridget Burkhardt, Committee Clerk]: That's helpful information. Thank you. Appreciate it. Thanks. Thanks, David.

[David (Deputy State Treasurer)]: Thank you.

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: Folks, we're gonna wrap up and vote tomorrow either at 9AM or at 10:50. So let me know if you need something before that happens. It would be the amendments that are technical changes to meet the intent of the bill that came up and go up. That would

[Rep. Carol Ode]: be two votes. See you

[Rep. Emilie Kornheiser, Chair, House Ways and Means]: tomorrow night.