Vermont Legislature SmartTranscripts:

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: Yeah. We are live.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: We're live at Senate Appropriations Day, February 7. We are finishing with the budget adjustment next, but we're moving into FY27. I'm gonna start out with our favorite agency.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: I appreciate that, Mr. Chittenden. So for the record, Nick Kramer, Chief Operating Officer of the Agency of Administration, the aforementioned favorite agency. I will, as always, my goal, I was in here a lot about this time last year telling you all we had a fairly sleepy budget, like nothing major to report. We're try to outdo ourselves this year and get even sleepier. But I welcome, of course, questions from committee members. I'll start by just general refresher because the secretary's office is coming here, is what I'm here to speak to today. It is a little idiosyncratic. There's a couple oddities in the way we're structured.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: This is a photo?

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: This is a new photo, yeah. So before I launch, as always, I wanna first give a shout out to our financial services division, who are incidentally part of this budget, but you're looking at, what, 60%, well, not 60% of them, but a big chunk of them are in the room with us today. This budget and all the other ones that have this beautiful photo on them were prepared by them, as they always do. I think they serve, there's at least 16 budgets that they're They also serve not just the internal to the agency of administration, but a lot of the boards and commissions that get stood up by this body and other sources, if they don't have a centralized financial shop, they default to FSD. So they do a lot of work and I just always wanna give a shout out to the team that works really, really hard this time of year to bring you all the stuff that I get to just talk about.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: And how long have you been there, Nick? I've been in this role in the agency since last December, Mr. Chair, and before that I worked in Target Finance and Management.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: It seems like I always does more than I used to have ten years ago, or even before. Yeah, so I think

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: I was in here last year talking about that, to some degree, we're kind of the heads all for state government, right? We are a central agency located on the 5th Floor, kind of principal aid to the governor in a lot of different ways, when often this body creates a new initiative or has some funding that they'd like to go out the door and it doesn't exactly fit into the existing agency, often it falls into the agency's administration. I could talk at great length how busy we were this summer with a number of different initiatives, help to facilitate a conversation around adult education and literacy, of which I learned a lot, not a subject matter expert, but as a neutral facilitator brought together a whole bunch of different stakeholders in this space and have issued a couple of reports. We thank you for that. It was a fascinating work, Senator. It needed little eyes that were not this short.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: If we were to add somebody in on that, there wouldn't be, might it still be AOE?

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: If you wanted to report on the report, Senator, if I can meet again, have me come back, and then I'd bring colleagues. AOE was part of the discussions, I'm sure the adult education and literacy providers would welcome the opportunity, we were just up in House of Congress the other day,

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: giving the report, but certainly Maybe sometime, if the house doesn't solve the problem. Yeah.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: We'll have a step in. So that, a big meme. Our secretary's office is a massive staff, four people, myself, the deputy and the secretary, and then we have an executive assistant. A big chunk of her time, Chrissy Gillhoole, familiar names for many folks, this summer was spent helping provide sports and redistricting task force. That was a big piece of work. I won't go on and on and on. We facilitated a conversation about grants improvement over the summer that was sort of a result of legislative conversation. So there are a lot of things fall the secretary's office, why they don't have a good place to leave. But I guess diving into the budget, fiscal year 2027, Governor's having their office, those split in different ways. A reminder that folks will recall, there's four components. I'll do it for you. That's right, I'd be great. Thank you, guys. There's four components to the budget that I'm gonna talk about today. Again, agency of administration consists of DHR and tax and BGS and finance and management and all these other departments they'll be in of course separately. So I'm focusing on the business unit that consists of the secretary's office, the financial services division I just mentioned, the office of risk management, which is also a huge team of three people, and the office of racial equity, has been a growing and important part of our work as an agency. In terms of structure, so like I mentioned, the Secretary's office kind of proper, there's really four of us, me, the Secretary, the Deputy, and our Executive Assistant. There's also the Chief Performance Office, that's Justin Kenny, and his co worker Katie, who also sit within our structure, they're also up on the 5th Floor, the Chief Prevention Officer, Monica Hutt, who works closely with the Governor's office, but she's sort of embedded in our budget. And the State Recovery Officer, Doug Blinden and his crew. Financial Services Division has 10 positions, all of which are funded by IDT, Interdepartmental Transfer. There's an acronym cheat sheet upon this slide, or anyone can be it. But those are sort of build back services to other departments that they support all the work that I just reviewed. Risk management focuses on exactly what it sounds like, kind of the state's portfolio of insurance and our liabilities. They manage three internal service funds that have to do with state insurances, and those are also kind of a build back mechanism where each department you'll see in all the other budgets has a charge for workers' comp, general liability, all other insurance. That's the WCGL and AOI. I'll talk about those funds in particular because And they have some ups and then racial equity, Susana Davis and her group, and they have six positions this year, three of which are funded by the General Fund. That's the Division of Justice Statistics. And that three of them were funded through the DHR internal service fund that's to the

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: two March folks in there.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: I will pause on that and if we case folks have any questions. Are there any departments within the agency? Departments within AOA? Yes, centers of finance and management, tax, BGS, EHR, libraries. Okay, all things. All within the administrative. Do they report up to the secretary? Including all that at the part like public service that doesn't have them. Public service is a different, a different catalogue, senator. That's their freestanding part, they report directly to the government. So the ones I listed are pretty much in fact, the facts, libraries, EHR, PGS, finance management.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: I was just thinking of different, okay. There used to be a lot of the word boards, but to pay

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: in the administration. And then, yeah, there are a lot of freestanding boards that, again, the financial service division, like the labor relations board this year was a new customer that came and said, hey, we really don't have the capacity, we would like some additional financial capacity, could we be on the roster, and the financial services team picked them up and helped prepare their budget in parts of the base of the

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: So

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: just the last thing I would point out on this first slide, this pie chart gives kind of a sense of our overall funding make up, we're about a third general funded, about a third ISF, internal service fund, and about a third IDT. The small sliver of special fund is our clean water funds. We, again, in the spirit of when things don't have a home, land with AOA, there's one line item in the Clean Water Board's annual recommended budget that flows through the agency administration clean water, I'm blanking on the name, but it's when you set up a storm water utility, a municipal storm water utility, they're consented payments as from through. So that's the small sliver. ISF is largely DHR ISF, or the ratio equity positions I mentioned, and the insurance, the workers comp general liability and all other insurances. Then IDT is primarily the recovery office, the department's job. They've been funded through insurance based

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: on the needs of the services for a company. And then I And long we've I assume it'll always be around. Or, like, if once we ever get through all the work that ever happened, is another disaster? Is the idea that that would just need

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: it ready, or would it be anything? I think they would even be the first to admit, Mr. Chair, we all wish we lived in a world where there was no recovery office, right? That that was a necessary function. We've, every year, had the conversation and assessed. Think what I can say at this point is there's certainly a need now and there's a need in the foreseeable future. Any other questions from the members of the Boards? Can we move the next slide? Okay.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: So in

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: terms of what's changing this year in FY27, in the Secretary's office, that first depth ID, the only really significant happenings are we are removing one limited service position from the recovery office, was a manager position to your point, Mr. Chair, just the nature of the work, was a lot happening immediately in the gap and that there's sort of downsizing. There are still three positions there in the recovery office. That limited service position was think times of ARPA funds that were set to run out. So, it was a planned wind down. In the office of racial equity Dick, can

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: you remind us about the Clean Water Fund, where that money

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: Oh, sure, yeah, thanks, Chair, I'd skip that. So the Clean Water Fund is a special fund that has three different sources into it. It's populated by, the smallest component is abandoned bottle deposit, so when you go in and you don't reclaim your sheets, yes, And that is a couple million dollars every year, the most significant sources are 6% of the meals and rooms tax is directed to clean water funds. And then there is a surcharge on property transfer tax. So in addition to property transfer tax, there's a small amount of folks, and that goes in. And so the Clean Water Fund annually, as long as I've been here, has been between 20, I think now it's maybe up to like at least $3,000,000 a year. Not to be confused with the clean water budget, which is a larger document that consists of both clean water spending and capital spending. And that clean water budget is developed and refined through public input based on a statutorily governed process, which is independent water board, some state representatives, but also folks from across the state. They come up annually with their proposed budget recommendations. As long as I've been here, those have been adopted the exact way the governor's recommending budget.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: And they also recommend an increase to the base, which I assume they do just because receipts are up from those funding sources.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: So, good point of clarification, Mr. Chittenden, this 125 is actually a decrease from last year, was $730,000 That was not for just storm water utility payments, but there was, the board recommended setting up like a one time reserve to potentially leverage some known about, but not exactly understood federal opportunities, and so that got stuck in anyway last year. So this actually, if you look at the Attack on B shows, is a significant down, but it's just returning to the baseline amount of payments for for certain parties. Those, by the way, are, I think, dollars $25,000 a year for four or maybe five years per municipality that sets up a storm water utility. Was kind of an incentive payment developed by the legislature, I think, in Acts. Something from 2015, rather the big Clean Water Act was that they set up the board. In the Office of Racial Equity, there's also the removal of one limited service position, that was a PDG data analyst, PDG, I should know, stands for something development grant, I think. Preschool, think it's preschool. Preschool development grant, thanks, ugly. That was a sort of time bound funding opportunity through the agency of human services for the primary recipients of this preschool development grant, but there was a position associated with that that lived in the office of racial equity. That body of work has come to its potential revolution. It's nice to see that even you can't get all the right. I just asked somebody, I was talking to Nolan yesterday, and then asked if they had, by any chance, like an acronym for something else for different again. Everybody has. Right. Can help us with that, actually. They'll create more borders. That's right. So that's really the only action in the office of racial equity. The financial services division, there staff are again this year. There are increases, again, they're entirely funded by interdepartmental transfers. You'll just see salary and benefits increases, the most part there. Opposite risk management, what we call the non demand side of the budget, is the kind of administrative expenses of the staff and their benefits, that's pretty sleepy, there's not a lot of again, there's a couple staff, their salaries and benefits are going up like everybody else. The more interesting, no shots fired, those staff, but just like the more significant financial action in the office of risk management has to do with the three internal service funds that they manage. The workers compensation, compensation fund I mentioned, the general audit and liability fund, and all other insurance which is an aggregate of a whole bunch of different things. Certain departments and agencies have their own policies depending on the nature of the programs that they run, and so those all kind of funnel into that and catch up. And as I mentioned, those depend, we self manage those funds, so depending on how much, with the help of an actuary, they make an actuarial projection based on recent loss experience, and then we set, I put premium in quotes, but it's technically not really that, but an amount that we charge out across state government departments based on their actual usage in prior years. So this committee will see those line items buried in attachment fees from every other agency. At a high level, workers' comp went up this year by about 13.4%. Again, primarily driven by claims experience. It's not unusual to have some volatility within these funds. It really has to do with the market. I've been shocked actually personally to see it's sometimes counterintuitive, the year after the twenty twenty three flood, our flood insurance went down significantly, which I was told it was more a function of the fact that the market had gotten a lot more competitive and there were more people offering flood insurance, we were able to get a better rate. And of course, a humble reminder that we in a little corner, but they're small part of the rate. So this year, workers' comp is up primarily based on claims experience. General auto loan liability is also up from FY twenty six by just about 5%. And then all other insurances are down about 1,400,000. Again, that's, I can say not out of the realm of experience based on volatility of everything that goes into calculating the change. I included a little chart here for anybody that wants to do a deep dive, the workers compensation, general liability and auto liability, and the all other insurances fund balances. Because in the past, those have carried a deficit. You know, everybody in this room, and we want to make sure that our special funds aren't getting read, especially our internal service funds. So on the right most column, you can see the fund balance at the close of FY24. In the middle column, you have the fund balance as of the close of FY25. In all cases, we've made some progress. The general liability and auto liability are pretty high fund balance, but that has primarily due to the timing of a particular receipt. Workers' comp is the only one currently in deficit. It's in deficit less than it has been in past. If folks look back at the history, we've been sort of inching back towards towards black, and as intended, we've been amortizing basically the deficit based on our base salary. So I'll pause, that's pretty much everything that's happening in the base. Any questions from senators on that?

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: The 110 ks deal.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: Yeah, so the That's a base change? That is

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: That's not a negative amount, that's just the hyacinth.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: That is not a negative, that is just the hyacinth. And yes, that would be, I think that's a one time senator, that's not

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: Oh, it's one time, I should.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: Jumping to that, last year, the governor's recommended requesting $220,000 for two years of ideal human funding. This is a program that they've worked with municipalities and municipal leadership who are interested in focusing on, again, the actuance to feeding in diversity, equity, something Inclusion, diversity, equity, action, leadership. There you go. This is a program that has been running for several years. It's been one time funded. We passed for two years of funding, In the final bill that was passed, it was just a single year provided. And so this is the cost of basically your Senator Watson, do you have a question? Excuse me, AOI? All other insurance. Oh, of course. Okay. So if senators don't have any other questions, there's the attachment fees, there's our performance reporting data, there are some new, I think, pretty interesting and illustrative charts requested by this body and your house counterparts this year, major object comparisons, and all kinds of other information. I think that's a 73 page packet, but I'm always sensitive to the committee's time and appetite for detail and knowing that you all can dive in and follow-up and pick any questions. I'll stop there. I guess that's sort of the end of what I have been at. Okay, the question about

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: how MCAT is going, and is there more money for that,

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: or you're just spending out the money that we put in before? Yeah, so ultimately, I'm just trying to think Doug Barnes would be the best person to speak at a really granular level. My understanding is it's been going well, I think we're spending down money that's

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: because we just like put a $2,000,000 into it or something, or Yeah, I that was

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: I wouldn't trust my, like, numbers core to the public. I'm remembering a $3,000,000 position three years ago, and we've been spending that down. That went out to a variety of partners for PCs, the council on rural development got some funding to help work with municipalities. What I hear is that it's been largely successful, and it was a good effort. I think it was originally targeted as an ARPA assistance program, and it grew a little bit based on other federal funding sources flowing into the state. That's, I guess, about the extent to the mind.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: But somewhere in the 73 pages would be why you're spending this year for that program?

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: That would be a one time appropriation, so it would be reflected there was a general fund appropriation being reflected in our remaining one time balance that is submitted in the

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: carry forward report. But if

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: it's something you're particularly I just

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: wonder where we were spending that $3,000,000 I wouldn't probably trust my report at this point. I'm just happy to follow-up. The other thing I've been thinking about recently, the return to office. Heard of it. A small extra work added to your office. How is that going now? Still, from your office's responsibility to kind of shepherd that through. Right?

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: Yeah. So, well, I guess I'll start off, mister chair, just by saying, as the committee, I think, is aware, the return to office policy is currently under litigation and working its way through the judicial system. So it's sort of our, it is our longstanding policy not to comment in-depth on active litigations, which sort of the limit to what I can say. To your question, yeah, it was a significant body of work for our office, but some of it's another thing that we spend on, and continues to be, frankly, as we do our best to navigate a change.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: The the review of the the panel that's reviewing, whatever we call them, dispensations in the role that's within AOA, well. The panel reviewing, sorry. I call them dispensations, but I think we're calling them some of those like flexible work arrangements. Oh. Somebody that's not following the three day deal.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: Yeah, like the exceptions.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: Yeah.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: And there's a whole reasonable accommodations process, that if there's a medical reason, those are funneled through DHR. That process exists prior to any of this, and then this year, there's an exceptions process, but yeah, that's, that occurs within AOI.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: Okay. Don't have any other questions. Anybody else? We will diligently read all Expect numbers. Rows on the 73 pages.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: Yes. Well, it's a lot of work does go into compiling these. I haven't really shared the team because Yes. This committee's interest and attention.

[Sen. Thomas Chittenden, Chair, Senate Appropriations Committee]: And if we see anything, we'll we have questions on, we know how to get on with you.

[Nick Kramer, Chief Operating Officer, Vermont Agency of Administration]: Okay. Thank you. Appreciate your time.