Challenges 2: House votes on sweeping changes to state government

A Victorian lamp in the House Chambers of the Vermont Statehouse. Photo by Kate Schubart

Any 82-page bill is a chore to read, but H.792, Challenges for Change 2, is even more challenging than usual. That’s because the bill is a laundry list of statutory alterations designed to grease the wheels for the reorganization of state government under Act 68 (a.k.a Challenges 1), which was enacted in February.

Challenges 1 and 2 create the most sweeping changes to state government in memory, yet very few observers say they understand what it means for state programs.

Today, the House will vote on the bill, after just two weeks of testimony, intense debate and hurried bill writing. Legislative observers – lobbyists for nonprofit organizations, state officials and advocates who have worked in the Statehouse for many years — say Challenges 1 and 2 create the most sweeping changes to state government in memory, yet very few of them say they understand what it means. The legislation is very broad – so broad, they say, that it’s difficult to know what real impact it will have on state agencies and programs.

The Democratic House and Senate leadership and Gov. Jim Douglas, who declared last fall he would not seek re-election, agreed to reorganize economic development, education, health and human service delivery programs and natural resources regulations, because they said traditional budget cutting wouldn’t be enough to resolve the state’s $154 million budget deficit.

Challenges 1 removed $38 million from the General Fund budget and $22 million in education funding for fiscal year 2011, and mandated that the Douglas administration come up with plans for restructuring state government.

Lawmakers enacted a set of “outcomes,” a list of objectives that defined what they expected state government to do for Vermonters. The Douglas administration’s job was to come up with the map for getting there, the “how,” in policy governance parlance.

Two weeks ago, officials did just that — to much fanfare.

Even lawmakers who were enthusiastic about the Challenges blanched at the recommendations in the progress report.

Even lawmakers who were enthusiastic about the Challenges blanched at the recommendations in the progress report. That’s because for many it was déjà vu all over again: Some of the proposals were not focused on the outcomes set by lawmakers, nor did they appear to save money — they were ideas the administration had tried to get the Legislature to adopt (to no avail) for years.

House Speaker Shap Smith, (a Democrat) who has adamantly defended the Challenges process, said in an interview yesterday he was disappointed with the (Republican) Douglas administration’s specific proposals.

Nevertheless, he said, he is determined to move ahead with the government restructuring process.

House Speaker Shap Smith, (a Democrat) who has adamantly defended the Challenges process, said in an interview yesterday he was disappointed with the (Republican) Douglas administration’s specific proposals.

In committee after committee, lawmakers tried to find glimmers of hope – of the original intent of the law in the recommendations — and, in the end, put the kibosh on measures proposed by Douglas’ appointees that would have been punitive in nature, such as mandatory consolidation of schools and the elimination of grants to economic development organizations. Most of these measures didn’t achieve the sought-after outcomes, efficiencies — or budget savings — according to a growing number of lawmakers.

The administration, for example, called for the forced medication of mentally ill patients, and for a provision that would allow the state to place liens on properties owned by deceased Vermonters who had received subsidies for long-term care. The Douglas administration also wanted to sell state lands without permission from the Legislature; to significantly loosen permitting requirements for pollution discharges; and to force the merger of regional development corporations and regional planning commissions.

With the exception of a permitting rule still in dispute, lawmakers have refused to make statutory changes to allow the aforementioned plans to move forward. In that respect, Challenges 2 stands as a polite rebuke to many of the Douglas administration’s proposals.

Many lawmakers were also dismayed that state officials didn’t include in the planning process actual stakeholders – disabled and elderly Vermonters, families and nonprofit organizations that provide state-funded services. Rank and file members of the General Assembly objected – privately and publicly — to the compressed timeframe for the Challenges 2 legislation. Many said they didn’t have time to take enough testimony or to consider the ramifications of the changes.

So far, the restructuring ideas the Legislature has approved in H.792 will save about $20 million out of the $38 million target.

So far, the restructuring ideas the Legislature has approved in H.792 will save about $20 million out of the $38 million target, according to the Joint Fiscal Office. The government redesign is supposed to save $72 million next year. As the reorganization is further developed after the Legislature has adjourned, administration and legislative leaders say more savings will be found.

The statutory changes lawmakers have included in H.792 so far would allow the administration to:

• Remove the $500,000 cap on the Secretary of Administration’s expenditures for information technology;
• Allow the Department of Forests, Parks and Recreation to offer discounts on vacation packages to state parks;
• Require the Agency of Human Services to involve families and service providers in the design of new programs;
• Allow the Department of Mental Health to monitor the use of psychotropic drugs for children;
• And require the Department of Education to design spending reduction targets for school districts.

The committees of jurisdiction will review the administration’s plans quarterly, starting in July. They have no authority, once the bill has passed, to approve or disapprove of plans that do not require statutory changes, officials say.

The bill ends with a statement that requires the redesign to “carry out the policies adopted by the general assembly” and that it be executed without reductions or limits on benefit eligibility. It also states that the administration shall not include “reductions in staff except to the extent necessary to achieve the required outcomes and financial goals of the Challenges plan.” This language, according to House Speaker Smith, is sufficient to protect state workers from layoffs and to protect essential programs.

Two amendments are being proposed by Rep. Paul Poirier, I-Barre. One amendment would cap at 2 percent the maximum number of people in a given community under the direct supervision of the Department of Corrections.

Poirier’s second amendment would delay implementation of the Challenges until July 1, 2011. He proposes that the state temporarily raise taxes to fill the $38 million budget gap.

Here is a breakdown of some of the proposed statutory changes in the Challenges 2 bill:

Pollution permitting changes

The bill would allow industries to self-police discharges without notifying the Agency of Natural Resources. It also requires permit applicants to reimburse the agency for engineering or scientific research costs it incurs that exceed $3,000.

Commented Rep. David Deen, D-Westminster, chair of the House Fish and Wildlife Committee: “We’re going to try to speed up permitting; we’re going to try and use that time not used in pushing paper to get on the ground, to tell applicants what compliance means. Our goal is to reach compliance.”

Economic development

In its section of the bill, the House Commerce and Community Development Committee rejected all of the administration’s proposals and required regional entities and officials from state labor, agriculture and commerce agencies to collaborate in the development of a plan for integrated economic development planning by Oct. 1.

Commented Rep. Jason Lorber, D-Burlington: “The measures didn’t reflect the outcomes, and there was a fundamental flaw that we saw that the stakeholders were not consulted when this proposal was put together. It looked to us like it was cuts, as opposed to remaining true to maintaining the level of services; it looked to us like less for less rather than more with less.”

Corrections

This section of the bill has been designed in tandem with S.292, which would allow the early release of several hundred nonviolent offenders. The Legislature’s objective is to reduce the population of out-of-state offenders. The state currently has 685 inmates housed in facilities in Kentucky and Tennessee at a cost of $17 million. The House Institutions and Corrections committee has endorsed the administration’s plan to save $10 million in overall prison costs.

The bill would permit home detention of 100 people who are held at any given time in the state’s prisons before their cases go to trial. This would save about $1 million.

The bill includes about $3 million in total savings, after the state invests in supports for newly released prisoners, such as transitional housing ($1.3 million); community justice centers ($650,000) and judiciary programs ($200,000).

Rep. Alice Emmons, D-Springfield, chair of House Institutions and Corrections, commented: “If we can look at the nonviolent misdemeanors and nonviolent felony folks and see if we can supervise them, monitor them in our communities for a much lower cost and safer outside an incarcerated setting, we can bring back those out-of-state beds, and that’s where you get your savings.”

Education

Rep. Gary Gilbert, a member of the House Education Committee, said there is no guarantee of savings in 2012 from mandated districts or staff-student ratio. Gilbert said his committee stuck up for local control. “After due deliberation and 40 days of wandering in the wilderness, we crossed the mountain because it wouldn’t come to us. We met with Solomon, and Solomon said, ‘duh, why are you negotiating with the Department of Education? They don’t run local school districts. They can’t make appropriate choices for local communities.’”

“We’re asking for the Department of Education to present that info to the Senate and House Education committees, along with a description of the methodology they used,” Gilbert said. “We will look at those and make adjustments we feel are necessary. When we give preliminary approval to those targeted amounts(,) that will be communicated to those school districts and superintendents. School districts can make comments and reply in writing to the joint committee, and the DOE we’ll sit down and look at those comments and then set targeted amounts out for districts.

“Whether we call them targets or Challenges, it’s the same thing; it’s the districts that need to make the choices.”

Human Services

A care management program for Vermonters with chronic health conditions would be expanded to include people who now receive services under Medicaid and Dr. Dynasaur.

The House Human Services Committee granted two statutory alterations: a change in wording that allows the Department of Mental Health to provide early intervention for children with severe emotional problems, and the addition of two child support officers.

Rep. Ann Pugh, D-South Burlington, chair of the House Human Services Committee, commented: “Despite having less money to spend, our intent is to redesign services so they result in the same or better outcomes. We continue to expect that the design strategies hold promise for the improved delivery of outcomes, and we won’t settle for anything less.

Pugh added: “The laundry list of ideas and things the agency is already doing did not ask for the robust participation that one might expect to get from stakeholders, consumers and agencies that provide the services. So, the first part of our section outlines the importance of stakeholder involvement, which requires AHS to engage the direct participation of service recipients, service providers and other stakeholders in further evaluation and in ongoing design of proposals and implementation of those ideas that we’ve supported. We then carefully outlined that other proposals not go forward without the expressed accountability of the rest of the Legislature. We’re still in discussion as to how that will look.”