(Editor’s note: Jon Margolis is VTDigger’s political columnist.)
[I]n early March, the Senate Education Committee was considering legislation dealing with higher education and how to pay for it.
There wasn’t much disagreement about the basics. The committee shared the widespread belief that the University of Vermont and the Vermont State Colleges have been getting short shrift in recent years; they needed more money.
There also seemed to be support on the six-member committee for a proposal to require that grants and scholarships from the Vermont Student Assistance Corp. be used either at UVM, the state colleges, or schools “in states that have executed a reciprocity agreement with Vermont.”
As it is, Vermont students who get this money may use it anywhere. Rhode Island is the only other state with that policy.
The committee had taken no vote on that measure, S.142. But its sponsor, Sen. Anthony Pollina, P/D-Washington, thought the bill had a good chance of committee approval despite opposition from Chair Ann Cummings, D-Washington, who is also on the VSAC board of directors.
That is, until four of the six members were invited — or perhaps summoned — to an informal meeting. This one was not held in the committee’s usual meeting room, but in the office of Senate President Pro Tem John Campbell. When the meeting ended, S.142 was effectively dead.
As Cummings recalled it, the meeting was not an example of the leadership throwing its weight around, but the result of an agreement that “we weren’t going to (approve) anything we couldn’t reach accord on.”
Still, the way some of the other committee members rolled their eyes and declined to discuss the matter did at least raise the question of whether the word had come down from on high, and on high in this case does not mean the Senate leadership. It means VSAC.
As a somewhat stunned or at least surprised Pollina said, “VSAC has a lot of power in this building.”
So it seems to have, and perhaps it should. Since its founding in 1965, the nonprofit VSAC has awarded over 461,000 grants totaling more than $500 million to help Vermont students go to college or vocational school. It has also made or arranged $6 billion in student loans, according to Sabina Haskell, VSAC’s director of public affairs.
In the 2013-14 academic year alone, she reported, VSAC provided more than $19 million in “needs-based grants” to 13,450 students and administered more than 160 private scholarships.
Many of those students would have gone to college anyway. They used federally guaranteed student loans from private banks, a system the Obama administration replaced in 2010. Those loans now come directly from the government, at lower interest rates. But VSAC offered other loans and grants, and it actively encouraged thousands of young Vermonters who had never thought higher education was possible for them.
Besides, VSAC does more than just hand out money. Almost a quarter of its employees — it has the equivalent of 242 full-time staffers — offer counseling on postsecondary education. Others are involved in continuous research into what works and what doesn’t when it comes to helping Vermonters — especially those from low-income families — go to college or postsecondary vocational school.
So it should be no surprise that along the way it has become a highly regarded and powerful pillar of Vermont’s establishment. It may be the embodiment of that establishment. Its general counsel is Thomas Little, the popular and prestigious former lawmaker who is often called on when officials need someone whose judgment and integrity they can trust. He recently conducted the investigation into whether Attorney General William Sorrell had violated campaign finance laws.
Two legislators, Cummings and Rep. Sarah Buxton, D-Tunbridge, are on its board. Former Rep. Martha Heath is the board vice chair. Another member is Mike Smith, dubbed Vermont’s “interim fixer-in-chief” (FairPoint, Burlington College) by Seven Days.
When VSAC President and CEO Scott Giles said, “I did not speak to the pro tem” about the Pollina bill, there is no reason to doubt him. He didn’t have to. VSAC has clout.
It is also — to employ this year’s most overused word — huge. Its four-story, 121,000-square-foot headquarters building — assessed at $2.23 million — bestrides one end of Winooski’s tiny but lively downtown. In lieu of taxes, according to the Winooski city clerk’s office, VSAC paid $47,000 to the city last year, not too much less than the $53,000 a taxed building of that value would have brought.
According to its own “condensed financial information,” VSAC has more than $1.2 billion in assets and almost $1 billion in liabilities. In 2015 it earned $82.68 million, slightly more than half of which was interest on its loans. It spent $84.8 million. A little less than a third of that — $24.8 million — went for loans and grants to students. An additional $35.19 million was for operating expenses and depreciation, of which $20.9 million was for salaries.
They are some of the highest salaries in the state. According to VSAC’s 2014 Form 990, which all nonprofit corporations must file with the Internal Revenue Service, Giles earned $318,478 in total compensation. That’s less than UVM President Tom Sullivan’s $429,093, but much higher than Gov. Peter Shumlin’s salary of $128,000. At least four other officials earned more than $200,000 a year, and the total compensation for all five of them was more than $1.2 million.
Despite its wealth and clout — or perhaps because of it — a few legislators are beginning to raise questions about VSAC’s operation and its cost. In addition to Pollina’s attempt to limit the “portability” of VSAC grants, Rep. Barbara Rachelson, D-Burlington, wondered whether VSAC remains “the best way to deliver the (student aid) function.”
“We owe it to the voters to look at what other states have done,” said Rachelson, who as the executive director of the Lund Family Foundation has experience in how nonprofit corporations work.
In reply, VSAC’s Sabina Haskell asked: What’s cheaper than zero? “Every last dollar of the $19.2 million of state appropriations goes to … students,” she said.
VSAC has asked for $20.1 million for fiscal year 2017, but Haskell is right. The entire state appropriation is spent on grants to students. But money, as economists like to say, is fungible. This does not mean VSAC could use some of its interest income for the grants. But it raises the possibility.
For all of VSAC’s wealth, accomplishments and power, Vermont still has one of the lowest college enrollment rates in the country. Almost all experts blame the high tuitions at UVM and the state colleges.
They also note that especially among lower-income rural families, education beyond high school is not considered possible, and in some cases not even desirable. Both VSAC and the Agency of Education spend a substantial amount of time and effort trying to convince these families that vocational or academic higher education is in their interest, and the enrollment rate has risen. But not by much.
The “portability” debate is one of those policy disputes on which there are reasonable arguments on both sides. Pollina pointed out that almost 25 percent of students with VSAC grants use them out of state, which he called “a $5 million subsidy to other states.”
Giles said a more accurate figure was $4.4 million. Either way, Vermont taxpayers — unlike those in 48 other states — are sending some of their money to colleges elsewhere. Furthermore, Pollina said, students who go to college in Vermont are more likely to stay in the state as adults.
But Giles said VSAC has always been student-centered, especially lower-income students, and that these students should be free to go wherever they wish. Cummings recalled meeting one student who said she preferred going to an out-of-state college where she would not feel out of place as one of the few nonwhites in her class.
And Campbell, neither pretending he had not helped scuttle the portability bill nor apologizing for it, said the Vermont students who get VSAC grants should be able to go to “whatever college they can get into. They can go to Harvard if they want to.”