Insurance Co's eager for 'reform' ...

Business skeptical of federal health law

By Jesse Roman

Published:

Thursday, April 15, 2010 12:09 PM EDT

A strange dichotomy emerges when you ask Vermont businesses and insurance companies about the new federal health-care law.

What you might expect is not what you get.

Insurers seem to embrace the federal reform — or at least aren’t complaining much about it — while businesses and many individuals, the people whom the law is supposed to help, are confused, frustrated or worse.

“It’s a disappointment among business owners,” says Tom Rugg, an account executive at Hikok & Boardman Group Benefits division in Burlington, which helps 300 or so employers with their employee benefits programs. “Not one of my clients has said, ‘This is great,’ or has even suggested they were glad that this has passed.”

Rugg, a former staff member for U.S. Sen. Jim Jeffords, a Vermont Republican turned independent, thinks the law will do little to reduce costs for employers — in fact, he says the opposite is true.

“For businesses owners, this is not conservative vs. liberal ideology. This is application, this is functionality, this is fiscal impact,” said Robert Gaydos, president of Benefit Group of New England LLC, which represents more than 300 employers. “Business owners have long understood that the state and federal governments place financial and administrative burdens on them. They are resigned to this fact. … They will act slowly, deliberately, cautiously, and with one eye over their shoulder, waiting for the next shoe to drop.”

Most of his clients are not pleased with the legislation, he said, because he predicts that “large employers will only see increased costs and increased responsibility.”

Costs will rise

Insurance companies think premiums will likely rise, at least in the short term, as a result of the law.

“For many health-care consumers, this experience of health-care reform will be increased costs,” Gary Hughes, director of public and community relations at MVP Healthcare, said in an interview. The reason: “Added taxes and fees and mechanisms that will affect the commercial health-care insurance companies,”

An excise taxes on premiums kicks in in 2014, which MVP estimates will add 7 to 8 percent to total premiums. Pharmaceutical companies will start paying an excise tax next year, which may add 2 to 4 percent on premiums. Add that to the typical 8 to 10 percent annual health-care rate increases, and employers may be crushed, Rugg says.

“The government needs those revenue sources” to pay for increased access and subsidies, Rugg says. “But everybody gets that those charges will be passed on to the consumers. That’s the frustration. … There is no cost containment in this law.”

Bill Little, vice president of MVP of Vermont, says as much.

“Many times, insurance companies are what people focus on (when it comes to cost) because what we do appears very tangible,” Little said in an interview. But, he says, much of the problem “tends to be the cost of care, not the insurance carriers. Insurance carriers really just reflect that cost of care.”

Executives at Vermont’s two largest insurers, MVP Healthcare and Blue Cross Blue Shield, both said in interviews that the federal changes will not be huge obstacles for them.

“The impact on insurers like Blue Cross Blue Shield and others in Vermont will be nowhere near as significant as it will be in other parts of the country,” said Kevin Goddard of Blue Cross. “A lot of the insurance reform that is part of the federal law is already in place (in Vermont) and was done as far back as the 1990s.”

Neither MVP nor Blue Cross seemed particularly wary of the law or all that concerned about any of its provisions, beyond higher costs for consumers.

“We are committed to implementing this legislation,” said Hughes of MVP. “We are diligently working on the parts we can … (and) find ourselves in a position now of really analyzing and moving forward at the same time.”

Blue Cross officials “embrace the fact that government regulation and legislation is a very important and significant part of what we do,” Goddard said. “We see ourselves in partnership.”

Asked if anything in the law worries Blue Cross from a business perspective, Goddard couldn’t name anything.

Cost trumps access

There are two pieces to the health-care reform debate: cost and access.

Vermont has long been among the nation’s leaders in access, insuring 93 percent of residents. State health-care costs, while increasing at alarming rates, are still below the national average. According to a 2008 report by the state Department of Banking, Insurance, Securities & Health Care Administration, Vermont residents spend an average of $7,414 per year on health care, below the U.S. average of $7,681. However, the state is catching up. Vermont health-care costs are rising faster than the U.S. average — up 8.2 percent from 2005 to 2008, compared to 5.7 percent nationally. Health care in Vermont in 2008 was 18.1 percent of the state’s gross domestic product, compared to 16.2 percent nationally.

Cost is a huge problem for individuals and employers, who devote more and more resources to premiums, often at the sake of employee wages.

Many believe the federal law addresses only one side of the equation and totally balks on cost containment.

“Access is easy to do politically; give everyone access and worry about the costs later,” Rugg says. “Cost is different. That’s not an easy thing; it upsets hospitals, doctors and insurance companies. There are a lot of players there and you have to look at it really hard.”

But addressing one and not the other is a losing strategy, says Dr. Deborah Richter, a doctor from Montpelier and past president of Physicians for a National Health Program.

“Increasing costs means decreasing access because people can’t afford coverage. We’ve got to get (costs) under control,” she said in an interview. “Subsidies won’t take effect until 2014, and my fear is any subsidies will be outweighed by enormous increases in premiums the next four years.”

For much of the health-reform debate in Washington, increased access was the rallying point. Many people thought that making health care more accessible was going to fix the health-care system — and that’s plain wrong, Gaydos said.

The long debate “was never about pre-existing conditions or community rating — insurance companies already do those things in about half the states,” he said. “This was about building a (fiscal) model that works.”

In that regard, the law “gave some people more health insurance, but it didn’t do much else,” Richter said.

Unintended results

Gaydos sees many flaws in the law.

“The unintended consequences will be vast,” he warns.

The legislation mandates insurance, and penalizes employers and individuals who don’t get it.

However, there is a significant disconnect between incentives and reality.

“Why would a 30-year-old healthy male purchase health insurance for $4,000 annually when the penalty is only $95 annually, and when and if he needs the insurance, it is guaranteed issue, community-rated, and no limitations for pre-existing conditions can be applied?” Gaydos said.

Another flaw he sees involves the penalty on employers and the insurance exchange subsidy structure.

The average U.S. employer pays about $7,000 (about 67%) per employee per year for health insurance costs. The average employee pays $3,500 per year, Gaydos says, citing figures from the Kaiser Family Foundation.

“Effective 2014, an employer with 50-plus employees could drop their health plan and only have to pay $2,000 per employee per year penalty. The math says that they will drop coverage,” he says.

Odds are those workers will go to the new health insurance exchanges, which will be set up by 2014. At the exchanges, premiums will be based on household income. Low-income households ($30,000 or less per year) would pay only 2 to 3 percent of income, or about $1,000 annually — significantly less than current averages.

Average-income households ($66,000 per year) would pay 7 to 8 percent of income, about $5,280 annually — one third higher than employees now pay, on average. Higher-income households ($100,000 and up) would pay 12 percent of income, about $12,000 annually — nearly triple the current employee contribution.

“To make matters even worse, the premiums listed above are based on 2010 premiums, and by 2014, the premiums will be cumulatively increased by over 28 percent,” Gaydos said.

However, he doesn’t believe most employers, at least in Vermont, will be so heartless as to get rid of health insurance and pay the fine.

“Most employers are in fact moral, and strive to be fair to all employees,” he said.

The logistics of health care reform

Vermont tackles reform

Health-care law’s impact not clear yet

By Jesse Roman

Published:

Thursday, April 8, 2010 12:10 PM EDT

Well before President Obama signed the long-anticipated federal health-care law last month, hospitals, doctors, government agencies, insurance companies, consultants, lobbyists, regulators, patients and state politicians were digging through all 2,700 pages of it, trying to decipher what it all means for Vermont.

As you might expect, it’s not yet clear. Not even to the experts.

The hardest part will be “learning and understanding what the different components of the legislation actually means,” said Paulette Thabault, commissioner of the Vermont Department of Banking, Insurance, Securities & Health Care Administration, in an interview.

Gov. Jim Douglas has asked his health-care cabinet — comprised of various department heads — to study the new law to see “if there’s anything we need to do in the Legislature right now to comply with the law,” he said Monday in an interview in Morrisville.

One key member of the Douglas team is Susan Belio, Vermont’s director of health-care reform. Belio, also the head of the Office for Vermont Health Access, was appointed by Douglas to coordinate and facilitate the state’s own broad health-care reform efforts in 2006. That was a lot of work, but nothing compared to leading the state’s efforts on the new federal reform.

The federal legislation is “much bigger than in 2006,” and in many cases leaves her to guess about the how and the what.

“In this (federal) document, the majority of areas don’t have specific detail, and not a lot of federal guidance has come out on what it means or how to implement it,” she said Tuesday in an interview. “We’re having to do our best guess at this point what some things mean. …

“At least (in 2006), I could go to the Legislature, the ones who wrote it, and ask, ‘What did you mean by this?’”

Not only must the federal law be read, digested, understood and implemented, the work must be done in a race against time.

The Legislature has largely firmed up the budget for the fiscal year that starts July 1, and any money that may be needed for the new health-care program, or laws changed to comply with federal statute, must be accomplished before the Legislature adjourns in May.

The federal law offers grants and other resources to help states, “but no detail about how to access them. We’re in wait-and-see mode,” Besio said.

The health-care law is huge and sweeping, “but states were not given legislative resources to deal with it,” said Douglas, who is chairman of the National Governors’ Association. He said he has spoken with U.S. House Speaker Nancy Pelosi about providing money and assistance to help states put the health-care law into action.

“This is very significant for states,” he said. “It will take some financial effort. We’ll have to continue to work with states closely.”

“There is a lot of planning that has to happen,” Thabault said. “2010 are the immediate things, then we have to anticipate the second round of changes in 2011, then the really big changes happen in 2014. So between now and 2014, a lot of planning needs to be done.”

Ups and downs

“This bill is a real paradigm shift, and one we will continue to move from,” says Marie Beatrice Grause, president and CEO of the Vermont Association of Hospitals and Health Systems. “In a way, it’s really a new beginning and it will be a big challenge for hospitals, patients, insurance companies and doctors to start looking differently at how health care is financed: How doctors are paid, how consumers pay and how providers administer health care.”

There are so many moving parts and vagaries that hospital administrators, doctors and other health-care leaders are still in the process of figuring out what the new law means to them.

The consensus among health-care providers is that more access to health-insurance coverage is good.

“There is nothing worse than having patients who lack adequate insurance, who don’t see a physician unless it’s an emergency,” says Paul Harrington, executive vice president of the Vermont Medical Society.

The health-care bill will extend coverage to 10,000 uninsured Vermonters and improve existing coverage for 381,000 more, says U.S. Rep. Peter Welch, D-Vt. Nobody argues the merits of that.

What has been debated is the mandate that everyone buy health insurance.

“Conceptually, I think it’s a great idea,” said Judy Tarr, president and CEO of Central Vermont Medical Center in Berlin. “After all, you need insurance to drive a car. It’s not unreasonable to ask people to be concerned with their health.”

Vermont hospitals had to eat more than $57 million worth of bad debt or unpaid bills last year, for care provided to people unable or unwilling to pay, according to a BISHCA report.

That will be slashed by $46 million — or 80 percent — because more people will have insurance, Welch said.

Most hospitals, doctors and others also applaud the end of certain insurance practices, such as denying coverage to people with pre-existing conditions — which Vermont already does — and dropping patients’ insurance once they get sick.

But hospitals, doctors and state officials also have their worries.

For instance, the law includes $148.6 billion in Medicare cuts over the next decade, which hospitals and doctors say will increase the widening gap between what health care actually costs, and the amount that Medicare will pay. Medicare is the federal insurance program for older Americans. The Medicare rate drop will affect six of the state’s 14 hospitals — the other eight are critical access hospitals, which have a different funding structure, Grause said.

Just last week, because Congress failed to adjust the reimbursement formula, Medicare rates paid to doctors and hospitals fell a dramatic 21.3 percent, Harrington said.

“This is a well-recognized problem and Congress failed to address it,” he said. The laws are making it difficult for doctors to afford to see Medicare patients, he said. In many cases, patients covered by Medicare and Medicaid — the federal-state health-insurance program for the poor — account for half their business.

Every hospital, including critical access hospitals, such as Copley in Morrisville, will be affected by a provision in the bill that reduces the amount federal money hospitals receive to help pay for uninsured and low-income patients. The federal government theorized that the reduction in Medicare and Medicaid reimbursements would be more than made up by increased revenue from the boost in the number of insured.

But in Vermont, where 93 percent of the population is already insured, that effect will be negligible, Grause said.

“The good news is, that isn’t happening immediately; it will take awhile,” she said. “In the world I live in, that’s 10 political lifetimes, and we’ll have a chance to take another bite at the apple.”

Hospitals and doctors also criticized the lack of any medical-malpractice reform in the law. Frivolous lawsuits lead to defensive medicine and higher costs, Tarr says.

“If you fear being sued, you may change how you practice and order more tests and be that much more careful, which really drives up costs,” Tarr says.

Malpractice insurance can run upward of $70,000 per year, depending on what type of practice a physician has, Harrington said.

Another issue is staffing. As more and more Vermonters have access to health care, more doctors will be needed.

“It’s all well and good to have more people insured, but if they don’t have access to physicians, it’s kind of a broken promise,” Harrington says. “There is already a shortage of primary-care physicians in Vermont. These workforce issues have not been adequately addressed.”

Gov. Douglas says requiring everyone to be insured will also cost Vermonters money, at least in the short term, as a result of what he called the “woodwork effect.”

About 7 percent of Vermonters are uninsured, and many of them are eligible for Medicaid or other programs but haven’t yet applied, he said. The mandates will bring them out of the woodwork and add more people to the state and federal programs, Douglas predicts.

“There will be added pressure on the budget, because of the mandates,” he said. “But I think it will affect Vermont a lot less than other states because we have such an expansive Medicare system already. … We are leaders and cited nationally for our innovative approach to care.”

For now, everyone is waiting to see what’s going to happen and hoping the state and federal governments will make the transition as smooth as possible.

“I wouldn’t mind having the Vermont Legislature support us in implementing this bill,” Tarr said.

•••

Timeline of health reform

Effective Immediately

Small-business tax credits for offering employees insurance.

Federal grants for a state health care “ombudsman” to assist consumers with complaints and questions.

Effective within 90 days

Indoor tanning services tax.

A Web site through which Vermont residents can identify affordable health-insurance coverage options in the state.

Effective within six months

Elimination of pre-existing condition limitations for children.

Children can stay on parents’ health insurance plan until age 27.

Elimination of lifetime limits on benefits.

Free preventive benefits. No cost-sharing (such as co-pays or deductibles) for preventive health care.

Prohibits rescissions: companies cannot cancel coverage.

Effective January 2011

Employers must report the value of health benefits on employees’ W-2 tax forms.

New voluntary government-operated long-term insurance plan financed by payroll deductions.

2012

Hospital payment must be linked to health outcomes, as defined by U.S. Secretary of Health and Human Services.

2013

Hospital tax (0.9 percent to 3.8 percent of income) on high-income wage earners ($200,000 individuals, $250,000 couples).

New Medicare tax on capital gains, dividends, interest and other unearned income.

Insurance carriers must adopt standard administrative rules and procedures.

2014

Creation of state health-insurance exchanges.

Income-based individual premium subsidies.

Limits all group deductibles to $2,000 for individuals and $4,000 for families.

Limits eligibility waiting periods to 90 days.

Limits maximum out-of-pocket health-care expense based on income as it relates to the federal poverty line.

Guaranteed health care, no pre-existing condition limitation, community rating (two exact plans must cost the same; premiums can vary only according to age, geography, family size and tobacco use).

Elimination of all limits on benefits.

2018

Excise tax on high-cost plans

— Source: Benefit Group of New England

http://www.stowetoday.com/articles/2010/04/08/stowe_reporter/news/local_news/doc4bbdcc882416f208105252.txt

Insrance broker talks health care reform

Benefit Group president sees pros and cons in health bill

By Jesse Roman

Published:

Thursday, April 15, 2010 12:09 PM EDT

There’s so much in the federal health-care law passed last month that few people, even the experts, can explain it all.

Robert Gaydos, president and founder of Benefit Group of New England (now called BGNE), may come the closest.

Gaydos, whose company helps more than 200 employers across New England figure out their health-care plans, has read all 2,700 pages of the bill and has designed and hosted webinars to explain the nuances of the new law and how it affects employers.

In 1999, Gaydos co-founded Choice Plus of New England, which was a plan manager for ERISA health plans. In 2001, Gaydos co-founded the Waterbury-based Choice Care Card, which administers health reimbursement accounts and flexible spending accounts.

Gaydos was a member of the Vermont Public Oversight Commission from 2001 to 2003, which reviews hospital budgets and certificates of need. Since 2006, Gaydos has been on the CIGNA National Producer Advisory Council, and in 2008 was appointed to the MVP Healthcare Broker Advisory Group.

The Stowe Reporter recently talked with Gaydos about the federal health-care law, and what it means for Vermont’s businesses and insurers.

Question: What immediate impacts do you foresee in Vermont from the new health-care law?

The only short-term effect for Vermont is the small-business tax credits. These tax credits are effective immediately, and available for businesses that employ 25 or fewer full-time equivalent employees with an average annual wage less than $50,000 (excluding the owners’ salaries). These tax credits are significant for employers with fewer than 10 employees, which is the majority of Vermont businesses. Information is available at www.irs.gov/newsroom/article/0,,id=220809,00.html.

Q. Are other states more affected?

Yes. In 1992, Vermont enacted significant small-group health-insurance reform with Act 52. This act implemented guarantee issue, community rating, and tight controls concerning limitations for pre-existing conditions.

In Vermont, small groups are not rated based on health status, age, sex, etc. Approximately 30 states never implemented these types of significant insurance reforms. For these states, adapting to immediate health-insurance reforms (the elimination of pre-existing conditions on children, increasing children age to 26, removing lifetime limits, etc.) will have premium impact. Later in 2014, when these states fully implement the insurance exchanges, they will have to comply with guarantee issue, community rating, and the elimination of pre-existing conditions. This will have significant rate impact for these states.

For example, community rating creates an average price rather than a varying price. Hence, younger workers will see their rates double, while older workers would see their rates drop slightly. Vermont moved to community rating 18 years ago.

Q. Do you think insurance premiums in Vermont will ultimately go down, up or stay the same as a result of this law?

The Vermont small-group health-insurance market (1 to 49 employees) functions well, especially in comparison to other states. We have the highest market penetration of consumer-driven health plans in the U.S. This has kept our average small-group premiums below the national average. Hence, there will be less trend and rate effect in Vermont than other states.

In fact, there is a chance that more carriers will enter the Vermont market, and this increased competition would be a good thing.

The law would change the small group insurance market from the current 1-49 employees to 1-100 employees. Employers with 50-99 employees are currently rated based on claims and demographics. Effective 2014, these groups would become guarantee issue and community rated, and would eliminate pre-existing conditions limitations.

The individual health-insurance market in Vermont is virtually nonexistent. Allowing individuals to purchase from the same insurance market as small business (which is one of the purposes of the insurance exchanges) will dramatically improve the plan choices and costs for individuals in Vermont.

Q. What are some of the primary concerns your clients express about this bill?

Concerning the new health reform law (PPACT), Vermont employers are lost. They do not understand PPACT. They are reaching out for guidance. They have little faith that anyone can solve their problem (the cost of health insurance is rising 2.5 times faster than inflation).

Over the past decade, I watched as business owners gave up and almost seem to resign themselves to this burden. They are very frustrated. We expect that now that this law is in place, they will learn and adjust.

Why do employers provide health insurance? The logic is to attract and retain employees. However, that is really not the case anymore. Over time, it has become somewhat an accepted moral obligation. We expect that employers will struggle over the next three years as they review this new law, learn the impact on their businesses, and adjust their business strategies appropriately.

Q. Has the reaction been positive or negative among businesses you work with?

Negative. For businesses owners, this is not conservative vs. liberal ideology. This is application, functionality, and fiscal impact.

Business owners have long understood that the state and federal governments place financial and administrative burdens on them. They are resigned to this fact.

Since the recession took root in late 2008, most business owners are living in a new world where credit is difficult and where the future is unknown. They have learned to operate on less. They have lost predictability.

While most business owners do believe that the worst of the financial crisis is over, they also believe that we are years away from full employment. They will act slowly, deliberately, cautiously, and with one eye over their shoulder, waiting for the next shoe to drop.

Q. What, in your mind, are the big questions or changes in this law that remain unanswered or ambiguous?

Functionality and financial projections. PPACT is perhaps the single largest government intervention in our history. The unintended consequences will be vast. There are many parts of this law that clearly do not function in the real world (premium subsidies, out-of-pocket subsidies, improved Medicare costs, improved utilization of medical procedures). If even one part of this law fails, then the entire fiscal projection falls apart.

This law projects that 32 million currently uninsured Americans will purchase insurance from the insurance exchange or access Medicaid. Under this law, we are banking on improved utilization and health status, and lower per-capita costs on these individuals. This is extremely unlikely. Economic predictions are based on rationality. Human behavior is never rational.

Then there is the basic idea of supply and demand. Under this new law, we are increasing demand immediately (adding 32 million Americans to insurance). However, it is not possible to increase supply (providers) at the same pace. It takes decades to increase the supply of medical providers. Once again, the unintended consequence of this will be vast.

Q. Who (patients, hospitals, businesses, insurance companies, or other) is the big winner in Vermont as a result of this legislation? Or is everyone a winner? Or loser? Or a little of both?

Very good question.

Small businesses benefit immediately with government subsidies.

Individuals without access to employer-subsidized insurance will benefit in 2014.

Large employers will only see increased costs and increased responsibility.

Hospitals and providers will see significant changes in compensation, and I believe that in five years, providers will see PPACT in a very negative light.

Concerning insurance carriers, the blame has been shifted. It is no longer their responsibility. They are being told what benefits to cover and not cover. They being told how much to spend on care and administration via the mandated loss ratios. They are being told who to cover and how to calculate the premiums. They are being told where to sell their products (exchanges). They are being told how much to compensate their executives (executive pay limits in the law). They are being told how much to compensate their agents and brokers.

Where is their responsibility? They have none, other than to administrate, which they are very good at. Citizens will learn that it is not the insurance company’s fault (or decision); it is the government’s decision (and fault).


http://www.stowetoday.com/articles/2010/04/16/stowe_reporter/news/local_news/doc4bc6fb11cb0d0371884108.txt

Vermont edcation reform gaining traction

School leaders call for reform

Newly elected Stowe School Board member Richard Bland addresses the Vermont Senate Education Committee at a hearing in South Burlington High School on Tuesday. Photo by Jesse Roman

By Jesse Roman

Published:

Thursday, April 1, 2010 12:10 PM EDT

Teachers, parents, school board members and top school officials delivered a unified message Tuesday night to the Vermont Senate Education Committee:

Vermont needs education reform.

What reform should look like is still open for debate, but most, if not all, of the people who spoke at a public hearing in South Burlington said consolidating school governments would benefit students and taxpayers.

Vermont has more than 260 school districts, each with its own school board, and 63 supervisory unions that provide top-level administrative services to those districts. One proposal in the Legislature would reduce the number of supervisory unions to 15 or 16.

“Sometimes in discussion on this we fail to recognize the seriousness and fall into quaintness and cuteness; this is not about the past, this is not about what used to happen, this is serious business,” said Jim Fitzpatrick, superintendent of the Essex Town School District and a former Stowe school employee. “This is one of the few times I’ve seen the Legislature in Vermont have a real opportunity to change the way we provide education in this state and I’d hate to see you guys miss this. … The system we have is inefficient.”

With consolidation, “we will either save money, get more for the money we already spend, or perhaps both,” he said.

Inefficiency was the word repeated time and again by school administrators, who told the Senate committee they spend more time dealing with school board members and selling budgets than actually running the schools.

Voters in the Franklin Northeast Supervisory Union, home to Richford and Enosburg High Schools, would probably reject consolidation, said Jay Nichols, the superintendent.

“They are willing to talk about merging to a unified district, but in the end they are not willing to give up local control,” Nichols told the committee. “But the administration and staff believe going to a unified district would be better for the kids and better financially. …

“One set of policies, hiring practices, transportation, economies of scale, sharing professionals — that all makes sense.”

Nichols said he spends a lot of time just negotiating teachers’ contracts, which are different for every school in the district.

“We do everything five times: five budgets, five policy manuals, five board meetings. There’s an awful lot of redundancy,” said David Bickford, superintendent of the Orange-Windsor Supervisory Union. “You need to provide the opportunity for your education administrators to spend more time on education issues, and less time serving governmental bodies.”

While almost everyone said the current school structure needs fixing, there is hardly consensus on how to proceed. Many favored letting school districts decide for themselves whether to consolidate, then, if they don’t take the bait, requiring them to merge.

“After applying the carrot, there has to be a stick,” said Richard Bland, who won election to the Stowe School Board this month.

Bland, like others who spoke, is open to a short window for allowing school districts to consolidate voluntarily, but wants the state to step in if progress is slow, because the state’s budget problems require it, he said.

Not everyone was as hawkish.

“Begin with freedom to consolidate, move to incentives to consolidate, but if we go to a system where we’re told to consolidate, I would be very careful,” said Richard Cassidy, chairman of the South Burlington School Board. “What if two districts have very different pay scales? You need to ask how that would be resolved, and my guess is it won’t be to move toward the less generous compensation.”

Whatever comes out of the Legislature, cost cuts should not damage educational quality, Cassidy said — a sentiment echoed by many.

“If we don’t do a good job on education, people will not want to come here to open their business; people will not want to stay here and will not want to move here,” Cassidy said. “Be careful of the quick fix.”

Not enough money

For the first time in years, there is broad consensus among Republicans and Democrats about a need to shake up Vermont’s education system.

“The problem is there isn’t enough money to pay the bill, and that’s a big problem,” said committee Chairman Bobby Starr, D-Essex-Orleans. “Our children are doing well, test scores are good, but there’s not enough money to pay the bill. We’re trying to find a way to provide good, quality education and save some money.”

On Tuesday, state Education Commissioner Armando Vilaseca outlined a plan to consolidate Vermont’s 281 school districts into 50 or fewer, and save $15 million to $17 million in fiscal year 2012. The plan would give him broad authority to consolidate districts as he sees fit, and reduce student-staff ratios.

The measure would increase student-staff ratios from 4.55 to 1 to 4.95 to 1 for fiscal 2012, eliminating more than 1,200 jobs and saving about $46 million, he said.

House members have been unwilling to embrace that type of top-down approach to consolidation and seem to prefer an incentive-based plan.

Earlier this month, the House Education Committee endorsed the only education reform bill now before the Legislature.

The bill — often referred to as the Peltz bill for Rep. Peter Peltz, D-Woodbury, who wrote much of it — does not require that school districts consolidate, but does require supervisory unions to at least discuss it. Budget and tax incentives are offered to districts that decide to merge.

If the House passes the bill, it goes to the Senate. It’s unclear what a final bill might look like, since there are major rifts between chambers about whether the state should require school districts to consolidate, or leave it for the districts to decide.

Two other plans have been proposed, but likely won’t be considered this year — from Rep. Heidi Scheuermann, R-Stowe, and Sen. Robert Hartwell, D-Bennington; each would require consolidation from 260 school districts to only 15 or 16.

Unlike the Peltz bill, Scheuermann’s bill also does away with the statewide property tax that now funds education. Instead, the individual, much larger school districts would set their own property tax rates.

That funding change is crucial in any reform, says Bland, of the Stowe School Board.

“In the gold town of Stowe … we have suffered through maintenance budgets over the last decade. Now we are seeing our programs cut wholesale,” Bland told the committee. “We are seeing one of the best school systems in the state of Vermont being dismantled in front of our eyes.”

In the Peltz bill, “there is no recommendation about funding at all, or for ameliorating the situation we face,” Bland said.

The best hopes for school-finance reform seem to reside in the Senate, which Scheuermann says has been more receptive to her ideas.

However, Senate leaders, including Susan Bartlett, D-Lamoille, although open to the idea, say it’s likely too late in the year to consider dramatic funding changes.

http://www.stowetoday.com/articles/2010/04/01/stowe_reporter/news/local_news/doc4bb48bbbe0786008853624.txt

Will state mandate school consolidation?

School funding critics gain some traction

By Jesse Roman

Published:

Thursday, March 18, 2010 12:10 PM EDT

There’s growing consensus in the Legislature, on both sides of the aisle, that school reforms need to happen sooner rather than later.

Even the rhetoric is the same: Consolidating small school districts would save money, improve educational opportunities, and result in a fairer tax code.

But reform may not occur this year.

“I think that there is a desire to move the issue forward and a recognition that we do need to change the way things are done; the rub is how do we do that,” House Speaker Shap Smith, D-Morristown, said Tuesday in an interview.

Legislative leaders set last Friday, March 12, as the deadline for advancing bills out of committee to give the House and Senate time to consider and pass bills. Those bills that didn’t make it out of committee likely won’t make it to the floor this session.

The leading education reform bill was conspicuously absent at the end of the day Friday, largely because disagreements lingered within the mostly Democratic committee. Smith granted an extension and the bill was finally reported out of committee Tuesday night by a unanimous vote.

The bill, largely the creation of Rep. Peter Peltz, D-Woodbury, stops short of requiring school districts to consolidate, but does require that supervisory unions at least discuss it. Budget and tax incentives are offered to districts that decide to merge.

If the House passes the bill, it goes to the Senate. It’s unclear what a final bill might look like, since there are major rifts between chambers about whether the state should require school districts to consolidate, or leave it for the districts to decide.

All three education proposals unveiled in recent weeks feature school district consolidation in some form.

Unlike Peltz’s plan, the other two— from Rep. Heidi Scheuermann, R-Stowe, and Sen. Robert Hartwell, D-Bennington — mandate consolidation from 260 school districts to only 15 or 16.

“As the process unfolds, we’ll work to find the proper balance of incentives and, where appropriate, make sure people are considering the consolidation issue,” Smith said Tuesday.

The argument on whether to require districts to consolidate doesn’t seem to break down by party lines; rather, there appears to be a rift between House and Senate.

The Peltz plan leaves consolidation up to local districts; Hartwell’s Senate bill, which didn’t make it out of committee, would require consolidation — an approach favored by several influential senators, including Sen. Susan Bartlett, D-Lamoille.

Scheuermann said Senate Democrats have been much more responsive than House members to ideas in her education bill, including abolishing the statewide property tax and having the new, big regional districts handle school funding.

“I’ve been beating this drum a lot and I’ve been making a lot of inroads lately in the Senate,” Scheuermann said in an interview.

Bartlett says she is open to the idea of switching from a statewide school property tax to a small, regional-based system — but doesn’t see it happening this year.

“It is way too late in the year to get into changing the funding system. That is a big conversation,” she said. “But we can give it legs so people start thinking about it and talking about so perhaps we can roll it out next year.”

Scheuermann’s plan never had much of a chance in the House, where the Education Committee, chaired by Rep. Johannah Donovan, D-Burlington, abandoned it early on in favor of Peltz’s incentive-based plan.

That’s largely because the committee thought a top-down mandate just wouldn’t work, Peltz said Tuesday in an interview.

“The cruel irony and contradiction here is people blame the statewide property tax for various problems, but they think the best way to answer that is by further state imposition,” Peltz said. “Over the years, we’ve had 20 attempts at school consolidation, but because we went with a top-down mandate with little concern with the quality of schools or direct local oversight, they have failed.”

In her column in this week’s Stowe Reporter, Scheuermann makes the exact same but opposite Act 60 argument for why opponents shouldn’t have issue the state mandates in her bill.

“The irony in this argument is that many of those who oppose my plan on this ground also supported, and continue to support, a statewide property tax,” she says. “If that is not a state mandate, I’m not sure what is.

Peltz, a member of the House Education Committee, said the committee has heard testimony from superintendents, school board officials, principals and teachers, and they have largely been receptive to his ideas.

“They’ve said, ‘We’re willing to do this if the decisions are made locally,’” Peltz said. “They know efficiencies can be gained.”

Speaker Smith agrees with the House Education Committee’s direction, and believes incentives can achieve the desired effect, so the state doesn’t have to be too heavy-handed.

“I think the conditions on the ground are such that supervisory unions … might make those decisions on their own,” Smith said. “I don’t think (consolidation) is something we can mandate from Montpelier, especially if it’s not clear it would be saving money.”

Scheuermann isn’t convinced about that, and neither is Bartlett.

“Do we let people volunteer, or do we have Montpelier say, ‘Here’s the path: In X number of years we’ll have 14 districts,’” Bartlett said at a legislative breakfast in Stowe last week. In her view, the latter is preferable to telling school officials, “Here’s a lofty goal, now get here somehow.”

“The path to getting to larger districts needs to be paved by finding all the best practices in administration and requiring all districts to implement these practices over a two-year time period,” Bartlett said in a recent statement to the Stowe Reporter.

For Scheuermann, mandated consolidation is important, but perhaps more important is fixing the property tax system. She says she’s made “inroads” in the Senate on the issue, but, when asked, said it’s far from clear that initiative will pass: “In politics, a month and a half is a very long time, so I can’t answer that,” she said. “I just hope we don’t do something for that sake of doing something.

“My brother always told me, ‘Never mistake activity for achievement.’ I think that applies exceptionally well in this case.”


Read story at: http://www.stowetoday.com/articles/2010/03/23/stowe_reporter/news/local_news/doc4ba20f86ce5e6758425124.txt

What Leahy says on health bill

Comment of Senator Patrick Leahy (D-Vt.) On The Signing Of "The Patient Protection and Affordable Care Act" The White House Tuesday, March 23, 2010 After a long night of worry and ruin for uncounted millions of American families who have fallen through the cracks of a broken health insurance system, this is the dawn of an historic new day of hope in a country that has always risen to meet its challenges and to renew its promises. America has some of the best health care in the world, if you can afford it. Millions of families in Vermont and across the nation worry that they are just one paycheck away from medical and financial disaster. This is a new dawn for them. Wherever I travel in Vermont I am often stopped in the grocery store, at church, on the street or at the gas station to listen to personal, wrenching stories, like the woman from Winhall who needs to spend $500 a month on prescriptions but who would be uninsured if not for her husband's job. She is working two jobs just to make ends meet and to afford their health care costs. Or the small business owner who works six and seven days a week but still can't afford the blood tests her doctor recommended. If she becomes sick she will lose her business and her home. This is a new dawn for them. I grew up in my family's small business in Montpelier. I know that business owners want to attract and keep good workers and many want to be able to offer health insurance options. Spiraling insurance costs are rapidly taking that option away. Some of the most immediate and far-reaching reforms in this new law are the tax credits that will help small businesses continue to offer insurance to their employees. This is a new dawn for small business owners and for those who are self-employed. Until now, the rules have been stacked in favor of insurance companies. Now the rules will protect America's families. Like many sweeping reforms of our history, this legislation will likely be improved in the coming years as these reforms are implemented. For example, I will continue to push for a public option and for repeal of the health insurance industry's anti-trust exemption to promote competition, choice and lower prices. This week, the Senate is already working on improvements to this legislation. These include closing the Medicare 'donut hole' in the next several years, making coverage more affordable, and creating a more equitable distribution of Medicaid reimbursements to states like Vermont that have acted early on reform. Health insurance reform has prevailed through the grueling gauntlet of obstructionism erected by defenders of the status quo. One remaining gauntlet remains in the Senate, where many are trying to derail these further improvements to this law - improvements that many of these opponents say they support. I am proud of our president and our country for proving that change is possible when a pressing national interest is at stake. Sincerely, PATRICK LEAHY United States Senator

Keene coaches White to gold

Keene has the golden touch

U.S. snowboard coach Bud Keene of Stowe pumps up gold medalist Shaun White before White’s impressive final run at the 2010 Olympics in Vancouver. Photo by Neil Korn

By Jesse Roman

Published:

Thursday, March 4, 2010 12:08 PM EST

Stowe resident Bud Keene is on the phone a lot these days.

Just last week, he spent two hours chatting with a writer from Rolling Stone magazine. This week, he’s talking to Time magazine.

It’s gotten to the point where he’s turning down tiny publications such as the Denver Post (circulation 255,000) because there’s just not enough time.

It’s the residual effect of another gold medal, of being the most decorated snowboarding coach in history, and especially of being Shaun White’s coach.

White — snowboarding’s Michael Jordan, Tony Hawk, and Muhammad Ali all rolled into one — transcends his sport. It’s now unclear which is more famous: White, or the sport he champions.

Two weeks ago in Vancouver, the 23-year-old from Carlsbad, Calif., with the flowing red hair dropped the two most technically difficult halfpipe runs in history to win his second-straight Olympic gold medal. Before Vancouver, White was already an icon; after Vancouver, where he landed his latest biggest trick yet — his new Double McTwist 1260 — he’s even further off the charts. Keene, as his coach, has also been lifted to celebrity status of sorts. And now, the phone won’t stop ringing.

“It’s cool. My stock definitely goes up working with Shaun,” Keene said last week in an interview in Stowe. “The best halfpipe rider on the planet has chosen me, which is great.”

Coaching gold

When White asked Keene to be his coach in the summer of 2005, neither was exactly an unknown. White was already winning X-Games, was one of the best riders and skateboarders in the world, and was the favorite for halfpipe gold at the upcoming Olympics in Torino.

Keene was the head U.S. halfpipe coach, and it seemed inevitable that they would work together.

“It was inconceivable that he wasn’t going to be on the Olympic team” in Torino, Keene said. “We had already some degree of familiarity, but in the summer of 2005 we decided to formally hook up and start working together in anticipation of the Olympics. We both figured the greater familiarity we had, the better.”

From that point forward, Keene and White were together all the time. They spent months in New Zealand perfecting his tricks.

“We basically lived together on the road. We both had amps and electric guitars; we’d play and sing, find a drummer and jam,” Keene said. “We had some great times sitting around playing cards, riding dirt bikes in New Zealand, or playing cricket or whatever.”

Over time, their bond has grown bigger than coach and rider.

“Bud is great; he is the guy I can go to and talk about anything,” White said. “He is great to hang out with, ride with, and obviously is a pretty good coach. In the end, though, it’s cool to say that Bud is my friend and that I owe a lot to him.”

That connection, camaraderie and familiarity are crucial.

“He’s doing death-defying stuff out there,” Keene says.

All that work turned into a gold medal for White in Torino.

Terrifying

Four years later in Vancouver, not a whole lot had changed — at least on the surface. White was still the overwhelming favorite to win gold, Keene was still his coach, and both had worked to develop new tricks no one else had dreamed up, never mind executed.

But Vancouver was different.

Keene wasn’t the halfpipe head coach; he was there to help all the athletes, but he was mostly Shaun’s guy. And the expectations were stifling.

“This one for me was much more pressure-packed. Silver would be a defeat for Shaun,” Keene admitted. “We worked incredibly hard to get ready, and we were more than ready. He is by far the best in the world, but still, anything can happen on any day. It could have turned out that we didn’t win — it was terrifying.”

Shaun White was such an overwhelming favorite, had he not won the gold medal, it could have been the story of the 2010 Olympics. Nobody would remember the rider who unseated the Olympic champ; everyone would remember only that White had failed.

In the past several years, White, with Keene coaching, has set the bar. He invents tricks that blow the competition out of the water, and his rivals spend the next year learning them, just so they have a chance. By the time of the next big competition, White has a new arsenal, and the cycle starts over.

Keene and White worked together through most of 2008 and 2009, preparing for Vancouver. White spent hours falling on the hard, icy halfpipe in Park City, Utah, perfecting his new Double McTwist 1260.

“He took slam after slam,” Keene said. “There was no safety net. He broke seven boards. Shaun has heart; nobody can deny that.”

How do you coach and prepare an athlete who symbolizes his sport, who’s the undisputed best in the world, for a gold-medal repeat?

“I coach him exactly the same as I would coach anyone, a 10-year-old kid, a boy, a girl, anyone. The challenges are exactly the same; the goal-setting is the same,” Keene says. “He is a 23-year-old kid with the same fears and doubts as everyone else.”

The big difference, of course, is the freakish ability and the uncanny way White can rise to the moment.

“Whatever adjustment I suggest, Shaun can immediately transfer to the snow,” Keene says.

“The more I’ve worked with the elite-level (snowboarders), I’ve found they have a quality of coming through when the moment matters. When the spotlight is on him, the higher the stakes, the higher the pressure, the better Shaun reacts, and the better I react.”

Cultivating a talent as unique as White’s is less X’s and O’s and more about motivation. Keene jokes that he’s surprised he hasn’t been awarded an honorary psychology degree yet.

“You’ve got to be able to reach into their mind and flip a switch,” he says. “It’s one of the most nebulous things. I can’t tell you how to do it; I can’t tell you how I do it. You’ve got to get to know the person, see inside their head.”

Keene’s style was on full display just before White’s fabled second run in the Olympic finals. With the gold medal already wrapped up, and White about to make what was essentially a victory lap, Keene prepared his rider to unveil the much-anticipated Double McTwist 12. According to Keene, White has a history of not being able to pull off tricks unless the pressure is on — unless it really matters. Victory laps hadn’t been his best moments.

The motivation for White, who really has no peer to challenge him, is his dominance; he can’t slip, he can’t even appear vulnerable. The Double McTwist was his trump card. It turned out he didn’t even need it to win, but his level of dominance demands he do more than just win.

The final run was a legacy run, and White knew it — his coach, in so many words, made sure of it.

That concept “is so pervasive with him. He’s showered in it, and the last run at the Olympics was case in point. That was the run he was there to do,” Keene said. “He was there to show the world that run.”

“I look over and say to him, ‘Bud, what do you think? Should I do the Double McTwist?’” White recalled. “He looks back and me and says, ‘Don’t do it if you’re not going to land it!’ It was the perfect comment to get me motivated, and kind of pissed, and set (me) up to stick my run.”

With Keene’s final words “still ringing in his ear,” as White later said, the world’s best rider pulled off the world’s hardest trick, barely getting enough speed, air and rotation to land it cleanly.

“It was by far one of the ugliest ones he ever did, but he made it happen,” Keene said, smiling.

•••

Shaun White’s view of his coach

The Stowe Reporter interviewed White on Wednesday about his coach, Bud Keene of Stowe.

Q: What’s Bud’s role in your life, career, in your snowboarding?

Bud is great; he is the guy I can go to and talk about anything. He is great to hang out with, ride with, and obviously is a pretty good coach. In the end, though, it’s cool to say that Bud is my friend and that I owe a lot to him.

Q: Why Bud? What makes him good at what he does?

He just calls it as he sees it. With what we do, there isn’t much debating or back-and-forth discussions about what to do. He is really sure of himself, which lets me know that he knows what he is talking about. It’s good to have people that you can trust and rely on when there is so much on the line.

Q: What’s Bud’s style of coaching?

It’s straight-up and direct. We will talk about runs and tricks, but when it’s time to get it done, he will let you know. I really like and respect that. In addition, he knows when to back off and give you space. Sometimes the best advice is nothing at all.

Q: What is one thing or a few things that Bud has done or said that made a difference?

During the 2006 Olympics, I fell on my first qualifying run. Bud pulled me aside and made me take some runs to relax, stay warm, and get my mind off things. It’s just the little things that help, and it’s nice to have someone around who can give you that advice.

Q: Can you share a Bud moment that will stay with you forever?

During my last run at the 2010 Olympics, right before I drop in, I look over and say to him, “Bud, what do you think? Should I do the Double McTwist?” He looks back and me and says, “Don’t do it if you’re not going to land it!” It was the perfect comment to get me motivated, kinda pissed, and set up to stick my run.

•••

White’s boards fitted in Stowe

Stowe’s connection to Shaun White’s gold medal in Vancouver doesn’t end with his coach.

Graham Lonetto, owner of Edgewise Elite Ski Services on South Main Street, prepped all of White’s boards for the Olympics.

“We take very good care of his stuff,” says Bud Keene, White’s coach, when asked why White is able to fly so much higher than the competition. “His boards were prepped by Graham Lonetto at Edgewise. We figured, why send it to someone else, when we have one of the best ski technicians in the world right here in town?”

Lonetto says Burton Snowboards — whose owner and founder Jake Burton Carpenter is also a Stowe resident — approached him early about working on White’s boards.

“I know they made Shaun’s boards right in Burlington and the guys at Burton were psyched to keep it in Vermont,” Lonetto said.

Lonetto prepped about nine boards for White in the months leading up to the Olympics, then three more right before the Games.

“Most of the boards come with a pretty generic prep, factory-tune,” Lonetto says. He puts them through a stone grinder, then does a ton of waxing work to “flatten them out and really dial them in.”

Different waxing patterns can be applied to the bottom of a board, depending on the conditions, which maximize its ability to glide over the snow.

White snapped a bunch of his custom boards while training, and had only a few left before Vancouver.

So, “two weeks before the Olympics, they brought in three more boards,” Lonetto said. “They knew it was going to be warm and they had a better sense of what the conditions would be like. I heard (White) was breaking boards, so I thought these three would be backups, or something.”

When the Burton people came to pick up the boards, they asked how they looked.

“I said they looked great, and they told me, ‘He’s going to use one of these three.’ I said, ‘Oh, OK.’”

A couple of weeks later, Lonetto saw his board on television as White rode to gold on Lonetto’s custom waxwork.

“It’s pretty cool. We don’t do a ton of work for snowboard athletes, but I obviously know who he is,” Lonetto said. “My mom and dad in Florida even know who he is.”

•••

Keene’s story

Bud Keene moved to Stowe from Virginia Beach in 1983, when snowboarding was still basically nonexistent.

He bought a ski pass, but used it only a couple of times before finding his true passion.

A couple of locals were basically strapping plywood to their feet and surfing down the mountain. As soon as he gave it a whirl, it was instant love. He’d hike up to the Chin four or five times a day just to ride down.

Snowboarders weren’t allowed on the lifts or even on the mountain in those days; the ski patrol routinely kicked Keene out of the resort.

Keene started at his coaching career at the Mt. Mansfield Ski and Snowboard Club in 1989. Four years before that, he had been competing as a snowboard racer. When he arrived at MMSC, the snowboarding program was a year old, and Keene coached racing.

He took a hiatus, but still coached at the club part-time. In 1996, he came back as head coach, to a changed sport.

By then, freestyle had become more popular, and Keene focused the program in that direction. In 2002, Keene left Stowe to coach the U.S. Snowboard Team.

Now, he is in charge of developing the country’s next big stars. He continues to work closely with Shaun White.

Vermont's next governor?

At Statehouse, the doors are wide open

By Jesse Roman

Published:

Thursday, February 11, 2010 12:11 PM EST

Many Americans have soured on politics, viewing bickering and dogmatic politicians as more eager to win a political battle than to offer a useful idea.

But things are different in Vermont, whose Statehouse has no metal detectors, has an open door policy, and provides more access to lawmakers than any general assembly in the nation.

Vermont politics is less a knock-down, drag-out brawl than a careful dance. With great energy, constituents, lobbyists, policy experts and elected officials dart through the capitol’s halls, in and out of little conference rooms, exchanging ideas and handshakes.

As chairwoman of the Senate Appropriations Committee for the last 10 years, and the lone senator from Lamoille County for 18, Susan Bartlett is completely in tune with the hum inside the Vermont Statehouse. She’s at ease here: This is home.

Bartlett is an insider’s insider and she wears that hat with pride. Strolling through the halls, she rarely makes it more than a few feet before a colleague pulls her aside for a quick exchange about the budget or health care, or to say a friendly hello.

Her jovial nature makes her approachable, but she also commands respect, from the governor on down. After 18 years, she knows her place in the Senate well, and seems to relish it.

This is Bartlett’s last year in the Senate. She’s embarking on an all-or-nothing run at governor this year. When the next session begins in 2011, she’ll either be Gov. Jim Douglas’ successor, or a spectator.

“It was not easy to give this up. I am very powerful” in the Senate, she says candidly, sitting in the capitol’s cafeteria sipping a diet Coke. “Power comes from 18 years of information. What I have in here,” she says, pointing to her head, “is where the power is.”

As chair of appropriations, she has unique power over the state’s pursestrings, and has a well of knowledge about state budgeting that may be unequaled.

Going back almost two decades, she knows when this or that bill was passed, why it was passed, how it works, the context for it. All of this comes with being in the trenches and watching it happen; it comes from experience.

But she’s ready for the next chapter.

“Eighteen years in the Senate is plenty of time. There are plenty of smart people who can do this job when I get out of the way,” she said. “I’m convinced everyone here is replaceable, from the top of the heap to the bottom of the heap.”

Early argument

Bartlett’s days in the Senate are not slow. Governing is faced-paced, full-time job.

Last Thursday started at 8 a.m. sharp in her appropriations committee room, at the southeast corner of the building. With her was a who’s who of health care in Vermont: Marie Beatrice Grause, CEO of the Vermont Association of Hospitals and Health Systems; Craig Jones, director of Vermont’s Blueprint for Health; Jim Hester, director of the Legislature’s health care reform commission; legislators on health committees; leaders of Blue Cross/Blue Shield, Cigna, Fletcher Allen Health Care, and the Banking Insurance, Securities and Health Care Administration; plus several consultants and other major players.

A vigorous discussion about utilization, practice facilitators, hospital costs, doctor pay structure, unsustainable growth and much more was raging well before the 9-to-5ers had had their first cup of coffee.

Bartlett and others were pushing the hospitals on ways they can control costs and cut budgets. Grause and other hospital officials told lawmakers it is near-impossible to cut as much as they’re hoping. The hospitals “are working to build consensus on what we can deal with,” said one hospital administrator. Hospitals “have been working hard to restrain growth and will continue to do that.”

Bartlett sees this kind of thing every day. Finally, fed up with the resistance, she asked, “Do we want to get run over by a glacier or do we change?”

As the hourlong meeting concluded, people rose, splintered into groups and continued the conversation for another 15 minutes in the hallway, near the door, or in the corners of the room.

“Can you pull together a group of people who can come here and talk to me?” Bartlett asks one high-ranking administrator, talking about Federally Qualified Health Centers. “I need to know what we can do, how we can do it and what do we see as the plan. If some of the things we’re talking about can work, we’ll write them into the budget.”

Making something happen

It’s remarkable how much of the work of running the state is hammered out in small informal gatherings, in the hallways or the cafeteria, standing or sitting in splintered small clusters.

During lunch, later in the day, Jones, Hester, Bartlett and several others met informally to continue the health care discussion. What seemed a frustrating morning turned productive quickly.

A consultant pointed out a fundamental difference between the state’s outlook and hospitals: Hospitals look at costs and adjust revenues (rates) accordingly, while the state’s costs are driven by how much revenue it can collect. Get the hospitals thinking more like the state, and perhaps the logjam can be broken.

All the state needs is a carrot to dangle in front of the hospitals to make them more willing to play ball. Lessen administrative duties for everyone if they cooperate? That might work.

“Once somebody has that kind of ‘aha’ moment, that’s when you start to make real progress,” Bartlett said in an interview. “What happened during lunch is the health-care bill started to come together. Sometimes that’s what happens when you get a small group of people together.”

Votes in hand

Twenty-minutes after the health care meeting, Neale Lunderville, the secretary of administration and Gov. Jim Douglas’s right-hand man, comes sauntering into Bartlett’s now-empty committee room.

He’s just arriving, with his coat still on and a bag flung over his shoulder.

Bartlett and Lunderville casually and comfortably exchange pleasantries and chitchat about primaries and personal items, then something catches Lunderville’s eye.

“Oh, I haven’t seen this,” he says, picking up the Blueprint for Health report and flipping through the pages.

“It’s a doozie,” Bartlett replies, flipping through e-mail on her phone.

“In a good way, or a bad way?”

“Oh, it’s good,” Bartlett says.

“I’m going to have to get a copy of that,” Lunderville says.

Then, realizing appropriations is slated to vote on the Challenge for Change that afternoon — the sweeping bill aimed at saving $38 million by restructuring several state departments — Lunderville asks if there’s going to be a problem; that is, does she have the votes?

Shaking her head, Bartlett says it’s a done deal.

“I can’t be there for the vote, but I want to catch up with you after,” Lunderville says.

Four hours later, after amending some language, appropriations unanimously passes the bill.

Finance Secretary Jim Reardon, the only administration official who sat in on the vote, stuck around to update Bartlett and her committee on the state budget. Then, his phone went off.

“The secretary of administration wants a copy of the Challenge for Change Bill,” Reardon said after hanging up. “As if I wasn’t going to bring one.”

Business challenges

“When I sit down in appropriations, I never get to do e-mail, because it’s one person popping in after another,” Bartlett said.

Around midmorning a white-haired man in a suit came bouncing into the room. It’s Tim Meehan, a principal at the lobbying firm MacLean, Meehan & Rice LLC, and a former Washington lobbyist. He represents several large corporations, including the Vermont Yankee nuclear power plant.

“It would be near impossible for us to have a face-to-face discussion like this with the Senate chair of appropriations in Washington,” Meehan said of the openness of Montpelier. In Washington, “there are layers and layers of people and staff between you and them.”

Bartlett is staff-less.

Meehan brought a client, an executive of a large international corporation with a plant in Vermont, to meet the senator.

“We love to live here, but for businesses it’s challenging,” the executive told Bartlett in her committee room. “Our competition have plants in Alabama and Mexico with direct gas lines. It is a challenge to compete against that.”

And Vermont politics don’t make it easier, he said.

“We see a bill that might have a lot of good intentions, that’s really good for kids, or something, then there’ll be one line in it that will make us say, ‘My God. That’s going to kill ours and every other business!’”

Bartlett concedes that Vermont’s energy future is vague at this point. She fears “there are some serious reliability issues” if the Vermont Yankee plant shuts down when its federal operating license expires in 2012. The plant is looking for a 20-year extension, but accidents, misstatements and radioactive tritium in the plant’s groundwater have put the request on thin ice.

But Bartlett stops short of making any assertions, predictions, or promises to the businessman.

Shortly after 10 a.m., Meehan and his client leave to see House Speaker Shap Smith of Morrisville.

Legitimate frustration

“People want to talk. There is legitimate frustration in the business community,” Bartlett said after they had left.

In the appropriations committee room, frustration is the norm — especially this year, when the committee is trying to solve a $150 million state budget deficit.

“In this room, we understand the weight of these cuts and their effect on people. We try to mitigate that, but I don’t know how we’ll do that this year. It’s really overwhelming,” Bartlett said.

Over the next couple of months, a cast of people will come to her and her committee and make passionate appeals about why their funding should be spared. Most will leave frustrated, disappointed and angry. Bartlett and her committee won’t feel good about it, either.

“Most (programs) at the beginning don’t fill in the measurables. So they come in with nice stories about how well things work, but they can’t show me the stats,” Bartlett said. “That’s our situation in appropriations. If there’s no way to substantiate with numbers and no proof whether something is effective or not, you are making arbitrary decisions. It’s really frustrating.”

That lack of information is critical and something she aims to correct if elected governor.

What will be more difficult to change are unrealistic expectations. She and her colleagues are working hard and effectively to balance those expectations with reality, she said.

“The system of the Legislature is really solid,” she said sincerely, gazing around the increasingly crowded cafeteria. “Vermonters don’t realize how lucky there are, how well this system works, or how hard people here work because they care.”

Despite outrage, tax laws benefit Stowe

Tax breaks have cut into fairness

By Jesse Roman

Published:

Thursday, February 11, 2010 12:11 PM EST

Everyone gripes about taxes. Everyone is paying too much. Nobody thinks it’s fair.

How to make the tax system more fair is a debate that will surely rage as long as taxes exist.

Is Act 60 fair? Last week, (see last blog post below) we showed that tax-rate discrepancies between Stowe and other towns have shrunk significantly since Vermont’s complicated school-funding law was adopted in 1997. But there’s a lot more to consider.

For instance, if Stowe and Morrisville pay the same tax rate, but Stowe has much higher property values, doesn’t Stowe get a raw deal?

What about the increase in tax exemption programs, such as income sensitivity and current use, which reduce taxes for some and drive up taxes for others?

Vermont Tax Commissioner Richard Westman says income sensitivity and another tax exemption — the current use program, designed to preserve open land — have helped cause property taxes statewide to skyrocket.

Vermonters earning less than $90,000 a year don’t pay school taxes based on property values; their taxes are capped at about 2 percent of their income. That gap between what they should pay and actually do pay, is what drives up taxes for those who don’t qualify for tax exemption programs.

And, when people’s school taxes are not tied directly to actual school budgets, “less people have skin in the game,” Stowe Rep. Heidi Scheuermann said in a recent interview. Why vote down an extravagant school budget if it won’t raise your taxes?

These laws and exemptions actually make the system less fair than it was even before Act 60, Westman says.

“Not only have we created inequities in one community vs. another, we’ve internally built in numerous differences for people, based on income and what kind of property they own, and those inequities have become much greater than we had before we developed the statewide property tax,” Westman said at a presentation in Stowe.

The winners and losers here are clear — those with exempt properties pay less; those making over $90,000 per year, or who don’t qualify for current use, pay much more.

Which category Stowe fits into, however, is less clear-cut than many believe. Stowe benefits from these exemptions much more than the average community.

Stowe benefits

According to the state tax department, just over 55 percent of residential property in Stowe is not taxed fully because of income sensitivity. That is well below the Lamoille County average of 69.1 percent and the state average of 66.3 percent. However, because of Stowe’s high property values, the size of the town’s income-sensitivity tax exemptions far exceeds any other town in the county, and dwarfs the state average.

Stowe taxpayers saved a total of $2.1 million in school taxes last year, an average of $3,282 for each of the 647 properties that qualified for income sensitivity.

The average tax savings per resident in Stowe is the highest in the state except for tiny Landgrove, where residents saved an average of $3,926.

In Morrisville, income sensitivity saved taxpayers a total of about $1 million, an average of just $1,055 per property.

Statewide, the average savings from income sensitivity was $1,182, about a third of what the average Stowe taxpayer saved.

Current use — the law that exempts open land from full taxation — also affects Stowe disproportionately because of its high property values. Last year, Stowe taxpayers in current use didn’t pay taxes on $59.2 million of property, saving over $1 million in taxes, including $961,000 in school taxes, according to state data.

Only Woodstock has more current-use tax exemptions than Stowe.

Current use saved Morrisville taxpayers only about half as much in taxes as Stowe.

When added together, Stowe’s roughly $3.6 million in tax exemptions far exceed any town in Lamoille County, and rank very high statewide, despite the town’s relatively low population of less than 5,000.

Stowe has more tax exemptions than Woodstock, Rutland, Barre (city and town combined), Montpelier, Bennington and Brattleboro, to name a few.

Burlington, which has a population roughly 10 times Stowe’s, has only $1.8 million more in income sensitivity and current use exemptions.

Property values

Of Stowe’s gripes with school funding, the biggest may be the way property is valued.

“I think if you took a look at the increase in property values, I bet values in Stowe have gone up faster than the rest of the county,” Westman said in an interview last week. “So Stowe is forced to pay the same rate as everyone else, but at the same time, their values have gone up faster than everyone else. You can’t just look at the rates; you have to look at the growth in communities, too.”

In a normal year, a house in Stowe is likely to increase about 12 percent in value, says Tom Vickery, the longtime town appraiser. The figure might be 8 percent or less in other towns.

Over time, that adds up.

In essence, “we’re sending more money to Montpelier because inflation is increasing faster (in Stowe) than other parts of the state,” Vickery says.

Since Act 60 was enacted in 1997, the total value of Stowe’s taxable property has grown more than 217 percent, according to state tax figures. Morristown’s grand list has grown 142 percent in that time, and the state average growth since 1997 is 120 percent.

However, rising values aren’t the only thing that expanded Stowe’s total property value. Development, including the huge Spruce Peak project at Stowe Mountain Resort, add huge value to the property-tax rolls.

Vickery says Stowe typically has 2 to 5 percent new construction growth per year, while most communities average 1 percent at best.

However, for the first time in many years, Stowe’s grand list growth was under 2 percent last year, below the county average. And property values in Stowe, for the first time in a long time, are decreasing.

Two years ago, Stowe houses were selling, on average, 20 percent above the appraised value. Now, sale prices are only 5 to 10 percent higher than the appraisal, Vickery said. So, a house assessed at $400,000 for taxes would have sold for about $476,000 in 2007, and for about $420,000 today.

However, state school-tax formulas consider the last three years’ worth of sales. Back in 2006 and 2007, when prices were high, Stowe had 40 percent more sales than in 2008, when prices dipped. So, in calculating Stowe’s property values for school taxes, the formulas are weighted heavily toward those years when prices were high.

Vickery is appealing to the state, hoping for a formula change that better reflects the actual real-estate market in Stowe.

“Everybody in the state has seen some value decrease, but not as much as Stowe,” Vickery said. “My job is to make sure Stowe is treated fairly in regard to where sales actually are.”

If the state agrees with Vickery, the school tax rate could be lowered about 2 percent this year, he said, and even more next year.