 We are going to hear more about the minimum wage bill that is floating around between the House and the Senate at this point and it will land perhaps at this committee at some point. So I thought, or our committee thought we should start hearing some information prior to the bill getting here. And Joyce, you're here from JFO, you're going to talk about the impact that it will have and are you going to address the Benedict Cliffs or are you, you're doing the Benedict Cliffs. Okay, thank you. Thanks very much, Joyce Manchester from the Joint Fiscal Office. So I think it's going to be helpful. If I take a little bit of time to give you some background on what went into the analysis of the minimum wage bill. So I'm going to try to do that quickly and then we'll move right to the fiscal note which talks more directly about the impact on the budget. Okay, so here we have the current minimum wage which is 10.50 per hour. Under current law the minimum wage increases by inflation only going forward. So starting January 1st, 2019, it will increase by the CPI which is the measure of inflation or 5% whichever is less. And given the projections from the JFO and the administration, the consensus projections of inflation, it looks like inflation should stay below 5%. So it will just be increasing by inflation. So here you can see the path and this is the path as of what February, so just six weeks ago maybe. And here are the inflation amounts that we're projecting, we being JFO and the administration. Oh yes. So it goes up to 12.16, that number was cut off. And next to that column, beside projected current law you see $15 in 2024 so you can see how quickly or how slowly, depending on your point of view, the minimum wage is rising over time. So it's going from 10.50 today up to 11.10 and then 11.75, 12.50, 13.25, 14.10, reaching $15 per hour in 2024. Good? Under current law when we get there? 20 to 34. So if you read the report more recently than I have, okay. And of course that all depends on the production of inflation which is not going to turn out to be exactly this, but this is our best guess. Yes. Okay, now let me just say right off the bat, okay, so here's a good picture. Here I've shown you the nominal of the bottom line, the nominal level of the minimum wage starting in 1938 in Vermont. And then the top line, which you can see is higher, adjusts that nominal amount for inflation. So this is to say, if we looked at the minimum wage in 1938 when it was 25 cents an hour, but if we adjust for price change between then and now, it would look more like $4 and let's say that's 25 cents, something like that, okay. So that's the effect of adjusting for inflation. And you can see that the minimum wage peaked in inflation adjusted terms in 1968 at 11.36. In the committee we talked about different measures of inflation and if you use different measures, you get a different peak for that 11.36. And we can argue about that. But generally speaking, there has been a general rise in the inflation adjusted value and then a gradual decline and slight uptick. This chart ends at $10, but we could add one more year to $10.50. Okay, I want to give you a flavor of Vermont's labor market. First, it's important to understand that about 90% of Vermont workers work in firms that have 20 or fewer employees, okay. So very much a smaller business community. Those employers are responsible for one-third of Vermont's private jobs and pay 30% of private sector wages. So there are a lot of people working in small firms that don't pay very high wages, okay. Just to give a flavor of the industries with lots of workers affected by an increase in the minimum wage, you can see here. Gasoline stations, retail stores, food and beverage stores, warehousing and storage, food services and drinking places, textile and apparel manufacturing, furniture and wood product manufacturing, large food product manufacturing, nonprofits, social services, and childcare. So those are the kinds of industries that you want to worry about when you think about who might be affected by the minimum wage increase and where would the pressure be perhaps to cut jobs or cut hours or whatever. Okay, characteristics of minimum wage workers. And this is based on a survey called the American Community Survey. So this is not absolute truth, but it's the best information we have. And this was compiled by Deb, thanks to Deb. So we saw in the early 2010s, okay, this is actually over five years, clumping data together. About 42% of all minimum wage workers are the head of a family. So either a couple or a single parent family. And 40% of those workers earn at least one half of their family's income. 59% of all minimum wage workers are over age 30. So lots of people have the idea that this is just a wage at a starting job and that people grow out of that job into higher paying jobs. That's not always the case. So we have almost 60% over age 30. About half are female, no, I should say. Half of all female, okay. Half of all female minimum wage workers are older than 40. Only 32% of all male workers older than 40. So there's quite a gender split there. And just to finish this, 49% of all male minimum wage workers are under the age of 30, only 36% of female minimum wage workers younger than 30. So quite an interesting. Do we have this? Yes, we do. Interrogate. It's under bills, that's 40, and you'll find two presentations. Joy, Sam, Deb. So Meg just asked me, is this Vermont specific word? Vermont specific, yes. This is Vermont, yes. Yes, and it does vary across states, yeah. Bob? Some place up there, you were in the food industry and you called it a drinking place, I presume that's a bar. Yes. But does it take tips into consideration somehow? So workers who earned what's called tipped wages have a minimum wage, which is different from 1050. They do now. Yes, they do now. Right. And they would going forward. And so yes, this would account for workers who end up with a wage that is less than 1050. Okay, and just one more quick one. I've got to presume, and I think I can do it, this does not take talent into consideration. Talent. Qualifications. Right. I mean, if you're a qualified mechanic with 15 years of experience, as opposed to a young guy out of school. So this is based on the wage, right? So this is looking at people who earn 1050 or less. Qualified mechanics are not earning 1050, they're earning. That's probably a bad example. Okay. Two individuals, one better qualified than the other. Same education. Let's call it that. And same wage? Yeah, they're going to be at the same wage. Well, if they're making a minimum. Correct, correct, correct. And you're right, there could be some people who are just starting out and maybe they're in a trial period. And so they're getting paid, it's hard to believe, but maybe they're getting paid minimum wage for three months or six months. And they would be included in this count. But they're going to move out quickly, right? And the demographics of who's earning the minimum wage tells you that lots of people don't move out quickly. They stay in the town. So, go ahead. And then, Maury? So, let's say I'm at a company and I'm making 1350 an hour. And the guy below me is making 1150 an hour. And with this, we're both going to end up at 15 an hour at the same time. So, and the guy making 1350 an hour is going to say, well, wait a minute here. Right, so the model does take into account wage compression, is that true? That's what they call that? It's called wage compression, right? Because the guy who's earning 13 and the guy who's earning 1050 are all going to be pushed up to 15, so they're being compressed all of that spot. So, the model allows for the $13 an hour guy to rise up above 15. Whoa. So, his minimum wage will then go to 1650 or something? So, already above minimum wage. He's already above minimum wage. So, he would again go above the minimum wage, the new minimum wage. Right, to 16 for maybe 1650 an hour. No, no, that would just be his wage. It wouldn't be his minimum wage. It would be his work. Right. Yeah, but yeah. Well, maybe not his work. So, he's not, the minimum is being pushed up for those but $4.50 an hour or more than what they're making now, not simply to $15. It's absolutely true. And exactly how much the $13 an hour guy will be pushed up, we don't know. No one knows. We don't. But the market works. Well, I think we just figured that out. I'm not sure we could do that. You'd be coming up the same $4.50. I'm not sure that's true. So, where would he go up to? So, I'm not exactly sure. That's up to the boss. Right. Right. Well, the boss is going to put him at $15 because that's the minimum. At least. He's already given them about a half an hour to raise. If he's a qualified worker, somebody else can hire him at 1650 or at 16 or whatever, whatever the market says he's worth. So, I, yeah, it's hard to know exactly where he'll end up. But it's quite probable that he will be above the minimum wage. If he started above the minimum wage, the market will say, we're going to find the right job for you. I guess I'm still confused. But I'll let it go for now. Did you have clarification before? Maureen, were you on a different topic? No. OK, fine point for Maureen. Then you and then Marty will have clarifying points for Bob. Go ahead. Yeah, I just think when we're talking if Bob has to remember going back to another slide, that when we're talking about two people coming out of school equal, remember, if it's a man and a woman, the woman's going to get less than I likely would. We can't forgive you. I don't really want to get into that. No, but I do. This side of the table. Nice point, then, Maureen, thank you. I was just going to clarify, make sure that Bob didn't think that this law was going to move the higher-wage guy automatically out of him. Is this that if the lower-wage guy gets up to 15, then the guy who's already at 16 says, well, he's getting an hour and a half wage. So I want an hour and a half or dollar and a half wage. He goes to his boss and says that. But the law will not make that happen. So the 1350 an hour guy only comes up a buck and a half an hour. Not necessarily. See, that's where I start. So under the minimum wage law, he has to be paid at least $15 an hour, right? If his employer wants him badly enough, and if he says, I'm quitting my job here. Yeah, you can bring him up to $30 an hour, if you want. That's right. The market determines all that. Well, yeah, OK, that's fine. The law is the market. But the higher-wage guy is not going to be raised just because the minimum went up. He may go to his boss and say. Nobody gets raised if they're over 15 or an hour. OK, all right, you bring it. So in the next slide, I have a question. Sure. And I'm going to try to articulate this question. I know what I want to ask, but I can't figure out how to get it out. Why are we at a place and does it have anything to do with our high school graduation rates but very low training and college rates? Why do we have such a high percentage at minimum wage? Is it because we're not doing more training for skill jobs like electricians and contractors and we don't have more students going on to higher education? I mean, this is concerning that why are people stagnant there when in our minds the minimum wage is your entry level and you move up? Is this directly related to education and should we be addressing education at the same time that we're addressing minimum wage? Is my question a yes? Or is this, how does this compare to other states? I mean, is this what you'd expect to see nationwide or are we much higher for that? OK, so that's a big set of questions, which is probably worth an hour's discussion. But it is true that people with high school degrees or less are the people who are most likely to be found in minimum wage jobs and they may not have the opportunity to move up in the wage rank. It's also true that we have a large proportion of people in the service sector, so ski resorts, mom and pop, general stores, so forth and so on. And there's not a lot of room to move up in terms of wages in some of those operations. So some people would say, yes, we ought to be putting more resources into worker training and education and so forth. Some people would say this is an artifact of Vermont's economy that's very small business-oriented and service-oriented and so forth. So I don't have an exact answer, but there are lots of factors that come into play. And it can be a combination of all the above. We're always going to have these small jobs available. However, if we focused, if there was more focus on training and higher education, we may be able to attract more people to do more sets of jobs and grow the economy up here, as well as down here. And of course, we always hear that employers can't find the skilled workers, the highly skilled workers, to fill the jobs that are open in Vermont. Yeah, we have lots of people working at minimum wage jobs. So some things going on there, yes. I just think this chart or this one slide makes it very clear that there's more than one thing we need to be addressing. Absolutely. And that maybe some things should be going in tandem here. OK, that's it for me, Kathy. Can you discuss the training wage, please? I think you need Damian to discuss the training wage. I know that there is a provision for young people who are starting off in a job. I don't remember the age. Certain months of the year, too, for certain periods of time. Certain periods of time, yes. So they can be paid less than the minimum wage. I think it's seven students. It's a student wage. And some of these people are on the training wages for years. That shouldn't happen. That should not happen. Yeah, no. We'll get Damian to follow up on that for you, as thank you, Theresa. Yes, he wanted to. Actually, he's next door. And he said if we had a burning question, we could bother him. OK, so I want to keep going here. About 8.5% of Vermont jobs, about 25,500, are at the minimum wage of 1050. And then I'll talk about the wage distribution by looking at this fine chart. So this shows you the hourly wage for salaried workers as well as hourly workers. You can see the bottom black line. There is the minimum wage. It's just below the 10th percentile. The 10th percentile means that 10% of jobs are paying an hourly wage at or below that level. So you can see the minimum wage is catching up a tiny bit to the 10th percentile. It's grown a little bit faster since 2004. You can see some growth in the 50th percentile wage. That's the median. People are above half or below. And the biggest growth since 2004 in the hourly wage has been at the 90th percentile. And that's what we've been hearing in the news, that it's the people at the top whose wages are growing faster. So we don't, from that chart, we don't know how many people. Like, the 90th percentile is growing, but what percentage of the population of workers is at? Does that show that? Yes, it does. It says that 90% of workers are earning wages that are at or below the top line. That's the 90th percentile of workers who are earning. But that goes against the other chart. We've said how many, what percentage of individuals we have at the minimum wage? So am I getting into trouble here? This is 8.5% at the minimum wage. Which is right there. But go back to the other one. 42% of all had a household. This one, 42% of all. Oh, that's just at the minimum wage cohort. Okay, got it, okay. And just doing some quick math, that's $80,000 a year at the 90th percentile, that 30, 80, 50. So that's middle class. You're not talking the one percenters or anything like that. You're talking middle class income. Absolutely, that's right. I remember this is only wage income, so it doesn't account for other kinds of income. True. I just think it's important when you say the people at the top are growing faster to understand that the people at the top of this case are middle class, right? Yes, and the one percenters are growing much faster, yeah. So I have the same comment, Peter. Okay. Just quickly, what about salaried workers? Those are included in the hourly workers. You can see there's a footnote down there at the bottom, yeah. So this is from a survey done in Vermont called the Occupational Employment Statistics Survey. So they've converted an annual wage, an annual salary, to an hourly wage. All right, I can't find the same word. Mm-hmm. Right, yeah. Right, yeah, it'll drop it by itself, yes. Okay, so we can also think about income disparity rather than wage disparity. That ratio has increased from 17.6 in 1967. Oh, I haven't talked about the ratio. The ratio here is the top 5% of US, now not Vermont, but US household income to the lowest 20%. So that's a common way to think about income disparity. So that ratio has increased from 17.6 in 1967 to about 29 in 2016. So that's another indicator of people at the top doing well and people at the bottom not increasing. I wanted to just mention the Vermont Basic Needs Budget because sometimes this comes up in the discussion of the hourly wage and the minimum wage. So the Basic Needs Budget, remember, looks at the cost of actual living for a single person who shares a household with another single person. And it includes items like food, housing, transportation, childcare, clothing and household expenses, telecommunications, charges, health and dental care, rentals, insurance, life insurance, and savings. So the- Mary had a question on that. Sorry? On that information, how accurate of a representation of the cost of living is that? And I say that thinking about the USDA's standards and if they were maybe arbitrarily blocked a long, long time ago and haven't been modified. Can we just kind of generally- Yes, so the US Federal Poverty Level is based on three times, I think, the cost of a very basic food budget for a person. And this started way back when it's our security and I used to work with the person in Mali, what's her name, who actually did this. Yes. But that was never meant to be the standard, right? And it's turned into the standard. So the Basic Needs Budget takes a rather different approach in that it adds up the actual cost in Vermont of all of these elements of living. And it is true that every two years the Joint Fiscal Office does a review of that calculation and this summer will be the time to review it again. So we'll see how we come out. But it does look at rural-urban difference. The livable wage that we'll get to in just a second is the average of the rural and the urban. And you can quibble with some of these expenses but it's the best we've got at the moment. Okay. And do you do some sort of peer review or conversation in the community at the moment? Do we have the right basket? Yes, so we talk to people at transportation and at the housing authority and blah, blah, blah. Oh yes, yes, yes, yes. Okay, so the Vermont livable wage is this single person who's sharing housing, no children, employer assisted health insurance, averaged over urban and rural areas. First estimated in 1998 and in 2016 was estimated to be $13.03 per hour. So you can see that's a bit above the current minimum wage of 1050. It is true that the Vermont livable wage increased 2.6 per year between 1998 and 2016. The Vermont minimum wage over the same period did increase a bit faster given those special legislated increases that did catch up a little bit. Okay, I don't want to dwell on this. This is minimum wage by state in 2018 and we've highlighted the New England states and New York. So you can see Vermont, I hope you can see Vermont is bright green. So it's down about what's sixth place. Massachusetts has the highest minimum wage in New England right now. You can see New York. This is upstate New York because Manhattan and New York City have a higher minimum wage. But you can see all the New England states are pretty close together except for New Hampshire which still follows the federal minimum wage which is $7.25 an hour. However, if you go across the border and look at the wanted labor wanted signs, they're all advertising $11 an hour because they're competing with the towns in Vermont across the border, right? So. So we're gonna spike right off the chart. Okay, coming right up. Matt has a question. Coming right up, I'm gonna show you this in just a minute. The Massachusetts one that's ahead of us, is that on a later schedule or is that just a set? Okay, I have a slide at the very back. I don't remember off the top of my head. Damien would know like this but I have a slide at the back so if I don't get to it, you can check it out later. Yeah, yes. Okay, this is the history of how wages have moved over time since, oh no, this is going forward. Oh good, this is going forward. So this will show you Massachusetts which is the dark blue line. Oh, it looks like Massachusetts is not indexed. It looks very flat, $11. Interesting, okay. And that's New York City large employers that's the very top line. It's obviously very high. You can see Vermont is rising there to be what, fourth highest, right in the middle. That's good for recruitment at least. This is under current law. And here we have Vermont, still the bright green line with squares. This is what it would look like under S40. So we would be coming up in the out years. A bit faster than the other states. I'm already a person named. Just when Diane just made the comment for recruitment efforts with the recruitment efforts. But minimum wage earners aren't likely the ones to be recruited or to move to Vermont. They're the ones who are likely to go from the McDonald's job to the Dunkin' Donuts job next door to the Grand Union. But you know, so I don't know. They might be staying in Vermont. Yeah, so I don't know whether. They'll be able to afford staying in Vermont. Yeah, it's expensive to move. So I'm just not sure we could, how much of a recruitment tool that would be. Yeah, that's true. There may be some in the service industry that are recruiting minimum wage workers. So I'm thinking about. Modesty. Hotel cleaners or, I don't know what to say. I don't know what to say. If the operators get paid. Would that include farm workers I mean, how are they fitting into all of this? So farm workers may not be included in the salary in the hourly wage survey. It's very difficult to get the data on the farm workers. So they may not. That would be a recruitment. You know, from what we know that people would be recruited to work on farms. So they're not included. I believe that's true. Yeah, thank you. Does that chart reflect legislation hasn't been passed in other states? No. So if other states are considering something like Vermont, it doesn't reflect that. It doesn't show up here. So that's all current law except for Vermont, which is an S40. Then that's really not a fair chart. Yeah, right, right. Main. Bob. What legal immigrant workers out there, federally guided and guidelines come as far as them getting made through the feds. So they gonna stay with the federal guidelines? No, no, no, no. Any job in Vermont is covered by Vermont's minimum wage. Except for farmers. Farmers, there are a few excluded classes, yeah. All right. Mayor? You answered it. Okay, and I put in this slide just to remind myself to tell you that the legislation includes a study that will be completed on or before January 15th, 2023 to think about how to index or whether to index the minimum wage after it reaches $15 an hour in 2024. Okay, so currently there is no provision for changing it after it gets to 15, but there would be a study. And who knows who'll be around at that point to conduct the study. Okay, so I'm now on to the fiscal note, which is very good. I'm going to be talking about effects on the state's economy because in order to think about what happens to the revenues and the benefit costs to the state, we have to think about what's happening to the overall economy. So we'll talk about employment and employees. We'll talk about effects on businesses and consumers. Then we'll get down to the effects on the state's budget thinking about both the revenue side and the expenditure side for benefit programs. And of course, you know how to find this fiscal note that's now on your committee page. Okay, so there has been a lot of work done on effects of the minimum wage on the economy and on jobs and so forth. So I'm just giving you some reference materials in case you get really interested in this topic. So as you know, there was a minimum wage study committee that met over the fall. So that full report is yay thick and it's available online here. Last summer I wrote an issue brief that looks at the economic evidence on what happens to jobs when the minimum wage goes up. And there are many, many, many published papers, peer reviewed papers, they don't all agree. It's a really interesting topic if you like to think about how analysis works. But this issue brief was meant to look at various sides of the issue. And there are many materials from many witnesses and so forth from the summer study, fall study committee. And that's all available thanks to Teresa online under the minimum wage notebook page. Okay, so regarding Vermont's specific effects of raising the minimum wage, Tom Kovett and his firm have done several analyses over the years. So I'm just letting you know that those analyses exist. And again, they can be found on the minimum wage webpage. Most recently he looked at raising the minimum wage to 1250 and 2021, 1325 and 2022. And also in the fall, the committee was focused on getting to $15 in 2022. So that's the scenario that he modeled last fall. Thank goodness, the path that is now in S40 follows 1250, I mean hits, 1250 and 2021, 1325 and 2022. And then keeps going to $15 in 2024. So we were able to use some of the very same results on the path, right, in 2021, 2022. And then we just extrapolated to 2024, okay? Creativity and modeling is what it's called. Okay, so let's talk about effects on employment and employees. First off, raising the minimum wage would have positive effects on employees in the following way. So first, we have seen reduced employee turnover. So employees feel more attached to their job if they're more committed to the employer. They tend to work more productively. So we also have increased productivity, right? They feel more valued on the job when they're paid a higher wage. They also have increased disposable income. That means after tax income. And as a result, they show an increased demand for goods and services, okay? So these are all good things that happen in the economy. We have more demand that fuels other industries and so forth in the economy. So those are all good things. There can also be some negative effects. And of course some employers will look at a person's value to the firm and say, yes, I hired you at 1050 an hour, but once the wage has to rise to whatever it is, $13 an hour, I no longer feel that you're earning that much per hour, okay? So there will be some job losses. There may also be reduced employee hours or firms may decide to cut back on benefits perhaps or they may decide to cut back on training expenses. Somewhere, profitability still remains. So you have to cut costs perhaps in the labor area. So would it be reduced hours? Would it be cutting jobs? Would it be cutting other expenses, benefits and training? Mary, when you did the analysis of the increase in the disposable income, were you able to go deep enough to see if the costs for what people would be buying are also going up? So I'm thinking maybe mistakenly now that minimum wage earners are usually have children who may, so they may be purchasing daycare, daycare costs, can you talk about that? Absolutely. So all of that works into the model. Tom Kovet used the Remy model, which is a well-established respected model. So all of those things fit together and it is true that evidence shows things like child care become more costly, restaurant meals will become more costly because the restaurant industry hires many minimum wage workers. That's all in the soup of the model. So it's all there. But it is worth thinking specifically about those industries that were listed because that's where you'll see the big impact on what they produce, right? So the net of that modeling leads you to the statement that there is an increase in disposable income overall. We're gonna get there. We'll get there, yes. You didn't list as a negative effect higher cost of goods. Is that intentional? This is not intentional. So right now I'm talking about the effects on employment and employees and when I flip the slide, we're gonna get to cost of employment. Thank you. Go ahead. So all of that makes sense to me. There's one that doesn't make sense and maybe it's the slower wage growth overall. Is that because you're talking about, because of profitability, every business has a pie worth of money to give out. So if it's going to the minimum wage side, then it's not gonna go over year more so you may see a leveling out of wages across the other spectrum. Exactly right. So this isn't the compression issue or anything like that. So the compression issue all feeds in to this but you can imagine if labor costs on average are about 70% of doing business and you're being told you must put more of that pot into the low end then there's less to the high end. So what happens after 2024? So under current law, the minimum wage would stay at $15 per hour but flat, flat. We're not addressing that. That's why there's a study. Okay. So what you'll find if the employer gets through all this at 2024, he's gonna go out another five years or some such period of time and he catches breath. Could be. Yeah, so you're gonna go, you get there unless you force it through government. You're gonna stall for a while. That could happen except to the legislature clearly to decide what you all want to do. I think if you think back to that chart of the historical minimum wage, there have been periods where it's been flat and then it bumps up again and then it's been flat and so forth. So yeah, that's what happens. Okay, so what about effects on businesses and consumers? Well, we've talked about this already, increased labor costs for businesses from changes in the minimum wage could result in lower profit margins. Some businesses might choose to relocate to another state or to invest in automation. There's been a lot of talk in the economics world about robots taking over in certain jobs. So if you have to pay people more, maybe you don't want so many people, maybe you want some robots. So that's a possibility. It's like in farming. Right, absolutely, yep. And for consumers, increased labor costs might lead to higher prices. So here we have, for example, higher restaurant prices. Do we have insight into the different business sectors ability to pay? And so I'm thinking essentially profit margin and I think that some businesses have a very narrow margin and can we talk about that? So I'm going to talk specifically about some niches that the state needs to worry about. For example, visiting nurses and home health aides and so forth. Deb's gonna talk more about the childcare sector, which is definitely one that would face a lot of pressure. So the overall economic modeling doesn't go into those specific sectors, but it does recognize that there are different effects throughout the economy. So that's sort of all rolled into a big ball wax, right? So I'm confident in our common ability to kind of dig into some of the state funded sectors or there's an association there. I'm curious about the typical kind of main street business. So the small ones, not the chains, but the ones that are on our main street and their ability to be able to withstand. Right, so what you're asking about is what's the effect of raising the minimum wage on jobs at the minimum wage at small firms, small businesses. And the best we can do is look at what has happened historically when the minimum wage has increased in other states, well, including Vermont. I mean, there have been increases in the past in Vermont. And I can say that the way that the studies are done is that they look at, for example, a county in a state where the minimum wage went up and they look at a comparable county close by, maybe across the state line where the wage did not go up and they see what happened to jobs here versus jobs here, right? So that's the best sort of measure that we have. And it's that sort of middle-of-the-road estimate that went into the job loss that will be reflected in the model. Thank you. But there is controversy about exactly how big those effects are, absolutely. Madden, Bob. So I think with this, one of the things that I wanna look out for is the more drastic way in which we're increasing the minimum wage, not just the minimum wage increase in general, we've done that in the past. And I think that when you do it slowly over time, like we're doing it now, it doesn't have the dramatic impact that you'd expect. What I wanna keep an eye on is what happens when you, if the minimum wage shoots up enough to get to $15 an hour and everyone knows that that's the goal of where it's getting by 2024, that may have a slightly different effect than the CPI adjustment that we're undergoing now. I know we have a little bit of data on that from a couple places like Seattle and places that have done that. Does this specifically look at those and weight those places where the minimum wage shot up instead of was just increased up? Right, so this is, again, a sort of deep subject. The estimates that are used in the modeling here are sort of middle of the road estimates. And you're talking about the two Seattle studies that came out very differently in terms of effects. One of them found no effect on jobs, even after increasing the minimum wage from $9.75 to $13 an hour over two years, right? Very steep increases in a very strong economy. One study found no effect on jobs, the other study found a significant effect on jobs and wages. And in fact, low income workers on average lost $125 per month in wages, given the results from the second study. So, diametrically opposed results. And the jury is still out on which is correct. But those are the only two studies that come up? No, no, no, no, no, that's the most recent in a long, oh, of Seattle? No, of all. So, I'm saying that as much as I appreciate the amount of data that's out there of what happens when you increase the minimum wage, what we're talking about is not just a standard increase the minimum wage, this is a pretty substantial jump up, a lot higher than you could see in the state of, when you showed the map of what our neighbors look like, we would be significantly higher from that, we'd be the first in the region. So, I think that while the data of what happens when you increase the minimum wage is important, I'm really interested in seeing what happens in places that have gone to in either a much higher rate or have done it that much quicker for what would really happen. Okay, so, let's see. So, Seattle did have a very rapid increase over two years and to a very high level for the time, right? So, in 2017, 2016, they reached $13 an hour, which was very high for the time. We are talking about in 2018 dollars in inflation adjusted dollars, $15 in 2024 is about the same as $13 today, okay? So, it's not as high a level as $15 sounds, right? And we have seen other places that have gone to $13 an hour. Adjusted for inflation. And they haven't all looked like Seattle. Seattle is a worrisome case if you believe the job loss data. Yeah, absolutely. But by stretching it out to 2024, rather than 2022, the Senate wanted to take that slower path that would not cause such big dislocation effects. I think Bob in the morning, did you have a question about that? So, you know, in Vermont, I see us as having a couple of economies. We've got the Chittin County economy, and you compare that against the Rowland County or Caledonia County economy and they're really different. Absolutely. Right? So, probably not gonna be much of an effect in Chittin County, but anyways. But you also have, and I'm from Fairhaven, my people go to Glens Falls. Or if you're in my redemption, you can go to Hannell. Or if you're on the mass border, there's a ton of places. I mean, and not only to be employed, but more business removal from the area. I mean, I don't know if you're able to figure that out. But then in the bottom of the whole thing, you've always got this saying that I think people in this building like to shy away from, because it's a tough one. And that's the underground economy, which is big in Vermont right now. I think this is gonna take you to another level. Probably so. So, if you collect all that stuff together, and there's a little risk in a little on the risky side, to risk getting a little state, 65 miles across there is about all it is in the middle of the state before. Yes, you raise excellent points. They're all good points. Some people are more concerned than others about the cross border differences. Hampshire, Vermont in particular, because it's so easy to get across the river there. There has been a distance between the minimum wage here and the minimum wage there for a long time. And as we've seen, the businesses along the borders adjust. And so they're paying, prevailing, what's called the prevailing wage, the market wage is not so different right across the border, right? But if you drive maybe 60 miles into New Hampshire, yes, you would find wages much, much lower. So, absolutely good point. It's also a good point to think about the underground economy and the pressures that this will put on people to get away from the law. In the underground economy, you'll lose even more. Right. You don't get any taxes up. Correct. Nothing. Correct. What? Mark, I'm a little concerned. Well, I have a question. Do we have any data regarding the behavior of companies that would perhaps result in their effect with a lower profit margin? I mean, you indicate that yes, some may choose to move, some may choose to invest in automation, some may choose, in my mind, to not invest in equipment and that sort of thing because of the way they have to change things. Some may find efficiencies internally to be able to accommodate that. But do we have any indication regarding the long-term viability of businesses if they end up getting squeezed and squeezed in terms of what they consider an appropriate profit margin? Yes. So, all of those considerations go into the modeling and when I get to the table, we'll see that we look not only at the effects in the near term, so up to 2024, but we also think about the effects in the long term. So we're gonna be looking at what happens 2028 to 2040 because in many instances it takes a while for businesses to adjust to the new minimum wage and to think about their labor resources versus their capital resources and should they invest in the robot and so forth. So, absolutely all of that is part of the modeling. Yes. Diana? Thanks. I'm sorry, were you talking? Yeah, no. My concern was just the long-term viability of some businesses if they squeeze hard. So this question is, why hasn't the market forces gotten to the point where this minimum wage or the average wage now is so much higher that there's very low unemployment, high demand for people? I would think, given that scenario, that looking at what kept it down. So what I can say is that there are two sides to the market, one is the supply side and one is the demand side. So it seems that there are enough workers willing to work at the low wage such that they're keeping up with what employers want. So there's the supply of labor, who's willing to work at that wage and there's the demand for labor, who's looking for a worker at a low wage. The hope is that as unemployment stays low that there'll be more competition for workers and that the wage will go up. This is sort of forcing that to happen. I'm, maybe I don't need to be mindful of the time but Joyce, what time do you need to be out in here? I need to be out for sure by 10.30. And how much more do you have to, we wanna make sure we get to the impact on your budget. And that's where I was almost gonna catapult there with my questions, but maybe I shouldn't. Do you should wait if it's the impact on the state budget and you'll wait too. Okay, we need to, okay, keep going, keep going. Okay, so I'm now talking about the most recent analysis, which is the fiscal note that is the topic of today's talk. And I'll be talking about the direct fiscal impact for the state budget. So first we do have increased state revenues because of course many people have a little bit higher income because of the increase in the minimum wage. So they'll be paying a little bit more in income taxes or other taxes and fees. Perhaps they buy more goods and services. Perhaps they can afford a new car, whatever, whatever. So the revenue to the state will increase and we'll see that quantitatively in just a minute. We also have the impact of higher wages that must be paid to some state employees. There are not a lot of minimum wage workers who are state employees, but we do have some temporary workers and some contractors who pay minimum wage. We also have impacts on the state program benefit levels. And this is where Deb is going to talk in a few minutes about changes in eligibility and the effect that that would have on the cost of benefit programs in the state. And I've talked previously about the gradual increase in the minimum wage over six years. But you're absolutely right to think about, you know, how fast is it happening and what is the impact of that increase over time. So, Matt, I'm going to take your question. Then we have to write them down and then we'll ask them at the end, there's a 10.30, they both need to leave. So ask yours and then we'll write questions down for the end. Do those, the things that you have up there take into account the negatives and the positives and it still comes out of net positive? You spoke before about, you know, there's a slower wage growth in other, in other side or there may be decreased hours. And you've looked at that and said that in the end it's still a net positive to state revenues. Okay, I haven't said anything about that yet. I have been very quiet about what the net positive effect is. So we're going to get there. But you just had one that said there's the revenues absolutely positive. Absolutely positive. Yeah. And okay, so here on this very slide is the net fiscal gain to the state's budget from increased tax revenues and decreased benefit payments. Okay, so if we separate out those two effects, increased revenues and decreased benefit payments, we see a gain to the state of about 150,000 in fiscal year 2019. That includes only six months of an increase in the minimum wage because it starts January 1st, 2019. In 2020, the effect is about $2 million to the positive in 2018 and I'm talking today's dollars. Okay, so positive effects there. And about 40, 42% of the net fiscal gain comes from higher revenues. Just in your mind, you can think 40% higher revenues, 60% decreased benefit costs. Okay, so decreased benefit costs include lots of these programs that Deb's going to talk about. So we'll jump over that for now. Okay, increased wages paid by the state, we think on average about 600,000 more for the state to pay out, on average FY 2019 to 2024. And it's smaller in the earlier years as the minimum wage is ramping up larger in the later years. And that does include both pay as well as Social Security and Medicare retirement contributions if relevant. Most of the costs come from temporary workers and they are not eligible for retirement benefits. I will just note that historically about 40% of the cost of the state workforce has been covered by federal or other funding sources and uncertainty about the federal budget says we don't know what will happen going forward. Okay, the cost of state contracts could increase. We had to think hard about this, but there may be some agency of transportation contractors who pay the minimum wage, although most of their workers are covered by the Davis Bacon Act, which says that they are paid much higher than the minimum wage, that's a federal rule. We have employees at designated agencies and specialized service agencies that because of a legislative change last year are now all paid at $14 per hour. So some of them would have been affected, but now they're supposed to be all paid at $14 now. We have home health and personal care organizations such as the Visiting Nurse Association. And we have evidence that says yes, there are absolutely minimum wage workers in those organizations. The problem there is that much of their reimbursement comes from the federal government and that reimbursement does not change when the minimum wage changes. It's a grant to the state, it's a lump sum. And so the question is what would happen? Would they hire fewer workers? Meaning they are able to offer fewer services. They cut the hours of all the workers they have. That is a- How do we just pay the extra? The state could choose to pay the extra, absolutely. So that is a real area of concern. In public education, pre-K through grade 12, schools, we looked at Addison Northwest, Middlebury, and we looked at North Country Supervisor Union, which is Northeast Kingdom. And both of those examples say that the increase paid to people like paraeducators and cafeteria workers and so forth would be less than 0.1% of their budget on average. So some impact, but not terribly large. We looked at UVM and Vermont State Colleges. And again, it looks like a relatively small effect, about 75,000 on average, or about 60,000 on average for the usual kind of workers you think of at the universities. But if you think about federal work study students, there could be an effect there. Again, the federal work study money comes in as a lump. So would they cut back on hours? Would they cut back on the number of students who are eligible? Just quickly on that. All right, Bob. Just very quickly. That's based on 1350 or the whole 15. That is based on the path leading up to 15. Well, where do you get, for Vermont State Colleges, where do you get 60? So that's an average? That's an average over the six years. So it'd be less at the beginning, more at the end. Okay, we looked at whether there would be an effect on the state employee's retirement and Vermont State Teacher's Retirement Funds. You would think higher wages could mean higher liabilities, but in fact, the way the benefits work, it's often the last three years of high paid work that matters for the benefit. And it's also true that the temporary employees don't get the retirement benefits. So it looks like not very much of an impact there. Where we do see an effect is changes in eligibility for the other programs. So that's debt, and we're gonna get there. Okay, so overall economic effects. As we mentioned, some minimum wage workers work fewer hours or lose their jobs. We're estimating in calendar year 2019 about 200 fewer jobs. In calendar year 2020, about 350 fewer jobs. So think about the economy chugging forward under the current minimum wage path. And then think of the economy moving forward under the S40 minimum wage path. And what's the difference in the number of jobs in a year? So we're saying that in calendar year 2020, you would see about 350 fewer jobs under the higher minimum wage. Okay. Now, if we think about the long term after we've moved up to 15 and things move forward over time, the rough estimate says about 2,250 fewer jobs each year on average in the very long term. 20, 28 to 2040. Decreasing each year. Nope, this says think of the number of jobs under the current path and think of the number of jobs in the economy. Yeah, so it's just a drop down. Oh yeah. Right, not lost annually, right? It says each year on average. It says each year. Yeah, so I wanted, this has been very confusing for many people. And I just wanted to say this is each year think about the average number of jobs. Yeah. Okay? No. No. I'm a slow learner. Okay, that's all right. Suppose we have, I'm gonna guess something like 350,000 jobs in Vermont under current law chugging forward over time. This says that instead of 350,000 we would have 347,750 jobs on average in each year. The difference would stay the same over time. So the difference stays the same once you get it out into the, from this one effect. Of course, zillions of other things are happening. Let's see. So it is true that during expansion our years more people might be induced. They would be attracted to enter the labor force. So that's a good thing. It's also true that fewer federal funds coming to Vermont would have a negative effect because eligibility for federal benefits would also drop. So think of the federal money as sort of free money from heaven, right? And that path, that flow would be shut off a little bit because fewer people would qualify for federal programs. So that actually ends up hurting us. It's also true that higher federal, now of course you can think in your mind we don't want these people to be on the federal programs and I agree. But this is just the result. Okay, and we also have higher federal tax liability for some people who are earning higher wages and would have to pay higher federal income tax, right? And again, that's money that goes out of the state. So that's a negative effect for our state's economy. So on average, the modeling says that Vermont GDP would be lower by about 0.3% in the long run. So again, think of all that gets produced in Vermont over time under the current path and think of what would be produced under the new path with a lower minimum wage and the delta of a change is 0.3%. So it's tiny, but it is a tiny negative effect, okay? All right, now this is the big table and we can go through this. We've talked about all of these effects. We can talk about specific ones or just go through the table. It's up to you. We can read through this on our own. I wanna give Deb, I wanna get to talk about this. Yes, and I do wanna emphasize when you look at the share of jobs and the number of jobs, this is jobs, not people because we collect data from employers on how many workers do you have and what are they earning? So we know the number of jobs very well in Vermont. It's harder to get the data on specific workers, right? That's the three, five, eight, four, five, six, seven, eight. This is all 18 numbers. 2018 dollars, yeah. All right, we will. Are we good on that one? On this one, we... Okay, good. Okay, and here's my last slide. So here's the picture of the long-term economic effects. We have net annual long-term unemployment. That means fewer jobs by the 2002-50 that I talked about. As a share of total jobs, that's 0.5%. So a very small percentage. As a share of minimum wage jobs, it's a loss of about 3.3% of minimum wage jobs, okay? Which again is not huge, but for some people it would be meaningful. And the overall effect on Vermont GDP, minus 0.3%, okay? Good, thank you very much, Joyce. You're gonna address that constant at us? So that's... To the state? So remember, it's overall a positive. That's the net fiscal impact that overall is a positive. That was in this... Yeah, but I mean as far as state... Mine too? Government. State, government. Employee unions. So that's all wrapped up into the net fiscal gain. So there's a gain from revenues. There's a loss from paying a little bit more to employees and there's a loss. There's a gain to fewer benefits. All that's wrapped up into the net fiscal gain. Yes. We have Peter and Dave and we need to stop at 10 after so that depth can get started. So Joyce, looking at this slide specifically, the gain to the state from increased revenue and decreased payments is $20 million, but then the loss of federal funds to the state economy from reduction of benefits is $54 million or a net loss of $34 million. So remember, the first line is just the state's budget. Just the state's budget, right? And the second line is to the whole state's economy. So think of all the people in the state and some of them will get less fewer benefits. That's right. It's not comparing. It's not. No. Dave. Three quick things, maybe we can do it offline, but trying to determine the cost on the state budget, not by the cost of what lower state employees are paid. Nursing homes, state regulations say whenever there's a state mandate, the state shall absorb that cost on them. I wanted to touch base with you to see if you did any modeling on what their current wages are with division of rates setting to see if there is an increase to us. The second area for you to focus on, I know you reached out to Ares and I think you've got some information. It's important, I think for all of us, remember there are many, many people who do the work of the designated agencies who are not employed by the designated agencies who aren't in that mix of $14 an hour. They're more minimum wage folks doing the personal care or day support services for the 3,500 people on the DS waiver that we heard about. And the same thing, there's a significant number in the Choices for Care program also that spills over into the V&A. And then finally, in the childcare world, I'm less concerned, I'm concerned very much about the whole benefits cliff, but I'm worried about the market rate gap. There's one now and I think in order to close it, it's a lot of money to get to more current market rates. If childcare centers have to increase their rates to pay their health, their costs to the consumers go up and our subsidy program, aside from eligibility, buys even less. And I'm concerned about a dollar amount, what would it cost if we tried to absorb some of that cost for those employers? So those are just three cost areas. By law, I don't think we're other than the nursing homes. I'm not sure we're required to do anything, but we should at least know it's going to be shifted to somebody. Does that make sense? Absolutely, and we've thought carefully about all three areas. So I'm going to punt the childcare to death because she's definitely addressing that. We looked very carefully at the distribution of wages in the V&As. We worked carefully with the executive director to collect data from all the 14 V&As around the state and to look at the exact wages paid to the people. Unfortunately, the way the data were collected, I was not able to play with the spreadsheet. And so the data came in in a way such that the executive director couldn't quite put everything together. We tried very hard, I can tell you that. So I don't have a number for you. I do know that it's a very big concern for V&As, for home health aides, and so forth, absolutely. And the same is true for the folks at the DAs and Choices for Care and so forth. There are many workers who will be affected and where the money's going to come from is not clear. So those are absolutely areas for concern. Thank you. Yeah. Thank you, Joyce. Thank you very much. Deb, I think you're here. Thanks. This is also a little outlasted. It looks like very close. You won't get out of it. So for the record, I'm Deb Breitner, consultant to the Joint Fiscal Office, and I'm trying to look at the relationship between the change in the minimum wage and benefits. So I'm going to try to whip through this and concentrate only on the ones that are immediately affected, but representative Yakivani will understand this. This came from, we started doing this when he was a commissioner. But this is looking at the relationship between wages and the other benefits that people get to help them make ends meet. And so across here, you have gross earnings increasing from zero all the way up to $82,500. And then the blue bar going up is your net earnings, net of taxes. And then all the other little colors added to that bar are the benefits that you may be able to get from public benefits to help you make ends meet. And then this line across here comes from the basic needs study that Joseph was talking about. It's what this household, in this case it's a single person, would need to meet their basic needs. And so you can see when they're below this level, we're chipping into a certain extent with a variety of benefits. As people's net earnings increase, they're better able to pick up a share on their own and the benefits decrease. So that means that people are on their way up in terms of making ends meet. And it also means that government is saving money on the benefits because they're using less and less and less. Clarification question. So is this, when you're talking about the benefits, is this counting sort of a cash value of that or the actual impact to Vermonters in receiving that? So for example, if you're receiving the benefit, a Medicaid benefit, you're not receiving a cash value for that, but if you go into the exchange system, what you're actually seeing and paying looks totally different. That's right. So I had to, most of them, they have a dollar value. Like Safe Food Stamps are child care, so they have dollar value. Something like healthcare. I had to value Medicaid and also the cost sharing and the out-of-pocket expenses. I had to turn them into a dollar amount to put them in. So if it's a direct dollar for dollar system? To the person. To the person, it's accounted like that and if it's something that's more intangible, you had to value it. Okay, thank you. So anyway, this is what you wanna see as people have a work incentive essentially as they earn more, they get farther ahead and we save in terms of benefits. This is what you don't wanna see. This is another household. This is a family with two children, or a single parent with two children. They're age four and six and so one needs after-school care and the other needs full-time care basically. And so what you see is to a certain extent, the benefits are fairly steady and up to about here, there's an incentive to keep working. And then at a certain point, the more you earn, the worse off you are. You have fewer benefits and you're not able to meet your basic needs. And so essentially, if you go from earning $25,000 a year to $45,000 a year in this family, your net resources would decrease by $7,500. And so it's not a cliff. We've been calling it a benefit cliff but it sort of functions that way because at a certain point you go, if I take that raise, if I work an extra hour, I lose childcare and to me that's a cliff, I can't do it. So people don't wanna do that. But the problem is with a minimum wage, we might actually be sort of pushing people off the cliff. Well, down the slope. Okay. Not crossing down the slope. I'm sorry. Right. And so let's see. Most of these benefits that you see were designed as sort of a safety net. And so they're supposed to be maximum up to 100% of federal poverty level. And then when you hit federal poverty level, they would decline. And the theory was that you're out of poverty now so that they can decline. The problem is that the federal poverty level is quite low compared to the basic needs budget. So in this case, the federal poverty level is here. This is two times the federal poverty level or 200% and that's 300%. As you can see, the benefits start cutting out at around 100% of federal poverty level. People still can't meet their basic needs. And they all cut out at about the same time between 100% and 200% of federal poverty level. Even the ones like the earned income tax credit that aren't pegged to federal poverty level, they just sort of fades out at the same point. And so I could quickly explain the ones that they, the big ones that they are. And the first one, the blue one, is SNAP, Thriceburg. And so that starts declining. It finally phases out at 185% of federal poverty level. But when you're on the down slope, for every additional dollar you earn, you're losing 24 cents in food stamps. The earned income tax credit is this pink one. And then it's also, we've pegged to it. We provide 32% of it and so that's the purple one on the top. And that's also phasing out in the same area. The red colored one is what I, sort of the public health insurance. It includes Medicaid and then it moves the people on to the exchange. And that declines because the parents move off of Medicaid at 138% of federal poverty level. And then the kids stay on with Dr. Dinosaur, much higher, so not in this range, but the parent moves off. And then that means that you're picking up more, even though you move on to the exchange, as you move up an income, you pick up more of the premium and the cautionary. Bob? Just to give you my real small way of thinking. So as opposed to $400 a week, how much, what does that do for you when you're making $600 a week instead? Because that's what we'll have. You get me? I mean, where's poverty level on a weekly basis? Okay. Yeah, I'm way ahead of it. Okay. All right, perfect. So you can see here that federal poverty level, first of all, that it varies by household size. And then you can also compare it to the minimum wage. Okay. And you can see that both federal poverty level and the minimum wage will end up full-time working, or still less than what the legislature determines as you're meeting your basic needs. So you don't have to go back to the other slide, but when you go there, nobody along this continuum, if the 70,000 is your basic needs budget, that's who you get. Yeah. Well, of course not. So even with all of their supports, it doesn't come close. Right. That's right. But so looking at the list of supports, oh, another one is the fuel assistance, which is the yellow that also fades out. And that also fades out around 185% federal poverty level. So all of those ones that I mentioned apply equally to all types of families, and they all phase out. The main reason that this family here is different and is going down as it's down slope rather than making some gain for every dollar or is a screen one on top. It's childcare. And this is the childcare financial assistance program. And so when the summer study committee looked at, had to look at the minimum wage and the benefit close and tried to figure out how to keep from shoving people over the, we're calling a slow footage, the hedge, whatever, decided to concentrate on that program because that would be the most direct way to deal with this, even though we could have tried to deal with all of the other programs because it's a cumulative effect really. So how much would it cost the state to fill in that? Is there a chart that tells us the amount that we would have to address to fill in the slope? Well, we haven't done this since a study with representative Yacovani, maybe five years ago, where what we tried to say was, what if we wanted not just to fill it in flat, but to give some incentive to say, for every dollar earned, you would at least keep 25 cents. And it was around, it was over $70 million at that time. So. Yeah, if we went on to other issues. Yeah. It didn't go very far. It didn't go far. And so we didn't, at this time, we didn't even bother to redo that calculation. We decided to focus on, it's, I think what it's been called now is that just do no harm. You know, to see what we can do just to make sure that the minimum wage is a benefit rather than a problem to people. So the way this program works is there are like most programs, benefit programs, you first figure out what the need is. And what that would cost to meet that need sort of like for food stamps, like they have this 50 food budget and they even figure out what that cost is. For childcare, people always ask, what is the cost, the total cost? And there are I think 120 possible total costs that depend on the age of the child with a full-time part-time extended care. And then these are the star readings, the quality readings. But if you just look at say an infant full-time, three stars, the maximum subsidy would be, do the state would provide, would be $180.43 a week. The second part cost, I'm sorry, that's not the cost, that's just, that would be our subsidy. Well, the subsidy is based on a market rate. And, so, but, it's based on a market rate and then, but then they have to get an appropriation, so it's based on the market rate subject to the appropriation. So they're out of date as you heard before. Okay. The second piece of all the programs is figuring out how much the public pays and how much the family pays. And usually it's based on income. And so in this case it's based on income as a percentage of federal poverty level. And so across the bottom you see increasing income. And then this is the percent of that maximum amount that you would get. So in the case that we just looked up, it's $180 a week. And so somebody at 100% of federal poverty level would get 100% of that subsidy. And then as you go up to say 150% of the federal poverty level, you'll get 60% of that. In other words, as your income increases, you're starting to go up decreases. Yeah, you're getting less. So this is an example of somebody starting at, if their income were $23,000 a year, and it increased by 2.75%. And I chose that amount because that's sort of in 2018 dollars the first step increase. Okay. So. With the Senate bill. This reflects the impact of the Senate bill. Yeah, the first. The first step. The first step. So at 23,000, that would be current law, they'd get 95% of that maximum amount, the maximum amount being $180. So they would get 171 a week and 8,913 in a year. Under this bill, instead of being 23,000, their income would be 23,633. So they'd only get 90% under current law. So 90% of 180 is $162 if they get. It ends up being 8,444 per the year. So they got an increase of income of $633, and they got a decrease in their childcare of 469. So all alone, they'd still come out a little bit ahead, but the problem is they've also lost all those other things. So it looks more like this. If you figure out all the other things that they lost, it turns out that income goes up $633, and they would have lost $765. So. So. Right. So, yeah. But why take the rate, you know, yeah. So the idea would be to just change that sliding scale, move it over by the same percentage. 2.75, you mean? You change the scale by 2.75? Yes, exactly. To compensate for that. So now, somebody at 100%, their income went up 10%, so they're 110, and they're still gonna get 100%. And 150%, their income now goes up to 160%, and they're still gonna get the same amount that they got before. Yes. But you'd have to do that every year. Yes, correct. So, that's what we're not going to do. Right. I mean, we're still, we haven't been able to even come into this decade with the market rates. That's right. That's right. Yeah, I'm not gonna say, let's see. Child care is really a crisis right now. It's a problem. Whether you're getting a subsidy or not. And this isn't solving all that problem. We knew that was, I think you're out of the room, we knew that was too expensive to get rid of that dip. So this is just trying to protect. What is the cost per year to ship that over? Okay, I get that in just half a second. Oh, okay. I just wanted to add this column in. If you made that change, then instead of, you're still earning $633 more, but instead of having your loss and benefits exceeding that at 765, now you're only losing 436. So you're still, you're not getting rich, but you're not going back. You're not going back. Okay, this is the estimate of the cost. And I realize this is incredibly confusing, but this is $20, $18. Okay, so these numbers down here from the range, don't match, oh, it's just because they are $15, it's actually $12. These are $20, $18. Okay, this is a set of $15 and $20, $24. Is this enough? Okay, and we did all of our modeling in 20 frozen dollars, $20, $18, essentially. So this is taking some of that state gain that we get from the increase in income tax and the decrease in other sorts of benefits, particularly the earning income tax credit, as people move up. And then comparing that with the estimate of what we think making that change every year would cost. So in other words, in the first year, it would add a million dollars to the cost of CCFAP, the Child Care Financial Assistance Program. And then compared to current loans. Just to keep it at $18. Yes, in 2018 dollars, you're correct. And then in the second year, it would cost $2 million over current loan. So not one plus two, but just two. That's correct. Just one plus one. Yes. Because we're good. Yes. That's totally good. That was good. You still should be there for that. I'm a pro. Yeah. I was thinking, so in the first year, I think that they're looking at this amount in the budget. It would not be covered in our best estimate by the gain that you get in the first year. But in subsequent years, it would be. I'm sorry, that's not a statement. In the first year, it wouldn't be covered in the second year or subsequent years, it would be covered so that it would go to column two. Then that's after the coverage is taken into account or you're assuming that the entire cost would be covered entirely by the increased revenue. That's right, we get this much revenue that we could use and we all really need 8.5 of it for that particular purpose. Gotcha. Thank you. Okay. So I'm sorry, that was a wrap. This is great. I'm sorry. That was really good. That means there's a lot of, a lot of revenue. Oh yeah. Yeah. Good work, guys. So a lot of information that they missed. All of the dollars are in 18. Yes. But, so I could add one and one and then I can't do any more than that. So as we move, are we freezing everybody into 18 rates? The answer is no. By the time we get to 2024, we're not gonna be saying, oh, we're six years. You know, we should have been inflating six, we should have been increasing the amount we're putting in. Right. All of these numbers would actually, all the numbers in this chart would actually increase with inflation. Right. And so this is like constant dollars, meaning that, you know, taking the inflation out. Yeah. But, the point that I think representative and I want to draw up is that our pay scale is out of date currently. This doesn't bring us up to that. It does include. Oh, this keeps. This keeps it. 2024, you're still going up to $18. No. Not that $18. This is the 2007 or 2010. Exactly. There's no change. In 2024. No change. This is just taking it. But, I'll do that. So the market's rate now that there is estimated at needing $9.1 million to fill it in. And this doesn't do that. It does, however, include an increase in pay. In other words, increase in pay of childcare providers because as minimum wage goes up, people either below, well, not below at or slightly above the, what ends up being $15 an hour. So they would get an increase. I don't understand how you do that without adjusting the market rate. What's the mechanism to do that? Because the way you handle the minimum wage typically is that you have, you know, they assume the, because of the private entity, they're going to be doing the minimum wage as part of the market rate. So I'm just going to look at what you said right now. So the way that we did it was to, we don't have actual data of all of the childcare providers, but we did three separate methods different ways. And they actually came together pretty well. So we just then took that percentage increase to the current market rates. No, actually, I'm sorry. I took that percentage on top of, if you brought them all the way up. So it doesn't- Right, all the way up the inflated cost of market rate. If you had first inflated them up to, added the 9.1 million, then I went and calculated what the increase would be. So these numbers that are based on the market rates being current as of this date and moving forward. So this is, these numbers bring us current with the, is that right? They can't- No, they're taking our out-of-date payment schedule. And it only inflates with inflation. That's the increase that we get. Okay. And then it's adding on top of that the cost of moving- Moving them. Right. Increasing- So it's increasing the pay scale, but not the whole payment schedule? Okay. So it's- No, Matt, pretty much got it together. Dave and then I have- Well, I probably, maybe I shouldn't say this, but I'm struck by the possibility that all of the unknown untold consequences of the minimum wage on all the economy yields when you're, all of a sudden, yields to me, not to the person making $23,000, you know, a couple hundred dollars net gain. Not even. And in the end, and this is the part maybe I shouldn't say, one might want to do an analysis and say, just take the state share, the EITC and plow it into childcare. And the benefits for some of the lowest income Vermont folks with children, you might get a better, I'm almost confident you'd get a far better return than trying, than this. Just because of all the complexities and how things come and go. Yet I know that's controversial, but you're almost like, one might want to look at it. So, Dave, I know you need to go and I'm going to ask a question that you won't be able to answer now, but I'd like to know your response to Theresa. What are all the assumptions that were made in putting this together, please? I mean, and, wow, how could he know? Yeah, I'm just wondering if you don't want to answer now. And what's the riskiest? If you just let us know, what are the riskiest assumptions that you've made and put together? That would be very helpful. So let's see, the biggest, no, I did have actual people participating and could figure out that and then I could use the census data to match them up with how many more people there are with working parents, needing childcare of different ages. But then the big unknown is what are they doing? They're not, you know, they're not in this program. They can't afford childcare. What are they doing? We don't really know that. And there is a discussion of a provide of a demand study that is going to be done, hopefully. Money isn't quite together, would be really helpful. So it just means it's hard to know, you know, how many people are eligible? You know, how many people are taking advantage of this program now? You know, how many people should have that need? We don't know what they're doing and what would make them come into the program. A lot of it is that the subsidy is just too low for them to be able to go to those programs. But where are the kids? I'm more on the ground here. Yeah? So, I find myself asking about $15, in the end of all this, the $15 an hour, I call it staying power, the ability to make somebody happy with $15 an hour. Now, I know businesses that started 12 and 13 and move them up to 15, these guys just come and go like, it doesn't seem to do a lot of good in some arenas, all right? So I'm wondering if it doesn't make people stick. It brings them up out of poverty somewhat, but it doesn't make them stay there. And all those lost, or a lot can be lost and fall back down to where it was and we start all over again. Yeah, I don't, you know. I mean, you're working with human nature here. $15 an hour and you're still not making it, particularly if you have kids. I've seen it, no, $20 an hour. I mean, these are 30 years old, 35 year olds that have some experience and stuff. And then just all of a sudden one day, just to say I don't have a particular problem or just gotta do something different. I don't know how to answer to that one. It's out there. I don't know how much it is in the industry that I'm more familiar with right now. We'll see quite a bit of it, but. So, Deva, I think that's a perfect place to end up as. I'd say that only because we've got somebody outside. I know, yeah. So, I think you need to go too. Thank you so very much for coming in. We do appreciate it. So good to see you there. Also at a... Yes, thank you so much for coming. This is for you. Thank you for coming. Yes, I understand. Thank you. Thank you. But unfortunately. I've got this. So we're gonna... It'll, no it'll, it'll just record. It's recording. Okay. Good morning. Good morning. We've lost a couple members to the Senate. Okay. They didn't, I don't really get elected over there. I didn't know how. They can ask you to come and do a presentation. Okay Okay, okay, so it's not that we're boring you Excellent Well, thank you for having us. I'm Rebecca white. I'm the director of risk management operations in the agency of administration I'm Bradley Cooper burger. I'm the financial director for the risk management programs in the agency of administration Yeah Chose to sit over there We we were talking about You know you were looking for as we understand it just a presentation kind of of what we have done and Rebecca's worked probably most directly and not daily or hourly with the third-party administrator PMA companies of New England who we hired in 2017 in the fall and so they've been working for a year putting their programs in place And so we thought we're 16 actually Oh, excuse me, and so we thought we do kind of an overview of what we've done and Where we are at this point, and then we would talk a little bit about the financial impact of that as well and I think we're open to questions or interruptions at any time So we Put out a request for proposal For a third-party administrator to handle the workers compensation Workplace safety and liability claims for the state of Vermont. The state is you may already know is self Insured so it's our money. We have an excess liability policy over 500,000 that covers liability type of claims, which is different from the workers compensation But the PMA folks handle the actual claims. We have a lot of say in the matter and how the claims are handled Obviously according to statute because it's our money basically. It's the state's money Because with some insurance companies and some companies If they just buy an insurance policy and they have the folks who handle the policy handle the claims The client has much less say in the matter of how claims are handled. So we have a lot of say in the matter, which is great so we chose through committee PMA companies for a two-year contract starting in August 2016 through August 2018 with two one-year renewals and After that point, we will go out to bid again they were the lowest cost and the best Content proposal that we had we had about maybe Six others I believe so we had a pretty you know good response and PMA handles workers compensation claims So basically they have about five adjusters a workers comp manager and a supervisor who work in their home offices and their office not home office, but their office at PMA and They get claims in online Our folks our supervisors and managers would work with the injured worker to file the claim online PMA gets the claim right away. They contact the injured worker the manager and get the medical Records in contact the medical provider if it's something that's serious, you know, such as a head injury Concussion, you know what anything like that? They would assign a nurse case manager and make sure that the claim is Reviewed right away to see what happened and how can we prevent it from happening again? in terms of the liability claims is the same type of process it's this Report the claims to risk management. We report them online to PMA and then the PMA adjuster calls the Injured party right away gets their statement Calls someone at the state of Vermont. We gave them a list of contacts Such as in human resources to talk about what happened usually with the liability claims It's things like auto accidents if we hit someone as we're driving in our state car or truck Or it could be an employment matter Anything like that is in a more serious matter is handled by the Attorney General's office and PMA just does the like Paper work basically Do you get a better rate because of the numbers of employees Why are you Obviously looking for a rate by doing this Think we saw in the budget this year. Mm-hmm. That's reflected So that must be why you're going out The rate was well, basically we did an RFP So we gave the information out there to companies who were qualified to send us a proposal And it was based upon number of employees. We have our claim history so we issued that to You know, obviously without having the names or any personal information so that these folks could could give us a rate and It was actually the rates that we got Were for the claims handling the administration their IT system that type of a thing the medical case Management and We're paying the claims on our own though. So it's you know, it's just the admin cost. That's the rate It's not like an insurance company where it's a mod type of a thing where if you're a roofing company It's gonna be very high versus an office company works not high because there's not much exposure there Thank you So I was getting confused because I thought we were talking about workers compensation But you were talking about liability claims So is PMA Handling all of our insurances for us. So liability as well as I don't know what else and workers PMA is because risk management used to handle that Worker's compensation, which means state employees who are injured on the job Liability claims also risk management have been handling that and those are claims where a state employee has You know where it's a car accident or if a The state employee may say they were Unlawfully terminated that type of employment matters. They also handle workplace safety Which is so I'm just saying what the contract is but we can Focus on I just thought I and then we do have a few other Contractors that handle claims such as there's an heiress program for home health care workers through D AHS Sentry insurance handles that so we have a few other smaller Yeah, so when you said you had five adjusters who were handling your Yeah, I assume you meant you had five adjusters were handling your workers No, it is no the liability we have two adjusters and a manager and for the workers comp it's So Traditionally workers comp is handled as a separate book of business from we may have the same insurance Managing that it's a different book of business Is that the case here or it feels like they're getting kind of blended together? Well, they're they're accounted for separately. They're two distinct programs and They just Happen to be managed the contract we have with PMA Supply Claims adjusting for both the workers comp program and the general liability program when And that is how it was done previously we had State employees who worked on workers comp and we had state employees who worked on liability as well But they are separated Yeah, I mean we have one big manager that you know I received both but there's a set of corporations and separate financial statements and separate accounts Just at the beginning So and also what PMA handles is workplace safety and they've done a wonderful job with that because we have a senior safety person who has been working with Department of Environmental Conservation on Confined space entry and dams. So DEC has been really happy about that We have another person who's who just does ergonomic assessments because we have a great need for that And he's done about 600 so far, you know since August of 2016. So it's A lot of people want those and need them for their to make their workplace a little bit more comfortable And you were all welcome as well because We don't want to touch that but you know, it's important so you don't have say or her You know neck or shoulder or whatever just by typing all the time and good light and stuff So they're great with that So that's another need that was done. They're also helping us with our OSHA Logs with statutory reporting. So they've been a very big help in terms of briefing up risk management and workers comp and making sure that we PMA yes, yes Helping us conform to statutory requirements and exceeding them and meeting best practices so We every year we have a an independent claims audit Of the workers compensation and liability claims program and this this again was put out to bid years ago And we renewed the contract with this person. He's is a lot of experience in Just reviewing claims independently for various companies and he gave us our review a few months ago And we passed with flying colors and it was interesting because it was now This was how how is PMA doing the job and they said that we can they conformed with best practices in You know practically every category. So it was a big improvement from the year before so that was a good thing And our contract as performance reviews. So that's been sent me for the state though We have a vendor that's not just Saving money, but that they're doing a really good job because that's important. I mean, it's not just about money We want to make sure that the employees are well-taken care of Best practices means calling the employee right after they get injured Handling catastrophic claims with a nurse, you know so that the person knows what to do type of a thing Like duty we've instituted that at many of our facilities such as corrections They're big proponent of that. I came in late and so I apologize. Yeah, that's okay. I miss something So is this information also coming from the point of view of the? employee as well, I mean do they do a survey with the employee about Working conditions being better and you say there's less risk and and best practices are being used Those are maybe from you know more of a company point of but do we get the point of view from the employee as well? Saying my workspace is better. I feel that my you know standing is better than sitting all day Are we getting the employee? Is there some kind of employee survey or I would say yes Well with the claims audit he was an independent person that did this audit So he was looking at the claims system that would have employee remarks, you know It was kind of like a running Tally of every time the adjuster would contact the employee and what was going on with that? So it was that and it was also we have our annual DHR Survey to employees and that I think that talks about workplace safety Chris McDonald's here, but you know that that I believe talks about it as well and also folks who? We should do us. I think that we should do like a survey monkey Survey to people on workers comp or after having their ergos because I've just heard anecdotal Information from people that those outside audits compare To what they look like when they were stated It is much better. They found he looked at Gary Jennings looked at about Yeah, of best practices and This year for October 2017 he found that there was One or two parts where we didn't meet the best practice the year before it was more like Seven or something And we can supply that if you'd be interested in looking at the report. It's a good report. It's interesting. Okay Do you want it? Well, I was gonna offer it. You're doing a great job. So I was just gonna offer a suggestion of Return to work and also claims reviews, which are things that we've never really done right, right? So basically I Came to the state of Vermont in January 2015 prior to that I had worked for the state of New Hampshire and Dutchess County, New York Managing and kind of rolling out third-party administrative practices and just Getting risk management departments more to where they need to be to help injured workers number one We want to prevent claims. We don't want claims But if they do happen figure out how they Cannot happen again and make sure that our employee is back to work is doing well is getting the treatment That they need and not out there in limbo land type of a thing and I'm happy and all that stuff so what we've been doing in terms of better communication with the Commissioners and their Directors and the managers of the folks that are on workers comp is having claim reviews because prior to that They weren't doing the claim reviews. So now we have every other week claim reviews with on the phone With folks that would call in mostly the veterans home is using it and who I mean, that's a high-risk job Nurses taking care of folks who are in you know an institution So they're very happy with us just finding out what's going on with their employee on workers comp They come back modify duty, you know, or can they come back at all because those are heavy-duty jobs you have to lift at least 50 pounds and Many of the people working there are females. They're older and they're you know dealing with You know that so it's not easy So that's been a big help and also We've worked a lot with corrections on their Claim reviews so we have them in person in on the phone just so that people get a sense of what's going on We also send reports to human resources every Other week or every week. I think it is on the claims and the status of the claims that they you know There's just better flow of communication And I think it also Connects the dots between having an injured worker and I we've heard Before different commissioners they would have an injured worker and And now maybe they'd have a vacancy or they'd fill the spot with temps But we're never really looped into the process of where is this claim? What's going on with it? What's the best way to move forward? And this kind of integrates the leadership and management of departments with the workers comp policy It's not just that they get a bill every year and then have to manage with an injured worker or vacancy Exactly or in the dark Right because that's the big thing and that is the biggest win-win for the employee the manager and Financially is getting them back to work modify duty Because in the past folks will go to their doctor and the doctors say just go back when you're ready Well, that's that's not good for the employee and it's not good for the manager Because as Bradley was saying then they have to figure out, you know, either people working overtime or they're hiring a temp Or just morale goes down and all that stuff So it's better to bring people back safely within their restrictions To come back to work so that they don't feel like they've been neglected or they don't know what's going on You know, because many times I found that folks on workers comp. They just kind of can get more depressed They sit at home on TV. They watch the lawyer ads and then forget it And We're done So if they're back, you know, they're there with their peers It's much better for them and then they're focusing on ability not disability So that's the big thing that we're we're plugging away at that But I'm not sure if this is right but how is How is workers comp now getting along with folk rehab services in terms of Somebody being able to see their own doctor You know, not making but really requiring an injured employee to Do the wellness part of recovery that sort of thing. How is that relationship working? Because it seems to me a few years ago when I was on commerce That seemed to the Commerce Committee that seemed to be a real problem, you know the interaction there and the success Well, folk rehab vocational rehab is It's mandated by the workers comp rules for someone who is out on workers comp 90 days are over That they even know and it is it's a great rule because it does help people Who perhaps they can never go back to their regular job if it's a you know, moderate or heavy-duty job depending on their injury They can be retrained. They can go back to college even or you know, if they don't have a college It's great go to college be retrained for a new position or voc rehab can help them modify their position permanently Because like-duty modified duty is meant to be temporary It should really be up to three months at most and then because the person is you know in theory getting better And then they should be able to go back to the regular job Well, voc rehab the voc rehab counselors that We use are They need to report to the adjuster and to the Department of Labor every month and they meet with the employee But they don't do the medical management part. That's a little bit different That would be a nurse case manager that would either go with the employee to medical appointments say if the doctor is being difficult and won't give them a release to return to work or is maybe You know prescribing opioids or is saying some sort of surgery that we're kind of like Why should they have that type of surgery to advocate for the employee too? Because many times they can be in a situation where they'll just listen to the doctor like okay They're a doctor they know, you know, they know what's past and it's good to have someone else there to talk to the doctor and kind of you know call them on things so The medical case management is different from the vote where you have the vote where you have I think it's wonderful But then they need to work closely with human resources in terms of if the person cannot go back to work They need to work within the parameters of HR with the medical riff process and all of that stuff And not overstep their bounds because sometimes they think that they know the things better than We do and that's not true. So and the medical case management is huge Because in Vermont we have a fee schedules for workers comp. So basically they can only charge a certain amount of money for a procedure Such as with blue cross blue shield they have a certain amount that they will pay But I think that most of the doctors are go to workers comp They feel it's still lower, you know, because they complain that they don't make enough that they have to have the volume So we it's tough. I think it's tough, but our folks at PMA they look at all the bills. They run them through a whole Algorithm I think it is and they've saved quite a bit of money on that like 42% through either double billing things that should not have gone through the workers comp claim but did by accident or They weren't in the preferred provider network that we have Which is another thing that we didn't have in the past that we're working on now Although it's kind of tough in Vermont because there aren't a ton of doctors. I mean, there's only so many, you know, there's UVM Few others So Mary and then I have a question. Sure So I think you just answered one of my questions Which is do you require an injured employee to see? our The department's doctors so do you allow them to go see their own doctors? Well per the workers comp rules the employee Must see our doctor quote-unquote just for the first visit And if they want to see say their own doctor goes somewhere else they file a form with the Department of Labor and PMA and it's Always approved and then they can see who they like Is Per the world so those are the rules of the yeah, any employee and any every employer your alarm To the states on track. It's not it's it's per. Yeah, it's a workers comp rule for all employers That we have the right. I mean maybe some employers don't invoke it But they do have the right to have the employee go to you know our designated doctor And I think that that has helped us just So employees aren't going to the emergency room because many times they were and that just is huge waste of money and time So it's better if they just go to and and the company doctors that we have set up their Concentra or urgent care. I mean, it's just those Middle of the ground types of places unless it's an emergency, of course, then they would go to yeah So the question that I hadn't you started out the road, it goes to how much money You've mentioned we're saving 42% But can you quantify that in dollar amount and from last year to this year in other words last year under the old System first during the new and what do we expect in future? Okay? Well, I think I can start speaking to that And then we'll talk about Okay We can talk about the individual components, but I'm gonna pass out Although the 42% is on the medical case management, right? Okay, so there's different variables Which I have the and we're gonna leave this here. It's our stewardship I Have fun Does everyone have one So here is The first chart is just a Quantification of our savings just on the operation side so the cost of administering and claims handling and what it is is a comparison of fiscal year 2016 which is the last full year that we had the in-house state employees running the workers compensation program and Compared to this year, which is the first full fiscal year and then I estimated the cost Or projected the cost of the last three months. And so we have a comparison here so The first or the biggest portion of savings comes from salaries and benefits So when we moved to the third-party administrator to PMA companies, we were able to reduce 10 positions Which is six claims adjusters and four medical case managers I The total savings that we're seeing in salaries and benefits is six hundred and twenty thousand dollars I would like to point out that Of those 10 positions only six were filled at the time that we made the transition and All six of those employees were able to find employment in other places in state There's also a reduction in overhead costs associated with these 10 fewer positions, which is the line below Which is a savings of about a hundred twenty eight thousand dollars The biggest portion of that being that we don't have to own and maintain our own risk management IT system We pay PMA a fee to use theirs Which is a big long-term savings because we don't have to upgrade it. We don't have to pay for people to maintain it and service it and PMAs is always up-to-date and it's a kind of a better system anyway So the six employees who were then employed Find other jobs in state government correct So the savings in salaries and benefits are to just workers come unit not to the state Not to state government it wouldn't we look at Well, it is because the positions that they would have gone to would have been budgeted for anyway Okay, we did not do so it wasn't it wasn't added in a position when an employee All right It's a position through their riff rights I would say typically these were positions that were Budgeted and being actively recruited for anyway, so it is an overall savings in Budgeted service just curious. What do you do with your old system? We Yeah, you know just take it to the dump. What are you doing? We went through a large Process or a long I shouldn't say large is long process of giving all of our information In a way that we could then use it so when we transition to PMA they not only started Administering all the claims that we received going forward, but also all the takeover claims that were Still ongoing for the state plus we needed to put all of our historical information in their system so we do it so we have The system has been Shut down or yeah, it was web-based so it just Oh, yeah, they took it Yeah, we took it back and they purge the data our data, but we have We haven't in PMA system. I transitioned So that was the front page go ahead Well, and so what you're now on their operating system. I said they're a national or regional company Yes, so how do you know that they're complying with Vermont specific laws? I mean have have they modified their manage their computer system to Be able to say this is what Vermont requires in terms of Yes, we well in the contract we require that they have a sass Sock to audit report which means that they well that's national That's not just for Vermont, but it just means they have the proper security Not security that I'm interested in but Vermont has its own particular Yes, instances rules are regulated law Regarding how workers comp is administered and what my rights are as an employer as an employer How how do you know that they're applying Vermont specific regulations to clients that are in Vermont because I'm reviewing what they're doing pretty much on a daily basis It's in the contract that they have to comply with Vermont law They're Vermont licensed adjusters So they all have their license to just claim to in Vermont and that means they have to study The rules and the laws and they have to pass the test and go to CLE. Yeah, do the adjusters Handle other states or do they handle us exclusively the fives that we they handle other states, too So do you so what do you hear? From the Department of Labor in terms of their review of our claims, are they seeing that? You know are they asking questions about why did you handle this that way? I mean that that's that's right double check right exactly. Yeah, well they will basically In our contract We said that they the PMA adjusters even if they have other accounts They have to handle it no more than I think it's a hundred and twenty claims Which is a reasonable case load, you know So and then the claims audit report he looked at the claims how many that their caseload To make sure that they're not overburden because then that's a huge problem They can't keep on top of it. They can't call people back. They can't do it Like anyone is busy. You don't do as good a job when you're swamped So that I'm confident is is fine they give a report to us every week on the caseload that the adjusters have because You know new ones and old ones and all that stuff it fluctuates, but it's all under the 120 Department of Labor so their role is Regulating and issuing decisions on Workers comp claims whether or not they're Compensable or not whether or not if PMA is going to stop benefits if that is Allowed or not if they approve it and also with any settlements that we enter into we need to get their approval So they have been definitely watching PMA. I mean they are They're on it there. I have a close working relationship with them So if any issues or questions or anything comes up, I would meet with them like Steve Monahan and Christina So what I'm asking is With that review process is DOL kicking out, you know finding on behalf of the employee as opposed to the employer when their Contested cases more frequently than they had been so I'm trying to get a sense of their difference. Yeah I don't really see a big difference, but I haven't calculated it like I would have to look to see how many of the Because it's more when it goes to a Informal or formal hearing if there's a you know, I'd have to look at that That's a good mattress. Yeah, that's a good. Yeah third-party standard. Yeah I'll find out So we're moving on to page two page ones the programmatic savings page two is Another effort that we undertook in this would have been about on this time last year And so we went through as PMA transitioned on and I just brought an example We went through every single claim that we had this few hundred And we went claim by claim and looked at What claims that are a leftover that we can close so every claim has costs direct costs so An employee gets an indemnity payment. That's a cost. They have to go to the doctor's appointment. That's a cost But for the life of a claim we also build in our reserve cost, which means Based on this type of injury We expect over the life of the claim that it's going to cost You know $50,000 or $500,000 what have you So we went through and we Looked at every single claim and wondered does this make sense? Yes, or no, can we close it and reduce the reserves to zero and If you look on the second page for workers compensation We there were about 300 claims that were done and closed but still have reserves tied to them So we were able to just close those all down to zero and we were able to free up $5.8 million in reserves there and then Based on looking at claims asking questions and using PMAs expertise and precision in Calculating the real cost of the life of the claim We were able to reduce the remaining reserves by another 5.8 million for a total of about 11 million dollar overall reduction and so what that does is it reduces our long-term liability for the overall program and Based on that reduction of our long-term liability We have an actuarial projection so these new reserve numbers then got analyzed by an actuary and the the final balance if you will that came out when we did the financial statements for the CAFRA was about ten million dollars of Freed up cash because we we fully fund this program which means Not only the our yearly costs of claims have Cash on hand, but also our long-term liability. So there's about 30 million dollars But 10 million of that was tied up in anticipating these reserves. We know we're probably not going to incur so we were able to Free up a fund balance, which we used in both FY 18 and FY 19 to reduce workers compensation premiums that you saw in Both meeting the management savings requirement and in FY 19 you would have seen reduced budget requests based on insurance premiums so that so then the question that I have is really based off what we've just said Hook on that is then going forward for for state fiscal year 20 and 21 Are we going to see an increase? Unnatural increase in the in the costs allocated to each of the I'm looking at the Vermont National Guard Which it said they have 50% reduction in their workers comp charge for the firefighters for example So are we going to see an unnatural increase there because we are outside this $10 million window or now? What are you anticipating? What what should we anticipate? I don't anticipate a big increase The numbers that we're seeing I think we still Have to get through this year of experience to know for sure And get through this year of the CAFRA statement And there and I shouldn't say no for sure because in the risk management world You'd never know for sure. It's driven primarily on claims experience, but based on our current trends. We are Where we're saving money not just through reserves and this and kind of long-term liability Our daily practice is also moving in the direction of saving money on the preventative side We're saving money in medical cost management. We're going to leave you a document We have a copy for you We couldn't We didn't have enough copies for everyone. We had to do some redacting, but anybody who wants to look at it can We have charts of they review all of our medical costs And as Rebecca said we're saving about 43 percent Mm-hmm And that's that's a cost of about two the savings about two million dollars So we have a lot of indications that say even though we've reduced premiums That We're not set up for getting blacked in 2020 and having to spike them back up I think all indications lead to we freed up 10 million At the same time where we're reducing the cost and kind of bringing everything down to a new plateau and using these freed up reserves as sort of A new balance a new balance. Yeah Very well, I want to argue with you on that But it's great We'll just have to wait and see. I mean you used it to buy down 10 million dollars of cost over a two-year period And unless you're expecting five million dollars of ongoing savings and it sounds like you're thinking you might get to It's going to bounce up a bit because you don't The ongoing savings off of the reserves is not going to be Five million a year or the difference between what you're saving in medical and that so it's got to bounce up a bit But I think we'll have to wait and see if we'll only know Coming We'll only know more in the in the summer and fall this year. Yeah A 44% reduction in medical costs is pretty and that's really striking And yep, it's good Yeah, it's amazing. It actually but it makes me nervous. I have what's not getting done What's that mean or just I mean and that and it's not uncommon at all when people change their carriers for Lots of costs to be squeezed at that is squeezed out, but then it creeps back up to Well, that's where our rule comes in is to make sure it's not going to creep back up I mean, I think in the past the reserves had been Set and then kind of not reviewed on a regular basis. That was one of the problems So that's why we went through that long process of looking at every single old You know, because we have claims going back to the 90s some of them Figuring out why are they open? They should be closed a person's bag It's done. So it was it was just a lot of cleanup that we did to reduce the 5.8 I think it was and now I think with the light duty The medical cost management the safety Things are going to be at a lower level than you know, these huge terrible claims that we used to see That's great. Congratulations. Yeah, we're thrilled. Stacks Maureen and Diane Yeah, I just I do think there's probably a lot of factors that go into that 42 44 percent Savings or whatever, but I think One factor that needs to be considered is that they're doing a better job than the state was You know So if I'm understanding you you sort of like looked at old claims and at least, you know, you've got two dollars left on this And collapse that in that's the first five million But then ongoing you you're you're saying, you know, I think we've been overbooking A claim that oh this happened and we should reserve $10,000 for it when you when you when you have the time to look at it you go You know what? We're not seeing that we're spending time. We're really I think we can going forward. This is the other This is right. I'm not going to need to book 10. I can book eight maybe seven And still have the same outcome. Am I getting that exactly people are going to get the same outcome It's just that you just had on the books an automatic for oh code this reserve that much for it right and you weren't Exceeding the experience and you can book it a little bit less But not being super aggressive like I don't think that's where the way to see to see if people people are being served at that Exactly Yeah Um, so one of the reasons I was interested in having a longer discussion is when We had management in just doing their budget presentations And as you know, every single department was seeing this these reductions And pretty consistently we or I said What's up with workers and they said They gave us a number we don't know and and so Mike get disappointed really But and I think I'm portraying that pretty accurately. I don't know Yeah Because management has to participate in this for it to be successful um So just We have to get the word out doing great things, but it needs to be across the board Yeah, um, and and I actually pressed this somewhat with the commissioner of human services resources who said, oh, no, we do this training and again The right words but our experience in talking I would particularly ask about the VA DOC which has Corrections. Yes And do you see it's very engaged? I'm surprised maybe that's just you know, the wrong I was asking the wrong Okay, but Yeah, no for sure. Management has to participate. They have to be on board for this and know know what's going on. Yeah Thank you for your work. Sure. Our pleasure. Thanks. Thanks for inviting us And not just that all in all in my saying That's not the only reason why management needs to be successful Or they need to know what practices to best expect and train and expect their employees to follow through on So is not to get injured in the first place. Exactly. Right. Thank you very much. Our pleasure. Thank you So