|  | | |  |  |  | Notes from Montpelier
by Rep. Bill Frank
My House Human Services committee spent a day reviewing a portion of the Palliative Care bill we developed and passed last year. Act 25 called for a report on the programmatic and cost implications to providing concurrent palliative and curative care to children who have life-limiting illnesses. The current requirements follow the rules developed by Medicare for providing Hospice services for people at their end of life. This is an initiative that is supported for almost everyone as being “the right thing to do” but finding the funding is another challenge. Six parents braved coming before a legislative committee to share there experiences with us. We also heard from Dr. Macauley, Director of the Pediatric Advanced Care Team, Vermont Children’s Hospital at Fletcher Allen and Cindy Bruzzese, Executive Director of The Vermont Ethics Network.
As the Legislature struggles to create a balanced budget I am often asked why we don’t use “the rainy day fund”? A “rainy day” fund is a type of reserve fund, a fund that is held for use at a later time for one of many reasons. Vermont has two types of reserve funds; Stabilization and rainy day. There is a General, Transportation and Education fund that is primarily designed to reduce unanticipated revenue shortfall at the end of a fiscal year. They also provide resources for cash flow needs in anticipation of revenues. There are four rainy day funds – General Fund Surplus Reserve, Human Services Caseload, Revenue Shortfall Reserve, and Transportation Fund Surplus Reserve. These were created over the years to put money away for a “rainy day”, the first in 1987. At the end of fiscal year 2011 (June 30, 2011), all of these funds will all be empty. Here is a chart of the different funds:
Year End Reserve Balances (in millions) | | Type | FY09 | FY10 proj | FY11 proj | General Fund | GF Stabilization Reserve | stabilization | 60.0 | 57.3 | 54.5* | GF Surplus Reserve | rainy day | 14.8 | 4.9 | 0.0 | Human Services Caseload | rainy day | 16.3 | 0.0 | 0.0 | Revenue Shortfall Reserve | rainy day | 0.0 | 0.0 | 0.0 | | | | | | Transportation Fund | | | | | TF Stabilization Reserve | stabilization | 11.3 | 10.3 | 10.5* | TF Surplus Reserve | rainy day | 0.0 | 0.0 | 0.0 | | | | | | Education Fund | | | | | EF Stabilization Reserve | stabilization | 31.1 | 22.3 | 24.0 | * Statutory maximum- 5% of previous year total appropriations |
The $54.5 million in the General Fund Stabilization reserve is the fund I think most people wonder why we don’t use now. This fund was designed to and is used to reduce the effects of annual variations in state revenues upon the general fund. For example at the end of fiscal year 2002 revenues were way down and this fund met the shortfall and carried us through to fiscal year 2004. This fund also reduces the need for short term borrowing which cost money and concerns bond rating agencies. While cash flows are generally healthy throughout the year, there are occasions where the cash position dips. It is projected to drop to $15m-$25m next month, May, 2010. Our rating impacts the state’s cost of borrowing money and perceptions of state fiscal management which is important in competing for public and private investments. And of course once the funds are spent they need to be refilled. Where fiscal year 2011’s shortfall will be succeeded by fiscal year 2012’s $100 + million budget gap shortfall, utilization of one time funds creates a greater problem in the following year.
As always I like to hear from you, either by email: Bill@RepBillFrank.com, phone: 899-3136 or mail: 19 Poker Hill Rd, Underhill, 05489.
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