Savings could mean more cuts

Vermonters who rely on services from the Agency of Human Services got a reprieve last week when the Vermont House passed its version of the fiscal 2011 budget. But they shouldn’t relax just yet. The Challenges for Change bill still holds the potential to take back what the House restored.

Challenges for Change is a report prepared by a Minnesota consulting firm hired to recommend efficiency savings for Vermont. According to the report, Vermont could save about $38 million in General Fund spending and about $11 million in education while maintaining or improving existing services. Legislation to institute the Challenges for Change recommendations has been passed and signed into law. This week, the administration is scheduled to report back to the Legislature exactly how it proposes to achieve the promised efficiency savings and what legal or regulatory barriers might need to be cleared away.

While all of the attention has been focused on the potential General Fund and Education Fund savings, any reductions in spending on human services are likely to decrease the matching federal funding for those programs. Because of the relatively high match rate in human services programs, Vermont could lose more in federal funds than it saves in state money.

Of the $38 million of potential General Fund savings identified by the consultants, about $23 million would come from human services programs, including the Department of Corrections. But the total projected savings from human services—counting federal funds—is $49 million.

The House budget passed last week accounts for the General Fund savings from Challenges for Change, but not the $26 million loss in matching federal funds. The loss of this federal money will mean additional budget cuts, wiping out much of the human services spending that the House restored last week.

The Challenges for Change report promises to do more with less. But skeptics worry that both the administration and Legislature are counting their chickens too soon and booking the savings before they know what the cuts will mean to the delivery of services. When the implementation plans are unveiled, the administration should provide Vermonters with a full accounting of all planned budget reductions including those resulting from the loss of federal money.