Legislative Update: 2/24/23

Things at the State House are picking up as we approach the March 17 “crossover” deadline, when bills need to be voted out of their chamber of origin in order to have a chance of passing this year. Common Good VT been busy, too, since our last update:

H. 55 Update: Proposed Changes to Unemployment Insurance Impacting Nonprofits

Following Common Good VT’s initial testimony on 2/2, the House Committee on Commerce and Economic Development has made some (favorable) changes to H. 55 – An act relating to miscellaneous unemployment insurance amendments. Common Good VT was back to testify on Thursday on Draft 2.1 of the bill.

As introduced, H. 55 would:

  • Eliminate the Small Employer UI Exemption: Small nonprofits with three or fewer employers are currently exempt from having to provide unemployment insurance for their employees. This bill would require all nonprofit employers to provide unemployment insurance for their employees.
  • Establish a Bonding Requirement for Reimbursable Employers: Reimbursable employers (or “self-insured”) elect to be liable for unemployment insurance claims, rather than pay state unemployment taxes. This bill would require reimbursable employers to execute and file a surety bond or deposit in the amount of two percent of the organization’s wages paid in the previous four quarters, by September 30, 2023.

New H. 55: Draft 2.1 language:

  • Still eliminates the Small Employer UI Exemption so all employees are covered by unemployment insurance, but pushes out the effective date from July 1, 2023 to July 1, 2024. This will give organizations more time to understand the changes and plan for compliance.
  • No longer establishes a Bonding Requirement for reimbursable employers.
  • Replaces Bonding Requirement language with section instructing the Department of Labor and the Secretary of State’s Office to work with Common Good VT and United Way of NWVT to create informational materials and conduct outreach to nonprofits to educate them about their options and liabilities for unemployment insurance.
  • The new draft also pulls in elements from H. 92 which will likely not make it out of Committee, including two reports from the Department of Labor.

We are getting much closer to language we would be comfortable having pass into law. In our testimony on Thursday, we continued to push for resources to support outreach and education around unemployment insurance as we believe it is important that organizations understand new and existing requirements and are able to make informed decisions when evaluating their options. We also emphasized the lack of government funded resources and assistance available to nonprofits more generally compared to public and private sectors. The Committee is seeking comment from additional stakeholders but is expected to vote the bill out soon.

Find out more:

We want to hear from you: Email [email protected] if you want to learn more or weigh in on these changes to unemployment insurance impacting nonprofits.

Government Grants & Contracting

Addressing government grant and contracting issues is a priority for Common Good VT. We’ve convened a working group of nonprofit stakeholders focused on building awareness and advancing solutions to hold the government accountable for funding the full cost of services nonprofits provide on its behalf.

As this is a sector-wide issue, we are seeking a united, sector-wide approach – we are stronger together! We’ll be sharing more soon but if your organization is interested in getting involved, or if you are already working on this issue, please reach out to [email protected]

We are also monitoring a couple of bills related to government grants and contracting:

  • S. 96 – An act relating to privatization contracts
    This bill, along with companion bill H. 308, was just introduced this week and would amend the requirements for the executive branch to enter into privatization contracts. Our initial review raises some significant concerns for many nonprofits that contract with or provide services through a grant agreement the State valued at $25k or more, including:
    -Amending the definition of “privatization contract” by removing the qualifier that the contract eliminates a bargaining unit position.
    -Bidders would need to pay employees with duties similar to State bargaining unit employees at least the same as the average step grade wage for State employees.
    -Bidders would need to include cost of health, dental and vision plans that would need to be at least equal to the percentage paid by State for State employees.
    -Increases prospective cost savings required from 10% to 20%

    This is concerning as it would likely increase costs for contacts with nonprofits without increasing funding. While we certainly support increasing wages and benefits employees, nonprofits cannot afford to do so without their services being fully funded. Government-nonprofit partnerships are advantageous not because they are a cost-savings, but because in many cases, nonprofits are uniquely positioned to meet community needs more effectively than the State; they are connected to communities, serve as a neutral entity, can respond more nimbly to changing circumstances, and have niche expertise. We understand this bills intentions when it comes to for-profit contractors, but it puts nonprofits and those they serve at a severe disadvantage.
    We will monitor this bill closely and see where it goes, but please reach out to [email protected] with any questions, comments or concerns. We would especially be interested in hearing from any organizations who believe they would be impacted by these proposed changes.
  • H.140 – An act relating to requirements for State-funded grants
    This bill would create simplified application and reporting forms for state grants and a “uniform formula and approval process for use in all State-funded grants for nonprofit corporations to use a higher indirect rate than the standard 10 percent de minimis rate.”
    These provisions would greatly improve two of the most significant challenges nonprofits face relating to government grants, especially if the indirect rate formula is extended to federal pass-through grants.
    On Wednesday, the House Committee on Government Operations and Military Affairs had the bill’s sponsor, Rep. Williams, in to introduce the bill – watch the recording to learn more.
  • S. 9 An act relating to the authority of the State Auditor to examine the books and records of State contractors
    This bill (similar to companion bill H.24 An act relating to the authority of the State Auditor to examine the books and records of State contractors) would allow the State Auditor to “Have discretion to examine the records, accounts, books, papers, reports, and returns in all formats of any contractor that provides services to the State, provided that the examination of records, accounts, books, papers, reports, and returns shall be limited to those that are relevant to the contract with the State.” The Senate Committee on Government Operations has been taking testimony from stakeholders and added new language that limits the Auditor’s examination of records to those relevant to “the performance of the contract with the State” and exempts records that are not otherwise available to the public from public inspection and copying under the Public Records Act.
    On Thursday, the bill passed out of committee, 5-1.
    This isn’t a priority for CGVT currently but we are interested in hearing what nonprofits think about this bill as it does relate to government contracts – please email [email protected] with any feedback.

H. 66 – Paid Family and Medical Leave Bill Update

Written by CGVT Intern John Harrington

H. 66 is an act relating to paid family and medical leave, aiming to reform the Parental and Family Leave Act. The following are the major components of the bill:

  • Provide 100% wage replacement up to $1,135 weekly in case of serious illness, injury, pregnancy, birth/adoption, parent-child bonding, or bereavement
  • Offer leave for all Vermont employees by 2026, regardless of how many people are employed by a particular company
  • Establish Safe Leave for individuals experiencing domestic or intimate partner violence
  • Create the Division of Family and Medical Leave within the Office of the Treasurer

In the bill’s current iteration, the paid leave program would be funded by a 0.55% increase on income taxes (roughly 5¢ for every $10 of income). In order to qualify for paid leave, individuals must provide income from 2 of the last 4 quarters. This allows for access by individuals who are self-employed, work part-time or seasonal jobs, or have multiple employers.

Proponents of the bill in the House and in the media applaud it for its investment in Vermont workers; if passed, it would be among the most generous paid leave programs in the country. This, they argue, would help attract new workers to the state. Additionally, the establishment of Safe Leave sends a strong message of support to survivors who currently lack the option to take paid leave while facing the trauma of domestic and sexual violence.

Opponents of the bill take issue with its cost, arguing that it would be an excess burden on the Vermont taxpayer and overall financial health of the state. Another notable concern comes from some small business owners who, in addition to concerns about the financial cost, worry about finding substitute employees amid an existing workforce shortage.

H.66 passed the House Committee on General and Housing in a 9-3 party line vote, and was sent to the House Committee on Ways and Means on February 17, 2023. The bill would then need to pass in the House Committee on Appropriations before being taken up by the house floor. H.66 is currently being assessed to determine cost and long term financial impact, and is subject to change over the coming weeks and months.

Other Bills We’re Monitoring

Have thoughts or questions on these bills? Are we missing something? Email [email protected]