Vermont’s converging education, housing and healthcare cost crisis

by Don Keelan

Try to picture three speeding locomotive engines, all without drivers, on separate tracks, heading towards their destination terminal. There is no need for me to describe the eventual outcome.

Today, in Vermont, we have our three out-of-control engines heading at full speed to disaster: the metaphorical engines of education, healthcare, and housing. 

The pending crises had their roots planted decades ago, when the State began to lose its young people, due to migration and lower birth rates.

About 30 years ago, Vermont’s public school population began a three-decade-long attrition of over 30,000 students. One would have thought that with such a decline in students, there would be a corresponding decrease in education costs. That was not to be. The price has doubled, currently exceeding $2.2 billion. Why?

The ‘driver’ of this engine failed to effectively address the annual double-digit increase in health insurance benefits contractually awarded to the State’s 8,000-plus union teachers and staff. Nor was any attention paid to the continuing decline in student enrollment and educational facilities as districts adopted a policy of deferred maintenance. Since 2008, the State ceased providing financial aid for school construction costs, new or deferred. The cost to correct is now in the billions of dollars.

Additionally, challenging student behavior was exacerbated during and after the COVID-19 pandemic. The increased cost each district has incurred by hiring social/psychologists has been unprecedented.

The out-of-control health care ‘engine’ has also been driverless for years.  This sector can also relate to an issue noted in educational demographics. Vermonters were aging and in need of more healthcare services, during the same period, the workforce was shrinking, with fewer people paying into the various insurance pools.  The loss of a younger workforce only added to the problem. There are fewer people to staff facilities, thus necessitating the hiring of out-of-state ‘travelers’ at three times the cost. 

A recent pronouncement by a well-recognized and respected hospital CEO defined the “healthcare crisis” more succinctly:

“Blue Cross Blue Shield of Vermont is teetering on insolvency and is in need of a financial bailout of at least $200 million…Efforts to create a margin to invest in staff, facilities, and innovation are inhibited by caps on revenue and expenses used by the Green Mountain Care Board…Federal Medicaid reductions will reduce hospital revenue in Vermont by $300 million…will likely lose the ability to purchase drugs at 340B prices in early 2026.” 

There are 14 hospitals in Vermont, and each is near or overhanging the proverbial cliff. This also applies to the State’s FQHCs, the federally subsidized health, mental, and dental clinics where almost a third of Vermonters seek care.

The third ‘engine’ is the crisis in housing: “Vermont would have to add 41,000 new homes by 2030.” An assessment by the Agency of Commerce and Community Development, noted in Seven Days on May 28^th. It will never happen.

What took place recently in Putney, Vermont, to develop 25 units —13 affordable (five for homeless families) and 12 market-rate apartments —is why.  

The Alice Holway Drive 25 apartment project took almost five years from planning to groundbreaking, with four court cases in between, costing $ 2 million to defend. The current project cost is $15 million, or approximately $600,000 per unit, to be funded by 11 federal, state, nonprofit, and private entities. 

There isn’t a private-public housing project being developed in Vermont today that has a unit cost below $500,000. Much of this is intended to be affordable housing, and it would only be possible with the support of numerous agencies providing financing. This year’s Legislature’s H-127 is too little and too late.  

To attract young people to Vermont, about 100 thousand or so, we need to get over the mentality that we don’t want Vermont to be like New Jersey. We need to recognize that you cannot lure young families to our towns and villages with 19th-century infrastructure. 

Development can be done thoughtfully, thus allowing young families to encounter what has been reserved for tourists and 2^nd homeowners, Vermont’s unique place.  

All three ‘engines’ must be brought under control. Not sequentially but simultaneously. Governor Phil Scott is encouraged to address all three crises publicly daily. He should approach this with the same urgency and clarity he demonstrated during the COVID pandemic. All Vermonters will be impacted by one of these derailments.

The author is a U.S. Marine (retired), CPA, and columnist living in Arlington, VT.