Appropriations panel hears Department of Corrections budget requests including Medicaid waiver funds and Correctional Industries deficit

The House Appropriations Committee on Jan. 16, 2025, heard from Department of Corrections officials about multiple budget-related items, including a $500,000 capacity-building request tied to a Centers for Medicare & Medicaid Services (CMS) 1115 waiver, a request to fill a long-running deficit in Vermont Correctional Industries of about $3.1–$3.2 million, and a separate cost for a service-level agreement with the Agency of Digital Services.

Deputy Commissioner Kristen Calvert of the Department of Corrections told the committee the $500,000 in general fund and federal funds is “capacity building funds that get us started on our work for the 1115 waiver,” and said the department’s planned implementation date for the waiver work is Jan. 1, 2026. The department said the waiver will enable pre-release and post-release Medicaid-paid services, including medication and care management, for people leaving incarceration. “This will provide coverage 90 days pre release and then a period of time post release for that bridge care management,” Calvert said.

A department policy director explained the waiver responds to a longstanding administrative issue in Medicaid processing: when someone is incarcerated the system must currently terminate rather than pause coverage, which can create gaps when people return to the community. The director said the 1115 waiver will create a mechanism to pause and then reactivate coverage so eligible people can more seamlessly access services on reentry.

Committee members raised staffing and workplace concerns repeatedly during the hearing. A committee member described reports of mandatory overtime, long shifts and high stress for correctional staff and asked whether the budget adjustments address those issues. Calvert and other department officials acknowledged what one speaker called “a crisis,” and described a package of responses including a new strategic plan to reexamine staffing, a unique pay scale and step schedule for correctional employees, and nonpay supports such as clinical staff access, peer-support programs and “stress relief rooms” in facilities. The department said it has used supplemental funds in recent years to increase pay and stabilize staffing and is pursuing additional strategies beyond compensation.

The committee also heard about Vermont Correctional Industries and the Vermont Offender Work Program, which the department said has accumulated a deficit over several years. Department testimony attributed the shortfall to a decline in institutional product demand (for example, fewer state purchases of wood furniture after office redesigns), limited customer eligibility (state entities and certain nonprofits), pandemic-related shutdowns of work crews, rising raw-material costs and reduced transferability of vocational skills to the community. The department described a one-time request of roughly $3.1–$3.2 million to eliminate that accumulated deficit and said the plate shop and a small graphic-arts operation remain and could be self-sustaining with two staff once the deficit is addressed. “Once that’s wiped out, it does become a self-sustaining program with only 2 staff remaining,” the department said.

A separate, smaller line item discussed was the Department of Corrections’ portion of an Agency of Digital Services service-level agreement for FY 2025. Committee discussion referenced a figure the department presented for central-office costs (about $159,481) but the department characterized that item as the agency’s portion of an ADS cost and did not present it as a standalone policy change.

Members asked about related topics including grievance or complaint-driven leave and the cost of mandatory administrative leave. The department said leaves such as FMLA, workers’ compensation and military leave contribute to vacancies and overtime costs but did not provide a specific tally tying those leaves to the Correctional Industries deficit.

Department officials pointed to other supports funded or in development: a congressional directed spending package the department said will fund free community college classes for correctional employees through the Community College of Vermont, and changes to the permanent pay scale for correctional staff to incorporate recent increases. The department emphasized that while pay is an important tool, it is “more than just money” and that a combination of pay, professional development and wellness supports are part of its staffing strategy.

No committee votes or formal approvals were recorded during the hearing. Committee members said the items will be discussed further in appropriations and policy committees.

The hearing included multiple clarifications from department staff on program scope and implementation timing; when precise figures were unclear in testimony the department characterized those as estimates or one-time requests rather than enacted appropriations.