2025-03-06 00:00:00 - Joint Committee on Ways and Means
2025-03-06 00:00:00 - Joint Committee on Ways and Means
REP MICHLEWITZ - I have to bang2 the gavel, that was nice. Let's get started. Welcome to the first budget hearing for the FY2612 budget cycle. My name is Aaron Michlewitz, I am the House Chair. I'm going to introduce my colleagues as I see them. If I miss them, there is a lot of them here, and I know some of them aren't even in the committee, but a lot of you are here. So, if I miss you, please raise your hand, make sure I don't miss you. So, I am going to start with the vice chair of the committee, Representative Ferrante of Gloucester, the assistant vice chair of the committee, Representative Diggs of Cotuit, Representative Kearns of Danvers, the ranking minority member, Representative Smaller of Warren, Representative McKenna of Sutton, Representative Marcy of Dudley. To my right, I'm skipping over you Senators, your guy's going to get you, alright? Representative Vaughn of Wrentham, Representative Chasen of Foxborough, Representative Sabadosa of Northampton.
Down here to my left, Representative Higgins of Leominster, Representative Howard of Lowell, Representative, Pease of Westfield, Representative Sullivan of Abington, Representative Xiarhos of West Barnstable. To my right here, representative Holmes of Boston, Representative Tyler of Boston, Representative Kearney of Scituate, Representative Elliot of Lowell, Representative Beal of Boston. Out here in the cheap seats, we have Representative Garcia of Chelsea, Representative Kilcoyne of Clinton, Representative Hamilton of Methuen, Representative Souza of Framingham, Representative Moran of Boston, Representative Hawkins of Attleboro, we got Representative Arriaga of Chicopee, Representative Mendez of Brockton, Representative Owens of Watertown, Representative Kassner of Hamilton, Representative Ramos of Springfield, and I think I got everyone, let me see. Anybody I miss? Alright. Good. That's alright. Representative Cruz, where is he? Why don't you sit in your seat? Representative Cruz of Salem. Alright, I'm going to turn it over to my counterpart, Chair Rodrigues.
SEN RODRIGUES - Thank you, Mr. Chairman. Good morning, everyone. I will take the liberty of introducing the Senate members, that are here in no particular order other than as I recognize them and wrote their names down. If I could ask, maybe they just give a wave so they can acknowledge after I introduce them. First, the Vice Chair of the committee, Senator Joe Comerford, Senator Lydia Edwards, Senator Mike Rush, Senator Jake Olivera, senator Adam Gomez, Senator Mike Brady, Senator Paul Mark, Senator Kelly Dooner, Senator Pavel Payano, Senator Brendan Crighton, Senator Ryan Fattman, Senator John Cronin,192 Senator Liz Miranda, and I know Senator Nick Collins will be here shortly, he's covering session as we speak also. So thank you all to my colleagues, for joining205 us here today, this very important207 hearing.
MICHLEWITZ - Thank you, Mr. Chairman. So we're going to get started. I want to thank you all for attending today's first hearing of the FY26 budget cycle. This is the first of eight hearings that we will be having across the Commonwealth, touching upon each section of the budget and each sector of our economy. For today's hearing, we will hear from Governor Maura Healey, and Secretary Gorzkowicz on her FY26 budget proposals. We will also hear from Secretary of state, Bill Galvin, Attorney General Andrea Campbell, Auditor Diana DiZaglio, Inspector General Jeff Shapiro, and the Assistant Secretary of the Executive Office of Technology Services and Security. Treasurer Goldberg was originally scheduled to testify today, but is providing written testimony instead as she is grieving the loss of her mother, our thoughts are with the Goldberg family today. I want to start off by saying what a contrast the process we are taking part in today is in comparison to what's going on currently in Washington DC.
Here, our Governor is presenting us a budget that the legislature will have multiple public hearings on, debate and discuss in the273 public, Republicans and Democrats alike. Once agreed upon between the two branches, we will send our governor our version of the FY26 budget that her excellency will have the ability to sign, veto, or do both in some cases. We may agree to adding funding to a particular program, we may agree to cutting funding from a particular program, we may also disagree at times, but we will be doing the work together. No Doge, no chainsaws, just the good old fashioned co branches of government style, pretty simple. The separation of powers between the legislative, executive, and judicial branches is certainly still sacred here in the Commonwealth of Massachusetts, it is very difficult to say the same about the federal government at this time.
With this being my seventh budget as Chair of Ways and Means, I am very thankful to be working once again with my counterpart in the Senate Chair, Michael Rodrigues. We certainly have our work cut out for us with the challenges we face in the FY26 budget. Revenues have been much stronger in recent months, and at over $600,000,000 above our benchmarks for FY25, we are in a much better place than we were last year at this time. With that said, we are still stuck with the discussion of how much that potential surplus is actually fair share funding, masking other potential underlying problems within our economy. This committee also has to build a budget with the looming fear of what might come next from the federal government that is unpredictable, to put it mildly. Which exposures are most vulnerable may emerge over the next coming weeks and months, but in the meantime, it is our job to cut out the noise, no matter how loud that may be, and produce a budget that provides the services that our constituents rely upon, while also being ready to pivot if necessary.
Threats to Medicaid, freezing of federal funds, and further impacts from the Doge efforts are still in the speculative phase. While the affordability crisis, the housing crisis, and our challenges in the healthcare sector are items we still need to be focusing on, I am comforted in knowing the fact that we have dealt with difficult challenges before, and even though this is a new one, staying disciplined will continue to be the best mindset as we move forward. I want to thank my vice chair, the gentle lady from Gloucester, and welcome the gentleman from Barnstable, or where are you from? Cotuit, it's in Barnstable, In his new role as the assistant vice chair. I also want to thank the members of the committee, and I look forward to their input as they travel the Commonwealth for the remaining seven budget hearings, and as we continue to build this budget together. Thank you very much, and I'm going to turn it over to my counterpart, Chair Michael Rodrigues.
RODRIGUES - Thank you very much, Mr. Chairman. Good morning, everyone, it's great to be here once again. Thank you, again to my co-chair and good friend, Chair Aaron Michlewitz, I'm grateful for the strong448 collaborative partnership that we450 have developed over these last six years and look forward to working with you and your team once again for what will be our seventh budget together. I would also like to thank and recognize all the Senate members whom I introduced earlier, most notably my vice chair, Joe Comerford. Let me just give up a mention that my assistant vice chair, Senator Paul Feeney, is home mourning the loss of his mom, his mom passed away suddenly yesterday, so we have him in our thoughts and prayers also. Finally, I would like to thank Governor Healey and those from her administration for joining us today, along489 with the assorted constitutional offices491 who have agreed to appear and493 testify before us.
Starting with today's hearing, we begin in earnest our consideration of Governor Healey's proposed budget for FY26. After we adapt to escalating uncertainty and increasing geopolitical turbulent, we find ourselves in an all hands on deck moment here in the Commonwealth. Whether it's threats from Washington to cut or end federal funding in vital areas like health care and education, or tariffs that will drive up524 the cost of living for our residents, the implications for the Massachusetts economy and our long term fiscal health are potentially costly and far reaching. Subsequently, we know that revenues, after spiking during the pandemic, have plateaued and returned to slower, more steady growth consistent to where tax545 collections were pre pandemic. So, we have our collective549 work cut out, and it is crucial551 that we exercise fiscal discipline, remain vigilant, and cost correct when prudent to navigate the unpredictability ahead as we work to develop a responsible and sustainable roadmap for FY26.
Today, we will all begin to hear in more details about the Governor's budget proposal and understand its impacts on our communities, our residents, and the Commonwealth. I am pleased that we are joined here by the Governor and her team, and I am confident that our teams will continue to collaborate and work together to strategically position Massachusetts to weather the challenges we face. I'm looking forward to working with597 Chair Michlewitz and our friends in599 the House, my vice chair and assistant vice chair, and our Senate colleagues, along604 with you Madam Governor, and your administration, as we craft a responsible budget that prioritizes sound610 fiscal health and moves Massachusetts forward to a more affordable, competitive, and sustainable direction. I thank everyone for being here today and for participating in what we hope will be a collaborative and informative budget process for all involved. Thank you.
MICHLEWITZ - Thank you, Mr. Chairman. Now we are moving to632 the testimony point where we'll start with Governor Healey and her team. Governor fresh off her appearance on, late night last night, and nice to see640 you get here in time. I missed it, unfortunately, but, thank you for, as to echo, the Senator's remarks. Thank you, to you, the Secretary, and your team for the continued collaboration that we've had over the past year in particular, in terms of building our budgets and, looking forward to doing so in FY26. So, the floor is yours.
MAURA HEALEY - OFFICE OF THE GOVERNOR, MASSACHUSETTS - Thank you so much. Thank you, Mr. Chair, and to Chair Michlewitz, Chair Rodrigues, members of the joint committee, thank you for the opportunity to once again appear before you, and thank you for not only the opportunity for us to testify, but to begin in earnest, the collaboration, the discussion you alluded to with respect to fiscal year 2026 and the budget. I am delighted and privileged to be here alongside our fantastic secretary of administration and finance, Matt Gorzkowicz, our budget director, Chris Marino, and A&F general counsel, Martha Kwasnik. I am very grateful to you all and the A&F team for the work that you've done in preparation of this budget. I'm grateful for the work you do throughout the year, you've really had714 to put your pencils to it, because716 we are facing more challenging circumstances than we've had in720 recent years. But I just want to say as Governor, this team, Secretary Gorzkowicz, his team, and indeed all members of our cabinet are here today and will be in every day, week, month going forward to work in collaboration with all of you to get try to get to the very best place for our state.
As Chair Michlewitz rightly acknowledged, it is a process here, we all embrace that process here, it is a democracy here, we're not supposed to agree on everything, and, that is the way it's supposed to work. So, I will now turn to my actual remarks, but I appreciated all of what both Chairs said to open this session. This budget is built, we believe to meet the challenges of the moment that we're in and to set us up for success in the years ahead, there's no doubt that we are in a challenging moment. The cost of providing services has only increased here and around the country. Revenue growth is ongoing, more modest, and federal actions, real potential, both on direct funding and also on broad economic disruption that we don't know the full extent of yet, creates a lot of uncertainty as we work together right now to do this809 important work. So, this811 is probably as challenging a budget cycle as we have seen in some time, but we are committed to having a balanced and responsible budget, one that is fiscally prudent and one that maximizes the opportunity to ensure that state taxpayer dollars are used in the very best ways for the betterment of the people of the state and our Commonwealth.
So, we dug in deep to identify efficiencies and savings across government. We've worked to close loopholes and modernize laws that keep us in line with other states. I recognize these are all tough choices, and in a shifting economic landscape in light of the Trump administration's attacks on public, private, and philanthropic sectors, we welcome conversation, collaboration about the best way to move forward and balance this budget. We'll work to protect our residents from harm and to preserve our nation leading rankings in education, innovation, healthcare, environment, and quality of life. I think each and every one of you, and members of both chambers, because those number one rankings don't just happen, they require intentionality and policies and laws, and I appreciate the work that is done every day in this building to that end. We have focused in the budget plan before you on a few things.910 Number one, protecting taxpayer dollars912 with spending growth that is below the rate of inflation. Lowering the cost of living in our state, increasing our competitiveness, that remains an important goal.
Thirdly, making upgrades to infrastructure, in particular transportation and some other capital areas where we need to keep growing our economy, things that are really important to our ability to create more jobs and to improve the quality of946 life in Massachusetts. Working together, we've delivered on historic results the last couple of years, let's just think about that and reflect for a moment what we were able to do, delivering the first tax cut in this state in over two decades. Those tax cuts are now fully in effect, saving money for families, seniors, and businesses. Thanks to our investments in childcare, we defied national trends by adding 45,000 seats since the pandemic. We're on track to deliver universal Pre-K in all of our gateway cities by the end of 2026. In our schools, we established cost free meals, improved reading instruction, expanded vocational learning, and regained our number one national ranking in student achievement across multiple measures. We made state colleges affordable to every student and family, we passed the biggest housing bill in the history of this state, the1006 $5,200,000,000 Affordable Homes Act so we can build more homes and bring down rents and the cost of housing.
Through the Mass Leads Act, we kept Massachusetts at the forefront of our global innovation economy, reauthorizing the Mass Life Sciences Initiative and launching new initiatives in climate technology and artificial intelligence. We passed the most comprehensive expansion of veterans benefits in state history, the HERO Act. We cut red tape, including red tape for energy infrastructure. It is so important that we move as quickly as we can to bring more energy online1047 to our grid. For the first time, we now have dedicated 24/7 crisis care mental health services through 31 community behavioral health centers around the state. In this budget, I am committed to ensuring the critical ongoing supports that many families depend on are not only protected in this budget, but also prioritized. We did this all while maintaining the state's excellent bond rating and growing the rainy day fund. I want to thank the Chairs, the members of this committee, the Speaker, the Senate President, the State Treasurer, for their partnership in building this record. So where do we go from here? Our budget plan advances all of the progress that we've made, and that's important because the hard work that's been done, we need to make sure that we're sustaining that and that we're continuing to advance in those areas.
At the same time, it's a plan that protects the state's fiscal health, this is very, very important to me. At a time where we remain committed to tackling our toughest challenges, I've said a few times that we're not an administration that's about kicking the can down the road, and that means taking up some challenging problems. It also means taking up some things that would have, could have, should have been done years ago, and it's not easy at times. But I think through thoughtful deliberation and work together, we really can make a dent on what we need to do for people in this state. When we took office, we found long neglected infrastructure needs that risk, to this day, holding us back if we don't take decisive action. So, we brought together1167 leaders from across sectors, including the legislature, not for nothing, to identify what needs to be done. I actually understand who appropriates money, there are some executives that don't. But I understand who makes the laws, I understand who appropriates the funding. So, we brought everybody together, right? And we worked with many of you to identify things that we need to prioritize and get done. I think our team has developed, I humbly submit a smart, proven strategy for funding them.
We propose using a portion of the fair share revenue to leverage capital, to access more capital, like any good business will try to do in order to make transformative investments in transportation and education. That is why, through using this approach, we propose an investment of more than $8,000,000,000 over the next 10 years for transportation infrastructure statewide. For the first time in decades with this revenue, we're going to be able to get our roads and our bridges and our public transit up to where they need to be around the state, and that is key to economic success, growth in our state. It will also improve quality of life for residents. Using the same approach, this budget would make possible a $2,500,000,000 investment in our 29 public higher Ed institutions, and specifically the campuses. These are the engines of economic mobility for our state, they always have been, and many have not seen a significant investment since they were first built well over a half century ago. So, as we expand access to college and post secondary education and training, we can also, we must also modernize our campuses to meet the moment so that we can deliver, train and deliver a workforce that meets the needs today and tomorrow of our economy.
In closing, in the past two years, we've taken on big challenges and we're delivering results. Today, we face unprecedented new challenges. Even as we built this budget, we could not have anticipated just how immediate and damaging the attacks on federal funding and economic stability would be from the Trump administration. The landscape is shifting every day and every state is facing fiscal disruption. These attacks have major implications for the well-being of our residents, our businesses, our economy, and our state budget. So our work together in the coming weeks will be critical. We must all be committed to collaborating both inside state government and also with those affected and with stakeholders and constituents around Massachusetts1344 in making tough choices. Thankfully, this is something that we've shown Massachusetts can do. Through strong fiscal management and the courage to meet this moment, we will protect the interests of our residents and keep this great state on a successful path. Thank you once again for allowing me to testify, and I'll turn it over to Secretary Gorzkowicz for more details.
MATTHEW GORZKOWICZ - MASSACHUSETTS EXECUTIVE OFFICE FOR ADMINISTRATION & FINANCE - Thank you, Governor, and good morning, everyone. I'm going to add through my remarks, expand upon a little bit of what the Governor talked about in hers. But first, I want to just say to Chairs Michlewitz, Rodrigues, members of the Ways and Means Committees, thank you for your ongoing partnership. I also want to just take a moment to thank both the teams of the House and Senate Ways and Means Committees. I've been at this for a while and, from my years of experience, I would have to say, the collaboration that's taken place between our teams has been unprecedented. I think it's through that collaboration that we've been able to work through some of the issues that we've encountered and done so in a way that has allowed us as a Commonwealth to achieve a lot. I can't emphasize how important those relationships are and1421 how much of the work, that the staff do1423 to help us all be successful. That's just not the case for Ways and Means, but I know on1427 many of your staffs, our teams have worked very collaboratively with you, and I just want to recognize all of their contributions and and thank you for that collaboration.
I want to thank you all in advance for your thoughtful consideration of1439 the Governor Healey's fiscal year 26 budget proposal. Before I jump in, you should all have a few things that we've handed out today, you should have hard copies of the budget and, copies of, what we're calling our budget briefs, which are detailed analysis and summaries of the proposals that we've advanced, both in the budget and some companion bills that I'll talk about as well. We're pleased to be here today to present House 1 to the full Ways and Means committee with a $59,600,000,000 bottom line plus $1,950,000,000 in fair share surtax spending. House 1 is balanced, responsible, and very forward thinking spending plan. House 1 works in tandem with companion legislation that we filed this year. That companion legislation includes historic initiatives to expand Chapter 90, investments in higher education, transportation, and to empower our municipalities. I'll talk a little bit about those because they're important to think about those in the context of our FY26 budget, they work together.
Those legislation we filed proposes critical investments in the people of Massachusetts, our institutions, and our infrastructure, and they reflect good stewards of taxpayers' dollars as the Governor has mentioned. The budget before you today was crafted to protect Massachusetts' fiscal health in 26 and for years to come. As this committee knows, the state's balance sheet has been transitioning to a new normal since the pandemic. Demand for state services and the cost to provide those services continue to outpace revenue growth, particularly in the area of health care. We are well positioned in FY25, thanks to our active spending plan management as well as the actions taken by the House and Senate to support our spending recommendations for FY25, but we expect modest revenue growth to continue in FY26, reflected by our consensus revenue projection of 2.2% growth, not counting surtax. Given that context, we used a multi pronged strategy to build sustainable and resilient budget. In all cases, we did our best to prioritize and protect services, including our most vulnerable populations who rely on them.
We controlled spending across executive branch, challenging our agencies to be thoughtful and creative in how they deploy finite resources. In some cases, it required some tougher choices. Our budget also relies on some use of one time funds and new revenues, but does not raise any new broad based taxes. As the Governor said, we harness voter approved fair share surtax to launch new initiatives in education and transportation. All of this was proposed as part of a multiyear strategy to address our structural budget challenges coming out of COVID-19 and putting Massachusetts on a path of sustainability into the future. The Governor discussed in our plans for making transformative investments in transportation and higher education, I want to go into a little bit more detail on both of those proposals. Alongside House 1, we filed a supplemental budget to spend $1,300,000,000 in excess surtax.1617 This is surtax that was generated in FY24 and held in the education and transportation for us as constitutionally required. House 1 and the FY24 supplemental budget work together to recommend nearly $3,270,000,000 of spending between education and transportation, almost a 50-50 split between the two.
Over the last two fiscal years, our administration has multiplied the impact of the surtax by using these revenues to support new borrowing capacity. In House 1, we build on that successful track record with proposals to finally address funding shortfalls and make generational improvements in both education and transportation. Under our transportation proposal, $765,000,000 of the FY25 surtax will go into the Commonwealth Transportation Fund, unlocking nearly $5,000,000,000 over the next 10 years of additional resources. This is an increase from the 250 we dedicated to the CTF in fiscal year 25 budget. Our plan to apply those funds was built using regional equity lens, and residents will see improved public transportation, rail, roads, bridges, and culverts in every across Massachusetts. As the Governor mentioned, this is part of our broader plan to invest $8,000,000,000 in new resources into our transportation system over the next 10 years. House 1 also seeks, once again, to extend our administration's innovative fair share strategy to the world of education. House 1 proposes dedicating $125,000,000 in surtax funds to support an estimated $2,500,000,000 in new borrowing for higher education infrastructure over the next 10 years.
Our corresponding bond bill, the BRIGHT1714 Act, works hand in hand with the House 1 budget proposal to provide authorizations and flexibility we need to put shovels in the ground. As a result, students, faculty workers, and employers will have access to more modern, sustainable, and updated facilities on our UMass, State University, and community college campuses. Our FY26 supplemental fair share budget also continues to support C3 childcare grants at $475,000,000 as well as expanded college financial aid, early literacy instruction, high dosage tutoring, and universal Pre-K. As I mentioned, House 1 was crafted to strategically grow funding in key areas. Our proposed $9,200,000,000 for local aid is $480,000,000 or 6% more than FY25. It fully funds the fifth year of the Student Opportunity Act and puts $1,338,000,000 towards the unrestricted government aid, a 28.8% increase over fiscal year 25, or a 2.2% increase consistent with our projected revenue growth.
At a time of rising costs, we are also continuing to focus on affordability by putting money back in the pockets of Massachusetts families with provisions such as fully funding another year of Mass Educate and Mass Reconnect, expanding early college program, allowing 8,200 students to attend college courses for free while in high school, supporting the implementation of the historic affordable homes act, which provides a blueprint to create 65,000 homes, preventing landlords from focusing renters to cover the cost of brokers fees, supporting income eligible fare relief at both the MBTA and our RTAs across the Commonwealth, and providing continued funding for universal school meals for K through 12 students. House 1 boosts our competitive edge by ensuring that Massachusetts is the best place in the country to start and run business, advance your career, and drive innovation through our investments in climate tech, wind industry, and, innovation in manufacturing as well as life sciences investments, all made through the Massachusetts LEADS Act. Before I close, I want to again stress that House 1 reflects our commitment to living within our means as a state. Our $59,600,000,000 bottom line reflects an increase of $1,500,000,000 or 2.6% over what we expected to spend in FY25.
That takes into account the fact that in the coming weeks, the Governor will be filing supplemental budget necessary to address additional spending pressures in FY25 that have all been built in and annualized in our FY26 recommendations to you. Our proposal achieves balance and invests in our communities without drawing on the stabilization fund, and in fact, continues to make deposits into that fund. By continuing to control spending and protect our rainy day resources, we are ensuring a stable financial footing for Massachusetts, not only in FY26, but for years to come. I'll close out by, again, by zooming out, House 1 is a critical linchpin in our administration's strategy, for making the several investments we've advanced. It wasn't crafted in a vacuum, it was done in cases through collaborative effort, particularly in areas of transportation and education where we had members of the legislature participate and actively work with our administration in crafting these proposals. Again, I look forward to working with all of you, your teams on advancing these as they go through the legislative process. We know that you will have ideas of your own, and we want to help support those and be a partner with you. So thank you for your time, and look forward to answering any questions you might have.
MICHLEWITZ - Thank you, Governor, and thank you, Mr. Secretary, we appreciate the testimony. I'm going to start off some questions with talking a little bit about the fair share first. I think we had a little bit similar discussion last year, but now we're in another year into the process, we actually had a full year of collections, and we're actually obviously dealing with the surplus in that bill that you guys filed that we'll be taking up at some point. I noticed in the FY26 proposal, there's a little more shift towards more annualization discussions within the fair share. I think, we're trying to continue to figure out how much are we going to be analyzing this or annualizing this, and how much is still a moving target related to, what we're can depend on, from a financial standpoint, what actual type of revenue we're going to be getting, consistently, if that's ever going to happen. So, I just wanted to ask if you have a little, now we have another year of an educated eye on this conversation, and now noticing that FY26 did move towards more annualization of items. Is that where we're heading eventually at some point? And how long do you think it will take kind of us to get there?
GORZKOWICZ - Thank you for your question about fair share, our forecast and projections. As you know, FY24 is our first full year of surtax collections, we collected just about $2,400,000,000, in surtax. We had only budgeted for a billion, so we were very conservative, very thoughtful about our approach, and even within that $1,000,000,000, we did have some one time spending to allow ourselves to grow into that. So, I think that was a great, wise decision on our parts. That then left about $1,300,000,000, available for the supplemental budget we've just filed. So, I think that was sort of the plan all along, and it has allowed us to make those investments. As we started to develop our consensus revenue for FY26, we were able to look at collections through the first half of fiscal year 25. Again, our projections for surtax is about $2,500,000,000. Based on year to date collections through January, as you know, we're about $688,000,000 above benchmarks. We believe a lot of that, maybe 25%, 30% of that is surtax.
So, it feels like we're on pace to once again, collect about $2,500,000,000 in surtax. I will also say, I think there's a little bit of that that's also capital gains, which contributes to our excess capital gains for all of, I think it's important to note, that while that's good news, it's not technically available for the budget in FY25. That's something, Chairs and I talk a lot about, they are, in one case, dedicated to the Education Transportation Fund, and in the case of capital gains, it's part of the excess capital gains. So, while it's a good resource for us to have, it may not be available for the budget. As far as our consensus revenue, as you know, we do forecast again, another $2,400,000,000, $2,460,000,000 for our consensus revenue for FY26. So, we believe that collections so far through 25 support that revenue estimate. It is true that as far as our spending has gone, we've gone from a billion dollars in FY24 to $1.3 in FY25, to 1.9 in FY26. As a percentage, more of that2133 is dedicated to programs that are reoccurring.
I think that at some point, we'll have to have a conversation, whether it's 26 or 27, as to whether or not there's a limit to how much of that we would feel comfortable programming into the budget versus allowing it to be, sort of an annual January event, that we do together. I also think it's important to recognize that while we are increasing the amount of spending that is built into the base of the budget through surtax, we have also dedicated a separate rainy day fund, if you will, dedicated to surtax. So, it's important, which I think has about a 30% cap on it, so 1/3 of all the spending that's in the budget. So, I think it's important that we continue to make progress while we have these excess revenues to build that up to safeguard us against what might be some volatility in this revenue stream, and we know that it can be highly volatile. So, I do think that what we've programmed in, collectively is, responsible, we've left ourselves a cushion going forward. I think there's some discussion going forward about where that cap might be as we get closer to that $2,000,000,000 mark, but I also think along the way, we're building up safeguards to make sure we protect ourselves against volatility.
MICHLEWITZ - Thank you for that. Following up in the earlier conversation about2210 balancing the budget, and, obviously, there's a number of revenue pieces that were2214 contained in H1, and we know that this work has been ongoing for months, to leading up to when you guys actually filed in January. But obviously, the world has certainly began to change a lot since you filed over the last five, six weeks, since then. And, you know, certainly with the capital and charitable deductions, the drug pricing penalty piece, and obviously the elimination of the sales tax exemption on candy. Now, that we're starting our process and trying to build our budget, first off, looking at the world as we are now, is there anything we would shift in relation to those into using those pieces as the options and also what should we be, kind of from a recommendation standpoint, how should we be navigating through it? As we know, the world will probably be different six weeks from now than it is today as well.
HEALEY - Thank you for that question. You're absolutely right, I mean, when we filed this, we hadn't seen yet what the Trump administration was doing with respect to the charitable deduction. So, remember, we had that on the books, but we were the first administration to actually let folks in this state take advantage of a state charitable tax deduction, and I think that's a good thing. The question is now, what do we do with that? We thought that, at the time we filed, we thought about making some changes to it to impose a cap. Other states do that, a lot of states don't even have the benefit of giving their folks a state charitable deduction. Obviously, with what's happened in the last few weeks, there's been concern from not for profit organizations, which we know are going to probably be facing even greater strain than ever. So, I think it's something that we'd like to actively engage with you on in dialogue, in terms of working out a way to do what's best to support people in this state. It's probably, you know, I think I woke up to another court order with respect to funding into states, I mean, this is an evolving situation. I want you to know, our teams are carefully monitoring all of that, what we expected in terms of federal funding, grants, all sorts of programming across a range of areas. We're in close touch with the Attorney General's office because she's brought claims on our behalf to get federal funds going again, to stop the administration from cutting off NIH funding for medical research and cancer cures. We've just got to continue to really be on top of this and it's with an openness to revisiting, what was proposed absolutely given the nature of the threat that we're facing.
GORZKOWICZ - I would just echo the Governor's comments about our willingness to partner with you on that. When we made the proposal, we did look at, as the Governor mentioned, other states, other jurisdictions in terms of what they're doing, There are other ways to potentially structure it if there's a desire to do that. You know, states like, you know, Minnesota have a cap, but theirs is 50% of every deduction over 500, Illinois is around 25%. Different states have done different things, and we're happy to share that information with you as you're thinking about it and partnering with you about better ways to to structure this in light2430 of the changing revenue environment we're in.
MICHLEWITZ - Okay, thank you. One last question for me, and then I'm going to2440 turn2440 it over to my counterpart. We've been2442 hearing a great deal about the special education circuit breaker from our members and local school districts as well. As we know, the cost of this program has continued to skyrocket over the past few years. DESE's estimates have not been accurate, you know, to say the least over the last couple of years. I understand, some of it's being tackled in the reserve, from the fair share supplemental, budget. But what more can be done from the district side in terms of helping pay for this and also kind of curtailing the costs? We need to kind of have a better grasp on this going forward, I feel. What can the districts kind of be doing to add to that to be helpful in terms of particularly on cost2484 savings?
GORZKOWICZ - Well, and I'll look to my team if they have thoughts on that. I think, first, you're absolutely right, I think as we were crafting the 26 budget, we2496 were also a bit surprised at the growth in SPED. It's coming in much higher than FY25, it's one of the growth items that we've had to challenge. We have about $189,000,000, invested in this, but we know SPED funding is a big priority collectively, I think we all agree with that. We've fortunately had the fair share surcharge to be able to provide that increase of about $189,000,000, and that was important for us to do. I would also say that in the spirit of trying to live up to the legislative intent of the Student Opportunity Act, that funding also gets us to about 75% on the reimbursement cost for transportation instead, and that is one of the big growing areas of SPED.
So, I think, as we think about trying to look at costs, transportation is a big component of that, that's really driving that, and so perhaps a place to look. I would suggest that as we move forward, Secretary Tutwiler and his team at DESE would be a good place to, I think direct those questions, and I know that they'll be having their hearing coming up in the coming weeks. I think we can certainly let them know, that that's an interest that you all have so that they can be prepared to talk a little bit more about some of the efforts they might have underway for helping to contain the cost of SPED. This budget, again, fully funds what we think the cost will be for 26, and does reach the 75% transportation reimbursement which was envisioned in the legislative intent of SOA. That was really our goal to try to make sure we were able to address that priority for 26.
HEALEY - I'll just add on that. Like, that's why any moves that are inflationary in this moment hurt. I'm hearing that later this afternoon, we could see an executive order from the federal administration dismantling the Department of Education, and what are the implications of that for Title 1 funding, special Ed funding, reading specialists, and the like. So, I mean, the transportation cost, the special Ed cost we've heard about from communities over the last year big time. We got to figure that out, and I'm just adding, even if it's unhelpful, that the urgency to that gets even greater given what we might be facing. So, you know, we've got to look at many different ways.
MICHLEWITZ - Thank you, Governor, thank you, Mr. Secretary. I'm going to turn it over to Senator Rodrigues.
RODRIGUES - Thank you. Thank you, Mr. Chairman, again, good morning. I just got one question then I know members have questions. Again, let me reiterate again2652 how much we appreciate the collaboration and cooperation. I2656 know, Mr. Secretary, you and I individually and our teams collectively are communicating with each other pretty much every day, so thank you, and it's important, especially as we know we're going to navigate the very tough FY26 budget. Can you talk a little bit about Mass Health? Fully 60% of the growth in spending in FY26 over FY25 is just in Mass Health. Can you talk a little bit about what those cost drivers are and maybe talk a little bit of how the caseload now is different than the caseload was pre pandemic because, you know, in the world of a picture tells a thousand words, if you look at a bar graph of where the growth drivers are in this budget, it's off the chart, Mass Health.
GORZKOWICZ - I think that's right, and I think when you look at the challenges for FY26, that will in part be one of the bigger challenges you as a committee will have to grapple with in balancing the 25 budget as we did. Just to answer your question more specifically, you know, as we were coming out of the pandemic and I think context here is important, to2729 understand where we are point in time. When the public health emergency ended, we knew that we were going to lose about a billion dollars of federal funding tied to the fact that you weren't allowed to do redetermination, so the Mass Health roles grew2743 a lot during the pandemic. Public health emergency ends where a billion dollars of federal funding is no longer available, and we started to do the redetermination processes as we were typically doing prior to COVID-19 and then after. That process ended last spring, the FY25 budget was already halfway through the legislative process, and at the end of that, a couple of things happened.
2770 One2770 is that the enrollment for Mass Health stands at about 2,200,000 lives, which is about 260,000 more members than we had pre pandemic, that in itself drives costs. The other thing that we saw in the case, mix of our MassHealth program is that the acuity was much higher. So, a lot of the members who did leave Mass Health2792 were2792 low utilizers, low acuity, and so therefore, we were left with a higher acuity population, which costs more to service. We've also seen huge costs in the GPL ones, almost a 16% increase, in those pharmacy costs, and we also had pressures around our MCO rates. Coupled together, that created an almost, $2,500,000,000 growth from fiscal year 25 GAA to FY26. Our March SUP will have some additional funding recommendations, needs for Mass Health, and so the growth rate over MassHealth, as we presented is a little bit less than that. But certainly, those are the challenges contributing to the growth of Mass Health.
And it is, when you look at the overall growth in the budget from 25 to 26, or even if you look at it from estimated spending, it's a big part of what's driving that growth. In fact, when you look at the growth in the budget and you back out Mass Health and you back out the surtax, which we know is a new spending source tied to the surtax, your growth rate is closer to 1.9%. So, there's not a lot of growth in this budget, there are a few things that are growing greater than the rate of inflation. When I say greater than the rate of inflation, I mean two or three times greater than the rate of inflation, but there are also things that collectively we have made priorities, whether it's the Student Opportunity Act, MassHealth, K through 12, Universal Meals, C3 grants. These are things that are putting pressure on the budget, but things collectively that over the last five years, we have made priorities. SHOW NON-ESSENTIAL DIALOGUE
SPEAKER1 - Alright. I'm gonna open up to other members here. Representative Ferrante.
REP FERRANTE - Thank you, Mr. Chairman and, to the Secretary. In the House 1 budget, you proposed a penalty on prescription drugs that exceed a certain growth. Can you just walk me through how you think that penalty won't be transferred onto the consumer by big pharma? Because we tend to see that a lot of them transferring fees to patients. And we were just so good, one accomplishment that we didn't mention last year that we did was the containment of some prescription drugs for patients and consumers that lowered costs dramatically, and some of my constituents are concerned that that's going to be negated by a transfer of penalty back to the patient or consumer when they pick up their prescription drugs.
HEALEY - Well, yes, I just say at the outset, the why, you know, so to understand, like, from where I sit and where we sit, we want to make sure people have access to care. You have seen pharmacies close where you live? I mean, we've got a lot of pharmacies closing. People not only can't afford co pays, but just like literally don't have a place to go. So, you know, part of what the thought is, is to think about ways to ensure that more pharmacies stay in place. It is not to pass on costs to people who right now in Massachusetts can't afford prescription drugs, can't afford health care, that they need. So, I just wanted to level set in terms of where the goal of efforts and sort of the North Star on any moves in that area.
GORZKOWICZ - Yes, I think you touched on the premise of it, of course, and I think that one of the ways I think we're hopefully ensuring that that doesn't get passed on to consumers by the mere fact that it is allowed to grow by the rate of inflation, but not in excess of the rate of inflation, and I think that in itself, provides a constraint that protects consumers. Again, this is in the case where we have excess drug pricing. In an ideal world, there'd be no penalties and there'd be no charges. Again, the cost is allowed to increase by inflation, but just not in excess of that, and that ebbs and flows based on how you track inflation, and that is going to be worked out in the implementation. I'd also say I think that there have been a lot of good discussions between Secretary Walsh and her team with the industry about ways that this could be looked at and structured perhaps differently or, how some of the concerns that are being raised could be addressed through the implementation of such a proposal. I know that they'll, obviously share those, ideas with you as you're looking at this proposal.
SPEAKER8 - Thank you.
SPEAKER1 - Senator Comfort Comfort.
SEN COMERFORD - Thank you, Mr. Chair. Governor, Secretary, and your teams, thank you for this very thoughtful budget blueprint at a really difficult time as you both have said. Governor, you know, I got chills when you talked about the pending and the threat of cuts to the Department of Education or the Department altogether, and that's, of course, what our constituents are talking to us about every day, and I know your team must be hearing this. During the consensus revenue hearing, there was a little back and forth about what should we be doing to prepare? I know it's volatile and so much is uncertain, which is the favorite word of this time. But I can understand that there isn't a reserve fund per se, that could be a cushion in this blueprint. Again, the blueprint is very good, but in this blueprint, there isn't a reserve fund. We do have a rainy day fund, but there isn't one set aside to help take a federal blow. So, I'm just wondering if you can give us a little insight into the important conversations that are happening in your administration about how we do prepare for pending or possible federal cuts. How are your agencies talking together? Are prioritizations being considered? How might we understand that thinking so that we could be smart with you going forward? Again, thank you very much.
GORZKOWICZ - I will just say, thank you for that question, it's on top of everyone's minds and it's certainly on top of ours on a daily basis.
COMERFORD - It must be, right? $16,000,000,000 dollars.
GORZKOWICZ - Our administration is focused on this. We're monitoring the situation in Washington as best we can.3177 As we all know, the information coming out of Washington is both limited and changing on a daily basis, so it's more than just herding cats here, it's really difficult to try to follow what's going on, but we're doing the best we can, and we're doing it at all levels of the organization, from the Governor's office, my office, and all the secretaries. We have folks looking at and trying to track what's happening in real time, we're doing scenario planning and we're trying to figure out what the3202 impacts of those various scenarios might look like. And, of course, as those scenarios change, we're trying to model that out a little bit. You know, that's taking some time, and what we're really trying to do is understand the impact. Fortunately, the work of the Governor and the Governor's office with the AG has been successful in terms of putting some of those TROs in place that have sort of paused some of the immediate action, and that's been good.
But we know that that's a temporary, measure and that there's going to be more work to do. That's what we're looking at, and that's the process we're in, and this is going to continue to evolve every week and every month as we go forward. I think when we get to a point where we feel we have information to share, we're going to have to sit down collectively and do it because I can tell you the problem is going to be too big for any one branch to think that they'll have a proposal to solve it. We're going to have to come together, it's going to require legislation, it's going to require, perhaps looking at appropriations and looking at resources. Maybe we have to reallocate resources differently than we have in the past, but the executive branch isn't going to have the authority to do it all, we're going to have to partner on it, and, that's the spirit of which we're trying to do this analysis so that we can have that collaboration and engagement when the time is right.
SPEAKER1 - Representative Smola.
REP SMOLA - Thank you, Mr. Chairman. Governor, Secretary, thank you for your testimony here today. Let me start off first by saying thank you for the commitment that you have made to West East Rail, particularly stops in Massachusetts, we've got a number of Western Massachusetts Legislators that are sitting on this panel today that worked extremely hard on that effort, and appreciate what you've done and the commitment that you've made relative to that public transportation effort, so thank you very much. Governor, a few of my colleagues have brought up some of the tax initiatives that are submitted in the House 1 budget, and I want to go to a couple of them, smaller ones, but important nonetheless.
The proposal on the sales tax on candy purchases as well as the synthetic nicotine tax. Now, I know that these seem like small numbers, and the legislature always walks into these proposals very lightly, particularly because when the fair share tax, the millionaires tax was talked about, one of the selling points of it was the fact that, well, these are people that have more resources, they can afford to pay a higher tax. But in these particular proposals, typically, these target the individuals that are least likely to afford an increase, even if it's minuscule to our eyes. So, I just want to get a sense in terms of those proposals, because we've had them before us previously, we call them syntaxes. But I'm wondering what methodology you used to go through these proposals in the House 1 budget, particularly the impact that they might have on consumers, and also the impact they might have on small businesses.
GORZKOWICZ - Okay. Let me just step back for a moment and contextually talk about sort of the thought process behind some of the revenue proposals. As I've mentioned, and it's come out in our remarks a few times today, clearly, we have some challenges in the budget that are stemming from collective priorities. There are things that we have all decided as a legislation, as an executive branch that we want to invest in and have been making investments in over the last five years. Again, those investments, those priorities are growing at a rate that's time times inflation. At the end of the day, if those are going to continue to be our priorities and we want to fund them at the levels they're funded, we need the revenue to pay for them. And with revenue growth at 2%, spending far outpaces the growth in new revenue, and so there's always a challenge and there's always intention to try to balance the budget and find ways that we have reoccurring revenue streams.
In the case of this candy tax, I think the thought process there and again, we're open to ideas, we're not drawing a line in the sand on anything. You know, we have a very progressive sales tax in Massachusetts, and candy, is in part because we don't have a sales tax, we exempt sales tax on necessities. I think the feeling was3458 that their candy was not necessarily a necessity as other food and clothing items, and many states have already treated candy in a similar way, so, very consistent with how other states view that necessity. With respect to the tobacco, that's simply taking a relatively new emerging product that is entering the market, but it's a nicotine product like that, and we felt that it should be taxed like nicotine. Those are the rationale really behind those two proposals, and in light of the context in which they were done in support of the priorities, it felt like those seemed reasonable, understanding exactly what you said is true. But, again, understanding we have a very progressive sales tax and focusing in on things that we thought were a necessity.
SMOLA - I appreciate that answer,3504 but, always the worry for us, and I know it's a worry for the administration3508 as well, is the impact that the3510 actions that we have, have on individuals across the Commonwealth. So, I appreciate that answer, and I know it's something that we'll talk about more. Last question to go into another territory that we haven't brought up today is relative to the judiciary and to public counsel services. I was a little bit concerned about the proposals for both categories in the House 1 budget, including what seems to be running a little bit short on public counsel services as well as the trial court, and it was also recently reported in Western Massachusetts relative to the shortage of judges. Now, I know there's a lot that comes with that, and Governor, you know better than anybody about how that process works because of your background.
But in terms of the shortage of judges, I think it's a big issue, particularly for the more rural part of the Commonwealth because it's a delay in terms of the services and the access to justice for individuals that are sitting in the pipeline, either waiting to get public counsel, waiting for a trial to be called up, waiting to go through that system. I know you've been vocal about this, Governor, appreciate your comments on this, but, the one thing that concerns me is that we have a mandatory retirement age for judges, so, we know when they're going to be rolling out of the system. So I'm wondering if there is a better way that we can tee that system up, so that we're not sitting in places like Western Massachusetts with such a shortage of judges that are on the bench to be able to make determinations and be able to move cases for all of the constituents that we represent. And if we know anything in this institution, access to equal justice is one of the most important fundamental things in terms of services that we provide for our constituents. So, I'm just wondering, and I'm concerned about the number though as well in both of these categories, and wondering if it may be falling a little bit short about what we should be appropriating at the end of the day.
GORZKOWICZ - Why don't I address the question for funding, and I'll turn the remainder of the question over to the Governor. With respect to CPCS, yes, you will see what looks like a reduction in CPCS when you actually compare it. In fact, you may not even see a reduction, but the level of funding has been consistent with the fact that CPCS has reverted money the last couple years. So, when you look at the FY26 recommendation, it's more in line with what the FY25 spending is. Now CPCS, like many other human service agencies, it's a caseload driven item in the budget. We feel that we've addressed the need of CPCS based again on what they've spent prior year and the fact that they have, over the last couple of years, reverted some money, not used all that was appropriated, so, we feel like this is a good appropriation.
Of course, we monitor the caseload and we work with CPCS throughout the year to the extent that the caseload comes in higher, then obviously, we would have to revisit that through a supplemental budget. But we feel that the appropriation we have is not creating an artificial deficiency and that it supports the needs based on prior spending. With respect to the judiciary as a whole, and I think if you look across the budget and look at constitutional office generally, we have provided a 3% increase, which again is consistent with inflation and higher than what our growth in revenue is. I think obviously the requests were for more, but we were trying to meet the needs of what they do, the what the judiciary does, with the resources we had, and we provided them with a 3% increase across the board, not just with the trial court, but when you look at the supreme judicial court, the appellate courts, across the board, a 3% increase.
HEALEY - Thank you. Representative, I'd just add, I share your attention to the judiciary and our courts, and we want to make sure that we have our courts fully staffed and that when judicial openings become available, that those are quickly filled. I think our administration to date has probably filled just over 60 judgeships. We are always on the look at who is going to retire, what the upcoming openings are, and then really working with the bar to try to identify candidates for these jobs. So, part of it is in Western Mass and we've named a number of judges, but if there3771 are both vacancies right now, the best thing that we can do, I find is to work with the bar, work with the regional community to encourage qualified candidates, talented candidates, practitioners, to give up what they're doing and submit applications. But I can assure you, like, the JNC and our legal office are working as quickly as we can to process because I have every interest in making sure that justice is not delayed by having any vacancies open. I look forward to working with you and others and just identifying folks in some instances, encouraging folks to apply so that we have the beneficiary of that talent in our courts, not just in Western Massachusetts, though we love the 413, but across the entire state. That applies to all of our courts, all of our trial courts, and all of our clerk magistrate positions as well. Thank you.
SPEAKER1 - Senator Edwards.
SEN EDWARDS - Thank you. Again, I'd like to echo the thanks for you all being here today. One of the components of the increased revenue suggestions that you have in the budget is capping the nonprofit donation exemption. So, capping at 5,000, I think for an individual, maybe 10,000 for a couple, and I see that it would, just in doing that, generate well over a hundred million dollars. So, I understand and respect the necessity at this moment to think of ways to generate funds because we have a non-committal federal partner at this point, and we're also dealing with potentially going to recession. So, I don't doubt that that was necessary to think of different ways. My questions really are coming around, if we're going to talk about nonprofits, then why aren't we considering ways in which we're raising funds from nonprofits that have a billion dollars in their endowments.
I'm talking about nonprofits like Harvard or Phillips Exeter Academy, they have billion dollar, well over a hundred million dollar endowments. So, if we're going to be capping for individual donations, why aren't we looking at some of these colleges or universities that do not pay state taxes? A concern that I saw in Boston was3931 the encroachment of a lot of those universities like Harvard as they acquire more land, as they build out, they take taxable land revenue from the cities and from the state. So, is there a way to think about, and I want to give credit where credit's due, I think it was Rep Higgins and Rep Barber who introduced a 2.5%, tax proposal on Harvard's endowment that would have raised a billion dollars a year. So, can we think about possibly, in terms of state exemption for taxes, looking at ways in which some of the richest institutions that continue to charge exorbitantly high tuitions, and run-in many cases like a business, how we can think about those nonprofits contributing a little bit more of their fair share, that's one component.
Then the next component is if directing them to pay taxes is a concern, have we thought about revamping or creating a more aggressive state pilot program? I know the city of Boston has a pilot program payment in lieu of taxes, that came to an informal agreement with the colleges and universities, and annually, I think, puts in about $30,000,000, though it's based off of 2012 assessment of properties. But assessing how much land they're taking from us, and then sitting down at the table and saying, okay, if we're not going to get rid of your nonprofit status, then at the very minimum, we could see you contributing a lot more through voluntary means to our state conference programs, education. Thank you again for your leadership on free community college. So, that's a two part question, and I understand you may not have a direct answer now, just really hoping that we look at that consideration. Thank you.
HEALEY - I appreciate the comment, and also the comment about the charitable deduction and what's happened from the time that we filed it, proposed it, and what we're looking at right now and what we're hearing from our not for profit communities about how they might be affected in terms of their ability to provide or to not provide direct services to so many people around our state. I also think it's important to, while we're on the subject of universities, last week, I convened a group in response to what was threatened for NIH funding, that included MIT, Harvard, University of Massachusetts, our teaching hospitals, our research institutions. The reason I did that is because they are under real siege right now, you've got things happening, attacks on our colleges and universities from a department of education, US Department of Education, and now, through the United States Department of Health and Human Services. So, I know I've spoken about this before, I think we're hearing about it, we're aware of it, but that is not just a $3,500,000,000 hit to Massachusetts by the loss of indirect grants.
There are other sources that those entities like our own UMass receive that are tied to receipt of indirect NIH funding, to say nothing of the ripple effect when you think about the people who make parts that go into our labs, the people that drive trucks to get parts to the labs, the restaurants and local businesses that are supported by our thriving life sciences, and that's why I sounded the alarm last week. I appreciate that the Attorney General once again was able to get a court order, a preliminary injunction. Anecdotally, what we've heard is that the federal administration nevertheless is finding ways to slow walk that funding, that funding is not coming through. When you have the government of China on our campuses right now in Massachusetts recruiting post docs and offering them full labs and office space in China, our universities and I mentioned those three, it impacts more, are really feeling considerable strain right now to try to mitigate against the loss of that talent, which means loss of innovation, which means loss of entrepreneurship, which means loss of so much that this state and this body has built through years of support of education.
Going back to our very founding as the first state to have a school, first state to have a college, first state to have a library through the present day with what was done years ago, the first life sciences initiative. That is not good for Massachusetts, it's not good for American competitiveness either to cede that talent to China. Personally, I want cancer cured, I want treatments for Alzheimer's, Parkinson's, ALS, heart disease, you name it, right? My preference is that it's made in this country, discovered in this country, and in particular, discovered here in Massachusetts, which continues to lead the way. I offer that just in context of some of what our colleges and universities are unfortunately up against right now from the federal administration.
SPEAKER11 - Thank you. Thanks.
SPEAKER1 - Thank you, governor. Thank you, senator. Next up, representative Elliott.
REP ELLIOTT - Thank you, Mr. Chairman. Thank you, Governor. My question, Massachusetts has brought in key awards for transportation projects through federal funding in the last several years. One of them being to replace a 42 year old temporary bridge in my district, the Rock Bridge. Do you have any idea that this funding may be in jeopardy at any level given we're about to award that project this month or any other projects, quite frankly, in the Commonwealth?
HEALEY - I'll let the Secretary take that, but I appreciate all the great advocacy that was done by yourself and others in the district, and advocacy that's been done by members of both chambers on so many great and important infrastructure projects that got to get done, that we want to see done, that we're fighting to make sure get done, including by continuing to make sure those funds flow.
GORZKOWICZ - A couple points on that, and I don't have specific knowledge about your particular bridge, but I can certainly double check and find out and make sure that whatever I'm about to say is factually true. But, I will just say, look, we have, you're right, been awarded a lot of grants in transportation for various projects, we are moving full speed ahead on all of those. We are committing funds, we are obligating funds, we're getting the money out the door as quickly as we can, and despite what has been happening in Washington, some funds are still flowing. Transportation funds, you know, we're still seeing some grants there, public safety. There have still been some chips and science grants that are funding, and we're still actively pursuing all of those, and those projects that are being funded by them are continuing to move forward. So, while we are monitoring the situation, we're also not taking our foot off the gas with respect to getting any federal commitments and obligations we have out the door as quickly as we can, and they're cutting the check, we're making sure that the project's moving forward. Again, I don't have specific knowledge of yours, but certainly we'll take that back to the transportation team and have my team follow-up with yours just to make sure we double check that there's no interruption on that particular project.
HEALEY - And we want shovels in the ground, the proverbial shovels in the ground as quickly as possible on transportation, on housing, right? It's why we undertook the effort too around looking at permitting and siting, because we got to get going on the grid, we got to bring more energy in because we got to drive people's energy bills down. That's the focus, is making sure that we are doing everything that we can to speed along what has been appropriated.
SPEAKER1 - Senator Miranda.
SEN MIRANDA - Good afternoon. Thank you, Governor and Secretary, and, to both Chairman. I had three questions, but I'm going to ask two, and connect with you all on the GILTIL, it's been the topic of the morning and something I care deeply about. I want to talk about the MBTA, our favorite topic. Thank you so much for the low income eligible reduced fares, they really work. I see that in the city of Boston and expanding that and investing in that, I think, will make a huge difference. I want to talk about capital. You have in the budget that you're going to spend $180,000,000 in capital improvements, which are incredibly important, about $0,000,000 of that is actually in my district, so thank you for the Fairmont line in Ruggles. Can you share more about why this investment in over $180,000,000 is critically important? It feels like we give a lot of money to MBTA whoever feels like it's ever enough, but where is your sort of trajectory in thinking right now in terms of the MBTA funding that you put in your budget?
GORZKOWICZ - Well, let me talk a little bit about just some of the numbers and what our proposal is. First, we've done so much in this budget, there's a lot her to digest and, to the Governor's point earlier about not kicking the can down the road, I think whenever we think about that, we think about the issues around the MBTA and I think we're trying to tackle those head on and we're doing so both with our proposal we launched last year, but I think our budget this year to really get at what's happening there. When you think about the capital, you have to think about the operating budget, they go hand in hand. When you invest in capital, you create operating cost, you create debt service, you have to think about them together. So, one of the things we've tried to do with our proposal is we've tried to provide relief on the operating budget to stabilize the MBTA by solving 90% of what their projected need is for the next three years, creating the stability, avoiding the fiscal cliff that we've all heard, that's on the operating side. On the capital side, we've done some other things.
One is, you know, we try to invest in their rail program, and by leveraging the surtax the way we have, dedicating it to the Commonwealth Transportation Fund, we're able to use that to leverage it for additional bonding capacity, which allows4632 us to invest on the capital side of the MBTA. The more that we can do to support capital projects for the MBTA, the less they have to take on and issue their own debt for us. So, there is a direct4642 correlation between helping them with their operations while also helping to relieve some of the much needed capital improvements that the MBTA needs. The other thing we have as part of our proposal is also trying to, once and for all retire some of that legacy debt, $97,000,000, that's about $15,000,000 of operating relief to the MBTA, and by using our resources to address that, we4666 provide more operating relief. So, the capital is important, we're trying to give4670 the MBTA flexibility around, what to do, but they have had certainly some very pressing, projects, that we were able to fund through through the CTF and through the proposal we have here. But being able to get what we've proposed in House 1, the money into the CTF to be able to leverage it, is an important part of being able to accomplish all of that.
MIRANDA - Thank you. My second question is on a topic near and dear that I work on a great deal with many of my colleagues here, it's on the racial homeownership gap. You know, when we talked last year about Team Massachusetts, we talked a lot about competitiveness, and I shared that one of the things that I'm seeing is a big challenge and why people are actually leaving the Commonwealth is because of belonging. If you can't afford to be somewhere, if you don't feel like you can live in a safe, healthy community, have a good job, get a great education, you don't want to stay here, right? We've made many strides, and free community college is definitely one of them, and so, I want to talk a little bit about the crisis that I think Boston is in. Over the last decade, we've learned through our census data that almost 10,000 black Bostonians have actually been pushed out of the city, in the last 10 years, and black homeownership rates in Boston have actually been declining, and the racial gap in homeownership is actually getting larger and not getting smaller. It seems like we are not moving fast enough and we don't have the tenant protection we need to actually weather the storm. I will give you an example, in Roxbury, Caucasian is made up 13% of the population, but actually received 35% of the home4774 loans to be able to4776 purchase homes in our city and even in a community that has traditionally been African American.
There's similar disparities across my district in Hyde Park, and places in Dorchester, Senator Collins' district, and Senator Edwards' district in East Boston with the Latino community. The Affordable Homes Act authorizes $5,100,000,000 in bonding authority over the next five years, however, the capital plan for 2025 to 2029 calls for the state to spend $2,000,000,000, 40% of that $5,100,000,000. About $1,000,000,000 for public housing, which matters to me because I have the largest concentration of public housing in the Commonwealth, and $1,000,000,000 for other affordable housing. 4% of that $5,100,000,000 in Affordable Homes Act authorization is specifically for homeownership, we don't yet know how much of that 4% the administration will actually spend. So, my question is, while the statute allows for homeownership housing to be built or rehabbed using many of the programs you've actually authorized. For more than 10 years, the state has been funding rental housing almost exclusively, and as you consider this next capital plan, what is the administration's plans or ideas to actually expand what I think is sort of desperate and in need, which is the affordable homeownership to keep residents in the cities and towns that they actually love?
GORZKOWICZ - So, I think a few things that I want to just highlight, and I'll probably end with your question. You know, in 2003, there were about 8,000 funded or approved housing units, about 8,000. In 24, we've increased that to4892 nearly 12,000 units across the state. There's a4894 50% increase since 2023, just generally in housing units. In addition, the HDIP program has funded about4902 25 projects totaling about 1,2564906 units in our gateway cities. These are developments that are not only just creating housing, but reclaiming many blighted buildings and redeveloping a lot of our our downtown areas. But with respect to homeownership, working with Mass Housing, which is the agency that HLC, Secretary Gus, and his team, work with to, at least through using our state resources, invest in homeownership, the Massachusetts Housing Partnership mobilized nearly $784,000,000, to help 2400 homeowners buy a home over the last year. So, those are some significant investments we're making. When we do use our volume cap, and we extend volume cap to Mass housing on a regular basis, we have a meeting with them about how much of it is going to the various projects, and there's always a discussion about how much of the volume cap is being dedicated to individual home owner, and homeowner buying. So that is something we do track and monitor, and we feel like we have been making some pretty good progress. Obviously, there's much more to do, and we know that housing generally is an issue we have to be focused on, but we are making progress and have some good stats to show for it.
HEALEY - Thanks, Secretary. We're really mindful of the generational wealth gaps. You know, I came to this having litigated some of those cases around disparities when it comes to lending, homeownership, and the like. I appreciate you listing out the statistics, I mean, this is why we're trying to come at it as hard as we can, and the work that we've done together, I think, is working, we just got to be able to, like, continue to bring it online. The fact that we did HDIP and increased the amount, we increased the number of units by 600% in just like 18 months, right? Now, I asked for that map, I wanted the statewide housing plan, it'd never really been done before in that comprehensive a way, certainly not by regions. And I feel like we don't know where we need to go until we know the number that we're looking at, which is why we did that, and it's a big old number, right? You heard it, 220000 units we need over 10 years.
But that's why, you know, I've got a thermometer, everything we bring online helps, and the way it seems to me, you create access to people to purchase a home, to afford or rent, which you pointed out is an issue for people in Boston and around the state, is you got to bring more units online. So that's why we went big on cleaning up and rehabbing existing units that are vacant because they're dilapidated. You know, the public housing, let's get that done, let's do the inventory of state land and property, see what we can turn into housing. You know, let's support other initiatives to incent and work with developers in a time when it's5084 tough, you know, it's tough with inflation, maybe even tougher with tariffs and the5088 cost of lumber, but let's bring everything online.
It's why we've been working with communities through the application of the MBTA Communities Act as just one lever. But, you know, we have got to bring the urgency, everybody's got to bring the urgency to this, that people need and they sure need it in Boston and around the state. But I feel like the work together, we've served up a menu, a lot of options out there, a lot of ways to get at it, and we just got to make the math work for developers. Some of the reforms, I think, are commission on on Unlocking Housing, which is basically like, how do you quickly operationalize the Affordable Homes Act and bring more online? Came out with a recommendation a couple weeks ago, like 50 recommendations, you may not agree with all of them, but there's a lot there to work from that can help us build more housing around the state, we've got to do it.
SPEAKER1 - Thank you, governor. Representative Holmes.
REP HOLMES - So, wouldn't surprise you that I'm going to have the same line of questioning instead of Orlando, I'm sure, and instead of their, efforts. So it is clear that the millionaires tax has helped us with both education and transportation. It's clear now that we need some help more help with housing. So, when you hear the recommendation around that, should we be doing this tax on rich people again or rich and down, that seems to be a much better place to be going after trying to get them after the folks who are in that terrible places. Do you have a sense of how many people before, we did up to those that needed $50,000 of repair. Now if we're on your page 46, it's clear.5235 As you say, with the emergency shelter, we're spending almost under 25,000 versus 27,000. Our dollars would
HEALEY - I don't know those numbers off the top of my head, we can have Secretary Augustus get back to you with whatever that inventory is. Do you? I know you have a lot of numbers in your head.
GORZKOWICZ - I was going to say, I don't have that. Of the 43,000, I don't have that number. I can tell you I've been in meetings with Secretary Augustus and through our work on the volume cap and distributing that through Mass development and Mass housing, I've seen the list of projects that we're doing, public housing projects that we're doing, and I know that we're working hard to try to get some of those units back online. So, I know there's a real effort there, unfortunately, I don't have that number off the top of my head that I can give it to you. You know, with respect to the charitable, I will say that, again, we've tried to be as thoughtful as we can recognizing that the landscape is evolving a bit on this topic. But what we try to do is, when we set the cap, we were thinking that it would protect 80% of those that filed last year. So, 80% of people who filed it would not notice an impact on what it is. Now how many people that is? I don't know, but it's 80% of those that filed, actually I can get that in terms of the number. But, it's 80% would not have not be impacted, and we will make sure housing knows.
HOLMES - We've read that we're the only one of five states in the country who do it blah blah blah blah. But how many of them are not actually being used? I was down in Fall River yesterday, I'm going to my sister I shouldn't say unfortunately. My sister's in5365 a housing authority, and there's a whole building over there not being used, just not used. I have 15, 20 units sitting there not being used, and to get those online, it would be better than trying to spend this billion dollars a year. We can get someone permanent housing versus some of the shovel. It'll be good to just know what is going on across the state. As the Governor just said, even also what's across the state, having an embarks ion, what's in Paul River, what's down in the West Ohio State, it'd be just great to have a sense of where they are.
HEALEY - Yes, we do have all that. I mean, I just want to underscore as we talk about future revenue scenarios, and let's deal with what is in our control right now, okay? That is why the stuff on zoning, the stuff on permitting, some of this was within state control, a lot of it is local control. You want to know why certain units haven't come online, or certain developments haven't been built, or certain places haven't been built out that people could be living in now. Like, that's a conversation with our communities, and that's where I have encouraged people to go and to5434 show up at planning board and zoning commission. Because if we're serious about building homes in this state, that is a local engagement, you can't fund your way through that when there are local permits and local gating processes that either speed up or slow down building housing. I really think the work we've been trying to do is to focus on that. So collective help on that, working with our cities and towns, you know, we really got to lean into that. I think if we do that, we can bring a lot more units online.
A lot more units online.
SPEAKER1 - Senator Fadden.
SEN FATTMAN - Thank you, Mr. Chairman. And, in that spirit of bipartisan cooperation that we talked about earlier, Governor, Mr. Secretary, good to see you, but yet to be noticed in this hearing are the two people to your right, and, they have origins in the Senate and are fantastic public servants, and, just want to give them a brief shout out, because I enjoyed my time with them, and I'm sure, the chairman5506 on the Senate side would feel the exact same way. There's been a little bit discussion just recently about housing, and, it's important, I know that we all feel5516 that. One policy avenue I believe is going to overshadow that eventually is our energy and climate policy, mostly due to the expense, there's not a day that goes by where my office doesn't receive multiple phone calls or emails about people's utility bills, energy bills, home heating costs.
The Commonwealth since 2021, as you know, has put in many mandates that we're going to have to achieve in the next 25 years. Going through your budget, that's something that has been really intriguing to me, and I found an outside section, it's an outside section of Chapter 25a, Section 11h, Subsection 13, and it talks about, the Department of Energy Resources Assessment Authority. It says it allows for the overhaul of the Department of Energy Resources assessment on gas and electric utility companies, providing for said companies to pay up to a 0.3% of their interstate operating revenues derived from sales within the Commonwealth. That currently funds most of Mass Safe, and it essentially is saying that DOER is going to be able to direct that in another area. One of my questions, and I certainly hope the answer is not a shift onto the rate payers, it's who pays for the lost revenue for Mass Save under that line item?
MARTHA KWASNIK - MASSACHUSETTS EXECUTIVE OFFICE FOR ADMINISTRATION & FINANCE - Hi, Senator. So, essentially, I think what you're looking5619 at is a provision which EEA has proposed, which allows for greater flexibility within the management of certain programs5627 within EEA5629 related to the assessment that is provided through utility holders. There is no change or reduction in funding to Mass Save through this flexibility, and in fact, we see it as a revenue neutral proposal. So, it's really just more of assisting in the internal management of the programs within EEA.
FATTMAN - So just as a follow-up, out of curiosity, if you're diverting funding from one place to another, how is it neutral?
KWASNIK - So, it's not essentially diverting funding, it's allowing EEA and the utilities to work together to manage the way in which they would otherwise, provide funding to different streams. So, as you can tell, it's a bit of inside baseball, and I'm happy to follow-up directly with your office5677 to give you some more specific information5679 on it. But it's more of what we view as a technical edit to allow greater efficiency and flexibility within state government.
FATTMAN - Okay, that would be fair. The other question I think as a follow-up would be what are those other programs? Because the word divert is in there and it says two other programs but those are not specified. I think one of the things that, Bruce Moll in the Boston Globe recently wrote about 10 days ago or so was about all these extra costs, and what I've noticed is a lot of people kind of going like this, on this particular topic. But, you know, perhaps we should be going like this, pointing to ourselves looking in the mirror here because it is legislatively mandated from 2021 to 2024 legislation. So, it's hurting people and it's hitting them very hard. I don't believe that's going to end, and we have to do something about it. I know we're developing home heating standards right now, which some of us have5737 been on those phone calls.
If we look5739 at what happened in Vermont, there's been a lot of reporting on that, they raised home heating oil and propane $3 to $4 per gallon in addition to the $3 plus it already is. So, this is a topic that I think is gonna be incredibly important, perhaps more important than housing, and its interface with housing regulations and the energy stretch code and all those things. So, I look forward to getting some of those answers, and I'll certainly be asking this when the Secretary of environment comes and the commission of DOER. Last point I'd like to make is just on the charitable deduction. I think it's important to note that the charitable deduction was actually voted on by the voters in 2000, and it received over 66% of the vote. So, you know, we've talked a lot about democracy and making sure we preserve and defend that, I think that's important relative to that particular issue and perhaps others that are pending. How about I'll leave it at that?
HEALEY - Yes. Well, thank you so much, and to that end, I don't know why it took 23 years, but we were the first to make sure the will of the voters went forward and that people were able to take advantage of that charitable deduction. So, I appreciate the comment. I'm glad you raised energy bills right now. I am doing everything in my power to do what we can to drive down people's energy bills. Energy bills are through the roof, I know it. You know, when I was Attorney General, I used to be the ratepayer advocate, right? And we used to go up against utilities all the time about those very bills that people are having to pay. And, you know, through rate increases, we've seen people hit especially really hard the last couple of months, and that's why I went out and after the DPU, demanding that they take action. They did recently to lower cost some, but I think more work needs to be done.
They came out with an order the other day that made changes to Mass save, I think that's appropriate. It's also why it's important that we have some flexibility within that program that you brought up earlier so that we can more effectively work with the utilities right now to manage that. The same time we're trying to bring energy online, and more power to the grid, we've got to build out the substations, we've got to do a lot of work, we've got to do a lot of work in communities that may or may not like that infrastructure built, but it's absolutely essential that we find a place to land that. I never want it to be on the backs of rate payers, the system though does have that as part of the dynamic and it's something you rightly point out, has to be really carefully managed.
Right now, I know that people cannot afford to pay their energy bills, and we've got to do everything in our power, and we will as an administration to help those folks right now, particularly as we get through the winter months. It's also why we need more energy coming in, and I've said, I'm for all of the above. You know, we need that hydro coming, I hope they don't put tariffs on it because it's just going to cost us more. We need the solar built out, which is why don't stop the funding for solar for all, because that's helping power 30,000 homes right now in Massachusetts alone. We need that to continue, and we certainly need the wind industry to be deployed because that's a game changer for us and the entire Mid Atlantic. So, you know, keep everything on the table, keep it going, we need more power, we need more electricity, and we need to drive costs down for residents and businesses in this state.
SPEAKER1 - Representative Kearney.
REP KEARNEY - Good afternoon, Governor, Mr. Secretary, thank you for putting this budget together and thank you to your staff as well, for being here. Pending Marshfield's efforts to determine their5982 obligations for compliance and implement, the MBTA district in the community, your office withheld a $261,000 grant to dredge the5992 North River, which incidentally doesn't just affect Marshfield, but arguably the entire ecosystem of the South Shore. We're definitively situated Hanover, Norwell, Pembroke, Duxbury, and Rock. As I'm sure you're aware, the supreme judicial court's recent ruling affirmed that under the statute, the executive office of housing livable communities has to publish fiscal impact statements on the implementation of that law. So, I have two questions. One, as we go through this budget hearing process, when can we, the legislature, expect the fiscal impact statement information to be available so that we can properly assess and allocate funds to the municipalities for the costs associated with MTA compliance? Secondly, pending the resolution of6038 whether or not this issue constitutes an unfunded mandate, can you commit that the administration will refrain from withholding funding from communities like Mine and Marshfield until the issue gets resolved?6048 Thank you.
HEALEY - Thank you, Representative. No, I cannot commit that, and I think the lawsuit that was filed last Friday is without legal merit, and I respect the opinion of the Attorney General, but that will be left for the courts. Look, we've said as an administration, we're here to work with cities and towns, I don't want to see cities and towns penalized, we don't want to withhold money, you know, for anything, dredging every river or public safety or anything. But we've also said, and in fact it wasn't me, it was a law promulgated by this chamber, signed into law by then Governor Baker that said, we're going to find a way to build more homes. I think what we've tried to do and, Secretary Augustus has tried to do with the team is offer up tools, we've provided technical assistance to communities to help them work through some of this. We've said it's not one size fits all. In fact, recently, I think there were communities that weren't in compliance that now have made steps towards compliance and we've said, let the funds go because you're on track. You know, I'm not going to get hung up on the technicality of whether town meeting was scheduled before a certain time or not, they're scheduling, they're moving that way, directionally, and we support that, which is what I think the legislature wanted in passing that law. So, I hope we'll work it out with Marshfield, we should work it out, there's a way to work it out. I wish it weren't further delayed, and it need not be further delayed just because there's a lawsuit filed, we can still work through this and do right by the good people of Marshfield and the South Shore.
SPEAKER1 - Okay. Thank you, governor. Representative Marcy.
REP MARSI - Thank you, Mr. Chairman, appreciate it. It's an honor to be on this committee for the first time. Governor, Secretary, thanks for being here. I know it's a lot of work to put the first pass of the budget together, so I appreciate that. In my 12 years as a selectman in Dudley, you know, budgeting, we always said that a budget is a written statement of our priorities, which this clearly is. But one of the things I noticed, we're going to be spending $1,290,000,000 on one time sources of revenue, which is almost a billion more than last year. So, I guess my question is around sustainability and funding operations with one time sources of revenue, that could get us in trouble in future years. So what's our plan if, like, revenue doesn't keep what keep up with our spending?
GORZKOWICZ - So couple questions there. I'll take the first on the one timers first. Yes, you're right, there are a number of one timers in this budget, more than we used the prior year. I would say, you know, every year there is some number of one timers, so there's some amount that every year in a $62,000,000,000 budget is acceptable and not something that we would typically worry about in terms of its long term sustainability. But what we've been trying to do is be thoughtful about what those one timers are, and as we use them, we think about sort of the next year or two. So, we're already thinking about 27 and 28 in terms of if we use a6235 one timer for 26, what is our plan for growing out of that one timer in 27 and 28. So, some of the things we've been trying to do and we worked with all of you this past year in our closeout sup is to sort of build up some of these reserves as we're going. So, in our closeout sup, we took some of the surplus that we had at the end of the year, and we were able to put it into the Student Opportunity Act. We were able to put it into the stabilization, we were able to put it in other reserves, that are available and flexible to us6262 to allow us to then either take some of our one timers and make it multiyear, meaning that we have a few years to work with it and grow out of it.
In other cases with young one timers where we have a replacement for that in mind for the next year. In some cases it may just be that certain costs are replaced with other growing revenues and other things. But we do try to monitor that, and we do try to make sure that we have a glide path for doing that. I think as we move forward, you know, we've had a revenue environment that's been relatively uncertain, and it's taken us through 24 and 25 to get to the point where, as the Chair said, we're starting to reach a new normal, that new normal is sort of moderate revenue growth. But we've also experienced, particularly as we talked about Mass Health, coming out of the pandemic, there's been a lot of inflation, there's been a lot of pressure on some of these programs. As we get into the 26 and 27 budget, you know, the 26 budget takes off, tackles a lot of that that inflation, a lot of that growth, and as we go into 27, we have to start thinking about what is sustainable and what is reasonable given the revenue environment we are in. So, we are very aware of the use of one timers and very deliberate and thoughtful about how we plan to grow out of those one timers in 27 and 28 or, again, replenish them so that we have a multi year approach towards balancing the budget.
MARSI - Okay, thank you for that. Speaking of the out years in the budget, do you have a sense of sizing, the one we'll rely on in the next couple of years? I just wanted to know the trend.
GORZKOWICZ - I don't, at this moment, but now with the 26 budget officially handed over to all of you for your consideration, multi year forecasting is something our office gets involved in as we start looking at how we end FY25 and how we think about 27 and 28. We're starting to think about that, but, I can tell you that, again, as we look at the programs over the last couple years, the priorities that we've all invested in, they're growing at a rate that exceeds inflation. Inflation's just about 3% now, these programs are growing greater to that. So, you know, are there things that we can do to sort of bend the trend on that growth, or do we have to take a look at sort of what is more sustainable going forward? But these are things that through our multi year forecasting, we'll, start to shed some light on.
MARSI - Okay, thanks. You know, because I hear from my town administrators that they can't do that, a one time fund, especially coming out of Covid. So things are sort of getting real for them, and, I hear that every day. So they want us to be more mindful of what we're spending on. So I appreciate it.
SPEAKER1 - Senator Brady.
SPEAKER9 - Yeah. What's that?
SPEAKER7 - I said I'm not sure. I did just Well
HEALEY - I'll6570 take them in reverse order, and then you can do cleanup. So, in reverse order, Pappas, Pocasset, yes, tough call, you know, and we've talked about this before and you've been there, Senator, I mean, concern about the infrastructure there, the inability to actually bring more patients into Pappas because of the really degraded condition of the facility, not of the care, awesome caregivers. But we listened to people, we heard from people, and what we've said is we're going to have everybody at the table. I convened a stakeholder6602 group, you know, to talk about the future of Pappas in particular and Pocasset and also just DMH. I mean, I think we're we are a team, and Secretary Walsh and her team, you know, we believe that more needs to be done for mental health in this state. And looking at ways that we can optimize our tax dollars to support mental health services is a top priority for us. So, we look forward to working with you on that. The opioid fund, yes, I saw the Attorney General went after it, got more money from opioid manufacturers and distributors, that's good.
I don't know the state of it, I think whatever way to make the best use of money I know when I was AG, we thought about having communities partner up regionally, that that might be a good way to better access and deploy funds, right? Because it's hard if you're just one off as a community. So, I personally support that, but that'll be for others to decide. Energy, I'm happy to talk about the food waste, the stuff, the farms, I mean, again, everything should be on the table, don't discount wind though, okay? The sun doesn't shine all day, but you know what blows at night? Wind. And part of the reason we're screwed right now and people are screwed on their energy bills is because we've been reliant on just gas, and not just gas, but gas is so volatile, you know, and we don't even produce it here. And with Jones Act and other things, it's hard for us to even get it here, okay? So, like, this is why wind right now is a proven technology, we just got to move forward and have that coming onshore and have the hydro coming down and doing everything everywhere. It's also why it gets back to the very unsexy but incredibly important permitting and siting, that stuff's got to happen in communities, and I think, you know, together we've worked on ways to better modernize the grid in a faster way.
SPEAKER7 - I don't have any you bailed me up nicely
SPEAKER1 - on that.
SPEAKER7 - Thank you.
SPEAKER1 - She got it all. Okay. Good.
MICHLEWITZ - Any other questions or comments from members of the committee? Governor, Mr. Secretary, your team, thank you for your time, your patience, answering all the questions, and being here today, we appreciate you really, digging in on this, and we look forward to working with you in the upcoming months as we have in the past. So, thank you again. Thank you.
SPEAKER5 - Thank you. Thank you for having us.
SPEAKER1 - Next up, we have secretary of state William Galvin.
SPEAKER10 - Cherry. Thank
SPEAKER2 - you.
SPEAKER1 - Got a lot of testimony still to go, so if we could, everyone please take their seats.
Mister secretary, the floor is yours.
WILLIAM GALVIN - SECRETARY OF THE COMMONWEALTH - Mr. Chairman, thank you very much, and thank you for the courtesy of hearing me and all of your colleagues as well. I want to also mention, a thank you to the Attorney General who was gracious enough to exchange places. I come before you today probably as one of the happier customers because, first of all, my budget is cyclical, and6869 I6869 can report to you that this year's proposal6871 is actually less than last year's.6873 But, of course, the reason for that is we don't have a statewide election this year and, that's one of the reasons. But, most significantly, I think I6881 can report to you in the general outlook is that my department is a revenue producing department, and in fact, our revenues are running ahead year to date of where we expected to be.
At this point, I'm pretty confident we're going to meet our full projection for what we told you last year we do in this fiscal year. Now that comes against the difficulties6901 of the housing market because the deeds are part of our activities, but it also comes with6907 the benefit, I think, of some very good administrative programs. One of which was the corporate dissolution project, where we tried to get rid of corporations that hadn't paid their fair share. Our efforts in that area has brought in $15,000,000 just recently. In addition, my securities division continues to aggressively police the marketplace and has brought in millions of dollars in fines as well as restitution for customers in Massachusetts. Having said that, and again, I'm pleased to say that the Governor's recommendation, I think, addresses most of our needs. I did want to take the time this morning to highlight two issues that have emerged really since the budget was put together, and the first relates to the Census, the United States Census.
Recently, the Governor and legislative leaders have re designated me as the liaison for the Commonwealth for the census, and in that role, which I've held now for several decades, I've had the opportunity to evaluate the census and prepare for the census. While it may seem a faraway thing, the fact of the matter is, just in a few weeks, we'll be out of April 1st of this year, that marks exactly the midpoint of the decade and exactly five years till the next census. Now in 2020, we had a remarkably effective effort that resulted in our population in Massachusetts exceeding 7,000,000 for the first time, this came against incredible difficulties. Obviously, the Covid pandemic, but it also, in a reoccurring theme, hostility from the US Department of Commerce, and in particular, the difficulties in dealing with the first Trump administration, which constantly made an effort to not count people who we have here in Massachusetts.
It wasn't totally directed at Massachusetts, but it had the effect of that because of the number of non native born persons, I'm speaking about legally present non native born persons that we have here in Massachusetts, as well as the number of students who are counted as part of our population. It came against the difficulty of having to try to reconstruct the actual population when many of those students had to leave Massachusetts because the university is closed. It came to make sure7044 that the commerce department adhered to the law and make sure that they counted people irrespective of their status, consistent with the United States Constitution. That, in fact, that fight went all the way to the United States Supreme Court, and we won. Now what I want to say this morning is this; the preparatory time for the next census is now. We begin the process right now of creating a current address list, recognizing7072 that7072 the address list changes all the time.
That work usually comes under the leadership of the commerce department, it's obvious already that's not going to happen this time out. Many of the programs that would ordinarily occur in this year, in the next fiscal year, are not so far identified or participated in by the US Commerce Department, that leaves Massachusetts and other states to be on their own. Now 10 years ago, or five years ago I should say, we were very effective in getting local resources, the resources from cities and towns. Because our governance in Massachusetts is based on cities and towns, and our records are kept at that level, we had a very good body of records that we were able then to show to the Commerce Department and show to the courts to make sure we could prove what we said. An example of that I already mentioned, the issue related to college students, we went to the universities and asked them for the address list they had kept in the ordinary course of business of their off campus students, and we were able to get those counted in the courts by the commerce department.
That was very important, maintaining our population, resulting in a population of over 7,000,000 for the state. And many of the cities, and towns in the state that might have gone under counted because of language issues and others work on it. Fall River, New Bedford, Worcester. Worcester came in over 200,000 for the first time, and many of the towns too where new construction had occurred, these are all very important programs. In order to do this again, to prepare for the next census, we need right now, and as you know, we work closely with our designated partner, the UMass Donohue Institute, the UMass of Massachusetts Amherst. In order to do that, we need the funds to be able to go to cities and towns over the next fiscal year and have them start preparing a current address residential list of locations of habitable properties. We need to go count group quarters, we need to identify all these things. The monies that are presently proposed, I don't think are adequate given the fact we're probably going to be going it alone.
So, I'm here today to identify this as an issue, I'm happy to try to calibrate an exact amount, but I can tell you at least another half a million dollars needs to be dedicated to making sure we work with the cities and towns over the coming fiscal year, so that we're doing the same things in the upcoming fiscal year that we did 10 years previously. I think this is critically important, not simply for our political representation in Washington or the legislative representation here, it's also important for our economy. Because one thing we do know about this administration, it will end, it will end in 2029. We also know that at some future date, federal funds will be available to cities and towns and to states, and we want to make sure we get our share fair share and not be short changed because of an undercounted population despite all the challenges we have. So, I want to put that before you this morning, I'm happy to refine our request, but I think it's critically important for our entire state. From one end of7267 the state to the other, the more rural areas have population challenges. Obviously, the urban areas because of language and density have a different population challenges.
I think we've done an effective job of addressing this before working with everyone, and that's what I would like to do again. I also want to mention to you another program that we've seen significant progress in. Last year, you gave our address confidentiality program for victims of domestic violence, $100,000 additional dollars for a grant program, it's been remarkably successful. One of the things about combating domestic violence is that oftentimes it has to be done by non profits. I'm very proud of the address confidentiality program that we have, where we have regularly 300 to 400 persons who are relocated, but that's addressing the problem after it's occurred to some extent. To prevent domestic violence, I think we need to rely more on the non profits that are out there and there are many of them. For instance, one of the applications that has come in right now for the upcoming fiscal year is one that is based actually in Western Massachusetts that addresses the issue of rural areas, which are often much more isolated where there is not as much help, and available. I don't have enough money right now to fund all of these fine programs, and we vetted all of them.
I would ask you at least for another $100,000 for the grant program in addition to what's already proposed. As we have already reported what we've been doing with it, what we've discovered is is there are many more creative approaches to addressing domestic violence, often a very silent situation that doesn't blossom into tragedy until it's too late. That can be done, and can be addressed, and can be done effectively, and I want to make sure that we are doing what we can, not so much that we won't have as much to do in relocating people, but more the point that we eliminate the terrible tragedy of domestic violence, which is a constant in Massachusetts month in and month out, and we all know that. So those are the two things I would like to put before you today and add to it. Regarding the other line items in my budget, I'm very satisfied with the Governor's recommendations, they address a number of the issues that we have. We don't have any statewide elections this year, but we do have other responsibilities that we're fulfilling, and hopefully, over the next fiscal year, we'll be able to complete all of our duties with the monies that are presently appropriated and I'd ask you to fully fund the Governor's request. Happy to answer any questions you might have.
MICHLEWITZ - Okay, thank you, Mr. Secretary, and thank you for your work, your continued work, and, your continued work with us, we appreciate that. Two questions I had, one on the census piece that we just talked about. You mentioned the Department of Commerce and, kind of the, you're not sure, but you're not expecting the government of commerce.
GALVIN - Well, they haven't initiated the programs, as you lead up to the census, there are all sorts of programs that begin to identify the address. The census is actually taken on April7456 1st of the census year, but the preparatory work is the key, and in all the involvement that I've had, getting those lists ready, for instance, new dwellings, new group residences, making sure the address list is current, those are all things you have to do in advance. It's too late by the time you get to the census, so we normally would have been starting that now, there's no sign that they're going to do that, I hope they change their mind, I think it's necessary not just for Massachusetts but for the entire country. But at the moment, it doesn't seem that way, and I don't think we in Massachusetts, because of our vulnerability, because of the number of non native born persons, the number of students, the number of languages.
Massachusetts is a destination that's unique given the size of our state, we draw people from around the world. Now whether you want to say it's because of universities or the health care, whatever the reason, that's the fact. You can talk about a state like California or New York or Florida, they too, but they're much larger than we are. So the fact that we are so dependent upon these populations, and I don't think it's any secret, and I think you've already touched upon this, this morning, that the policies of this new federal administration are going to do a lot of damage on our economy here in Massachusetts. It will be in fact, unfortunately, it seems collateral damage on a lot of that. Well, one of the reasons our economy has thrived is we constantly have a new flow of people coming here to school, coming here for medical care, coming here because they see opportunity here, and making sure that they're counted and counted for is extremely important in moving forward in our economy.
MICHLEWITZ - I think we all certainly agree upon that, and, I appreciate your concern. I'm just trying to get a timing perspective in relation to, I mean, a lot of the stuff that we're dealing with from the federal government is unknown in terms of the timing of when it may come, may not come, how it may come, or whatever it may be. I think on this one, I'm just asking, is there a specific deadlines, timelines that we're talking about in this fiscal year?
GALVIN - Yes, in this year and into the next fiscal year. Normally, we would begin to start to come up with the current address list, we would verify group quarters. Group quarters are places where you have more than one residence unrelated, which we have a lot of. You'd start to identify all these things. One of the things that has helped us in the past is we do have good local records. Now, we've tried, and Donahue Institute has tried to enhance our collection of that information. But obviously, as all of you know, because of the disparity in your districts, there are some communities that are small, their records are not as good, they don't have the resources, there are others that are larger, there are others that have growth and development, some do not. So, we need to cover all of it, no matter whether they're rural, wherever they are, we need to see what development needs to take place and is taking place and put that into the planning so that these communities are accurately counted and so that we will have a record, not just of the addresses that we'll try to identify where people live, but also what other places where there may be people out there. And doing that this year is what we've always done and preparing to do it into the next fiscal year.
Those are the programs, we know the programs, and I'm happy to provide from the Donohue University the programs they expected to hear, but every one of them at the present time is haven't heard anything, haven't heard anything, haven't heard anything. Now, I sincerely hope that changes, maybe it's a new administration they haven't got to it yet, I hope that's the case because it's not just about us, it's about the whole country. But at the moment, we don't have any evidence of that, and I think we're in a particularly fragile and vulnerable situation because of the elements that I've already identified. So, that's why I want to be prepared to go into communities where there's been either growth or change or different circumstances to start preparing that base list. That's really what we want to do, we want to build a base address list because there's another program that comes along later as we approach the census, it's known as the local address correction program, LUCA is the acronym. We want to be in a good position when LUCA kicks in, in a year or two to say, here's what we got, these are addresses you don't have and we do. I also want to point out to you that, as you know, one of the other departments that seems to be in some flux at the moment is the postal service.
So, when you get into addresses and delivery and how things people are going to get this information, that too is a concern. So, I think we have to be prepared as we look forward to any eventuality that might occur. Some of this is political decisions, but some of it's not, some of it's changes that have occurred. I think in order to be in the best position to defend the population we have, I constantly found myself saying in 2020, we know the people are here, you just drive down the street, you see them. We know when you see the full buses or we know when you see the full highways, we know when you have colleges, I live near a couple of them so I can identify much more easily, but you see the people here, so, we should get credit for that. We know, some of our populations are older, we know, for instance, parts of the state such as Barnstable County and Berkshire County itself had some contraction in population for population changes. We know we want to make sure everybody gets counted and reflects the changes that have occurred in these areas. We want to make sure everyone's included, but to do that work, you don't start a month or two before you take the count, you start now, and that's what we need to do.
MICHLEWITZ - Thank you for that. One other question I had is related to the recent, putting the Boston election department into receivership. Is there going to be a cost incurred by the state that that's going to have to deal with that, or is that strictly a city budget?
GALVIN - There may be some cost, we've done this before, not just in Boston, but in other communities. The objective would be for a quick change here, in other words, to change and correct what we need to do. Our previous experience in Boston in 2006, we really were in and out of there within a year, and I'm optimistic we can do the same again. I mean, it's procedures, in fairness to Boston, they have the largest election department in the state, they have the most registered voters, hundreds of thousands of registered voters. And some of the very elements we just spoke about in terms of the census are very much applied to transient populations, changes in population, multiple dwellings, density, those are all factors. So, obviously it's challenging for them, but there's certain basics you can't have, and you can't have a situation where people don't get ballots because they were sitting on hundreds of thousands of them and nobody could call. I mean, we don't have to rehash the whole story, it was well documented. I'm optimistic that we'll have a good result, we're in the process right now of identifying competent administrators from outside the city to assist Boston and as we've done not just in Boston, we've had other communities, smaller communities too, where we've had to engage in this thing to make sure that the election laws are adhered to, and I'm optimistic we'll be successful. I'm hoping not to have many state7870 dollars involved. Fortunately, I think Boston has enough revenue to support the changes that they need to make, but, if there is, I'll certainly let you know.
MICHLEWITZ - Okay. Well just keep us in the loop on that in terms of the financial aspects of it. Mr. Chairman, you have a question?
RODRIGUES - No, I have no question.
MICHLEWITZ - Okay. Any questions or comments? Representative Smola?
SMOLA - Mr. Secretary, thank you so much for your service and for your testimony here today, and appreciate your explanation of how we're counting individuals in the census now, it's helpful to have that information. Are there any groups that we should be concerned with here in the Commonwealth that are leaving the Commonwealth? So, in other words, the reverse of what you're talking about, the out migration, and as policymakers, when we figure out taxes, regulation, new law, who should we be most concerned with are leaving the Commonwealth of Massachusetts?
GALVIN - Well, we don't have anything solid, it tends to run behind. We are a participant in the ERIC program, which allows us to get information about people we register in a different state and things like that, they'll give us some clue. I think that the way you're going to get the types of information you are asking about is for the Census Bureau, which does annual updates of population by community as well as a mid decade assessment with the American Community Survey. It would be the Census Bureau to do the national picture, which will reflect what we're losing or gaining, where it's coming from, and where it's going, which is the other part of your question, I think. So, again, it's troubling that at this point, the census doesn't seem to be as high a priority, but I'm sincerely hopeful that that changes because I think it is necessary for the whole country. I mean, there are parts of the country where they believe they're experiencing growth and I'm sure they too. For instance, in the last go around, as you know, states like Montana and some of the other more rural states gained population and that was because of the fact that they were accurately counted. They too have an interest, everyone has an interest in knowing what's there and where they came from and where it's going. So, I'm hopeful that the National Census Bureau will in fact, and the Commerce Department will kick in and do what they're supposed to do and that this is just a transitional situation.
But our situation and our history here of not just the elements that I already described, but, the particular issues that we had in 2020 tells me that we need to be prepared to sit back hoping that everyone says, oh, yes, let's make sure everybody is counted. I mean, we had a lot of resistance to counting people who had to be counted, and it was very challenging, and we were able to do it. I mentioned the college students, I mean, just to be fair to everybody, you know, in case you think we've got some hidden bonanza, states that have large military installations, they get to count the soldiers that are there, military people that are there, even if they're not permanent residents there because like students, they're there, we are physically present. So those two, those states also get the benefit, this issue of counting those people is very important. Now in Massachusetts, there are various figures out there, but I think we'd all agree that there's at least 400,000, 500,000 students that come from outside of Massachusetts, and we deserve to get the benefit of their presence here. For those of us who live close to some of them, we suffer with their presence here, so, it's certainly a case where we wanna make sure that we get compensated whether it's transportation or whatever it is that we need to do. So, that's why this issue, which seems so bureaucratic and boring is so important, and we need to address it right away.
SMOLA - I appreciate that, and thank you for that clarification. I think that some recent studies that have come out relative to concerns that we should be looking at as a Commonwealth for out migration in some of the populations. And to your point, the Census information is obviously going to give us the best picture overall. But when we're drafting policy, when we're looking at changes in law, when we're cultivating the budget, when we're talking about different adjustments, that for us to always be mindful of what might be the catalyst to encourage somebody to say, you know what? I'm not going to stick around here, I think I'm going to move to another state for whatever reason. I know it's tough, I know it's not an easy thing to do, but getting a handle on those categories, I think, is of the utmost importance because it does have an impact. To go to your point about how we calculate the census now and those individuals that are being tabulated without them, you know, what would our numbers be looking like in Massachusetts by comparison if we didn't? So, those numbers matter as much as coming in, but just as much going out, and what might be driving people from leaving the Commonwealth, and to make sure that we have our eye on the ball in terms of what we're doing on this end, and not discouraging people to leave for one reason or another. So, I think that's something that we should be really concerned about. I'm also concerned with some of the information that's come around where estimates say that we've lost a significant amount of money, according to the IRS, because of some of the talent that's left the Commonwealth. I don't know how accurate that information is, but it's been reported out there, and I think it's something we need to keep our eye on.
GALVIN - Well, I mean, again, you would get some of that information from the census, you also get it from other sources. I think we can honestly say, though, that the reason we've grown in population, the reason people come here has been traditionally economic opportunity, whether that's driven by the internationally known8207 universities we have, the medical facilities we have. That's8211 why I think again being very candid, the current direction of policies that seem to put some of those at risk threaten8219 our economy, and we have to think about that. I mean, people come because they have to get they want to work and they want jobs and they see it as a place they can get them. If we jeopardize that by any policy, which again goes beyond the census, so I guess this is out of my specific situation, but I think it's an observation that is obvious that people come because they want8240 to work and they think they're going to be welcome to work. And if they think there's not going to be any place to work because the hospital's closing or laying people off or the colleges don't have the same number of people or international students, you know, international students, certainly is a factor as well. Those are all factors, the robust economy of Massachusetts relates to what we present to the world, and we present to the world a place of opportunity where you're welcome. If we end up coming into something else or exhibiting a different message, we will suffer.
SPEAKER1 - Senator Commerford.8276
COMERFORD - Thanks, Mr. Chair. Secretary, as you know, in the fiscal year 25 budget through amendment and then signed by the Governor, we established an advisory commission to pick up the baton from the special commission that was charged with creating a new flag seal and model for the Commonwealth, and I'm grateful to Governor Healey for appointing Secretary Tutwiler and director Fox to lead this special commission, which has its first meeting, I believe, on March 20th. I'm concerned Secretary that we don't yet have an appointment from you, and I'm wondering if your office will send someone to be represented on that special advisory commission since the timing is fairly tight and we're starting a little later, I think, than anyone would have liked, especially given the 250th anniversary of the Commonwealth and the length of this work. I myself share it, and many of my constituents share a great urgency here.
GALVIN - Well, Senator, I've always taken my responsibility to make appointments when8339 necessary, and in this particular case, I've made multiple appointments, but not just appointments, I've made appointments of people of expertise because they were the archivist or historians. I'm surely I take it as responsibility. But I would be remiss if I didn't, which I think you know, point out to those who might not understand, this issue has now been kicking around for several years, hundreds of thousands of dollars have been spent without resolution. It's not that it's not serious, it's certainly important, we want to resolve it. But unfortunately, the previous commissions, for whatever reason, have been unable to reach8373 any kind of consensus, because I've had people serving on it, I've gotten regular reports on the meeting.
COMERFORD - Just one commission and the commission did extend its time.
GALVIN - Well, there were discussions even before that. The commission extended its time several times which we support it, but the commission was a8387 failure. I don't think that anybody could argue that8389 it wasn't. Many of the members and8391 many of the meetings spent their time quibbling over what they were going to do and who would be represented. The issue8397 needs to be addressed as many other states8399 have promptly with the opportunity8401 for equity involved in it. If hopefully, the new commission being established8407 by the Governor, having been established by the Governor will be the opportunity to8411 focus everybody's attention on it.
COMERFORD - Can we have the benefit of your appointment?
GALVIN - Well, you always have the benefit of my appointment, Senator, why would there be any difference?
COMERFORD - My understanding, Secretary, due respect8422 is that we haven't yet had an appointment from your office.
GALVIN - We haven't had a meeting yet either. So,8426 when there'll be a meeting, there'll be an appointment.
COMERFORD - March 20th.
GALVIN - I'm good at dates, I know.
COMERFORD - I'm sure you are. And just for clarification, when you said that we've spent hundreds of thousands of dollars, the legislature did appropriate some funds for the first commission and then another hundred thousand dollars for this coming advisory commission,8448 but it's not multiple for the first one.
GALVIN - Well, it's also a fact that some of the people on it were public employees because8454 they had the expertise, so their time was valuable as well, and I calculate that as well. I mean, I surely have no hostility8461 to the idea of addressing updating8463 the seal, we've all addressed that. I do think some of the representations that have been made about the existing seal and its biases have been exaggerated, but that's irrelevant.8473 What's relevant now is coming up with something that we can all feel proud of and participate in, that should be the goal. It8479 shouldn't be about addressing past grievances or based on whatever, and that unfortunately, the previous commission spent more time addressing grievances than they did thinking8487 about a new seal.
COMERFORD - We may have different perspectives.
GALVIN - Well, we may, and that's the whole idea. We have a new commission and a fresh start, so let's try to make the most of it.
COMERFORD - Thank you. I'm excited about this, and I do thank the Governor and Secretary Tutwiler8501 and Director Fox, and I'm very, very, heartened by8505 it, and I do think we're going to reach to a good resolve, and it'll be stronger, if8509 we have a member of your team participating. Thank you, Secretary.
GALVIN - As you always got it, Senator, you will.
SPEAKER1 - Representative Pease.
REP PEASE - Thank you, Mr. Chairman and Mr. Secretary. I know the legislator passed the mail in ballot law, which is fine, but what I'm here to talk about is that I've heard from several clerks and I'm just wondering if your office has heard from either the Mass Municipal Association or other clerks in the state, that when the mail in ballot request forms continue to go out from the Secretary of state, voters are very confused. They're like, I got my ballot and I sent it in or and it's like, no, you did not. What I would propose, and you'd probably save millions of dollars to help8557 cover the cost of your census program that you want to do in lieu of the federal government, is that you send out like a form every8567 year, not a form, but just a letter saying, there is no excuse absentee ballot, just contact your clerk. And just reminding people that that option is available without having to have any excuse at all to do a mail in ballot or do an absentee ballot. But for some reason, and maybe you just, if you haven't heard from this, then maybe I need to get my clerks to go to the Mass Municipal Association to have this brought up to you to say, hey, there is a lot of confusion. I hear it from both my clerks all in my district. I asked them all and they they said yes, that we get a lot of voters who are confused about what they're doing.
GALVIN - Well, I think the confusion last year, Representative, might be we had three different statewide elections, and obviously, the mandate was for all three. The first one being the presidential primary in March, the second being the state primary and then the third being the election. We did clean the list, people had already asked for all ballots this year, they did not get another application. The law, the votes act mandated an application and I think that's the right thing. To send people a letter that's not as effective as an application they can fill in. I would suggest to you, and I realize some clerks have different perspectives on this, but people have different perspectives on everything. But I would suggest to you, the success of that effort is proven by the number and the percentage of people that are doing it and have done it. It's a rising percentage of the participants in our electoral process, and, that's why I believe it to be successful. Now can we try to tighten up for instance, one of the things I just mentioned was three elections in a single year, that was the first time it applied to all. So we have to think about things like that, maybe there are other approaches that we can take. I'd also take note of the fact that it seems now that as a result of the most recent statewide election, that all parties, political parties, are interested in using this option to encourage their voters and their supporters to participate.
So, I don't think this is8689 a partisan issue at all, I think it's a case of efficiency8693 if there's a way we can do it. But it's8695 also a fact that people get well, not always, they don't always get their mail,8699 but usually they get their mail. People get their mail, but, you know, it's important I think to give them the opportunity to do it easily and simply. All of us think about elections and voting all the time, most people don't. I know that's breaking news to some people, but it's true, and so people get the opportunity to vote and they're excited about it. I think the votes act is, you8723 know, just in a couple of weeks, we're8725 going to be celebrating our 250th anniversary, and it all started here, make no mistake about it. The reason it's starting here in 25 is because it had started here in 75 as well. I think we as a state have a lot to be proud of about the commitment to democracy that we've had. So I think it's not the time to say, well, we're going to save money on postage and we'll only do it, I do think we can do better. We can always do better and we have great respect for the clerks. In 2020 when we had to do it because of the pandemic, we relied on the clerks to tell us best practices, and oftentimes, their ideas were better than ours, and we adopted them. So, the idea is to make it better, but I think the concept of mailing an application out to every voter is important.
PEASE - I appreciate that, and that's all I'm asking is kind of just continue to look at the process and try to make it better as you go along. Thank you.
Right. Senator Miranda.
MIRANDA - Thank you,8782 Chairman, and thank you for bringing attention to the receivership around the Boston Elections Department. One of the biggest, egregious, most errors happened in Hyde Park, which is in my district where there were hundreds of people in line, we may disagree about how how to go about fixing that, but it was a big challenge with so many people calling our offices around not having access to the fundamental right that they have to the ballot, and they stood in hours and waited, so thank you. My question is about jail based voting. Most people in this building know that I work a lot in the criminal legal system here and was happy that we worked as two bodies to pass jail based voting to give access to the 8,000 to 10,000 incarcerated individuals that still had the access to the ballot but weren't receiving the ability to be able to vote at their facilities or to be able to request a ballot. I fundamentally, believed and worked really hard to ensure that that happened because many of those people, due to the racial disparities in our criminal legal system and in our DOC represent or live in my communities of Roxbury or Mattapan. My question is, how have you seen implementation? How are you resourcing it? Is the program working? Are the DOC facilities, are you working closely with EOPS? Is it fully funded so that you're able to actually ensure that the access to the ballot as the law intended to those individuals is actually enacted?
GALVIN - Well, Senator, most of the people who would be eligible to vote who are incarcerated are in the custody of8887 county sheriff because they're8889 not felonious convictions. We've worked8893 closely with the sheriff's association,8895 we continue to do so. We8897 think that's where the best opportunity to maximize8899 the participation of those individuals is. I know in Suffolk County, Sheriff Tompkins has been very interested in it, I also know Sheriff Kaushik has been very interested in Middlesex, and that's not to say the others aren't. But I think that's where from our point of view is the most effective place we can work. DOC would have fewer people because more likely if they're in DOC custody, they're felonious, and therefore, ineligible under the state constitution as adopted by the voters to participate. So, in terms of maximizing our resources, the challenge in an election, as I mentioned at the outset of my testimony, it tends to be very cyclical.
So, last year, we had enormous turnout, record turnouts because it was a presidential election with all that went with it. Then in municipal elections, it's not so much, it tends to be less and that's across the board, not just people who are incarcerated. So, apportioning resources and municipal elections, it tends to be more on the backs of the municipalities themselves. There's certainly an opportunity if the legislature has the resource or wants to give resources to municipalities to reach out to their incarcerated voters to participate, we'd be happy to be a pass through for that. But I think in general on the larger elections, the sheriff's group has been pretty effective across the board. We're happy to work with them, but they're the landlord, if you will. So, we're trying to make sure that they have resources that they need and work with them to understand what's out there.
MIRANDA - Thank you. Can I work with you and them to ensure that we maximize? I love to hear that sheriff Tompkins is interested because that's my district, but I would9003 love to ensure that that happens from Pittsfield9005 to P Town.
GALVIN - Well, generally, I want to be clear, the fact that9009 I just mentioned a couple of the larger counties, but the fact is is that all of them have. I know the sheriff of Bristol, former member of the House, he's very interested in it, and a lot of other county, Barnstable and some of the other counties as well. So, it's not simply Suffolk and Middlesex.
SPEAKER4 - Thanks.
SPEAKER1 - Senator Edwards?
SPEAKER11 - Hello? Okay.
EDWARDS - Thank you, Mr. Secretary, for being here today. I was part of the the team of legislators that helped to push through the Affordable Homes Act, and you saw we increased the, I think it's the historic tax credit, rehabilitation tax credit, much to great lobbying from a lot of different people and personally going out to see old factories and, buildings in Fitchburg. And many of them saying, you know, if we could just get the funding to streamline this and move these projects along. So, now that we've increased, doubled, I believe, the historic tax credit, can you speak to the process of how the money's moving out? How many more projects are getting streamlined?
GALVIN - Well, first of all, I should have started off by saying thank you to all of you because you did it. But I also point out that the historic tax credits are away by, if you're looking to increase housing more rapidly, as you already noted, you're dealing with structures that in general already exist,9095 it's a lot easier than building out of the ground, so, it's had a lot of progress. When we evaluate, we still have a cap even with the higher number.
EDWARDS - On the annual spending.
GALVIN - The federal tax credit is unlimited, so, there's a difference. So, we're operating on two different sets of rules, although the same standards. So, what we've done is we've accelerated our granting grants, especially those projects that can be rapidly completed and we prioritize housing, that has been our priority. What I would tell you is the the overall process, and there's a lot of confusion about this, is that even prior to the increase as a result of your actions, we've always prioritized the grants based on an evaluation that's based on a point system. How far along is the project? Housing is prioritized? We try to geographically balance it somewhat, we don't want it all going to one or two communities. So you can't make everybody happy, the biggest question we get is, why can't I get everything I'm entitled to? Well, you can't because if I give it all to you and you have a big project, that means other people aren't going to get anything. So we can't do that, we try to balance it out in rounds. We've increased dramatically the amounts of money that are going out, and, if you go to our official website, you'll see that the actual dollars that are up there.
There's still a need9175 and but I still sincerely believe that you're going to see faster housing production as a result of historic tax credits than you will out of any9185 other projects that have to go through permitting, identifying locations. You know, I was just talking to one of the designated developers the other day of the Medfield State Hospital, which was formally a state institution and he's using historic tax credits to build up hundreds of units of housing, and he's not alone. There9208 are many places around the state where we're taking some of these facilities that qualify as historic properties and using it. So, it is being used, the proof is on our website, you can go see what we've done. But we're anxious to move things along as fast as possible because, it's the best situation where you have a structure, especially if it's an older industrial structure that's open, no walls, you're in a lot better position if you wanna do something. It tends to benefit largely places where the density is higher already anyways, that tends to be places Midfield's kind of an exception. Usually, the density9244 is in older cities, Revere, places like that, you know, have factories and have presence, and, I think it's been a very good investment for housing.
SPEAKER2 - Thank you.
SPEAKER1 - Representative Marcy.
MARSI - Thank you, Mr. Chairman. Thank you, Mr. Secretary. Great to see you, thank you for all you do. Building on what Rep Pease had said, some of my towns and some other that I've heard of in the off year, they're opting out for cost reasons.
GALVIN - You're talking about in person early?
MARSI - What's that?
GALVIN - In person early?9281 Is that what you're asking?
MARSI - No, mail, opting out of mail.
GALVIN - Well, I obviously don't encourage that, but I can understand that there are some elections that are local that perhaps, aren't going to have a high level of participation. You know, if you have a vacancy on the cemetery commission, that's not going to be right off the top for people to rush down and vote. But in general, we like to have some consistency, so we don't encourage it, but as you said, it's a local option and some do.
MARSI - Right, and my question was, are you seeing that around the Commonwealth or just beyond towns?
GALVIN - No. Mostly, it's been very few communities that have done that, and usually, there are exceptional circumstances like I described. Usually, a9321 special election for a municipal office where they just don't anticipate a lot of interest.
MARSI - Right. I've had several constituents reach out and I've said, you know, make sure if you want to do that, you have the option of absentee balloting.
GALVIN - Well, there are other9337 options, like I said. But as far as taking the9339 whole town, there are also the remarkable acceptance and enthusiasm of vote by mail9345 is without a doubt. As you see it everywhere, particularly, communities that have older voters, they like it a lot. Rural and suburban voters seem to9355 like it a lot. The places, frankly, they have less participation tend to be cities, but in the towns and especially, it's very popular.
MARSI - Yes, definitely in my district. Thank you.
SPEAKER1 - Representative Sabadosa.
REP SABADOSA - Thank you. Thank you for being here today, Mr. Secretary. I have a question about the way your office works and interacts with the registry of motor vehicles, particularly around voter registration. It's come to my attention that individuals like me who are already registered to vote when they go online to renew their license, they are asked if they would like to register. I, of course, said, you know, I am registered...
GALVIN - Representative, I can stop you there, you just put your finger on the problem. Unfortunately, they no longer asked, they used to be. When we got automatic voter registration, which I very aggressively supported, we had an opt out feature. After a year or two, some of the advocacy groups decided that they didn't weren't getting the return that they thought they were going to get, and they reversed the process. So, we no longer have9424 an opt out feature, and this is where I think the problem that you're going to identify has emerged.
SABADOSA - Well, if I may, so, as you go through this process, if you're already registered to vote, again, as I am, if you don't, then specify that you want to stay in your political party, you all of a sudden become registered.
GALVIN - Default, that was in the bill that we opposed as well. Let me explain what happens, so, in case anybody doesn't know this. So, you're registered to vote, you're a member of the republican or democratic party. For whatever reason, the9460 registry of motor vehicles has you9462 the way your name presented differently. For instance, you might, for the registry of motor vehicles, because back when you were 16, you used your middle name. So now, when you got your license, so now they have you as somebody with a different middle name. When you go to renew or do a registration of an arm bill, they have to notify the local clerks that you need to register to vote. Now, if your name shows up in the local records identical to what's already there, there'll be no further action taken by the local clerks. If, however, they cannot merge it because they're not the same, they will in fact register you again under the different name, which results in your previous registration being superseded in most cases. Unfortunately, we had a lot of experience with this in last year's filings for ward and town committees of both parties, where people who were either Democrats or Republicans serving on the ward and town committees were no longer a member of that party because they had done that.
We also had a number of your colleagues, who I will not identify, who found themselves also, re registered and not in the party which they're serving and9538 not in the name that they are commonly known as. As a result of that, we had to do a lot of last minute work to make sure that they were restored because, as you know, one of the requirements of getting on the primary ballot is you have to be a member of the party, and for a set period of time prior to the filing date. So, this has created a lot of problems. But just to be clear, we identified these problems back when the advocacy groups moved for the change, we said it was a bad idea. I don't claim any credit for that because it gets me nowhere. I'm concerned because this problem is going to continue to occur. We thought about what we might be able to do administratively if we could, but it's easy to understand. If somebody's somehow over time changed the way they're identified and they've never had a reason to change their identification with the registry, how would the registry know? They wouldn't know, they're going to go by their records. So, as I said, in the order to get people registered, which we all support, sometimes administrative mistakes are made and shortcuts are taken that maybe shouldn't be taken.
MICHLEWITZ - Alright. Do I hear any other questions or comments from members of the committee?
GALVIN - Well, thank you all9614 very much.
Thank you again, Richard.
SPEAKER1 - Thank you. Your time. Appreciate your patience, and, we'll we'll be talking soon. Thank you.
SPEAKER18 - Thank you.
SPEAKER1 - Next up to testify is the attorney general, Andrea Campbell.
9636 SPEAKER189636 -9636 How9636 are you doing? Good to see you.
SPEAKER1 - Alright. We're gonna get, keep it moving. Everyone, please take your seats.
SPEAKER3 - Attorney General
SPEAKER1 - Campbell, the floor is yours.
SPEAKER2 - Oh, perfect. Perfect.
ANDREA CAMPBELL - OFFICE OF THE ATTORNEY GENERAL - Good afternoon, everyone. Thank you for having us today. Chairman, thank you for having us. Of course, Senator, great to see you as always. I know the vice chair was here, Vice chair Comerford, great to see you. Thank you all to the members of this committee for your patience, but also of course for being here. Thank you for the opportunity to testify on my fiscal year 2026 budget request and for your leadership and your partnership in serving the people of the Commonwealth. We, as you already know, are in a unique moment in time,9761 at no time in my life has it been more important9763 for state government to actually9765 deliver for our residents than it is right now. Massachusetts residents expect and they should expect a state where they can afford to live, where necessities like housing, energy bills, childcare, health care, even car insurance do not break their family budgets. An economy that treats them fairly, where workers are paid the wages and benefits they've earned, where consumers are protected, not exploited by big banks or new financial tech companies, where our health care providers are driven by health outcomes and not profit.
Our residents expect a government that advances public health, that protects public safety in our environment, especially in ways that impact our children and our elders. As I will share with you today, my office has achieved meaningful results on every single one of those issues, and while that work will be even harder in fiscal year 26 because of our changed federal landscape, it's even more important. I didn't come into 2025, as many of you looking for a fight or looking to be a part of any resistance, I did not want to have to defend billions in federal dollars that flow to our state and9839 are vital to our interests. I'd prefer to have a federal government that9843 can actually work with us to solve problems rather than create them. That the president use his power to be effective and to collaborate rather than at times being frankly plain cruel. I'm also not naïve that the chaos we have seen from the last two months will likely be our new normal.
Let me assure you, I do not shy away from bullies whether they're in the state or out of the state, and my office doesn't either. I never forget who I am, where I come from, or whose I am. As many of you know, I'm very faith driven, and I name that publicly everywhere I go. I will continue to use this role, which I don't take for granted to protect the people of the state, to defend and contribute to our state coffers no matter what. So, where the federal government has stepped back, this office must step up and my entire team realizes that. Where they have abandoned the fields of protecting consumers, safeguarding civil rights, environmental protection, even preventing corporate fraud9907 at the federal level, we will fill them. Where they have attempted to harm Massachusetts by taking illegal actions, including stopping the flow of federal dollars already appropriated by Congress, we will march into court, and we will stop them, we've actually already won, and we continue to.
When the president tries to use fear, which seems to be his main instrument of power right now, we will not be afraid and we must, and I tell my team every day, respond. We won't take on every fight, but we will definitely pick those fights that have an outcome and affect our economy9942 in particular. My office, we use every tool available to inform our residents, our companies, our nonprofits about what the law actually is and the many rights they continue to have. This begins my third year as Attorney General. Each year, I've come before9958 this committee to tell you we are the best investment in state government, yet again, this office9964 has truly delivered. I want to run through some basic math to illustrate just how valuable an investment in my office is. For fiscal year 25, we have a budget of $77,400,000. The same fiscal year, we will be returning more than $900,000,000 to the general fund. We have saved the Commonwealth an additional hundred million by successfully defending civil claims against the state. This year, for every dollar we have spent, we have returned 11 more back to the general fund or to Massachusetts residents.
For fiscal year 26, we requested a budget of $82,700,000. We were thoughtful and reasonable, not coming in with some crazy number that didn't make sense. We need every single penny that we ask for and precisely $694,964. A lot of nines and sixes in there, but we need all that money and every penny we can get. And we need this not only to continue to work with each and every one of you to deliver for your residents and return money to the general fund, but also to address the consistent cruelty at times we're seeing coming from Washington DC. While the math I think is quite impressive, this work is not only about numbers, it's about using the law to help actual people and to solve real problems. Before I share what lies ahead in FY26, let me explain the values that drive our work and the tangible results we actually delivered on in FY25. Residents deserve an affordable place to live and a fair economy, these are the priorities I know this body shares and the AG's office delivers on. To address our state housing crisis, we took action to make clear that every community covered by the law must come together to address this common problem.
We also took steps to level the playing field, and what do I mean by that? We placed $32,000,000 back into the pockets of Massachusetts workers who were underpaid or denied the benefits they worked to earn. We resolved litigation against Uber10114 and Lyft to guarantee drivers10116 a floor of more than $3310118 per hour. We put nearly $150,000,000 back into their pockets, all in the way that preserved the ABC tests for independent contractors. When we saw big tech companies are artificially inflating prices, we took action, and you know this includes some of the biggest companies in the game, Google, Amazon, Apple, and Ticketmaster. These are cases that we were pursuing with the federal administration, but sadly, it looks like they will pull back, and we'll need resources to continue those important cases and that10151 important work. We also protected10153 consumers and secured tangible benefits for our mutual constituents. Our office and its local consumer aid program,10161 we grant money to these programs, helped consumers save or recover over $10,000,000. We helped student loan borrowers save $1,700,000.
We provided direct assistance to consumers with complaints against insurance companies, financial companies, recovering over $2,000,000. As the ratepayer advocate for the state, and I know this is one of the critical issues right now for each of you, my office has successfully opposed requests for rate interest or rate increases for utilities to the tune of $437,000,000 covering fiscal year 24 and 25. We're currently working with many of you and, of course, the administration, the DPU to address the current concern with respect to utility bills. We'll keep using the law and the regulations that we, of course, oversee to protect our people. We know that public health, including access to quality and affordable health care is a continuing concern for many of you in the Commonwealth. It's a matter of dignity and, of course,10223 a test of who we are as a state. It's also an opportunity for the work of this office to defend, support, and enhance your leadership and10231 to work with you on these critical issues. So, for example, when pharmacy benefit managers colluded with drug makers to increase, of course, the cost of insulin, we work to hold them accountable, which we know complements the work this body did last session to cap prescription drug co pays for our residents.
When three subsidiaries of UnitedHealth, which as you know is the largest health care conglomerate in the country sold sham insurance products to our consumers, we took them to court, we got, and I'm very proud of this, I wish the media would cover this instead of someone else. We got the largest award under the history of state consumer protection law ever. That award has been appealed, but we're going to fight to prevail. And what was it? It was more than $158,000,000 that will be headed where? To the general fund. When this legislature took action to ensure coverage for the most10294 common therapy for individuals with autism, of course, this10298 is applied behavior analysis, certain providers decided they would portray themselves as delivering that therapy to consumers and to charge Mass Health, but they didn't actually deliver the product, and we have been holding those folks accountable as a result of going to court to do just that. Through work like this in 2024, we recovered $23,900,000 for the Commonwealth, including through restitution to Mass health. When Purdue, which I know came up earlier, of course, catalyzed a nationwide opioid crisis through brazen corporate misconduct, the AG's office brought consequences.
In January, we reached an agreement in principle that will end our long standing litigation, and we actually got more money than the previous settlement, which will deliver $108,000,000 to the Commonwealth. We've shown up in court across the country to protect access to reproductive rights, gender affirming care, and we will be steadfast in that work in what has become sadly an increasingly hostile national landscape. I know that when people or entities are motivated by greed and when that affects the provision of health care and access to health care in the Commonwealth, we will work with you to also hold folks accountable. Another area of interest I think it's also important to lift up is that we know every community and every resident deserves to live in a safe and healthy neighborhood, free from crime and pollution. We still remain laser focused on the fentanyl trafficking organizations and gun trafficking operations in the Commonwealth. For a long time, that work was focused in Merrimack Valley, and actually, frankly, only Merrimack Valley in many ways. We have since expanded through your investment, our state police unit, and partnerships with various law enforcement agencies to continue to address this crime and those who perpetuated in Brockton, in the South Coast, from the West, and also, of course, in the West, also in Springfield, and far beyond that, and we have delivered results.
Our work to enforce state laws that protect the environment have also brought in more than $1,000,000 and I could go on and on and on, but I would be here10437 for another three hours, and I know we10439 don't have time and you are probably hungry. I also understand10443 that the richest man in the world is down in Washington DC pretending to know or do something about government efficiency. Well, let me tell you what government efficiency actually looks like. The staff in my office could make multiples more in the private sector. Instead, they have devoted their talent to public service and to10467 the service of those residents we all10469 serve at a tremendous discount to the Commonwealth because of the importance of the work they do every day and the passion for service that they have in their hearts. My staff takes a $77,400,000 budget and turns it into $900,000,000 in return and $100,000,000 more in savings. That is efficiency, that is government service, that is always putting the people first. And how do we do it? I'll give you one example. For10505 years, large tobacco manufacturers have tried to manipulate a 1998 multi state settlement to address the public10513 health cost of smoking.
They attempted to withhold millions of dollars per year, making empty allegations that the states don't, for example, enforce our cigarette excise tax law. More than 40 states responded by settling out, taking a major discount for upfront payments. What did Massachusetts do? We chose a different path, we showed that we do actually enforce the law here in Massachusetts year after year after year, and we use that leverage to reach a better deal for Massachusetts, better than any10550 other state in the nation. As a result, tobacco manufacturers will pay the Commonwealth more than $850,000,000 in the next month alone, and another $165,000,000 more will come next year. That is just one of the matters that one attorney worked on in the office. That is the best return any state in the country has received on the settlement agreement because the staff in my office worked to earn it. It is a sad reality that while state government is trying to serve the public and we are trying to do that with each and every one of you and deliver tangible results that people can actually wrap their heads around, the federal government is not.10596
Our current president has pledged to strengthen our economy and to work with us to reduce the cost of living, he sadly already has not delivered on those promises as evidence even today with the tariff conversation. Instead, they continue to undermine our state economy, and it will get worse. He has attacked vital funding and harmed the economic interests of consumers dealing with a nationwide affordability crisis, which is the most pressing issue for our residents. What does that mean for Massachusetts? Well, it just means we have to do a lot more work. And our residents, as you know, depend on10632 NIH federal funding to10634 fund all types of life saving and life extending cancer, Alzheimer's research, and so10640 much more, our state economy depends on that work, especially to continue to be the world's leading center for biomedical research. The President's attempt to actually access funding with a quick memo and communication included nearly $100,000,000 at the UMass system alone. $100,000,000 from the University of10663 Massachusetts. So what did we do? Of course, the federal administration announced those plans late on a Friday night.
We didn't go to sleep, we didn't go enjoy our weekend or take the time off, we got kids, we love to hang out with our spouses too. We worked, and we worked really hard. By Monday morning, we were in court with over 20 other states leading here in Massachusetts, leading and drafting of those briefs. By Monday night, we had relief to protect that funding, which drives most of or much of our economy here. And just yesterday, we secured nationwide relief, not just for the blue states, for the red and the blue states, including those states, the red ones, that didn't even show up to help us do any of that work, and that case proceeds delivering relief for all of us. As this committee knows very well, the Commonwealth receives more than10715 $22,000,000,000 in10717 federal funding annually, we will continue to work with you and collaborate with you and not waste any time in protecting those resources10725 as they continue to think about threatening access to them. As you also know approximately 70,000 babies are born every year in the Commonwealth. Nearly every single one of them becomes a citizen by birth because of the 14th amendment. Not anyone claimed anymore claimed the new president's first day in office, of course.
That executive order, which some people may think is not important, flies in the very face of the constitution we say we all care about and that we swore to uphold. It's wrong not only for our country, it's wrong not10760 only when it comes to constitutional principles, but let's be clear, it's also wrong when you think about the Massachusetts economy. We took action the very same10769 day to make sure that it was blocked, and this is, of course, only part of the work. We continue to be in court to protect access to health care, limiting DOGE access to all of your sensitive financial data, and who else knows what they have. We're trying to still figure that out and what they're going to do with it. But we know we have a role to play, we're prepared to play it and to work in partnership with each and every one of you. Thank you for allowing me to go a bit long because that's just a snapshot of the work we're doing every single day. Looking to work across any political divide because the last I checked, none of our residents care what party we're affiliated with, when we were elected.
They care that we're in the seat now to do something of significance that will actually help them, their children, and their families, their bottom line, their family budgets, not just to live paycheck to paycheck, but to help them grow their10824 wealth, to help them thrive so that their children, their families, even if they don't have any children, that the next generation does better than the last. Our office cannot do this work if we don't close that gap, if we don't get all those sixes and the nines I mentioned earlier, we need every penny. I'm happy to answer your questions, happy to continue to work with you, of course, to protect the Commonwealth and to protect the interests of the Commonwealth and to protect our residents. Quickly, Abby is my deputy chief, she's amazing. Paula is crunching numbers all day every day. I told her she looks fabulous today, she brought her special glasses to make sure you also give us the six and the nines. Anne, as you know, came out of the state House. Talented team, overworked, we work on the weekends all the time because we believe in working collaboration with each and every one of you. We may not agree on every topic, but we want to work in partnership, we want to take constructive feedback, and we want, most importantly, to deliver, and I can't do that if we don't close the budget gap. So thank you, chairs, vice chairs, and thank you to this entire committee.
MICHLEWITZ - Thank you, Madam AG, appreciate the testimony, and, the strong sentiments towards protecting Massachusetts, and thank you for reminding us why we always round up or round down when we're given figures.
CAMPBELL - Yes, well, you can make it 7,000,000,10908 but it's a little bit more than the gap. We'd be okay with that, we're happy to stand outside the State House with all of you accepting that money.
MICHLEWITZ - So, first10918 of all, I want to thank you because we've obviously had a number of conversations over the last couple weeks in relation to what's been going on with the federal government. One thing I've always said, to you privately and I said publicly is I think we're very thankful that you have our back in terms of the conversations of protecting what Massachusetts stands for and what Massachusetts needs to do to thrive, and so we thank you for that. One question I just want to have or I want to ask is, obviously, there's a lot going on related to what Washington is doing, what the Trump administration is doing. And, you know, many times, it's spanning over multiple states and multiple regions, depending on industry, depending on the10963 sector. But, obviously, what we saw with the attempt on the congestion pricing in New York City, in particular was10969 targeted, it was direct, it was going after a specific program within a specific state or a10975 city in this space. Are we in for that? Do you think we're in for that type of potential fight directly with Massachusetts or Boston or any other municipalities that are going to be targeted directly in terms of what they're doing just on an individual basis, never mind even as a collective group?
CAMPBELL - What we know is all states are being targeted, and I would say red and blue. When you think about the NIH funding issue that affects every state in the Commonwealth, you think about the OMB memo, freezing all federal funding that affects every state in the Commonwealth, and every municipality in Massachusetts could point to something where that would affect and have a ripple effect on their constituents. So, we are prioritizing where there is a direct impact on the state, particularly in the context of federal funding. Where we've also seen it be more targeted is and I can look up an example of a lawsuit we just filed today jointly with California and New Jersey, is funds directed at grants to deal with our teacher shortage and to allow us to expand our pipeline of educators across the Commonwealth through some actions by the federal administration. That funding and those grant programs were paused or canceled, including through the UMass system, one in Boston.
So, some may say that some of that is very targeted and specific, so we were very thoughtful in reviewing this with our partners and felt like we needed to file a lawsuit today on those specific grant programs. So, more will certainly come our way, but I think already in many ways it's targeted. Will it start to target individuals? That's always a possibility because what we're seeing at the Department of Justice is a weaponization of a federal agency, where they are looking to undermine the employees at the Department of Justice, regardless of their party to insert themselves at the headquarter level, at the state level to do away with certain types of cases, or to think about through threats of targeting elected officials and others who stand in the way of what they deem to be their policy agenda. So, I don't know what will come, I will tell you we're fully prepared, and there's a coalition of AGs across the country who have actively worked to take on any potential threat.
SPEAKER1 - Thank you for that.
SPEAKER3 - Mister senate senator? Thank you, mister chairman. Welcome.
SPEAKER2 - Good to see you, senator.
RODRIGUES - Madam general, it's great to see you. I just want to say thank you for all the work you're doing on behalf of all the citizens that I represent, that we both represent in the Commonwealth, and you've got an amazing team, and we appreciate and value what you do. So, thank you very much.
SPEAKER2 - Thank you. And thank you for extending gratitude to the team. Thank you. Representative Ferrante.
FERRANTE - Thank you. Thank you,11155 Madam AG, for coming before us today. Just a comment, not a question, but I want to thank you on behalf of every cancer or Alzheimer's patient and their family in11167 this Commonwealth. You know, I know the value of experimental trials, and there are people in this Commonwealth as we both know, who have been watching trials, who have been participating in trials, and now have gotten word that the President has11184 held up their trial or11186 the advancement of that medication that could save them, and for a lot of folks who are in that position, time is of the essence. You're usually on an experimental drug because you have a short term in which to survive. The fact that he has held that up, the fact that he has made that a political issue, the fact that he has put that on the chopping block is outright disgusting. It's no better to listen to an administration talk about, we have to stop fentanyl, we have to stop this, I agree with all of that. But don't be a goddamn hypocrite when it comes to people who are on their last breath or the last leg of their journey and sit there and tell them that their life is nothing more than a political football to be abused on some sort11239 of national stage.
So, I want to thank you and your team, I want to thank Maura Healey, I want to thank the two bodies of Representatives and Senators that are here today for being steadfast in their commitment to say out loud, this is disgusting and it needs to stop. Earlier, the Governor testified before us that there's a court order that came down that says he is not allowed to do that. So I congratulate you on that victory. I congratulate you again on behalf of everybody who has to bear the burden of these horrible diseases, and I just want to add that she said he's going to now slow down the funding or slowly bring it back up. I just ask you to just continually to stay focused on the residents in this Commonwealth for whom time is of the essence and to keep them foremost front and center because their lives literally depend on minutes, days, months. Or I should say that in reverse, months, days, minutes. So, thank you to you and your team, you should really be congratulated for standing firm and standing strong on that.
CAMPBELL - Thank you, Rep. I will say yes, the decision came down yesterday, it was a 76 page decision, very thoughtfully done. One part of the decision that the judge lifted up was just that the chaos that that policy decision at the federal level injected into our state and every other state, especially around these life saving trials, and found it to be unacceptable. So, we'll keep fighting and and working across state lines to deliver for residents, not just in Massachusetts, but also other states. Thank you.
SPEAKER1 - Senator Edwards.
EDWARDS - Thank you. I have a11351 a comment/compliment, gratitude to your team, and then I have a question about potential services or your interest. So, I want to thank you all individually for your hard11366 work, I especially, have been honored to work with many members of the AG family for years, going back to domestic workers, going back to civil rights, and so just to note, so much of what the Attorney General's office has done for the Commonwealth oftentimes is, again, off hours and coming to meet with me or advocates to literally go through what their rights are. You did that for domestic workers and designing a whole form for them, specifically for the new law. You also recently made your office available to my constituents who had voiced true concerns about discrimination and being harassed as a young girl was on the tee for wearing a hijab.
So, we needed a safe place that we knew that they could come and talk with advocates from around the country, and we we organized that, and without any question, you open your space to that because we didn't want it public building, we weren't sure what reaction would be. You made it available to children, so, I wanted to note that. I also wanted to thank specifically, if it's okay, members of your family; Margaret Hurley, who I've done way more than she deserves in terms of11444 your questions. He's no longer part of the family, but I blew up his phone as well, Shane, and then also Esme, who is a new member of the family, running now your new department on housing and getting ahead of certain discriminations in appraisals and getting ahead of discriminations11466 when it comes to FHA loans. The creativity of your office is incredible, and I'm grateful for11472 all that. So, I wanted to finally compliment you representing a large immigration population. Your office led the way in making sure that landlords and individuals knew that you couldn't discriminate or hold people's status as a leverage point for whether they should be evicted or not, that's very important.
I encourage you to keep pushing that out there because of the amount of fear that trickles down from this administration. We really do need more outreach like you've done before and will continue to do specifically addressing those moments of fear. Then, I have a question in terms of your incredible work on wage theft, you've been there the entire time, you've assured that it was never a matter of where you came from. You worked here, you're going to get pai, I appreciate that. I've asked before, I don't know if you're interested in, this is the question of looking at your criminal powers on wage theft. I know the ADAs are not interested in it, I have tried. But I am curious if you are at all interested in expanding your criminal powers in pursuing employers, not just bad actors, but repeat offenders, labor traffickers. There's a special core people who do horrible things to11556 workers, and it's beyond defined as far as I'm concerned, it's beyond the triple damages. I'm really hoping you look to criminal, if it's within your power.
CAMPBELL - We can certainly, follow-up and continue that. Short answer is yes, we actually had our first labor trafficking conviction in the history of the office under my leadership. I will say the leadership of the team, some really horrific facts there to say the least, and also some courageous folks who came forward to ensure that there was some level of justice, not just for them, but for others who also suffered. So, we have the blueprint and we have the team that navigated all types of systems to bring about that relief and want to certainly continue11598 it, and we need those sixes and nines to do11602 that for sure, because FLD is busy. Because you mentioned FLD, when I say how hard my team works, I can't overstate that.11611 I have to go to a service11613 next week Friday for Deb Anderson who ran our bid protest unit, is11620 known in many circles. She served the office for over 20 years, and unexpectedly passed after a very short and acute illness. So, FLD right now is suffering, to say the least, she was not only an expert on all those laws in the state, but across the country and mentored, I think, every lawyer and staff member in that division and beyond. So,11648 this is the level of passion that folks have, so I just wanted to take an opportunity to lift up Deb11654 and her family, because people work really hard. Thank you.
SPEAKER1 - Senator Dooner.
SEN DOONER - Thank you, Mr. Chair. I first just want to thank you personally for your responsiveness, specifically to me when I reached out regarding DPU and utilities. It was a Friday night after 5:00 PM.
CAMPBELL - There's a lot going on Friday night, that's my date night time with my husband, we have to clearly find a different night, but I'm just joking.
DOONER - I just want to thank you for that, you responded immediately, I think that's very important with government. And could you just touch upon a little bit deeper what you're doing around the utility charges and where things stand with DPU and kind of how we're going to move forward. I know11702 you're still diving into it, but obviously this is important to all residents in the Commonwealth right now, and, you know, six months isn't going to11710 cut11710 it for them, they're struggling right now.
CAMPBELL - Well, thank you, Senator, and everyone else for your leadership, for reaching out. Sometimes folks can sort of hold an issue and think they have to navigate it by themselves, so we want folks, if you're hearing things from your constituents, immediately reach out, and I want to be responsive. So, on the utility bills, I've been lifting up that everywhere I go because I think folks want to distract us to talk about whatever. I'm like, the number one issue right now is not only housing affordability. I just got this bill, and it's now, for example, 30% more than it was, and I don't have any immediate relief. So, what we did with all of your advocacy, including yours, Senator, and others, was become even a bit more aggressive with the DPU, and me, obviously, in the weeds on that. So, one was just to extend that moratorium really quickly to ensure that anyone who couldn't pay11761 would not have their energy shut off, which11763 was a major concern by many constituents, and so, we got that extended through April.
The second was looking at what the utilities were proposing. Obviously, they were proposing to defer some of those costs to the summer, and then to add interest on top of that and through our advocacy, we got all of the utilities to say, no, you can't charge interest, and they agreed to that. But it was aggressive advocacy to DPU, and I have a question even for the team, how can we continue to push them on even the 10%? Well, can you take some more, not just the interest, can you take a little bit more of that utility companies even though they may be lawfully allowed to have it? So, we can still be creative and have a conversation, can't we? So we want to think outside the box with our advocacy to the DPU. We were successful on those two big asks, and will continue to work with the DPU. I have a conversation with the team tomorrow around what other advocacy could we push at the DPU with respect to driving down these costs, recognizing that even that even though we're winning some of these victories, people won't see that in their immediate bill the next cycle, we're mindful of that.
But then I also think it involves to some line of questioning earlier mid term and long term solutions. The mid term solution is, yes, get back to the DPU to figure out what else we can do, even if we're thinking creatively and outside the box. The second is working with everyone here along with the Governor and the environmental advocates and the DPU to have a deep conversation on as we move towards clean energy in this transition, how do we make sure it's not on the backs of rate payers? We have some ideas on that, we think some infrastructure projects that drive up some of these costs maybe should go away, and our office is willing to advocate and work with folks on that. Mass save, yes, we can have a conversation around Mass save. It used to be more of an energy efficiency program, less so now. But I'm not going to accept utilities saying it's just because of Mass save that all these costs are driving up. No, they are federal government, their rollback on some of these projects has a direct impact on these utility bills and will in the midterm and long term. So, we have11901 to have a conversation about that.
Then we also have to have a11905 conversation on how much do we expect the rate payer to bear when it comes to this transition? And kudos to our rate payers who have not said yet, well, we don't want to pay anything, they're willing to pay something, they just don't wanna pay it all. What should we expect from utilities? Clearly, everyone I think agrees utilities need to do more, what should the state do? Should the state be doing a little bit more, and what does that look like? What can our office do with all of you on that? Then what should the feds be doing as we transition and try to reach these goals to ensure everyone's paying their fair share and it's not on the backs of ratepayers. So, Senator, that was11945 a lot, but this is ongoing to have that conversation. It may be that we have to file some legislation on some of this and want to work with all of you to set a really large table with the administration and the Governor, and, her division, and come11961 up with something that's creative but also impactful11963 that people can wrap their head around and feel in their bills.
DOONER - Thank you. I actually did already file legislation on this, almost immediately when everybody got their bills. But I'm open to feedback from your office as well as anyone here as far as what we can do to rectify some of the consequences that the residents are now footing the bill for. Thank you.
CAMPBELL - Thank you. We'll follow-up on that quickly because we definitely have a lot of ideas, and I told the team they can't just exist within our newly defined era division, we want to do it in partnership, and we need to. So thank you.
MICHLEWITZ - Thank you. Any other questions or comments from members of the committee? Seeing none, thank you, Madam Attorney General. Appreciate your time, your testimony, your patience, and look forward to working12013 with you.
CAMPBELL - All the sixes and the nines, thank you. Good to see you all in the midst of everything. Please, all of you, take care of yourselves. God bless you. Thank you.
12021 Yeah.12021 Hang on.
SPEAKER1 - Next up, we have, state auditor Diana Desaglio testifying.
Welcome, mad at auditor. The floor is, yours.
SPEAKER6 - On? There we go. Thank you.
DIANA DIZOGLIO - OFFICE OF THE STATE AUDITOR - Thank you so much, Mr. Chairman, and through you to the members, honorable members of the Ways and Means committee, it's great to be before you today. Thanks so much for your service to the Commonwealth and for working alongside of the Auditor's office in so many areas. We do really appreciate the great work that12142 all of you do on a daily basis to serve your constituents, to help make government work better. That is the mission of the State Auditor's office, and I'm so grateful that we have12152 the opportunity to share with you today, some of those things that we do alongside of you, to make sure that folks have access, transparency and accountability. I am sure that most of you know about some of the ways that our office is seeking to do that,12171 but there are a lot of other ways that maybe you may not have heard12175 about regarding what12177 our office actually does. Last year, we had the opportunity to come12181 in and to talk about the work that12183 we do in a more detailed fashion than what you might read about in the press, for example, and some of the media coverage.
There's a lot of nitty gritty work that goes on, there are a lot of different audit opportunities, lots of behind the scenes stuff that's getting done on behalf of tax paying residents in your communities. That's why I thought it was important today to use this as an opportunity for us to get to know each other a little bit better. I know that I know most of you personally, but, my team members, and the great work that they do is probably less known amongst us. I think it's important that you know that you have direct access to our team to be able to talk to them about the issues of concern that might be raised to you by your constituencies, around areas such as waste, fraud, and abuse, but also around areas such as making sure the Department of12238 Children and Families is working as it should in serving children who are in12242 need, making sure that the MBTA is getting audited on a routine basis, making sure that these different government agencies and entities are actually examined thoughtfully12253 and thoroughly, and in accordance with what your constituencies are raising to you as being areas of concern.
So, we come here in the spirit of service, in the spirit of cooperation to work together, with those of you, Madam Vice Chair, who are willing to work together with us, and I am so grateful for this opportunity to let you hear from our staff, who are professional audit staff, many of whom were on this12280 team long before I arrived on the scene. I know that this is going to be a respectful conversation today about the issues important to12288 all of us regarding our shared values of serving our communities. I'm gonna introduce Steve12294 Lisauskas, my executive deputy auditor in the office of state auditor who is going to lay out some of the financial aspects of what we are seeking here today. Then I am going to have him turn it over to others on the team who are going to let you know about some of the great work that they've been doing on their audit teams. Thank you so much.
STEPHEN LISAUSKAS - OFFICE OF THE STATE AUDITOR - Thank you, Madam Auditor. Thank you, Chairman, members of the committee, Steve Lisauskas with the office of the State Auditor. The work of our office isn't always glamorous, but it is the basic blocking and tackling that we do every day that helps to build a better Commonwealth. It's reviewing policies and procedures and compliance with them that helps us find where state agencies aren't protecting children, where the MBTA is falling down, where no bid contracts or settlement agreements are misused to help some people and harm other people, all while undermining the faith people have in their government. Last year, the auditor set for us a goal of identifying $17,000,000 of savings through our work this year. That that was designed to help this body restore the $17,000,000 in local earmarks that had been cut as part of the budget process. Those being investments in councils of aging, in fire departments, in economic development, tourism, parks and recreation that were developed through your budget12385 process reflected your priorities to improve our communities across the Commonwealth. Over the past 12 months, the office of the State Auditor, against that goal of $17,000,000 has identified $44,500,000 in financial savings through our work.
That includes $27,000,000 in improper billings paid by the Commonwealth, $10,000,000 in public benefit fraud, $3,700,000 in improper contracting, including potentially improper no bid contracts, $1,600,000 in unassessed fines, $1,100,000 in overpayments, and12423 many others. With your continued support, we as an office look forward to generating another positive return on investment for12431 the taxpayers in FY26, both financially and in terms of improved service to the people of the Commonwealth. As in prior years, we have requested your consideration this year in developing new audit capabilities, including housing, transportation, the environment, and artificial intelligence. The Commonwealth is spending billions of dollars to address the first three areas without the ongoing independent oversight that history has proven time and again is needed. AI represents another area of potential risk, especially with our partners in the private sector, where they're modeling into the software that government uses AI applications that are increasing risks where agencies think they have none.
As you know, we have also asked for consideration in moving the three year statutory audit mandate to five years. We are looking, we are hopeful to be able to move to a risk based audit standard where we move from auditing low risk agencies and high risk agencies the same, but rather can use the resources of the office to audit based on actual risk in agencies. We can audit the places that are higher risk more often than the places that are lower risk. But even with that request, so far this year, we have released audits of 79 different agencies. Last year, 2024, we completed audits of 76 different agencies, and in 2023, we released audits of 32 agencies, that lower number reflecting the lower number of audits that were started the year prior by the prior administration. So we are continuing to produce good work, which you'll hear more about from my colleagues in just a moment. And look forward to our continued work with you, and your staffs as we continue that work, and would certainly be delighted to answer any specific questions you have about the specific numbers or anything else with the budget recommendation, as we move to questions. With that, I'll hand it off to Modesta Roshi, who is our director of information technology audits.
MODESTA ROSHI - OFFICE OF THE STATE AUDITOR - Good afternoon, Chair and the members of the committee. I12580 am Modesta Roshi, director of IT audits12582 at State Auditor's Office. Today, I'll provide a very brief overview of the two critical audit programs that our unit conducted. Last year, we issued nine website accessibility audits and 29 cybersecurity audit across state agencies. Why do these audits matter? Website accessibility ensures that all residents, including those with disabilities can access vital government services online. This is not only a legal requirement per ADA, but also a matter of digital equity. Regarding cybersecurity training, cyberattacks, including phishing, ransomware, and social engineering are12624 increasing in frequency and sophistication. Well trained employees are the first line of defense in protecting safe system and sensitive data that we hold. Some of the common deficiencies that we have identified during those audits were regarding website accessibility.12641 Nine out of nine agencies that we audit, they all had deficiencies. Common issues included missing alternative text for images, poor color contrast, inaccessible forms, and lack of keyword navigation support. This can make our government's website functionality unusable for people with disabilities and locking them from services.
Regarding cybersecurity training, 23 out of 29 agencies audited had findings. Completion rates for required training were inconsistent across12682 agencies, creating an unnecessary exposure for phishing scams, data loss, and other problems.12688 Our three most common recommendations for both of these areas were training, policy reinforcement, and ongoing monitoring. The12700 legislature only recently begun funding our IT audit work, and we are very grateful for that. But with your continued support, you will allow us to expand the IT audit program so we'll be able to cover more agencies, acquire enhanced tools to monitor real time compliance and identify emerging risk, provide technical assistance and consulting to agencies that are actually struggling in remediation efforts. Proactive audits, regular training, and clear policies will help ensure that state websites are fully accessible to12743 all residents, including those with disabilities, and the systems are effectively protected against increasing cybersecurity threats. Thank you, and I look forward to collaborating with the committee to enhance the state's commitment to digital inclusion and protection against cybersecurity threats.
LISAUSKAS - Modesta, thank you. Now I would like to introduce Paul Travaglini.
PAUL TRAVAGLINI - OFFICE OF THE STATE AUDITOR - Good afternoon. My name is Paul Travaglini, I'm one of the audit directors here at the State Auditor's office. In my role, I oversee audits of independent authorities and education related agencies, including the Commonwealth's higher education system. Over the past year, my unit has completed 15 audits, which have included entities such as the MBTA, the convention center, the University of Massachusetts, and various state universities, community colleges, and regional transit authorities. Our audits follow a risk based approach, prioritizing areas with the highest risk to ensure we address critical issues and maximize our impact on improving government operations while delivering value to the taxpayers. One audit I'd like to highlight today is our recent review of the MBTA. This audit, released just this week, uncovered significant issues regarding the MBTA's management of its $2,000,000,000 contract with Keolis, the operator of its commuter rail system.
We found that the MBTA did not have effective oversight processes to ensure that Keolis was meeting the agreed upon performance levels. Our audit identified $3,000,000 in performance based penalties for Keolis that the MBTA failed to assess, funds that could have been used to enhance service for MBTA riders. Based on these findings, we've made several recommendations to the T, these recommendations were aimed at improving operational efficiency, ensuring greater accountability,12868 and most importantly, providing safe and reliable12872 service to the people of Massachusetts.12874 In12876 this coming year, my unit will be reviewing the special education process for students with disabilities in12882 the Commonwealth, among other important topics. This review will be focused on ensuring that all students receive the services and12890 support they need and that they're entitled12892 to. Our goal is to identify areas for improvement with an emphasis on increasing transparency and accountability12899 so every student can12901 access the resources they need to succeed. Thank you for your time today12905 and your consideration.
12910 LISAUSKAS12910 -12910 Thank12910 you, Paul. We'll now12912 be joined by Chris Barassa, one of12916 our audit directors, and there'll be just12918 the last two speakers.
CHRISTOPHER BARASSA - OFFICE OF THE STATE AUDITOR - Good afternoon. My name is Christopher Barassa, and I am the director of judiciary and law enforcement audits. My auditing unit completed 12 audits in 2024. A few examples of the audits my team performed last year include audits of the Department of Early Education and Care, the Executive Office of Public Safety and Security, the Massachusetts Bay Transportation Authority, AFC2.0. I'm proud of the audits we issue at OSA because our audits positively impact the lives of residents of Massachusetts. In the audit of the Department of Early Education and Care, for example, we found that the agency was not always reviewing or initiating investigations of suspected abuse or neglect of the children in EEC's programs. We found that EEC was not always performing background checks of employees who had unsupervised access to children. We concluded that EEC was not assigning investigators to the investigations of high risk complaints of unlicensed care. These are just four of the nine findings our office identified in our audit report. Another audit related to the safety of children that I would like to highlight is our audit of the Department of Children and Families. We found that DCF did not always obtain or renew12994 court approval before children in its custody were administered antipsychotic medications.
Additionally, DCF did not maintain all health care records in its system for the13004 children who received psychotropic medications. DCF also13008 failed to document follow-up doctor appointments or recommend psychosocial services for these children who were receiving psychotropic medications. All of the findings in these two specific audits serve to highlight deficiencies in how the Department of Early Education and Care and the Department of Children and Families ensure the safety of children in their care. Our audit work helps the public by identifying safety concerns or uncovering misspent funding by state government. In 2025, my auditing unit will be focusing on audits of the District Attorney's offices and the County Sheriff's offices. We'll also be focusing audits of the emergency shelter program to ensure that the funding was used appropriately. We will determine whether the residents of these shelters were housed in safe and livable conditions. Additional funding will allow us to continue to produce impactful audits to serve the people of Massachusetts. We'll be able to identify problems that exist for those vulnerable people in our population who need someone to shine a light on the issues they face. With additional funding, the office of the State Auditor is capable of making our state government run more efficiently for the betterment of all. Thank you.
LISAUSKAS - And our final speaker, perhaps more of a crescendo,13081 than last is Gina13083 Cash, our director of special investigations.
GINA CASH - OFFICE OF THE STATE AUDITOR - Thank you, Steve. Thank you, Auditor13089 DiZaglio for the opportunity to present with you and some of our colleagues from OSA. Members of the legislature, thank you for your time. My name is Gina Cash, and I have the honor, I would also say, pleasure of being the director of the Bureau of Special Investigations, also known as BSI. BSI is a group of diverse examiners and business professionals who investigate public benefit fraud throughout the Commonwealth. We investigate fraud in the programs administered by the Department of Transitional Assistance, the Department of Early Education and Care, as well as Mass Health. Last year, I was before you, and with your support, we were able to increase our workforce. Indeed, we hired some additional examiners, and with that workforce, we were able to identify over $10,000,000 in identified fraud throughout fiscal year 24. Our team completed over 5,700 investigations, of which 584 had identified fraud, and in that same time period, they recovered over $800,000 in overpaid benefits attributed to fraud. With your continued investment in our workforce, we hope to align BSI staff salaries with other investigative agencies throughout the Commonwealth, and we also hope to further invest in our BSI investigatory toolkit. I'm happy to answer any questions that you may have, and again, thank you for your time.
DIZOGLIO - Thank you so much. We're going to just open it up to questions. Thanks, Mr. Chairman.
MICHLEWITZ - Thank you, Madam Auditor, and, thank you to your team for all the work that you guys do, we appreciate it. Just wanted to open up for questions, I'm just going to start because we did talk about this earlier in terms of, Madam Auditor being an auditor, what's your thoughts on what's going on with the DOGE discussion in Washington right now, in relation to how that process is being held in relation to finding different types of waste, fraud, abuse, whatever it may be, in the federal government side of it?
DIZOGLIO - Yes, I am so glad you asked that question, Mr. Chairman, because I've actually been getting a lot13206 of questions, based on some of the comments made by some folks that are members of this body, actually, and I'm happy to clarify, the difference between what the Office of State Auditor does, and what DOGE does. It's actually pretty simple, that I don't know the ins and outs of DOGE, I do know that there are, some very salient differences, that obviously we know here in Massachusetts, the Office of State Auditor has a democratically and independently elected State Auditor, that folks from our communities have the opportunity to go out and vote for or against, much like those seated here today in this honorable hearing. So, we have a situation where in, DC, obviously, we have somebody who is appointed. Another salient difference is, I am not a billionaire, I do13262 live in the city of Methuen, right on the Lawrence line, about a mile from where I went13266 to high school and about a mile from where I was13268 born at Holy Family Hospital, and, I think there13272 are some significant differences just personality wise on that regard. But we have an elected State Auditor here, we have an appointed person who is running this new agency on behalf of the current President.
Unlike DOGE, the office of state auditor does not answer to the governor of this Commonwealth as though she were the boss or governing entity of the office of State Auditor. And I know those who are constitutional fans, certainly know that we have constitutional officers for a reason, and it's to make sure that our constitution is preserved and that the people of this Commonwealth are protected.13317 When this office was actually elevated years ago, it wasn't always13323 a constitutional office, it was actually13325 elevated to a constitutional office to safeguard the13329 office, to make sure that one entity of government was not controlling the decisions that were being made in the auditor's office, but so that the people, the people are in charge of who's elected, what topics they appreciate or don't appreciate being covered, and they make the final decision in what is a democratic process here in Massachusetts. So kudos to Massachusetts, and our forefathers, so to speak, for having the foresight to be able to establish this office, to prevent what we're seeing at the national level, the budget cuts that we're seeing, they're not being done in a democratic process. We, in the office of State Auditor have no authority to cut programs, to require any agencies or departments do anything that we recommend.
You heard from Chris who was speaking earlier, Gina, Modesta, and others about the great work that they're doing. Whenever they find challenges in these state entities, they are able to make recommendations for potential solutions. Those agencies and departments do not have to follow those recommendations, they are actually able to do as they choose. They can implement or not implement, obviously. We13410 make recommendations because we see gaps13412 that need to be filled. So, we hope13414 that some of our recommendations are taken, but they might come up with a different solution and say, great idea, but we have a different path forward that's going to address the same challenge. I know talking to Democrats and Republicans, that's often a conversation. Sometimes, we as elected might have the same goal of helping our community, but we might have different paths to get there. So, we make recommendations, the agencies and departments get to decide on what recommendations they choose to implement, what recommendations they don't want to implement, and then we come back for a post audit review and we see what changes were made or not made, and we make that available to the public so that we can track potential progress, again, to help make government work better. Great question, Mr. Chairman. Thank you so much.
MICHLEWITZ - Thank you, Madam Auditor. Yes, we agree with the structure of the constitution being the beacon here in Massachusetts versus what's going on in Washington. So thank you, we appreciate that. Chair Rodrigues?
RODRIGUES - Thank you, Mr. Chairman. Good afternoon, I want to say good morning, been here for a while. It's good to see you, thank you all for what you do. I have a question about the budget because that's what we're here for, right? A budget hearing that in the recently closed fiscal year, fiscal year 24, the office of the State Auditor reverted about 8% over $2,000,000 back, which is highly unusual. Can you explain why so much money was left on the table proverbial, if you will?
LISAUSKAS - Sure, thank you for the question, Mr. Chairman. I think it reflects, several things. First, it reflects the13515 auditors' perspective and the perspective of the office that sometimes when there's a budget and there's a fiscal year, it creates an artificial spending deadline where folks run up to the end of the year and accelerate spending in anticipation of the close of the fiscal year. Sometimes that spending is not, because it's not as planned as well. It's not the highest return on investment that perhaps the taxpayers would have expected, so, we don't do that as an office. What that largely reflected, that 8% was, when people leave the office and go find other employment or retire, it takes time to hire people. And with the hiring environment that existed last year and existed the year before and, for several years and is now slightly different, but still, the dynamic is softening for us. It has taken us quite some time to13564 be able to find auditors, and find audit leaders. We go through a very rigorous process of vetting folks that13572 is not dissimilar for our senior leaders, police, hiring, where we go through a very rigorous 360 process, that results in a delay, results in some additional money falling to the Commonwealth's bottom line, but we think results in better staff, better promotions. So, it's primarily the delay13591 in hiring associated with what was at the time a very tight labor market, particularly for13597 auditors.
13599 RODRIGUES13599 -13599 We've been reading about a high level of staff departures in the office. Does that continue through FY25? So can we expect a level of reversion into FY25 like you saw in FY24?
LISAUSKAS - I apologize for interrupting, Mr. Chairman. I think this also touches on Chairman Michlewitz distinction between DOGE and the office of the State Auditor. We limit ourselves to facts, in the audits that we conduct, we care about the facts. And some of the facts related to the turnover numbers that you were reading about, were the increase in our intern population. So, in order to address long term in a structural sense the workforce challenges we've been facing, we've been doing more to train a future generation of auditors, which has resulted in an increase in the number of audits interns that we have, summer interns that we have. So, a fairly large percentage of the turnover that was reported were known temporary staff who, of course, as temporary staff will come off the payroll at the end of the summer when their internship is completed. So, what we have seen for, I apologize for the term, but real turnover, that's turnover two, but it's planned turnover and it's not a typical turnover, it was known when we hired the people, and it's what they were seeking because they went back off to college. That turnover has been consistent with what we've seen for the last several years. So we've not seen a massive increase in turnover, what we have seen is as folks turn over, it's been harder to, at least last year, it was harder to replace them. Thank you.
DIZOGLIO - I actually want to add something to that. Great question, Mr. Chairman. During transitions, as I'm sure you know, when new administrations come in, new staff come in as well, and also people leave from prior administrations. I believe that this has happened with the Governor's administration, I'm sure it happened with other offices who have new leaders who come in and who are the executives of any state entity. So, when we talk about the time of turnover, I think it's important that we talk about that time of13744 turnover, in the context for which it is appropriate to discuss it, which is during a transitionary period for the office of State Auditor. Also recognize that this office13761 has had tremendous challenges in making sure that we can fulfill our duties despite the fact that unlike some administrations who might work collaboratively with the people who come and take their position over, as I know anybody would hope would happen with them, unfortunately, in the Office of State Auditor, my predecessor worked actively to sabotage the work of our office for the last two years.
So, it was incredibly challenging, as you can imagine to continue the work of the office with a predecessor who sabotaged actively or tried to sabotage actively some of the work that some of our staff was doing. And, you know, kind of acting inappropriately in terms of making sure that that transition went smoothly. We made it through a very difficult time, where new folks coming on had a lot to learn with very little support from the prior administration, but we did it. I'm really proud of the work that we did do during that transition period. What you see now, is this amazing team before you, which again, many did exist under the prior administration, and they're doing incredible work alongside of those of us who are new. They've done a great job mentoring us13843 on the work of the auditor's office13845 to make sure that that work on your behalf can continue. Thanks so much, Mr. Chairman.
SPEAKER1 - Senator Edwards.
EDWARDS - Good afternoon. Thank you all for your presentation. I do want to note so much of the work that you've done, while some may be a little critical of the Uber and Lyft, I actually found that it was very helpful in discussing some of the wage theft arguments. So, I wanted to thank you for at least pushing in that area. I do have two questions. One is regarding, since you brought up separation of powers. Specifically, there been a time when the judicial branch or the legislative branch has pushed back on you and said, you're going too far? As in, this is beyond your purview, this is beyond the separation of powers, and if they did so, what was the office's response?
DIZOGLIO - The answer is many times. During my time as the State Auditor and during the prior auditor, Suzanne Bump's tenure. Auditor Bump, for as many, times as the prior auditor has had strong disagreements with me on13929 many issues that I've been working on. She is to be credited for taking that13935 issue on because without her, the judiciary would not probably have been audited by the office of State Auditor, continuing on. She's the one that actually went in and she addressed some of the challenges where there was pushback, and she said, we are here to conduct these audits in accordance with the law and the constitution, and due to her championship13959 of that issue, we do, in the office of State Auditor, audit the judiciary, but that is not without disagreement. There are disagreements quite often between the office of State Auditor and any entity that we audit, and that is certainly also the case with the judiciary. The way that we've moved forward is our amazing general counsel will go in and will talk to their general counsel, and they will work out what those disagreements are and the spirit of cooperation to make sure that we can move forward.
EDWARDS - So, in this case, I am referring to the judiciary, and in this case, the courts put specifically pushed back and said, you have gone too far in your audit of them. I think it was, at this point, they would avoid any, their words, right? Beyond the request of the OJC respectfully declines to provide further promogamic records. This is regarding to auditing the jury, jury pool, admission, and so on and so forth. This step is necessary at this point to avoid improper interference with the independence of the judicial branch. When you received that statement, this is in August of 23, what did you do? Did you respect that line that they said, you're going too far?
DIZOGLIO - We worked with them to work it out so we could continue our audit.
EDWARDS - So just to be clear, after this statement, when they said14051 you're going too far, we're not going to give you anything more, they agreed to MMARS records, they agreed to that, they said no more after that. Was there more given? Was there more required?
DIZOGLIO - We worked it out with them. Senator, I want to ask you a question back, and first of all, congratulations on your chairmanship of the judiciary. Congratulations, that's fantastic news. I hope to call you, Madam President one day. I'm just curious if you can tie this please to the budget, I know this is a budget hearing today, and I'm just curious as to how this pertains to the budget that our office is here to discuss, thank you so much.
EDWARDS - Absolutely. I believe budgeting is discussing the function of your office, and what you do with the funds that you're getting. So, one of the concerns or one of the questions I have is, when you're told or pushed back in the function of auditing, what do you do? That's the question.
DIZOGLIO - I'm not really sure how that pertains to the budget, it seems like it pertains to constitutional dynamics. As much as I love the opportunity to talk about the constitution, and to get to have those conversations, I'm just struggling, Senator, to find where in what you're asking that has to do with this hearing today, because it sounds like it has to do with constitutional arguments that we've been having about some other issues that aren't up on the agenda today and part of the scope of this hearing. We are happy to answer questions about the budget, we're happy to answer questions about the work of our office. I think it's important though that we don't turn this into a hearing about other matters that I know we're not here to discuss today. If you would like to have a constitutional conversation, happy to do14171 that. I just want us all to get clear, is this a trial about constitutionality of issues, or is this about the budget today?
EDWARDS - I appreciate that question. I take my role, and I think14185 all of us do as roles of members of the Ways and Means committee, as an important role to ask questions of the function of government. You brought up separation of powers, I'm going along that line. But more importantly, as members of this committee, we used throughout the entire day opportunities to ask about all aspects of the functions of constitutional officers. We did all day, consistently. Some directly related to money, some directly related to their budget ask, and some directly related to what is going on. We opened this committee hearing with you comparing yourself to DOGE, you had no problem going on for some time to explain the differences between the two, and I don't know that that was necessarily a question about your budget. So, maybe you can follow-up with me later about the direct response, let me finish, maybe you can follow-up with me later specifically about this case because I know it is specific, right? So, maybe you can just follow-up with me later about that. My second question is about the mandates and decisions on mandates. Again, this might be something you need to follow-up with me on. Has there been a time, before this past January where the auditor's office have found a zoning law to be an unfunded mandate?
DIZOGLIO - So I'm going to answer your first question, Senator, again, because my response appears not to have been sufficient. When we audit the judiciary, if there are challenges, we address those challenges and we work through those challenges. I think it's important though14294 that we don't use this hearing to try to lead into, trying14300 to garner more information for potential litigation to change the subject matter of this hearing. So, that is why I'm trying to stay on point today, and I think that is the judicious thing to do, considering the fact that we are likely to be in litigation over constitutional issues. So, I am happy to talk about issues as they come up and get into as much as we can. I just wonder how far we really want to go down the constitutional road today, considering the fact that we are very likely to be in litigation over constitutional issues. I defer to you, Senator, if you do want to continue to that, you are a member of this hearing, and I do thank you for your question. Regarding the mandate determination that we had recently regarding the MBTA Communities Act, thank you truly for bringing that up.
EDWARDS - I want to be clear on my question, it14360 was14360 simply, do you have, has there been a history of decisions about zoning laws being an unfunded mandate? But you don't need to address the specific decision, you can choose to do that on your own, but that's the only question I have.
DIZOGLIO - Thank you so much, Senator. As you stated, I should be able to go on, I just went on about the constitutional issue as requested, so I will answer the question as I would like to answer the question, and I hope it's a response that is sufficient for you. Then my attorney is going to, our general counsel here is going to talk about maybe some of the in and outs of what has been looked at. He's been in the office a lot longer than me, I don't have the full history right in front of me, I'm happy to get you every time we've done a determination, if that is your request, if we can find those, going back in history. Regarding the unfunded mandate determination, regarding the MBTA Communities Act, which I supported, voted for alongside of many of you, and was happy to vote for that proudly. Born to a 17 year old single mother, experienced childhood homelessness myself, this was a very important issue to me. I'm very proud to say that I currently live in an MBTA community, that I live in an MBTA zoned neighborhood. I'm proud to say that after voting for this, that I also advocated for my city council to pass these zoning reforms, which we did 8 to 1 in the city of Methuen.
And now we have these questions coming before us, those of us who did support this. If14463 you didn't support it, you didn't support it, but those of us who did support this and want to continue to support important zoning reforms to increase housing are14473 faced with the challenges of the fact that the legislation, though well intentioned, was not properly vetted regarding another important law, which was passed, I believe, through citizen petition in 1983 when I was born, that said that the local mandate law is going to exist to make sure that citizen towns are fully funded and that their costs are covered for state mandates. Through that local mandate law, the office of State Auditor got the division of local mandates. The division of local mandates is responsible and also legally required to respond to cities and towns who reach out to us, who ask us for a determination about whether or not something was funded appropriately through the local mandate law.
Now, I want to commend this legislative body for having the foresight to put a grant program forward that has funded some of these issues, recognizing that there are sometimes some costs associated with implementation for things like planning and design. The issue is that that funding because it's a grant program is discretionary in nature. So, it requires that these cities and towns apply for it and then have it approved for them, and because that is something that they have to do work to get and then hopefully get reimbursed or get a grant, it is not something that can be viewed as fulfilling the local mandate law. Because the local mandate law is very clear, and I know I'm talking to a lot of people who understand this, that when you pass a mandate, it has to be funded in accordance with the law through an appropriation. Now, the early voting law is actually the best example14602 of14604 where this was very easily14606 resolved, thanks to our wonderful chairs of Ways and Means14610 work on this issue.
Early voting is a14614 great thing, I was proud to14616 support it in the votes act, but when we passed it, this provision wasn't14624 legally vetted to the extent that it needed to be. And even though it was very well intentioned, that portion was left out that fulfilled the local mandate law that said that the appropriation needed to accompany the early voting mandate. So, what happened? We had city and town clerks calling us relentlessly, talking to us about how they fully14649 supported the expansion of voting opportunities. Understanding especially that during this time period, it was the pandemic shutdown period when we were working on a lot of this stuff. Making sure people had access to these opportunities was incredibly important to them. But they were telling us that they couldn't do it because they didn't have the resources that they needed to be able to implement the very well intentioned mandate that was set.
So, the office of State Auditors, division of local mandates was contacted, and as was their legally required duty, they released a report that said that it was actually accurate, it14690 wasn't14690 funded appropriately. That14692 was passed along to all of you wonderful humans here today, and14697 folks14697 took action and the local14699 mandate law was funded. Our clerks are able to now get14703 funded for those mandates that the state has imposed on them. This issue is very, very similar, it might be regarding a much more hot button topic, but to14721 disagree with this determination and then to say that that determination was accurate would be a bit hypocritical. So, I think we need to understand that the division of local mandates is not full of politicians, it's not full of people who have a particular side on these different issues. They have a very technical job to do, it's existed for a very long time. They go in, despite my personal preference, my political preference, how I voted in the past, they have to call balls and strikes, and that's what they did in this determination, just like they did with early voting.
They did it to help to shine a light on what some of these challenges have been when these communities come to us and14773 they say that they really want to comply, but they don't have the funding necessary to be able to comply. Some have said they absolutely have the14787 resources to be able to comply, others have said that they don't, those are conversations that need to be had with this administration. When the Executive Office of Housing and Livable Communities comes out with a fiscal impact statement that recognizes that since grants were indeed granted to some of these communities, recognizing that there are some costs, when their fiscal impact statement actually includes that, puts that into a fiscal impact statement, that will allow for this legislature14828 to ensure that it is appropriately funded through an appropriation. Once that occurs, our office can conduct its fiscal analysis, so we can hopefully move forward past this time of local division. The office of State Auditor does need to do its job, and I've been very disappointed recently with some who wish that we would just cover this issue, because it's not politically expedient for some of our viewpoints and some of the things that we want to see accomplished. We have work to do, we're looking to do it alongside of everyone, and we're looking forward to continuing this conversation.
The power to get this issue resolved is very much in the hands of the administration, namely the Executive Office of Housing Livable Communities, and this legislative body will say, this legislative body cannot most likely ensure that this issue is appropriately funded until EOHLC gets that fiscal impact statement worked out and includes those grant opportunities to make sure that those are equitably considered amongst all of the MBTA communities in the act. There is equitability that is part of this conversation, some communities got grants, others didn't. The funding's discretionary, it's not mandatory. Those are some of the kinks in this system that need to be worked out. They're very easily worked out, but it is going to take action from the administration, which could happen tomorrow, and then subsequent action during this budget process from this legislative body so that we can do our determination once again, and then move forward, with what I believe would allow for this to be cited as a funded mandate similarly as we did with early14965 voting by working together. Michael, did you want to add anything to answer Senator Edward's question?
MICHAEL LEUNG-TAT - OFFICE OF THE STATE AUDITOR - Yes, thank you very much. Michael Leung-Tat, general counsel. So, yes, as the Auditor said, you know, the MBTA Community Act is a hot button issue, but DLM's analysis is a sterile, apolitical, legal analysis that looks for two things. One, is it a mandate? The SJC decision said it was, and then the other part is whether or not it's unfunded. A discretionary grant does not equal contemporaneous of appropriation,14999 so that's really the analysis. I think our determination has been, mischaracterized as an endorsement for noncompliance, and it is not that, it is just that it is an unfunded mandate.
EDWARDS - So, the question, with your legal experience, the original question, and then I'll follow-up with some additional feedback. The question was simply, do you have or has the Auditor's office found a zoning law, an unfunded mandate before?
LEUNG-TAT - I will have to do15038 some research into that.
EDWARDS - That's fine. So you get back to me with whether there's been a time where you've seen a zoning law be considered an unfunded mandate.
DIZOGLIO - Senator, regardless of whether or not it has or hasn't is immaterial to the conversation.
EDWARDS - It's not because I'm asking the question. So, I just asked the question, and, he said he would get back to me, which I thought was a perfectly satisfactory answer, not that it was immaterial, I appreciate that. And just to note, as you stated, this ultimate resolution of this, it lies in the hands of, I would just correct you, of the court, right? Because the court ultimately will decide if this is an unfunded mandate, it will ultimately decide, whether because the decision, as I understand, from the division of local mandates is ultimately is permission or allows a city or town then to go petition to the court, right, saying we want an exemption from this. I agree with you, there has been a lot of political implications from this, and I agree, and I've heard that you have said consistently that your office is not saying this is unconstitutional nor do you have the power15114 to do that, right? You have said consistently, we are not trying to say15118 do or don't comply. That I have heard, and I hope people do hear that. But the courts will ultimately decide if this was an unfunded mandate, which first, we have to see if it's a new law. Second, then you determine if it's an incidental cost or not to the implementation of that new law, whether it's a new obligation or whether, as some people feel, zoning and planning is something cities and towns already do. So, the state has said, you'll do it this way or you'll do it this way, whether that actually causes additional costs and whatnot will be determined by the courts. So, I appreciate that, I look forward to the follow-up. Thank you.
SPEAKER3 - Sure. Thank you.
SPEAKER4 - Representative Ferrante.
FERRANTE - Thank you. Thank you, Madam Auditor, for coming today, and thank you to your staff for providing us with so much information. I'm going to ask a couple of questions today and I know that,15176 Senator Edwards just inspired me to do this. So, I know that you're a15182 little tense about constitutional issues, but I happen to like them. The other thing I happen to like is that this committee pretty much funds your entire operation. So, to the extent that the taxpayers expect me to ask these questions, they will be asked and hopefully you'll answer them. So, the first question is, do you envision the mission of the State Auditor to be equal to the judiciary and, more specifically to the Supreme Judicial Court? Do you think the opinions that come from your office have the same weight of decisions that come from the Supreme Judicial Court?
LEUNG-TAT - We don't15224 issue judicial opinions, so it's comparing apples and oranges.
FERRANTE - But you kind of do, right?
LEUNG-TAT - In what way?
FERRANTE - Because you put ballot questions forward that have separation of acquisitions?
LEUNG-TAT - That was an independent issue, that was an independent effort.
FERRANTE - That was an independent issue?
LEUNG-TAT - Of this office, yes.
FERRANTE - Independent of this office?
LEUNG-TAT - Yes, that15245 was15245 not done by the city office.
FERRANTE - So this is the auditor as15247 an individual?
LEUNG-TAT - I can't speak to that.
FERRANTE - Why can't you speak to that?
DIZOGLIO - Madam15251 vice chair, would you like to ask15253 me some questions about the ballot question?
FERRANTE - No, I'm just trying to understand. I hear a lot of information coming from my colleague in the Senate saying that various members of the15264 judiciary issue statements and opinions, and15268 that15268 sometimes you agree, sometimes you think that what you're doing supersedes what they're saying. Case in point,15276 I'm wondering, just before the ballot question came out, the AG issued an opinion on the constitutionality of, so I'm just trying to figure out how you see the hierarchy of the three branches and where your office fits in in the weight of the opinions that come out of your office, because you seem to like to challenge judicial opinions. I think the SJC was very eloquent, and it's setting out what the 3a communities was and what it was not, and where it sides and where it doesn't. So, I'm just trying to figure out how you lead this office, where you see you fitting in? Do you see you as part of the executive branch? Do you see yourself as a separate branch? I'm just curious.
DIZOGLIO - I'll answer your last question first. We're a constitutional office, I got into that at the beginning with Chair Michlewitz question. With respect to the disagreement in superseding a judicial opinion, can you give me an example of when we've done that? Madam vice chair, I'm not quite following your question with respect to that claim, especially since our mandate determination that was just discussed, it did nothing but affirm the SJC opinion and articulated that because the SJC determined this to be a mandate, which was a question, before they made that determination, some folks thought, it's not necessarily mandatory, you may lose your grants at the discretion of the administration, you may not. But is it or isn't it a mandate? When the SJC determined it is indeed a mandate, it's a mandate now. The15396 SJC made the decision, and the judiciary made that decision, not the office of State Auditor. The office of State Auditor simply, once the SJC did their job and determined what the law states, which is, by the way,15413 since we want to talk about constitution so much, how these things should be decided, it should be adjudicated in a court of law with judges and not amongst elected officials like us.
FERRANTE - Really? I'm sorry, I'm just trying to ask a question.
DIZOGLIO - I'm sorry, I'm trying to finish.
FERRANTE - And I'm trying to ask a question, which is my role here today.
DIZOGLIO - I'm still speaking.
FERRANTE - So, my follow-up question is, does the SJC appropriate funds?
DIZOGLIO - Does the SJC appropriate funds?
FERRANTE - Correct. Do do they pass laws? Is that within their constitutional authority?
DIZOGLIO - I would expect that you would understand the legislative powers, since this is the topic of discussion constantly. The legislature appropriates, the administration also is able to do the administration's budget, we're here to discuss the budget today, right? Madam vice chair, what are we doing here today?
FERRANTE - We're talking about...
DIZOGLIO - Do you know the legislature appropriates funds? I'm not sure what type of question that is.
FERRANTE - I do but I'm not sure that you do. So, I just want to confirm that when you say the SJC decides, because there are things that the SJC decides, there are things that we decide.
DIZOGLIO - Okay, I will do my best to break it down for those of questions I'll ask whether or not the judiciary...
FERRANTE - That's a yes or no question. Does the SJC appropriate?
DIZOGLIO - Would you like me to answer the question?
FERRANTE - I would.
DIZOGLIO - Good. May I ask that I be able to finish my sentences so that I may try to fully answer your question without interruption?
FERRANTE - We'll see how we go with the questioning, but go ahead.
DIZOGLIO - Okay. Madam vice chair, respectfully, I'm happy to have debates about the issues that I know you're concerned about. I do think this is an inappropriate time to be trying to go down the rabbit hole of, again, this issue of constitutionality that I know is so important to you. If we have to do it because we're going to keep getting peppered questions, and this is going to be a kangaroo court instead of a budget hearing, I guess you got us here. I mean, we're here to have a discussion about the budget. The SJC, no, doesn't appropriate funds to my understanding. I think15561 that that's the job of you all, but they do make decisions. Does that answer your question?
FERRANTE - Yes, I'm just trying to make sure that we're on the same page. Thank you.
DIZOGLIO - Okay. Well, thank you so much. Anybody else?
SEN CRIGHTON - Thank you, Mr. Chairman. Madam Auditor, to you and your team, thank you for your testimony as well as all the work that you continue to do for the Commonwealth. I have a very straightforward budget question, it's been proposed to increase the statutorily required audits that you do of all agencies, from three to five years. We've heard a great deal today, and we appreciate, all of your team talking about the required audits that you've done. But they're also, I guess what I would phrase is other audits, ride share companies and labor practices come to mind. Have you considered rather than extending the time to get this work done to prioritizing more the statutory required audits versus the others? Also just as a follow-up on that, how many statutory audits are there required, during that period? And just an update in terms of the progress you've made there.
DIZOGLIO - I just want to thank you for bringing up the ride share report that we did, that was not statutorily required. We do our statutorily required audit reports, that was not an audit, that was not part of the auditing process. That was actually a report, through the division of local mandates, which actually does reports on important issues, but it does not go through an auditing process. It goes through a report process separate from the statutory mandate to conduct audits. Why we actually did that is because, Senator Edwards and others actually contacted us and asked us to look into that issue, and we deemed it to be a very important issue. And, in the spirit of collaboration back then, we were able to work on that issue and get a very important topic covered, and look into some of the details about how much the state missed out on in revenue from these companies who are taking advantage of Massachusetts residents and not covering things like unemployment and other benefits, that they15715 should have been covering for their employees, causing the taxpayers to have15719 to subsidize a lot of those costs that should have been borne by those companies. Subsequently, after that report was done, the15727 Attorney General did settle with these rideshare companies and the state of Massachusetts was therefore able to come to a situation where we were able to get those funds back.
In terms of the five years, while, I would very much like to be able to move very quickly through these audits, unfortunately, and the administration will themselves tell you this. It's why Governor Healey proposed five years in her budget for our office. Auditor Bump had proposed five years in order to conduct all these audits, understanding that you have to move very quickly, the audits have to be limited in scope sometimes, and we want to do more research, but we're not able to because we have to hurry up and churn out these reports. You're not able to do as in-depth reports sometimes as you would very much like to do because you're on this three year deadline and the size of government has grown tremendously through the years, that's why Auditor Bump actually filed this. I want to thank the administration for recognizing this as being a challenge, not just regarding the substance that we would like to be able to cover at times, but aren't able to cover, but also recognizing that we can't get audit reports done until agencies get us the documents that we need to be able to complete our audits.
We've waited well past what public records deadlines call for in the Office of State Auditor. We give, you know, ask for three days on the original deadline, and then we'll go up to 10 to 14 or 15 days for other deadlines. Public records law calls for, I believe it's 10 days, we give more than the public records law does, and then oftentimes what happens is we're asked for extensions, and then we're asked for more extensions, and we're asked for more extensions. Sometimes these extensions are abused, sometimes they're legitimate, but sometimes they're abused. And sometimes folks just don't get us documents for months at a time claiming they can't find them, claiming they need more time. And even if we don't grant an extension, they still take one. So, we saw the situation actually happening with the settlement audit that we did. We found $40,000,000 of settlement agreements that had little to no accountability regarding how they were being executed amongst our state departments, and found a lot of confidentiality clauses existed that weren't being monitored, and essentially a free for all in the system.
We audited this, and we were able to call for changes. The Governor did implement some changes, banning non disclosure agreements across all executive branch agencies through policies and procedures, but that audit took far longer than it should have taken. That audit should have been done a lot earlier, months and months and months earlier, and the reason why it wasn't is mostly due to the fact that the administration, though they were, most agencies were working hard to try to get these documents, some agencies, Governor's office in particular, didn't get us the documents we were requesting for not just one, not just two, not just three, not just four, not just five, but six months after we requested the documents. So, that's an audit that's on hold and can't move forward with the questions that we're asking. For five or six months, at times, that causes significant delays. The reason why the administration wants this five years, I think more than the office of auditor wants the five years, is because frankly, I think that they're tired of our office asking them to get us the documents in a timely fashion and move more quickly, because we can't meet our mandate without them getting those documents to us in a much more timely fashion than they've been able to get them to us in.
CRIGHTON - Thank you for a very thorough answer. In terms of the audits that are required though, how many, I guess it's for every state agency. Once every three years is what it's historically been. How many audits is that, that are required?
LEUNG-TAT - Roughly, don't hold me to this, it's over 200.
DIZOGLIO - 207, we have a list, we'll get it to you.
CRIGHTON - Thank you.16027 And what is the the16029 pace, I guess, of the audits16031 to date? In terms of how many audits you've had completed? We have over 200 required over the course of three years.
DIZOGLIO - So great question, thank you so much. When I first came on, actually, in my first year, I think there were only 32 audits that we were able to release in my first year16054 in office. Folks asked me why that was the case, why only 32 audits? I16060 can't answer that question because audits take16062 mostly at least a year to finish.16066 So, that's a question for the prior administration, because my first year was actually just reporting out, whatever we released was actually started under the prior administration. So, that first year of only about 32 audits, that was actually the audits that were started under the prior administration, and I just happened to be there to report them out and work with our team to get out the work of the prior auditor. In my first year of being able to deliver the audits that I started, how many audits did we complete? 76 audits over 100. 76 audits covering over 100 entities, in my first year of reporting out audits, and that would be my second year in office, for the audits that I started, and that I was able to get out. So significant increase due to these amazing professionals next to me, stepping it up and making sure that we put some pep in our step.
But again, we cannot force a lot of these documents to come to us in a timely fashion. So, the administration recognizing this has said, you know, even though we said, look, we're really working overtime to try to meet this mandate and get creative about how to get that done, and move through the process, and get these compliance audits done, the administration agrees that we should have the time to more thoughtfully consider the issues of importance to Massachusetts residents in these more thorough audits that we've been able to do, MBTA, DCF audits, for example. But they also recognize and own the fact that they play a part in whether or not we're able to do that. We can't get a report done without the documentation to be able to get the report done, we need those documents. So, we're very much partnering with the administration on that front, making sure that they can get us the documents in time, that we can do more thorough audits. I'm very pleased that Governor Healey saw fit to include five years in her budget, and I hope that you will also see fit to include it in yours.
SPEAKER4 - Thank you. Representative Smola.
SPEAKER6 - Sorry.
SMOLA - Thank you, Mr. Chairman. Never again let it be said that a Ways and Means budget hearing is boring by any stretch.
DIZOGLIO - It is always an exciting time when I come back to hang out with16221 you all.
SMOLA - Well, Auditor, thank you for being here today16223 for your testimony and certainly for the work that your team does, we appreciate that. I do have a budget question for you. So we have a House 1 recommendation that's before, can you give us an idea in terms of what's been proposed in the House 1 version is going to do exactly what you're looking for it to accomplish financially. What are we talking about here in terms of what you guys are looking for, and what's recommended so far?
LISAUSKAS - I'm sorry, I'm having a little hearing problem here.
SMOLA - So we have the house 1 budget that's before us now, recommendations. I'm looking to get a sense of what's out there now in terms of recommendation and what the office of the Auditor is looking for to kind of accomplish some of the goals that you're talking about, whether it's what you're doing existing now with16267 audits or expanding the audits that you're doing into different arenas?
LISAUSKAS - Sure. So, thank you for the question and thank you for repeating it for my ears.16275 So, we have requested additional funding for things such as the ability to conduct AI16283 audits, which, continues to represent a risk to the Commonwealth and it is a fast growing risk, that even the Commonwealth's position to go slow on it, our private sector partners are not going slow, which is creating secondary risk for us as a government. So, we did request additional funding in the amount of $150,000 to do that, which is not reflected in the budget that is before you. We also requested an additional $250,000 to be able to focus additional resources in transportation audits, and you heard from both, Mr. Barassa and, Mr. Travaglini earlier, who did terrific work with their teams on MBTA audits, that's an area of particularly high risk, with very large contracts that have historically not been managed. Our16345 audits have found, other work has found requires additional oversight, so additional work there is necessary, and we're also investing as a Commonwealth billions of dollars in additional other transportation areas that we think requires additional oversight. So, that's about another $250,000 for the transportation audit unit. So, just those two areas. We also looked at the environmental audit unit, which is comparable to the transportation audit unit. Again, we would focus on how well as a Commonwealth we're doing meeting not only our climate change goals, but also actually figuring out, how we're doing adjacent to those goals, and we can get more into that if that's helpful. But I hope that's responsive to your question.
SMOLA - Yes. One of the questions that hasn't come up today with other constitutional officers that have testified is whether your staff is at full complement in order to do what you need to do for the course of the next upcoming fiscal year. Where are you at staffing levels wise? Do you have all your team in place? Are you looking to hire?
DIZOGLIO - We need more staff, we need more audit teams. I would love an additional audit unit, namely an MBTA audit unit. I did ask for that last time around, Senator Miranda and Representative Worrell originally had filed that, didn't pass, unfortunately, but we've actually been doing some pretty significant work regarding the MBTA in particular, and many other things, but I'll use this as an example regarding what another audit unit in general could do, even if it was a general audit unit, that we are finishing up right now around of, I believe it's going to be four reports in total, constituting one audit looking at, AFC2.0 contract at the MBTA, the Keolis contract at the MBTA, but also looking at safety and performance at the MBTA. We did some significant work on that, but we do have16468 to wrap that up now because we need to move on to16472 meet that three year mandate. And16474 we need to make sure that we can move on to these other agencies that are not as high risk as the MBTA, as we know the MBTA is, to make sure that we're simply in compliance with the law.
So, we're shifting our resources Representative from these higher risk areas where people are calling on us to keep auditing these high risk areas and coming out with these reports, and unfortunately, having to take those resources from audit units like the folks who are working on the MBTA, and shift that audit team. Paul was talking about the great work they did on those MBTA audits, he's getting shifted now along with his team to other audits that do need to get done that might be lower risk, in terms of what folks are concerned about, where there's the likelihood of potential waste, fraud, and abuse, and other concerns. So, we would very much benefit from an additional audit unit. I would say what was missing, even though I commend the administration for having a much more equitable budget this year than what occurred last year, we did ask that due to16550 the very inequitable nature of the budget last year when it came16554 to our budget and other constitutional officers budgets, for example, that we be able to recover some of those funds that we didn't see the previous year, that some of my constitutional counterparts, and other similar agencies did get to see.
For example, other entities got over 9%, some got 10% in the budget, the office of State Auditor got 2.1%, we're not sure, you know, exactly why that was the determination at that time by the administration. But we did get to go in, talk to the Secretary this year, and to ask for a more equitable funding appropriation for the office of State Auditor. Certainly, we understand if there are financial challenges, if there's rationale for why we may not be getting as much as normal. I've served in the legislature for 10 years, I understand we don't always get our holiday wish list, right? We put it forward and then we get what is decided that we get. But we do hope that there's some sort of equity there, and that there's not going to be this lopsided amount of funds going to some, but not to others, right? I think that because that didn't happen last year, you know, we wanted to make that case to the administration that we understand that there are financial challenges, we just don't think that the auditor's office should be the one to carry that entire burden of solving that problem. If you can give 9% and 10% to other offices, certainly we could figure out a way to make that funding appropriation a bit more equitable and bring our 2.1% up.
So we did ask that those funds that we didn't get last year were restored in this year's budget, because we did give over an 8% cost of living adjustment to staff, as was appropriate to do with the cost of living adjustments that were necessary, and then we brought that up to in total, it ended up being 10.3%, I believe in total over the last two16684 years, and that's just cost of living adjustments, making sure that those colas are being given to the hardworking employees in our16692 office. Certainly, the appropriations that we've been getting do not cover those cost of living adjustments. So, I know our experts in the budget here know that if those costs keep going up, but our budget doesn't keep up, it is a cut, might not be technically labeled as a cut, but underfunding in terms of what the cost of living is and what our appropriation is does constitute a cut, not just for us, but for all of these entities who are looking to be appropriately funded so they can keep up with the cost of living. So, we didn't get the restoration of the funds that we didn't see last year during that time period, but we did this year, at least see, which again, I was very pleased with, and I want to thank the Governor for that and her team, we did see, that 3% increase, which is, very much in line with what others saw. So, if you would like to help16750 to fill that gap that still exists, Representative, if you happen to be on the conference committee, you know, I ask that you go to bat for the Auditor's office to make sure that we can get back up to the funding levels that we really need to be at.
SMOLA - There's a chance I might be on the conference committee, so I guess we'll find out.
DIZOGLIO - I have a feeling.
Until
SPEAKER9 - Thank you very much.
SPEAKER4 - Chair Rogers?
SPEAKER10 - Thank you.
RODRIGUES - Thank you very much. What's confusing though is, I started these questioning is the fact that you say you don't get enough money, but you revert back 8% over $2,000,000. So what that tells us as budget writers is that we over appropriated to your agency and that was built into the base. So, the subsequent fiscal year, the current fiscal year, FY25, the increase was built upon what was appropriated FY24, which was 8% too much.
DIZOGLIO - Mr. Chairman, again, we talked about the transitionary period in my office that we experienced. There were new people coming in,16815 other people leaving, and during that transitionary period, as you can imagine, funds that weren't expended due to some staff not being there16825 anymore during that transitionary period, with a new administration coming in, which did take some time to move forward through that. Those funds, I don't think that we should be punished in the office of State Auditor for not finding out a way to quickly waste those tax dollars. If we didn't need them during that time period because of the period that we were in, I actually believe it was a judicious move16852 to return those funds back into the budget and then make our case about why we need the funds that we need right now during this time period, when we need to continue to be able to do our jobs. So, I understand maybe there may be a desire by some rush state agencies into hurrying up and getting rid of all of our tax dollars so that we can get the same budget that we're asking for, but I don't think that's a good way to handle the budget process.
I think actually that if there are opportunities to give those resources back because of whatever has happened in a state agency, that the fiscally responsible thing to do, Mr. Chairman, is to give that money back to the budget makers so that you can appropriate that in the next fiscal year and make sure that it's not wasted. We see so many instances, and we know we've all talked to these folks where people that have to spend money very quickly to try to prove their value to this legislature will tell us, and we know we hear it, they will tell us that they are rushing to get rid of these taxpayer dollars so that they can ensure that they're not punished in the budget process for not spending all of the money quickly enough to be able to get their same budget. I think we need to reevaluate how we have these conversations and have these conversations regarding what the needs are during the time that we're having the conversations, and not try to punish any state entity who's trying to be fiscally responsible in returning some of the funds that may not have been expended during a certain time period. I think that that serves the taxpayers. Thank you, Mr. Chairman.
REP MCKENNA.16976 Thank16976 you very much. Very much16978 a budgetary question. Outside of Chapter 70, our next four line items are all MassHealth related, the next four largest line items, and you had briefly mentioned an audit into the Mass Health program. Can you go into deeper detail as to when that last occurred, and what the nature of that audit revealed, and where there might be opportunities to have a more fiscally sound appropriation if there's an opportunity for either the legislature or the administration to have some tighter grasp of where that money is going?
DIZOGLIO - Steve, if you wouldn't mind answering that first, but then Gina, I would love for you to talk about the work you do in Mass Health and how you do that work, and, please feel free to respond to the Representative. Thanks.
LISAUSKAS - Thank you, Madam Auditor, and thank you very much for the question. So, thinking of17029 last year, for instance, one of our17031 Mass Health, audits, identified $86,000,000 in overspend this year. We're at $2,728,000,000 in audit that's in publication now, not yet released, is looking at a particular dental practice. So, we look at the system itself and look at the risks and the structures, and our policies and procedures being followed and where's their weakness, where payments get made but maybe they shouldn't be. We're looking, right now, and there's an audit that will be released shortly of a dentist's office where they've worked 12 hours a day every day, never taking a vacation for the last five years, and are billing at a much higher frequency than everybody else. Now, I say that sitting next to Gina, who probably just got interested in special investigations as a result of that work. But we look at both the system of Mass Health and identify where weaknesses exist, but then also we do audit into providers to find out where17089 there are areas. Each17091 year, we're finding, tens of millions of dollars of opportunities to strengthen the controls at the Medicaid system, and have found them, over the last two years interested in working with us to tighten those. I think that partnership has been very helpful as we continue to identify more and more challenges on the audit side. Now on the, enforcement side, I'll pass it over to Gina.
CASH - Thank you, Steve, and thank you, McKenna, for the question. So BSI, we investigate public benefit fraud for MassHealth. We look at member fraud, so that's just individuals that are applying for member benefit health care benefits, the ability to either be on the health connector or receive Mass17133 Health standard and the other various categories that are within that program. We also17137 look at providers, that17139 could17139 be people that are PCA, so personal care attendants, individuals that are getting paid by Mass Health to provide activities or assistance with activities of daily living, for members that are Mass Health consumers. We also look at providers like dentists, doctors, sometimes we make actual recommendations or referral to our audit team when we think, okay, we've looked at someone, maybe there's more that audit might be able to do with this individual.
We've also charged on providers, both federally, stateside. I would argue that things have changed, I think, through Covid for the member health side. So there are different rules now about what we can actually recoup and recover, we don't actually recoup any member health benefits or overpayments associated with that. But we are able to do that with providers, and, unfortunately, we would argue that providers are in such a pivotal role. If you're not providing the care, abuse, neglect, or very real consequences, possibly even death that's associated with that sort of program. So, if you're interested in numbers in terms of just what we've identified, I'm happy to share that with you in your office. What we do report on that quarterly, we have a quarterly report. Every 3/4, we provide information about what we've identified in each program. Then annually, we wrap that up, and we provide sort of a much more detailed report that outlines the work that we've done, the different projects that we've maybe worked on throughout a fiscal year.
SPEAKER4 - Senator Aduna.
SPEAKER12 - Thank you, chair.
DOONER - Thank you, Mr. Chair. First off, I just want to also thank you and your team for the response,17236 my community was vaguely touched upon earlier, and I know that they were they felt stuck, and they were very thankful for your responsiveness with that letter, whether anyone is for or against it. So, thank you for being responsive to my community that felt like they were kind of backed up against a wall.17254 Regarding the benefits17256 fraud, could you just touch upon that again as far as the amount you17260 guys uncovered?
17263 DIZOGLIO17263 -17263 This is Gina's territory, she just started jumping off, she's very excited to talk about this, and it's because she's doing amazing work. She runs an incredible unit, and I'm thrilled that we have her at the helm. I do want to say thank you, Senator, we didn't have the chance to meet yet formally, but we have received correspondence, I believe, from you regarding, some of your concerns. Our team is actually working on a DTA audit currently, and we've been talking to some other Senators who have also raised some concerns. I just wanted to take this17298 as an opportunity to invite you to come and17300 meet with us because we haven't had the opportunity to formally meet yet. This is our team, the door's open, we're happy to chat about these issues to you, address any of those concerns, hopefully before that audit is completed and released. So hopefully that can happen in the coming days, and now, I'll turn it over to our wonderful Gina Cash.
CASH - Thank you, Madam Auditor, and thank you, senator Dooner. So, what exactly17324 is your question? Just the dollar amount itself for?
DOONER - Yes, just a rough estimate. And if you could just touch upon and if you don't have the information now, that's totally fine. Where the fraud like, where you found the fraud?
CASH - Sure. So, we identified over $10,000,000 in fraud. What did we find? Well, we find that people aren't accurately reporting their incomes, they're not accurately reporting the members of their household with income, and that's a big deal for the programs, right? Eligibility comes down to couple17351 basic facts that individuals that are agreeing to and signing up for these benefits are agreeing to the programs to sort of uphold. So, a basic level of honesty about your income, the members of your household. The programs use that information to determine your eligibility amount, right, what they're actually going to be able to provide you. As that information changes, as your circumstances change, you are required to report those changes to the programs. They have different rules about how long you have, most of the time, it's at least 10 days, but EEC does give you 30 days, Mass Health and DTA, it's 10 days. But within that amount of time, you're supposed to tell the program what's changed. We found, unfortunately, that people don't always report that. We found, unfortunately, within our PCA program that because those wages are paid on a 1099, people don't report that to DTA if they're getting SNAP benefits. That's problematic, you're being paid by one program and lying to another, and you're receiving a state benefit.
We would argue that those17407 benefits really are for the individuals that truly need them, and so we take that mission very seriously. I'm very fortunate to be supported by a very strong auditor, a very strong team, people that are mission minded, because we realize we're creating a problem, right? We're creating an overpayment for often people that are vulnerable that maybe don't have a lot of income, that's not our goal, but unfortunately, it comes part and parcel with the work that we do. Really, we're trying to make sure that these vital benefits are really there for the people of this community that need them. Then what we also do is we try to work with the programs to sort of recoup these funds, but really, we're just a negotiator in the middle. I would argue this is the least favorite part of the work that we do because we really don't have any authority about the collection of the overpayments that we civilly recover. We really just work out an agreement with the individual that may have been overpaid, and we return that to the program. So, when I refer to that $800,000, I can't give you an accounting17462 of how many of those dollars were actually17464 taken back in or collected by the17466 programs, but we would argue that our effort is all the same in trying to make sure that those monies are recouped by the programs.
DIZOGLIO - And just to provide some clarity to what Gina did a fantastic job explaining clearly, the office of the Attorney General and then the state entity, they actually have the authority to recover the monies that we identify. So, once again, the Office of State Auditor has the ability to shine a light in some of those darker places, and then provide access to those resources and that information for those who have17499 the authority, to actually get those funds back. We work in conjunction, very much so with these state entities to make sure that that occurs and that they have17509 everything they need from us to be able to provide that information so they can do their jobs in recovering those funds regarding that waste, fraud, and abuse. Senator, thank you so much.
DOONER - Thank you. Yes, we had noticed it in my community before I was a Senator, and I just thank you guys because there are so many people out there who are trying to get these benefits or struggling to get these benefits. So, I just hate the idea that somebody who may not need them is using them, and I think this in itself is just one example that does prove the value of your office and the work that you guys are doing because it helps people all the way down. So thank you.
SPEAKER2 - Thank you.
SPEAKER4 - Senator Collins?
SEN COLLINS - Thank you, Auditor DiZaglio, to you and the team for your work in identifying waste and approving accountability and transparency. We know that the work your team does is very important, particularly the areas of quasi government, as you mentioned before, areas that this legislature doesn't have as direct authority over, so we appreciate that. My question is about the audits that take place of your office and how they're conducted, are cost associated in their availability for review?
DIZOGLIO - So, our office is actually reviewed by the National Association of State Auditors. That's who actually conducts those audit reviews of our processes, our procedures, and make sure that they are actually done in accordance with government auditing standards, which I'm sure that all of you have been thrilled to be recently learning so much more about. It's thrilling to learn about these auditing processes, isn't it? Those government auditing standards that we follow, actually are required to be followed by law, Chapter 11, Section 12. In those GAGA17626 standards, it does require that in order for us to actually, come into compliance17630 with those standards, we do have to have17632 those reviews done. Every three ish years, we17636 have to have them come back in and start that audit,17638 so they're going to be coming in soon and looking at our processes and our procedures. They've already been in my office speaking with the National Association of State Auditors to have them come in, as is our statutory requirement in order for us to be in compliance with the law. I believe that is a cost of about $15,200.0 for each audit that's conducted for each of those reviews to be done and to be completed in accordance with the law so that our office is in compliance with the law. Great question, Senator. Thank you so much.
SPEAKER14 - Thank you.
SPEAKER4 - Representative Sullivan Almeida.
REP SULLIVAN-ALMEIDA - Thank you, Mr. Chairman. My question might have been answered, but I guess I just want to clarify. So, I just want to thank you and your office, you've been very responsive. I've called you on several occasions, on several issues, particularly around our schools and how the budget process goes within our public school system. I'm excited to kind of see the findings of the special education audit and hopefully, you know, kind of work with your office on that because I hear quite often from my local schools and parents and constituents concerns around special education and schools not following through or not spending appropriately around special education. So, that's going to be definitely a focal point from myself. Can you just roughly kind of give us an idea, and I know you have, by statute how many audits you have to do within the time frame. How much time goes into somewhat of these bigger audits, and then how much money goes into these bigger audits? Because I know your office has been kind of criticized on several different occasions by, some of our colleagues here, but also the public on you not fulfilling your requirements. I personally think you're doing an excellent job at what you're doing, you're trying to be as transparent, and accountable to the public who you serve and who we serve. So, I appreciate, you in your office, and the hardworking individuals and passionate individuals that you have in your office, and you can see it here today. So I guess those are a couple of my questions so far.
DIZOGLIO - Yes, thank you, first of all, Representative, and thank you for still calling me, I appreciate those calls. I always appreciate it when17785 any of you actually reach out to me, and I welcome17787 those calls, and I hope you'll stop by my office, and invite me out to whatever you'd like to see me at, at any point. We welcome those invitations to join you and to collaborate as much as you'd like to. Thank you for your collaboration, thanks for your support of the special education work that our office is doing, just education overall, and then just the overall work of transparency and accountability. Sure, there are some critics, I definitely have some, some who are here today, some who weren't able to make it to criticize today, and, that's part of the democratic process, and I greatly appreciate the opportunity to hear feedback, whether it's positive or negative. That is what we do in the state of Massachusetts, where we should have a transparent, and democratic system of governance. I think regarding the mandate issue, when I was talking to some of our colleagues behind you a little bit earlier, you know, I referenced the five year mandate plan that the Governor had actually proposed.
Really truly that is going to assist17853 with making sure that these audits get done in17855 a timely fashion, but that they're also more robust. Now that17859 needs to be also paired with appropriate funding as well, but, it is something that would allow us to meet that mandate a bit more easily, to be able to give the flexibility that whether we're granting it or not, some of these agencies are taking, with their time regarding getting us documents, and, you know, hopefully we'll be able to get those things done in a timely fashion, with that five year turnaround time. I will say, it's looking like we might actually be able to meet our mandate for the first time in years, which is covering all those entities once every three years. There may be one entity that we weren't able to technically cover, but, the rest might be able to be covered within that three year time frame, because we have been really coming together, getting creative about how to come into compliance with those aspects of the law.
But again, even if we do get to meet that mandate for the17930 first time, you know, previous administration wasn't able to do it, we're trying to do it, even if we do it, there are a lot of audits that I wish could be a lot more robust and look into more issues alongside of you. You know, Senator Crighton earlier talked about, you know, we looked at this issue or that issue, and we did that report that Senator Edwards had requested, I certainly don't want to have to start telling folks in the legislature or in our communities that we're not able to look at the issues of importance to them because we have to hurry up and get these compliance audits just done and out. I think that the taxpayers are better served when we can have those conversations, when those conversations can go a bit deeper, where if we find something that's challenging in these state departments and and agencies that we can pull that thread if we do find some areas of17983 concern to us. But far too often,17985 we find ourselves finding other areas that we may want17989 to look at while we're in a state entity and just not having the time or resources to be able to continue to go down that path.
That's what's happening right now to just put it in perspective with the MBTA, we would love to be able to just continue auditing the MBTA, just keep going, peep people call all the time. It's one thing after the next that we get reported to us about what people have challenges with and want us to look into with the MBTA. Same can be said for high risk agencies like the Department of Children and Families, right? And we can all think of some other agencies that we get calls about. We're only able to go so far because of this three year turnaround where the size of state government has grown tremendously, but, that time period has not been changed in many, many, many years. Again, this was an issue before I was even elected to this role. I remember being in the legislature and Auditor Bump had filed this as part of what she was requesting. So, I certainly hope, it's years later, you've had two administrations coming before you now regarding that five year time period. We'd like to be able to work collaboratively with you to look into issues more deeply than we have been able to at least, and we're grateful again that the administration saw fit to include that in our budget, understanding those challenges that do exist.
SULLIVAN-ALMEIDA - Thank you for that response, and I think as far as myself and maybe most of my colleagues, I look forward to working with you and your team, especially around situations that you might uncover, certain policy changes that might need to be made, that you're getting pushback or barriers that you're encountering, and that maybe us as a body of the legislator can change those things, especially around entities like DCF, right? We've seen so many, and I've sat on committees where we've heard testimony and hearings where DCF has fallen short and lives have been lost. I think if there's an audit done by your office that uncovers things that state agencies are more apprehensive about changing, then that's where we as a body should step in and make those changes if they're not willing to make those changes by recommendations from your office. So, I look forward to working with your office in the future, and job well done. You know, I know you've been put barriers up at barriers, but you keep pushing through them, and I want to say thank you for that.
DIZOGLIO - Thank you, Representative, and thank you for highlighting the ways that we can collaborate. Friends, we obviously don't agree on everything, and I know that every time I walk into the room that it's like an elephant just walked in the room. We all understand that and that's okay. We're going to move past this time period at some point, hopefully sooner rather than later so that we can all move forward.18170 But, what I'd like to say is that Representative Sullivan-Almeida just highlighted something that's incredibly important for us to recognize. Our audits provide an opportunity for us to make incredibly positive changes on behalf of our shared communities, the people that I know that we all care about, regardless of whether or not we agree or disagree on certain political issues. The Office of State Auditor provides not just what we18207 found to be problematic, we actually present some potential solutions, but those solutions don't always get implemented because not every agency or department is willing to actually take the steps that we said they should take. I'll go a step further and talk about how some state entities say they did take action, but they really didn't take action.
We did an audit of elder affairs of our elder population who were being neglected or abused and found that those elder abuse and neglect cases were not being reported to our District Attorney's offices the way that they should have been reported, allowing our seniors and our disabled community and those who need us to be an advocate, allowing them to fall through the cracks, those who are suffering. We produced an audit report that highlighted those challenges, called for changes, and we were told that those changes were implemented. But then fast forward when we went back in to do a spot check audit, which happens from time to time, sometimes when we get a tip that those changes didn't actually occur, we went in and we found out very quickly, due to their own admission, that they didn't actually do what they said they did,18290 and that they had just told us that they did what they said they had done. So, if we want to make meaningful progress in some of these more challenging areas, it is absolutely imperative that we work together, that we put any differences aside that we may have on some issues and some things, and that we continue to recognize that we have a very large18318 population of people in need who need us to pull it together, to work together, and to make sure that we are collaborating and that legislation is being filed, budgetary appropriations are being made using the resources that we do have.
I have to say, I found it so disappointing that many times I'll talk to legislators, especially after 10 years of serving with most of you, some legislators have no idea what our office does with respect to these issues, they just know about the audit that we're trying to conduct. Obviously, there are issues with that in this membership. That is not the only thing that is happening, that just happens to be the only thing that is creating a ruckus, so to speak, right? There are so many things that we are doing to help people, but we can't do this alone. If we're going to continue to do audits, but every time there's a disagreement over a political issue with the legislature, all the rest of all the audit18397 work we do is going to be ignored and just brushed aside because folks aren't willing to speak to each other around the issues we disagree on, then the audits that we're doing that are meant to help people in need, they're going to get ignored like that elder affairs audit got ignored, and people in need are going to18419 continue to fall through the cracks.
So, I'm very grateful Rep Sullivan-Almeida for your acknowledgment of how we can and should be working together in the areas that we agree, so that we can ensure that our communities are served to the best of our abilities, and that where we do agree, we are taking bold and meaningful actions to make sure that the work that we're doing is not being wasted on recommendations that aren't being followed. But you can come in with legislation, you can come in as legislators who have a significant amount of power to be able to appropriate necessary funds where they are needed for agencies, like you18464 mentioned DCF, like you mentioned special education. If we're demonstrating areas where there is a need, that provides an open door for legislators to go in18474 and talk to some of these entities about why that happened, why that finding is there, and then to be able to ask them what they need to be able to fix that issue so that we're helping people, so that we're making government work better, which is again the mission statement of the Auditor's office. Mr. Chairman.
MICHLEWITZ - Thank you, Madam Auditor. We got a couple more people that have either questions or comments. I just want18499 to get us through this. Representative Kerans.
REP KERANS - Thank you, Mr. Chairman, I'll be brief. I first wanted to note the fine work of my neighbor and constituent, Gina Cash. Thank you for what you're doing, your whole team, all the talented staff. I don't want to end your visit today on a sour note, but I must register my deep sense of, I'm just offended, I guess, would be the plainest way of saying it, your remarks about your predecessor. I served with that individual in the House of Representatives. Auditor Bump was integrity personified, and I think she raised the level of professionalism18555 in that office and I'm so pleased to see that it very clearly18559 has carried forth, right to the present, and the fine people in that office doing this very important work. It's really important that we know about these things, but I think we can all agree that it doesn't help to tear people down or blame, it's just not how we do things in Massachusetts as we've been discussing. So, please note my objection, but overall, thank you very much to the staff of the Auditor's office, and thank you.
DIZOGLIO - Thank you so much, Representative Kerans, and thank you so much for recognizing the amazing work of Gina Cash. With respect to the remarks of the prior Auditor, I was asked a question about what happened during that transitionary period, I answered honestly, and respectfully, I very much respect18619 the work of the prior Auditor. That does not change the fact that the prior Auditor has very publicly worked to sabotage the efforts of her former team here. That did pose a challenge, and sometimes it still does, but we work through it, and I do find it unfortunate that even though we did start off with a great working relationship, that type of sabotage was occurring, and that the moment that I did not do exactly what I was told, all support was withdrawn. I was hurt by that, and I think that the taxpayers were hurt by that, and I think that our office was hurt by that. It's not fun to talk about, but it is the reality, and if we want to have honest conversations about what's really going on and not gloss over everything, I'm here for it, but that is the reality. Again, I very much respect the former Auditor, but in answering your question, I am going to be real about why we experience some challenges.
KERANS - I don't think we need to continue, I'm18706 looking at the clock, I'm looking at the Inspector General who's also going to talk to18710 us about investigations, I just18712 do want to note that I felt that that18714 was uncalled for and and18716 off base. Thank you.
MARSI - Thank you, Mr. Chairman. Madam Auditor, thanks for coming, and thanks for all the great work you and your team do. Budgetary question related, so the towns are doing their annual budgeting, and, you know, I've been through it, worked with your office in the past with the DLS and local mandates and everything. Towns are coming out of Covid, have struggled, and people started paying more attention when a lot of the one time money dried up. I touched on this earlier in the program today, but, they're setting up audit committees. Do they reach out to your office? I'm thinking about staffing, you mentioned staffing earlier. Well, do they reach out to your organization for help? And, like, how to navigate that? Because some towns, they're setting up these committees that really don't have teeth, but hard to enforce what they want to do. You know, because there's always something that's hidden, they think, for a lot of people. So, transparency and, staffing, I guess, is root of my question for town.
LISAUSKAS - Thank you, sir, for the question. Yes, I think as a State Auditor's office, our authority to audit is limited to state agencies. So we are not involved in the auditing of individual cities and towns. Where individual cities and towns need our assistance, we're more than happy to provide it, and certainly, if there are folks who are interested in audits, you'll have a line of interested people who would like to talk to people who are interested in audits. So, if there are cities and towns who are interested in talking through how their audit committees can work or how we may be able to help them think some things through, we'd be delighted to do so. There is a process for cities and towns who have significant concerns to request the State Auditor's office engage with them and conduct an audit of their local government. I take that to be a different process than you're asking about, but certainly, if any of your communities or any of the communities...
MARSI - Yes, that's why I'm asking because I get asked from time to time with all the interest in audits these days. But, you know, why are my taxes going to go up? You know, I want to audit everybody from every department in the town. So, that was the genesis of my question. Just do they like, what other, like, services do they have act access to? I know that you don't audit the towns, but do they come to you and ask for help?
LISAUSKAS - From time to time, they do, and where the state law requires them to receive certain local approvals to do that, and where they do that, we'll help them, and where folks just want advice, we're all ears and all able to help.
MARSI - Alright, fair enough. I'll let them know, appreciate it.
DIZOGLIO - I often hear, I think I hear more of these requests than my team probably does because I'm out with a lot of you. So half18888 the time I'm standing there with you, when somebody comes over and demands that we conduct an audit of their municipality, and they list off all18896 of the challenges that their city or town is going through, and I'm really grateful that people recognize the services that an audit can provide and the transparency that it can help bring. But, to Representative Keran's point, the Inspector General is here and does have authority to audit municipalities, we do not, unless there is a vote of the council or town meeting, and end with the support of the Mayor. I believe we have yet to receive a formal request, as shocking as you all may find that, we haven't gotten really a ton of requests for people saying, please come audit us. But, it is the Inspector General's purview to be able to do that. We do respect those legal lines between our offices.
MARSI - Sometimes I get asked, you might come to a budget hearing on Ways and Means and meet the Auditor, and could you ask for that? Thank you.
MICHLEWITZ - Thank you. Anybody else from the committee that wants to comment or question? Okay. Thank you, Madam Auditor, thank you to the team, thank you for your work, and thank you for your testimony18965 and time today, we appreciate it. Thank you.
SPEAKER2 - Great job, everybody. Great job today. Thank you so much.
MICHLEWITZ - Next up, we have Inspector General Shapiro. Mr. Inspector General, the floor is yours. Thank you for your patience, your tremendous patience, and thank you for being here today. We appreciate your upcoming testimony. So, the floor is yours.
JEFFREY SHAPIRO - OFFICE OF THE INSPECTOR GENERAL - Sometimes when you go to a concert, the closing act is surprisingly good, so I just want19077 to start there, and I want to let you know that, I19081 recognize it's been a long day of the hearing and it's day one. Chairman Rodrigues, Chairman Michlewitz, Vice Chair Comerford, Vice Chair Ferrante, ranking Members O'Connor and Smola, members of the Senate and House Committee on Ways and Means, good afternoon. I19104 am once again delighted and honored to be here as the Commonwealth's Inspector General. As I said during a recent interview, with no disrespect, I truly have the best job in state government. Thank you for your leadership and for your invitation to be here today. As Inspector General, I rarely get invited anywhere. Thank you for the opportunity afforded me to testify before you today. I am fully cognizant that I am just one of many that you will hear from and that the financial outlook is uncertain at best.
That said, it is never a good time to reduce oversight, but that is especially true when budgets are tight, when resources are limited, and corners are cut. Before we look ahead, please allow me briefly to share a little bit about how the Office of the Inspector General used your investment this past year to execute our statutory mission in a meaningful and impactful way. My focus continues to thoughtfully divide our resources between our investigatory and our compliance19182 role and our prevention, education, and outreach roles equally significant to appropriately divide our time between state matters and municipal matters. No easy set of tasks, but when done effectively, demonstrates why you and the public whom we serve together should take pride in the first in the nation statewide Inspector General's office that we have here in the Commonwealth. Over the last year,19216 the OIG team has issued 77 public letters, 10 in-depth reports, expanded the ways that we can be effective with an expansive view of the available tools the OIG can use to provide meaningful and impactful work on the protection of public assets.
I regularly testified and commented formally and informally on dozens of bills, we've offered 101 courses through our OIG Academy, we've trained 1,952 students, and we've awarded 565 Massachusetts certified public procurement official designations for municipal and state procurement officials. We've worked jointly with the administration and with this legislature to pass a solution for municipalities to use19277 when purchasing electric vehicles. We've continued to extend our municipal outreach19283 and solve problems as we did with a municipality that had trouble procuring a fire vehicle under very trying circumstances. We made a number of recommendations regarding ways that the MBTA can and should be a better fiscal steward of public dollars, including earlier this week when we highlighted the need for the MBTA to redouble its efforts with regard to fair collections on the commuter rail and with its next commuter rail operator contract and procurement.
Focused on ensuring that we maximize the sheer number of different topics that we investigate annually by introducing19329 a proactive and19331 data driven approach to our19333 work, I look forward19335 to sharing a more detailed review19337 of the outstanding work of the leadership and staff of the OIG to achieve real measurable results as part of our annual report that will be issued in late April. I am hopeful that you too will agree that the return on investment of the OIG is a true force multiplier. Looking at the19360 fiscal year ahead, with the level of enacted and19364 proposed cuts in federal program19366 support and the uncertainty around the economic impact of policy decisions, most especially at the federal level, it is clear that the only certainty is uncertainty. Like you, this office is regularly in conversation with members of the Governor's administration to understand, as best we can, the most current information about federal dollars already awarded and committed to Massachusetts for this year and most particularly for multi year projects.
I share with you that so that you know within our mandate, we are focused on protecting state dollars and mitigating risk during a period of great uncertainty. The OIG's FY2026 budget request. The19420 Governor's House 1 budget recommends a 3% increase across all of our direct appropriations. However, after studying the underlying composition of House 1, 40% of that funding is for an increase in the EOT's chargeback, thus only leaving the OIG with a 1.8% increase over FY25, which based upon existing commitments would in essence be a step backwards. This funding level will not allow the OIG to competitively lag behind executive branch salaries, that's competitively lag behind executive branch salaries approved by the human resources division. Since I became Inspector General, I have worked hard to create a sensible salary structure that while not a leader, at least allows us to trail at a reasonable pace. At the House 1 level, the gap will undoubtedly increase.
For FY26, I am requesting a 6% increase across all appropriated accounts, which equals a total increase of a little over $520,000. I'm requesting an increase to the ceiling on our retained revenue account, which is made up of revenue that the OIG team earns from course registration fees, and we'd like that ceiling to be raised to $1,680,000, as well as some language changes primarily focused on the ability to allow greater flexibility for students when registering for our classes by retaining revenue earned from the OIG Academy from one19532 fiscal year to the next. These language changes are included in House 1 and are further explained in the19540 information packet distributed to you today. The information packet also contains the detailed narrative and figures the19549 committee requires. Thus, being respectful of your time, I shall focus19553 my testimony on two key items. First, I am sure you will hear from other independent agencies that EOTSS dramatically changed its billing model, which has significantly increased the chargeback for the services provided to19578 the OIG, and from what19580 I understand, to many similar situated independent agencies.
For the same level of service, the cost increased 70.3% in one year for the OIG. You can see from this chart the significant increase, and that's for the same level of service. This is a key factor in why I am requesting a 6% increase for FY26. We were not aware of this major increase when we were preparing our initial maintenance request to A&F. At the House 1 funding level, the OIG will lose ground to other state agencies with regard to retaining its staff, our budget must be focused on two items. One, mitigating the effect of the human resource division authorized salary raises to the secretariat to which the OIG is not a party19637 to, so that we do not lose staff to other Commonwealth agencies. Two, continuing to invest in technology that's not supported by EOTSS to enhance our investigative and compliance work, our our training and our prevention efforts, and our basic human resource and business functions. Second, as EOTSS changes its model regarding what services it provides and what services agencies must seek elsewhere, the OIG's other IT costs have increased significantly.
The OIG IT costs, including data storage and cyber security are increasing19677 as we make the necessary updates to systems that are beyond end of life and further incorporate technology into the improvement of previously very ineffective and labor intensive processes. Historically, the OIG lacked a comprehensive IT strategy and under invested in technology. I believe that my understanding of proper public administration procedures, my ability to develop and implement a path to use technology as a tool for fraud detection, and my strategic leadership are among the reasons that I was selected to lead this agency at this moment. As this chart shows you, thanks to the past support of this body and the Governor, I have dramatically upped our game, not only in our investment in new technology, but also our approach to how technology fulfills our mission. And if you'll see on the far right, it'll be the fiscal year 23 when I joined the office, and you can see FY25, with the various tools that we've been incorporating and what our path ahead looks like.
In the documents that you have, I'm at page six, and I think that's appendix A, if we're aligned correctly. As the chart shows, and thanks to that to fulfill our mission. Note that in FY23, when my tenure began, there was very little in regard to a modern technological system that was in place. In fact, the few systems we had in place were well past their end of life, meaning they were no longer useful and19787 there were no plans to support or replace them. Within the information packet, you'll find charts that highlight the historical low spending in IT at the OIG when compared to agencies of similar mission, that would be appendix b, page seven, and of a similar staffing level, which would be appendix c on page eight. Over the past two years, we have invested in IT so our critical systems remain functional and staff time can be spent on oversight and not on band aiding out of date systems. In particular, we need to replace our case management and E-discovery systems, which are on the roadmap to be replaced during FY26 after careful planning and preparation work this fiscal19835 year. Ultimately, these investments are critical as they will allow us to one, stabilize these functions with modern capabilities, and two, redeploy human brainpower to necessary analytical capabilities and not basic administrative functions.
For example, we are implementing our new learning management system right now which19861 provides a user friendly online interface like what we've all come to expect when making purchases or registering online, that had not been the case. Our students, who are mostly public employees from the communities that you represent will now experience a smoother registration and payment process, more complete information on courses they've taken or still need to take, and enjoy a better quality training from their location or ours, allowing them to perform their jobs, procurement, governance, finance, payroll,19897 you name it, and protect public resources from fraud, waste, and abuse far more effectively. Fraud is a crime of opportunity, under my leadership, the OIG is equipping our partners in government with the right19914 information and tools to build systems and controls that reduce19918 the opportunity for fraud19920 to occur in the first place. Our prevention work, while also continuing to provide strong oversight to deter the bad actors from exploiting opportunities and taking nefarious actions, in essence, our investigatory work.
The OIG's efforts to meaningfully provide front end assistance to our various stakeholders, understanding their challenges and limitations represents a fundamental shift in focus and approach. I am pleased to report that we continue to receive incredibly positive feedback from our stakeholder meetings with town managers, mayors, and local elected and professional leaders across the commonwealth about our proactive problem solving approach. We cannot accomplish all of this without the legislature and the administration's investment in the OIG, which in turn allows me to hire a highly skilled team who have access to the tools needed to effectively perform their jobs. Finally, at a time when Inspector General are under attack at the federal, state, and local levels, you and all the people of the Commonwealth should be proud20001 that we not only have the first20003 in the nation statewide Inspector General's office, but that20007 the legislature, in your infinite wisdom, created a very strong model of independent oversight. Our independence ensures that we can investigate fraud, waste, and abuse without fear or favor, and that the policy decisions that this body makes through its budget process result in public dollars and assets being used for their intended purpose. With the Chair's permission, I am happy to take questions from members of the committee, and I once again thank you for your attention and your interest in our work. Thank you.
MICHLEWITZ - Thank you for your testimony, and again for your patience, and, thank you for all your work, and how we've worked together. I want to turn it over to my colleague, Senator Rodrigues.
RODRIGUES - Thank you very much, Mr. Chair. Mr. Inspector General, thank you, it's good to see you. Really, you do great work quietly, importantly, behind the scenes, and you're a very valued member of what we call state government. So, thank you for what you do, and we will certainly entertain your request as seriously as we always do. So thank you.
SHAPIRO - I appreciate that very much, Mr. Chairman. Thank you.
SPEAKER4 - Yep. Senator Collins.
COLLINS - Thank you, Mr. Chairman. Thank you, Inspector for your testimony. I have a couple questions, one is, are you required to use EOTSS services? Because, I mean, 41% of a 3% increase seems excessive.
SHAPIRO - They provide certain services. I think that the kinds of things that we use are like email, mass gov, I think some of the other systems. I think at this point, it's certainly cost effective. I wasn't looking to move our email and then be responsible for all of those other things that fall behind that. On the other side, you know, I'm pretty brave to be giving this answer right before the Secretary is going to testify, but I just tell you, that's how I get, that's how I roll. But I do think that in the areas that they provide service, they do great work. There are many areas that they used to do that as technology has evolved, they're not services that they provide anymore. So, we then have to go out in the open market, and we do have to provide those items for ourselves, and that's what I tried to show in the chart that was there. I don't begrudge the fact that their costs are going up like everyone's, but I do have a concern that that was a figure that we weren't aware of. As you can see, we have a modest budget, and so when you take that type of a20170 hit, the kinds of things that we were hoping and planning to do, which are not20174 extravagant, it makes it more difficult to be able to do that.
COLLINS - Yes. The OIG Academy, I know, is well received across the state, and the retained revenue quest seems modest. I know the Governor has proposed it. I got to say, though, you're a tough grader, it looks like out of the math, unless I'm wrong, half the group fails?
SHAPIRO - I'm sorry?
COLLINS - Well, you said, only 500 out of the thousand passed the test.
SHAPIRO - 500 out of 20000. You could say yesterday, and then you'd have one agency done.
COLLINS - But I know it's well received. And the process is, any agency of20212 the state or municipal, or town, you know, government has the ability to point someone to be a part of this class that you put on. Is that correct? The OIG Academy?
SHAPIRO - The OIG Academy is open, I couldn't hear the question, I apologize, Senator. The OIG Academy is a non appropriated, so it's a fee for service, and we have courses that are specifically designed for municipalities. I think we have the premier, I will say, as the dean, I guess, or the chancellor, whatever I am of the academy. We have the program that many municipalities use as the preferred qualification for someone who is a chief procurement officer in many of the cities and towns that you all represent. It's an MCPPO, not a title that was created by a marketing person, because I have trouble with its name, but it's a Massachusetts certified public procurement official. So, that is open to anyone that pays that fee. As you know, for the last year and this year, we did a creative way of doing a one free designee, and so we've been absorbing that cost.
That's something that we'll continue to have the conversation about as to what we can do in the future, but that's open to municipalities. I've also asked the person who runs that program for us to think about other programs as I go out and meet with local officials, areas in governance, in responsibility of boards, fiduciary responsibility, places where I think that there20304 might not otherwise be training, that we can step in and we can be helpful to that. So, we're continuing to evolve that, but I would say it's probably at least half of the20314 participants are, municipal employees or volunteers that are on boards or commissions in many of the20322 communities. We also do20324 have some that are private industry, we do some training on construction and engineering and some of those other things. Those are private companies that want to do construction at risk, project management or get involved in other kinds of things. So, it's a pretty robust offering.
COLLINS - Thank you. And just finally, as it relates to your office nationally, I know there's state Inspectors General, you're one of the few, if I'm not20349 mistaken, that doesn't just deal with state government but has the whole state. Is that correct?
SHAPIRO - It's correct. In the model that we have here, which is I said, I've got, what I think is the best job. I mean, every day, I'm fortunate to be doing this work and to working with the quality people in our communities and across the Commonwealth and with all of you, every day am energized by that. But the unique thing about this job which was created as a result of the ward commission, as many of you know, in the late 70s with the construction irregularities in county and state buildings, most notably, UMass Boston. The creation of this office was to have an office that could investigate and has the resources readily available. There are 12 other statewide Inspectors General of my colleagues, there are a number of states20400 across the country that have a model20402 similar to the federal government where they're subject matter specific. So for instance, Los Angeles has a school district, Chicago has a housing as well as it but of the other 12 that have a statewide, none of them have both state and municipal responsibility. I merely point that out because that's one of the challenges that I have as to how we allocate resources, not that I'm suggesting we do something different, because I think that the ability to do both of those spaces, makes it impactful and meaningful. We can have those kinds of conversation as opposed to having many different Inspectors General, and the size and scope of it.
But it's for that reason also that when we look at municipal matters, I don't specifically look at a threshold. And sometimes in a prosecutor's office, and I totally understand that, but they have to decide that they can't take a case because of a certain value. You know, I think about not what the value is, one of the factors that I think often about is what is the residential real estate taxable value for one piece of property in a community. I think about that when I think about how many homes they might have in a community. And so for a town like that, a $10,000 theft or misappropriation or some other kind of procurement irregularity could be a huge thing. And if I just said I don't do anything under $25,000 or $50,000, then what am I saying, for instance, to the 62 communities that have a population of 12,000 or less? Or more importantly, what am I saying20497 to the 63 communities that have a population of 2,000 or less20501 that are all the communities that you represent. So, that's what I try to do, regularly, and it does make it when we're allocating resources and we're talking about priorities. You know, I've got a great team and they work really hard, but I reprioritize and I shuffle the deck and we go through things an awful lot as we hear about new things that we need to be thinking about. I hope that answers.
SPEAKER14 - Yes. Thank you.
SPEAKER18 - Thank you, Senator. Representative Diggs.
REP DIGGS - Thank you, Mr. Chairman. I hear your passion and your dedication and being proactive. I think that's the way things should be worked. Because, if we're being reactive, that's costing us money. So, I truly appreciate your concerns and your dedication. So that's really all I had to say. So, thank you.
SHAPIRO - Thank you very much, I appreciate the kind words.
REP XIARHOS - Thank you, Mr. Chair. I echo the comments of my brother from Barnstable and also you, Chair Rodrigues. Your presentations are always to the point, and I appreciate that. My question is about the division of state police oversight that you are involved with. Could you briefly tell us more about what that is and why you would need more20591 funding?
SHAPIRO - Sure, thank you. We have, as from time to time, under20597 Chapter 12a, which is our statutory creation, as you know, we have very broad authority to look at fraud, waste, and abuse across all of state and municipal government, as we've said. From time to time, the legislature has made the determination that there are some specific areas that they in particular want us to look at as you indicated. So, we have three what I call statutory units. One unit looks at transportation, the MBTA and Mass DOT, and I appreciate over the last two years, I've come here and asked you for funding, because from my estimation, it was woefully underfunded when I got here. You've done a tremendous job of moving us from $577,000 to $1,300,000. We have another division that looks at the 11 child agencies within the Secretariat of Health and Human Services, we continue to do lots of work in that space. The third statutory unit, we have the division of state police oversight. That's a smaller unit, it was created, as you know, in response to the overtime and payroll irregularities that were happening a few years ago with the State Police, most notably, some of it was at Logan,20674 some of it was on the Turnpike, there20676 were20676 a few troops that were involved, but there certainly were some issues to be looked at. So,20682 we were given some money to look at that. I think we maybe have about three people that work in that space.
Dave Andrews, a former prosecutor heads that unit and does an outstanding job, and he, full time, with that team, is regularly looking at different projects and issues of concern with regard to state police. In addition to looking at fraud, waste, and abuse, and overtime, and any of those kinds of things, we're also charged with looking at any of the changes in policy that they have to do with regard to they were recently, for their first time and with the longest, original state police unit in the entire nation and only in the last 18 months where they accredited, which is an unbelievable undertaking to be able to do. And certainly, there's always challenges and there continue to be headlines. I talk with the colonel regularly, the new colonel, Colonel Noble, about his efforts, I think he really is off to a strong start, but there certainly is more work to be done. But what we are asked to do within the statute, in addition to fraud, waste and abuse, is we look regularly at policies and procedures. We look at when they have to make changes to get certified or to do accreditation, so, we're looking at those kinds of things. Then there are a number of other proactive types of things that we do in that space. We regularly look at their different units, and each year we pick a few projects that we do work on. So I hope that answers that. I know I saw you at one of the times I20775 was, meeting with the colonel.
XIARHOS - Yes. I just spent three days there at headquarters, so I appreciate your time.
20781 SHAPIRO20781 -20781 I appreciate the question. Thank you.
SPEAKER4 - Representative Holmes?
HOLMES - I just want to be clear. On the, retained revenue, we have the number you want and the language you want to pick up?
SHAPIRO - In the retained revenue, we have the number that we want and we have20800 the language that we want. So, we want to just keep that, but we just want it to happen, because last last year, to the Commonwealth,20808 we were happy to make the contribution, but I think, in a question that wasn't asked, but I'll answer, I think we reverted from that account about $900,000 of funds that we had earned, and that's under the policy, so I'm not complaining about it. I think in our main account, we maybe reverted $11,000 or something, so we were good stewards in that question. But that would be certainly impactful for our ability to continue to do that important training work. So thank you for the question, and I hope you appreciate the indulgence on answering, fully.
MICHLEWITZ - Thank you. Any other questions or comments from members of the committee? Thank you, Mr. Inspector General, appreciate your time, your testimony, and we'll continue to talk with you during this process we're going through for the FY26 budget.
SHAPIRO - Thank you, Mr. Chairman, appreciate the Chairs and members of the committee, and certainly in the year ahead, if there are ever any issues that you want to talk about. I've met with many of you, I continue to work my way through individual meetings with all of you and look forward to that. And if you see fraud, waste, or abuse, let us know.
MICHLEWITZ - Okay, thank you so much, appreciate it. Next up, we have the deputy secretary, Erica Bradshaw of the executive office of technology services and security. Madam secretary, the floor is yours.
ERICA BRADSHAW - EXECUTIVE OFFICE OF TECHNOLOGY SERVICES & SECURITY'S POST - Good evening. I think I am the encore, the actual encore. Chair Rodrigues, Chair Michlewitz, and members of the joint committee on Ways and Means, my name is Erica Bradshaw, I'm the Deputy Secretary for the executive office of technology services and security, or TSS. Secretary Jason Snyder sent his regrets that he's unable to join us today in person as he's traveling back to Massachusetts from a workshop that he participated in at the Vatican, focused on AI, justice, and democracy. As Massachusetts is leading innovation through our values and through the core component of equity, it is important that the Secretary Snyder and Secretary Yvonne Howe speak at this important workshop. While I'm new to my role as Deputy Secretary, I'm not new to state service. Prior to my last role as the chief technology officer at Harvard University, I'd served as the director of engineering for the infrastructure or for the information technology division, which was an agency under the Executive Office for administration and finance.
When I returned to state service in December, I could immediately see the value that the broader scope and authority that is now entrusted to TSS has set broadening an IT strategy for the Commonwealth. TSS also prioritizes modernizing legacy IT systems, improving digital services for our residents, and enhancing data driven decision making. Whereas ITD had focused primarily on maintaining existing IT infrastructure and had a more narrow operational focus. I am excited to be working with familiar colleagues, to execute this very21002 bold vision that enhances the delivery of governance services without compromising security, privacy, cost savings, and the residents' digital experience. I am proud to testify before you to detail the investments that Governor Healey has proposed in her FY26 budget recommendations to advance this continuous improvement. On behalf of TSS, we are deeply appreciative of the members of this committee and the entire legislature for your leadership and your understanding of how critical information technology is in this state.
Having dedicated legislative partners has been critical to making state government IT systems work more smoothly and securely while making state government work for all residents, and this collaboration has been recognized well beyond our state. Last year, Massachusetts celebrated two first place national awards for digital experience. First, the Center for Digital Government awarded Massachusetts with the first place government experience award in September for improving the experience for residents accessing services and information21071 via the web. In October, the National Association of Chief Technology Officers,21077 or NACTO, awarded Massachusetts with the government to citizen digital services award. Together, these two awards underscore the administration's mission to advancing access to state government information and services in this digital age.
As Secretary Snyder would say, if you were here, in Massachusetts, we do our best21099 work when we work together, and21101 this21101 teamwork continues to deliver results across state government and to all21105 of our shared constituencies. I want to thank the legislature for your partnership throughout last session to consider and ultimately pass the Future Tech Act, a five year IT bond authorization, which allows us to continuously innovate, to keep our IT capital assets up to date, and our state's data and IT systems secure. With thanks21128 to the legislature for its passage, the Future Tech Act pairs a modern vision for our state's IT systems with all of the investments needed to get there, and I assure you that we are already hard at work to execute21140 on that vision. While capital funding is one core piece of this vision, I come before you today to discuss the operating budget of TSS. The budget that Governor Healey filed in January directly funds TSS at $62,300,000 for FY26. These funds are mission critical to state government operations, directly addressing the cost of delivering government services in a world where the front door is digital.
When you fully fund TSS, you are investing in state government's capacity to deliver all services consistently, securely, and efficiently. I know we touched upon chargeback a bit, so I'd love21183 to take the opportunity to go over and address some of the comments in the prior testimony. You will notice that the H1 appropriations also reflects a new rollout of our chargeback model, which we believe more accurately encompasses the full cost of providing services and products to our partner agencies and government. Because TSS is a service provider to the executive branch and other offices, charge back is a way that we recover those costs to maintain and support our products and services on an ongoing basis, such as software licenses, hardware maintenance, and IT staffing. A good way of thinking about this new model is how you would bake a cake.
Under the old model, we would charge customers for some of those core components separately, like flour and21232 butter, and they would need to know how to combine them and be required to know which ones21238 they needed to use. Under our new model, we have pre combined some of those key service components into fewer rates, essentially pre baking the cake, making it easier for our customers to both consume and be billed for the services in the most efficient way. While our chargeback line item has grown over FY25, that revenue growth is neutral due to an offsetting reduction in our appropriation. This budget neutral offset aligns our evolving operating needs with a broader fiscal priority. To prepare for these21274 changes for the new chargeback, we had worked with the executive office of administration and finance to communicate these changes to all impacted agencies, and we will continue to21284 provide ongoing support throughout this21286 key transition.
As I mentioned, our new model is revenue neutral, what we have done is we've created a new way to allocate costs out for providing IT services. And because things like the network or end user support services, the metric we use has changed, the way we have allocated those costs have changed based on usage. We feel this new model is more modern, more transparent, and more visible so that we can accurately reflect and show the true cost of providing IT services in a world where those costs are increasing. We continue to prioritize stewardship of public funds and deliver the best services even in the face of major inflationary pressures, combined with the economic headwinds that have hit IT harder than most areas of investment in recent years. We have been nimble with the appropriations received, and we continue to work to deliver outstanding public and enterprise value for those investments. The largest cost drivers for TSS are the renewal of existing software and hardware maintenance and licensing contracts that support our operations and the services that we provide across the executive branch and beyond.
Like others in the industry, TSS has experienced increase in fixed cost as our annual maintenance contracts and license renewal costs have increased greater than the rate of inflation. Additionally, continued expiration of our prepaid contracts and maintenance that are currently funded by capital are external factors that must be absorbed into our operating budgets to maintain existing service levels within TSS and the enterprise. H1 maintains level funding for these services and allows us to make progress across key priorities. This progress has been made despite external pressures that we've experienced as well as the broader technology sector. I'd like to briefly highlight a few of those enterprise priorities starting first with cybersecurity and risk management. H1 enables the expansion of our vulnerability management program. Through the Commonwealth's Security Operations Center and the TSS Enterprise Risk Management Office, critical cybersecurity vulnerabilities have been reduced by nearly 50% from a 2023 baseline, including the remediation of all external critical facing vulnerabilities.
The vulnerability management program has now expanded to include the identification and mitigation of operational technology and interconnected device vulnerabilities. Another priority is enhancing the digital resident experience. As mentioned earlier with the celebration of two national awards, the Healey Driscoll Administration has a vision to provide accessible, simple, and secure digital experiences for all of our residents. Supported by the passage of Governor Healey's future tech act, TSS continues to enhance the digital experience for our residents, anchored by the mymassgov single sign on, which nearly 2,000,000 residents now use to easily and securely access multiple Massachusetts programs and applications with a single sign on and the ability to self manage their data, including their name, their password, their email, and their multi authentication settings.
Another key component of the enhanced digital experience is the ability for all communities to access these services. With funding in fiscal year 25 to launch an enterprise digital accessibility program led by the Commonwealth's first ever IT accessibility officer, TSS has successfully21506 implemented the accessibility center for consulting, education and support services, or the access team to provide testing services, resources and training to employees to ensure that our digital services and applications are fully accessible and functional for all Massachusetts residents. Finally, TSS is committed to using emerging technology, including artificial intelligence to improve government service delivery. Guided by the work of the Governor's strategic AI task force, the innovation institute at the Mass tech collaborative21541 is now leading the executive branch to build out an AI hub to help our state keep its lead in emerging technology.
Our partnership with the Massachusetts high performance computing center in Holyoke allows us to use clean hydro power to make AI compute capacity available21560 to both start ups and higher education in our state. Within state government, agencies are actively encouraged to develop innovative21568 use cases with AI. TSS has partnered with21572 a vendor to provide an AI sandbox, which a secure environment for us to innovate innovate21577 with AI, ensuring that the state's data will not be used to train any public21583 AI tool or model. Individuals and team from every ex executive office have had the ability to develop potential AI solutions to solve a business need or that would have a positive resident outcome. While the sandbox itself is secure, TSS still requires that all users abide by our terms and conditions. The overall AI policy21605 that was published on our website this year, and the enterprise security policies of the Commonwealth.
In January 2024, TSS in the Executive Office21615 for administration21616 and21616 finance created a partnership with higher education to develop generative AI solutions to state agencies. Throughout the course of two, six month cohorts, students were embedded in state agencies to develop AI solutions to assist call centers at Mass Health and the MBTA ride, to assist our highway engineers more readily navigate a giant standard operating procedure governing our highway projects, and to help the Governor's federal funds and infrastructure office more efficiently apply for federal funding, just to name a few. We are amid onboarding a third cohort21653 working with UMass Amherst, and we have also partnered with Worcester Polytechnic Institute on data analytics initiatives that support both AI adoption and enterprise data analytics in our state.
Our ongoing efforts in IT are delivering value for our partner agencies across state government and the public. TSS is a strong partner with the Healey Driscoll administration that drives positive change for agencies to deliver their missions for benefit of all Massachusetts residents while ensuring our systems are simple, secure, and accessible. In closing, we remain grateful to this committee and to the entire legislature for understanding and supporting the vision for better government services enabled by technology.21696 We ask for your21698 strong consideration to fully fund Governor Healey's H1 budget request for TSS. Thinking of the dedicated team at TSS and all of the initiatives they are driving, it is a sound investment. On behalf of Secretary Snyder, I want to thank the committee for having us today and I would be happy to answer any questions that you have.
21717 MICHLEWITZ21717 -21717 Thank21717 you, Madam Secretary, and please, send our regards to Secretary Snyder, and to all the team over at the executive office of technology21725 services and security. We appreciate your21727 testimony, your patience today for sticking it out. We appreciate you being here and all the work that you guys do. I want to open up to any questions. Senator Collins.
COLLINS - Thank you, Mr. Chairman. Thank you for your testimony, Madam Undersecretary. So, for the increase in service fees, is that used just inside the department or is any of it for21758 government agencies or is any of it21760 any of it used to supplement the work with startups and private organizations?
BRADSHAW - So, the chargeback, again, was a revenue neutral activity. What we did was we reallocated, we took the same pie of money and reallocated the way that we charged back for our services based on more modern metrics. That was done for executive branch service usage and some of the constitutional offices.
COLLINS - Okay. Still a little confused on that, but more on that later. So, is there an opinion from either you or the Secretary about how existing software license contracts that require or give the authority to software companies to determine the hardware they're used on. Essentially, limiting our competitiveness when we're purchasing software and hardware for the use of government services, including the legislature, whether that's desktops or laptops?
BRADSHAW - Yes, we21822 partner21822 closely with OSC on statewide contracts for technology procurements, and we have within TSS a group of people responsible for reviewing and working to make sure that we have supplier diversity in the contracts in some of the hardware software users that we21842 partner with.
COLLINS - Yes, because right now, the setup being where the software21848 companies determine whether or not21850 you can use a certain hardware for the use of their service, which right now, limits our competitiveness. Is that something you and the Secretary would be in support of changing?
BRADHSAW - I think when it comes to those hard and fast rules around what software will work on what particular hardware, I would say that we do have a robust architecture program that reviews and ensures that some of those statements are correct, and we are committed to making sure that we pick the right technology architectures for the problems that we're trying to solve.
COLLINS - So do you think it's non competitive in the way it is set up right now? It seems that if you're forced to buy essentially from wherever the software company is saying you need to buy from, that makes it21896 non competitive for us, which drives up costs and IT is obviously a big cost21900 of the Commonwealth.
BRADSHAW - Sure. I'm happy to follow-up too with any specifics if we can provide more information to you on that. SHOW NON-ESSENTIAL DIALOGUE
SPEAKER14 - Thank you. Representative Holmes?
HOLMES - [Inaudible 06:05:11]. The state needs a 311, can you help with that?
BRADSHAW - I think as you mentioned, 301 is an important live in this municipal systems, because they have been a direct benefit of, 311 system in one of my prior towns that I've lived in. I do think just to mention we are laser focused, as you heard on the digital experience for users.
HOLMES - So there's nothing better than 311.
BRADSHAW - I had an opportunity to connect with the executive director for the unemployment system this week, there's a public facing go live on May 6th. He also mentioned that he will be scheduling a legislative session in April to answer any additional or deeper questions that people may have.
HOLMES - Will it improve them or will it work? I mean, we've been putting a new system, but, yes, I'm still getting, like, phone calls, like, printers.
BRADSHAW - The goal of this is to really improve the user experience. So, things like even the old system wasn't mobile responsive, you couldn't even use it on your phone. I mean, it's making major improvements to usability and user experience so that some of those older problems with the older system do not perpetuate.
HOLMES - They fix that type, like, the method of danger something. The old system that's going to fix is not correct.
BRADSHAW - I'm going to defer to the executive director to give more detail about that in the session, but I can say that usability is of the utmost importance for making sure this system is successful.
MICHLEWITZ - Thank you. Any other questions or comments from members of the committee? Hearing none, appreciate your time, your testimony. That concludes our marathon hearing we had today. I appreciate all the members for their questions, their patience, and for being here today. Craig, appreciate all the staff as well for sticking it out. Our next hearing is going to be on Monday, the 10th in Gloucester, Chaired by my vice chair here, and the category is going to be economy, development, housing and labor. Thank you, everyone. Have a great night.
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