The Vermont Senate gave preliminary approval to a nearly $5.5 billion state budget Monday afternoon.

The chamber will have one more chance to amend the so-called Big Bill before H.885 is hashed out in a conference committee of House and Senate members.

"I realize anything of this magnitude may have provisions that may not be what we would necessarily prefer," said Sen. Jane Kitchel, D-Caledonia, who as chair of the Senate Committee on Appropriations oversaw the changes to the House-passed bill. "But we weighed it, and we feel that as a package the budget addresses many many areas, and uses our resources in the most effective way forward."

The Senate version would raise General Fund spending by 3.7 percent and overall spending by 4.2 percent.

Highlights include:

  • $28.6 million to fund health care for retired teachers. The upfront hit of funding health care fully will save hundreds of millions of dollars down the road, says Treasurer Beth Pearce.
  • Restructuring the "waterfall" plans for any surplus revenue from the current fiscal year. Senate version sets aside the first $500,000 for an entrepreneurial lending program, and the first $4.5 million after that goes into a new Enterprise Investment Fund. Any remaining money would be split equally between the "rainy day reserve" and repayment of an interfund loan that's planned to jump-start the retired teachers' health care fund.
  • Raising the Medicaid reimbursement rate for health care providers by 2 percent.

The state is committing more than $1.5 billion for public education, and about $89 million more for higher education. Sen. Bobby Starr, D-Essex-Orleans, said the Legislature is prepared to transfer almost $296 million next year from the General Fund to the Education Fund.

For higher education, Shumlin and the House had proposed increasing appropriations by 1 percent for the University of Vermont, the Vermont State Colleges system and the Vermont Student Assistance Corp. But the Senate is taking a different tack.

The governor's proposed increase in funding amounted to little more than $500,000, said Sen. Richard Westman, R-Lamoille. He argued on the Senate floor Monday that that amount would be better spent in a more targeted way.

The Senate budget directs $400,000 to be spent on a pilot program designed to encourage college aspirations among students in schools with chronically low "continuation" rates, meaning few of the students who graduate go on to pursue higher education. Another $100,000 would provide need-based stipends for low-income students in the dual-enrollment program.