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Vermont board would take 23% fiscal hit by signing on to interstate compact

Interstate compacts—agreements among states to accept other states’ occupational licenses, in the same way that states’ drivers’ licenses are accepted—are good policy, but can mean extra costs for licensing boards and higher fees for licensees, a Vermont study of the interstate nursing compact (eNLC) found in March.

That’s because the pool of people paying licensing fees would shrink. In simplified terms, the Vermont Secretary of State reported to thelegislature: The cost of a Vermont license “is determined by regulatory expense divided by active licensees.” Because Vermont nurses licensed elsewhere may not need to pay for a license, active licenses would drop, while expenses, driven by Internet technology, administrative personnel, investigation, and discipline, would remain unchanged.

The report authors estimated that the reduction in total license fees would mean a loss of $932,575 of revenue to the state nursing board, against a roughly $4 million budget per biennium—roughly a 23% hit to the board’s budget.

On the plus side: interstate licensing may help to ease nursing shortages by allowing multi-state licensees to travel and more easily fill vacancies. This labor market fluidity, though, does not guarantee inflow, the report notes. Trained nurses will be more portable but whether compact participation will increase the supply of trained nurses is unknown. Add the transition costs of communication and outreach to stakeholders, and updates to Internet technology infrastructure, forms, and administrative processes, and the policy benefits may not outweigh the fiscal impact.

Geographic location and size of the states affects their likelihood of joining the Compact. “The eNLC enjoys excellent penetration in the mid-Atlantic, Midwest, and Mountain West, but poor penetration in new England and on the West Coast.” Only Maine and New Hampshire, among the New England States, participate in the nursing compact, and the report authors say that few or no observers expect that New York or California will sign on, while Massachusetts has considered bills but not adopted them.

The result: “Our most populous regional neighbors are not sources of Compact nurses and Vermont nurses holding Compact licenses would be unable to realize the benefits of portability in most states closest to us.”

The Vermont Board of Nursing voted to support joining the Compact in 2017. But despite supporting the Compact in principle, given both the benefits and costs, the state’s Office of Professional Regulation said it is offering a “neutral action” recommendation on the question of whether to join the Compact, for now.