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VT Announces Plan to Pay For Retired Teachers' Health Benefits

Vermont announced plan to pay for retired teachers' health benefits.
MONTPELIER, Vt. - Vermont announced plan to pay for retired teachers' health benefits. 

A press release says the proposal would utilize many sources to address the lack of funding for teacher health care on a current-year basis. 

"I am pleased that after months of hard work, we've been able to find a way to pay for this valuable benefit that teachers have earned over their careers," said Vermont Governor Peter Shumlin. "The agreement calls for everyone at the table to bear some responsibility for ensuring that the pension teachers rely on in retirement is solvent, safe and secure for generations to come."


The proposal was presented to the House Government Operations Committee on Friday. Key components of the plan draw from the following funding sources:
  • Appropriations from the fiscal year 2015 General Fund budget of $10.05 million toward teacher health care--$4.75 million as proposed in the House Appropriations Bill; an additional $2.8 million in new General Fund dollars; and $2.5 million from the Supplemental Property Tax Relief Fund.
  • Current teachers not yet vested in the pension system and new hires would begin contributing July 1 an additional 1 percent of their salary.
  • For teachers hired on or after July 1, 2015, local school systems or educational entities would pay an annual teacher healthcare charge.
  • Beginning in 2016, school districts that pay for teachers with federal dollars will need to include costs of pensions in the federal grant, lowering the liability for the State.
  • Beginning in 2016, school districts that pay for teachers with federal dollars will need to include costs of pensions in the federal grant, lowering the liability for the State.
  • To facilitate an immediate infusion of funds to pay health care costs, the State would borrow $28 million from the State's operating cash. The money would be paid back at a rate of interest comparable to similar investments made by the State. Funds would be paid back within eight to 10 years, or sooner. To the extent that surpluses are available, it is expected that these could be used to reduce the need for an inter-fund loan. The House budget contemplates a portion of any such surplus to be used for this purpose.
  • The proposal also incorporates savings from the already implemented Employer Group Waiver Plan for retired teachers on Medicare.
The proposal is expected to be taken up this legislative session. 
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