MONTPELIER – The Vermont House of Representatives has put forward a plan to address challenges facing Vermont’s state employee and teacher pension systems, but some are concerned it places the burden of years of underfunding the system squarely on teachers.
NEA Vermont President Don Tinney said the proposal fails to take advantage of the massive influx of federal dollars, adding that he believes wealthy Vermonters and large corporations should have to pay their share.
“This is coming in a year when our teachers have put themselves at risk, have gone to work every day to meet the needs of the children and youth of the state, and their thank you is that they have to work longer, pay more and get less in retirement,” Tinney said.
Unfunded liabilities in Vermont’s pension system are projected to increase by over $600 million between state employees and teachers next year. The plan put forward by the House would have the state pitching in $150 million, but it would also cost teachers about $309 million, hiking the retirement age and boosting teacher contributions.
“The serious question for the Legislature is ‘whose side are you on?” Tinney said. “Why is it so important that the State Legislature protect the millionaires and Wall Street crowd in Vermont by avoiding an increase in taxes on people who can very well afford paying more taxes.”
And it’s not just the Vermont NEA asking the Legislature to pump the brakes on this proposal – the Vermont State Employees Association testified before the House Committee on Government Operations on Thursday, urging lawmakers to reconsider their push to have pension reform passed by the end of this session.
“Our members right now, quite frankly, are very busy,” said Steve Howard, VSEA Executive Director. “They’re in the middle of managing a pandemic, and they haven’t really had the chance to pay a lot of attention to this issue because they’re trying to save Vermonters’ lives.
Instead, Howard wants a better understanding of the crisis at hand before the tough decisions are made.
“An independent investigation of our investment strategy would be really helpful over the summer and into the fall, and a process that our members can believe in,” Howard said.
The proposal was introduced on Wednesday, and is aimed at addressing the structural challenges facing Vermont’s state employee and teacher retirement systems by reducing future liabilities, increasing the pension system assets, and relieving budgetary pressures to improve the state’s long-term fiscal health.
The proposed changes would not apply to existing retirees, active employees who are within 5 years of current normal retirement eligibility, or inactive vested members.
In the draft of the proposal, lawmakers outlined the following principals and goals:
Lawmakers are also considering changes to oversight of the state pension system with the creation of a 15-member committee including the state treasurer, governor appointees, and representatives for state employees and teachers.
Unions have also expressed concern here, feeling political appointees’ opinions will be given more weight.
“I wanted to push back just a little bit that we are taking away stakeholder voice in this proposed governance change,” said Rep. Sarah Copeland-Hanzas (D-Orange). “We need to have stakeholders who have that set of experience, that set of skills to be able to dissect what they’re hearing from the financial advisers, dissect what they’re hearing from actuaries.”
The public is invited to testify on the proposed changes during a House Committee on Government Operations will hearing via Zoom on Friday, March 26, 2021, at 4:00 p.m.
A second public hearing has been scheduled for Monday, March 29. It will also be at 4 p.m.