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Unions, lawmakers finalize plan to address Vt. pension shortfall

A person stands with a sign reading: A pension is a promise, do the right thing, in front of a grey building and a dozen other people surrounds them
Angela Evancie
/
VPR
Liz Demas, a Williston Central School art teacher, protesting proposed cuts to Vermont's public pensions at a rally at the Vermont Statehouse last April. Union officials and lawmakers unveiled a plan Monday to shore up the pension system.

A panel of union representatives and Vermont lawmakers gave unanimous approval Monday evening to a proposal that would see the state spend an additional $200 million this year to shore up the public pension system.

The 9-0 vote capped a yearlong debate that pit two of Vermont’s largest unions against Democratic leaders in the House and Senate.

The compromise measure, which still needs approval from the full Legislature, includes more $200 million in one-time expenditures this year to buy down future pension liabilities. Under the proposal, the state would increase annual contributions to pension and other retirement benefits, such as health care, by at least $30 million in the future.

More from Brave Little State: What's Going On With Vermont's Pensions?

Teachers and state employees, meanwhile, have committed to annual increases in pension contributions, as well as modest decreases in cost-of-living adjustments to pension benefits for future retirees.

"The state is putting in an unprecedented amount money into the pension systems right now and is really showing a commitment to do right by our state’s teachers, which allows us to do our jobs more fully and to better serve our students,” Andrew Emrich, a teacher at Brookeside Primary School in Waterbury, told VPR on Tuesday.

I don’t think this will be the end-all be-all fix-all that gets us out of the hole.
Franklin County Sen. Corey Parent

Emrich was one of three representatives from the Vermont-NEA who served on the task force that helped broker the deal.

Last year, State Treasurer Beth Pearce and House Speaker Jill Krowinski floated plans that would’ve required teachers and state employees to work longer in order to become eligible for pension benefits. Pearce said the "painful" reforms — which also included cuts to benefits and increases in workers’ contributions — were needed to address a $3 billion unfunded liability in the pension systems for teachers and state workers.

The proposals, however, drew strenuous opposition from state employees and teachers, including Emrich.

“When I first heard about the changes I was really kind of shocked … and decided it wasn’t something I could just sit idly by and watch happen,” Emrich said.

Facing harsh opposition from the public sector unions that represent two key Democratic constituencies, Krowinski withdrew her pension reform proposal last March and announced the creation of a task force to work on the issue.

The panel included lawmakers and representatives from the Vermont-NEA and Vermont State Employees Association.

Steve Howard, executive director of the VSEA, said Tuesday that the proposal approved by the task force is a far better option than the one his members opposed last year.

"The biggest difference between this proposal and where we started is this proposal does not require our members to work longer for less retirement security,” Howard said. "That was an important guiding principle, I think, of the discussion — to try to protect the commitment that people were given when they were hired to work a certain number of years and then be able to retire with some fiscal stability.”

The devil is always in the details, and I haven’t seen any of the details yet.
Gov. Phil Scott

Franklin County Sen. Corey Parent is one two Republican lawmakers on the pension task force.

Both voted in favor of the proposal Monday, and Parent said workers’ willingness to pay more in contributions, and accept small cost-of-living adjustments, is one reason he supported the deal.

“I think the members of the VSEA and the Vermont-NEA started to realize the problem’s not easy to solve, and realistically can’t be solved just by taxing people more or having government put more in," Parent said. "It required adjustments in the actual program to remain sustainable."

The size of the increased contributions from workers will depend on how much money they make. State employees who are in the lowest earnings quartile, for instance, wouldn’t see any increase in contributions. State workers in the top earnings quartile, meanwhile, would increase contributions by 0.5% over each of the next five years.

More from Vermont Edition: Pension Cuts For Teachers And State Employees: A Conversation With State Treasurer Beth Pearce

Teachers, too, would have a progressive structure for contribution increases.

“That progressive structure was really a critical component for any contribution changes,” Emrich said. “We wanted to be able to protect our lowest compensated colleagues moving forward throughout this process.”

The task force’s plan would also address the $2.5 billion in unfunded liabilities in non-pension retirement benefits. The bulk of those costs relate to health care for current and future retirees.

Gov. Phil Scott said during his weekly briefing Tuesday that he hasn’t yet reviewed the task force’s proposal.

“The devil is always in the details, and I haven’t seen any of the details yet,” Scott said. “My concerns are still the same, that we have something that’s viable, that’s sustainable in the future regardless of whether we have all this federal money or not.”

Since he only learned of the proposal Monday evening, Scott said the budget address he’ll deliver next week won’t include some of the new allocations on which the package relies.

“So there’ll have to be decisions made about what we’ll do without at that point in time, because it has to come from somewhere,” he said.

House Speaker Jill Krowinski said in a written statement Monday evening that she believes the reform proposal will achieve the “sustainability” that Scott says is a precondition for his support.

"There are a lot of lessons learned during this process and I think many of us would admit there are things that we would go back and change, but the fact of the matter is, we stuck through the difficulty and worked together to craft a package that will have a lasting impact,” she said.

Parent, however, said he’s not convinced the proposal, if enacted, will entirely ward off future pension shortfalls.

"I think the work we’ve done has helped the program; it will help the system. I don’t think this will be the end-all be-all fix-all that gets us out of the hole,” he said. “I think we make these adjustments and we monitor them for the next three to five years and then reconvene if we have to, but I think it’s a step in the right direction.”

Have questions, comments or tips? Send us a message or get in touch with reporter Peter Hirschfeld @PeteHirschfeld.

Corrected: January 11, 2022 at 6:17 PM EST
A previous version of this story misidentified the school at which Andrew Emrich is a teacher.
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