In January, Beth Pearce, the state’s treasurer, dropped a political bomb, recommending painful cuts to the state employee and teacher pension systems in an effort to keep the system afloat in the long term. Top lawmakers in the lower chamber kept their cards close to the vest for months, working behind the scenes to craft a response, which was finally released Wednesday in the House Government Operations committee.
Between trimming benefits and asking for higher contributions, the House proposal would cost school workers a cumulative $300 million. For state employees, the cost would be about $200 million. Legislators are offering to pitch in more state dollars, too — an extra $150 million one-time contribution. (The proposals in play would not touch benefits for current retirees or those within five years of retirement.)
There are many reasons why Vermont finds itself staring down the barrel of a nearly $3 billion unfunded liability in its state employee and teacher pension systems. The funds have consistently fallen short of expected returns, and demographic trends also contribute to the problem. But one of the biggest culprits has been several generations of Vermont’s political leaders, who for decades shorted their contributions to the system.
Author(s): Lola Duffort
Publication Date: 29 March 2021
Publication Site: VT Digger