Blog: A pension reform proposal has been released. Labor leaders and top lawmakers are behind it. – vtdigger.org

Steve HowardSteve Howard
Steve Howard, executive director of the Vermont State Employees Association, speaks on Aug. 27, 2020. File photo by Mike Dougherty/VTDigger

A long-awaited pension reform proposal is finally out. 

On Monday, a special legislative task force charged with finding a way to pay down the ballooning debts of the Vermont teachers’ and state employees’ pension systems unanimously endorsed a package of recommendations

The reform plan still has a ways to go. It must be crafted into a bill — it will make its legislative debut in the Senate Government Operations committee — and pass both chambers before it could garner Gov. Phil Scott’s signature. But it has significant momentum behind it. 

When lawmakers took a first pass at pension reform last spring, a proposal put forward by the House faced immediate backlash from labor unions and was shelved within days of its unveiling. The new proposal was crafted by a task force composed of lawmakers and representatives from the Vermont-National Education Association, the Vermont State Employees Association and the Vermont Troopers Association — and is being applauded by labor and legislative leaders alike.

“The state has never made a commitment like this before to the pension systems for both state employees and teachers,” said Andrew Emrich, a VT-NEA representative on the task force who teaches at Brookside Primary School in Waterbury.

Both sides are making concessions. Employees are agreeing to modest benefit reductions and higher contributions. (Current retirees would not be impacted.) Lawmakers, in exchange, are offering $200 million in one-time money to pay down the system’s debts as well as 50% of any general fund surpluses going forward.

The unions representing educators and state employees had been emphatic earlier in the process that any deal would require the state to pony up dedicated revenues. But lawmakers — and Scott — remained dead set against creating any new taxes to pay for retirement benefits. By promising a share of any future general fund surpluses, lawmakers are pledging new forms of ongoing support without having to agree to new taxes.

And while employees are agreeing to shoulder part of the burden of reform, Emrich argued that the concessions in the package were a far cry from the cuts initially contemplated in proposals discussed last winter and spring. Earlier plans, for example, envisioned teachers working an additional 10 years — and seeing annual cost-of-living bumps to their pensions axed entirely.

The deal before lawmakers now keeps the retirement age for teachers as-is, and it preserves — with some tweaks — a cost-of-living adjustment.

“I think there’s a lot of great positives to take away from this,” Emrich said.

Steve Howard, the executive director of the VSEA, said the deal eliminates changes to the pension that would require the union’s members to work longer for a less secure retirement. 

Another key win, according to Howard, is the panel promised to look into creating a new pension benefit group for staff at the Department of Corrections, which is facing unprecedented levels of turnover. Vermont State Treasurer Beth Pearce would be tasked with finding a cost-neutral way to pay for it by April 15.

“That’s a major victory. We haven’t finished the work on that yet — but we’ve never gotten this far,” Howard said. “We’re there. We’ve got all the ingredients, and we can put it together.”

The deal comes after weeks of intense back-and-forth negotiations between union representatives and top lawmakers, who cheered the package’s unanimous endorsement by the panel.

“This is a hopeful day for Vermont public employees and for Vermont taxpayers. The agreement we’ve struck will protect the public pension system and will save Vermonters millions and millions of dollars over the coming years,” Senate President Pro Tempore Becca Balint, D-Windham, said in a statement issued minutes after the task force’s adjournment. “This big financial investment will right a wrong, give public employees peace of mind, and will benefit all of us.”

Balint was echoed by her counterpart in the lower chamber, House Speaker Jill Krowinski, D-Burlington, who called it a historic moment.

“We must use the momentum and energy of the task force members to get this bill passed and into law. We will continue to show the rest of the country that difficult issues, like pension reform, are issues we can tackle in Vermont,” Krowinski said in a statement.

Scott, who said he wanted lawmakers to take the lead on pension reform, has yet to weigh in. The lone administration official on the task force, Department of Financial Regulation Commissioner Mike Pieciak, voted alongside the rest of the panel for the overhaul but said he had not conferred with the administration about it.

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