S.286 AN ACT RELATING TO AMENDING VARIOUS PUBLIC PENSION AND OTHER POSTEMPLOYMENT BENEFITS
in the State Senate
on May 4, 2022, by a vote of
Purpose: The purpose of S.286 was to reduce the $3 billion deficit in the state’s public employee and teacher retirement funds, with that stated goal of making the pensions 90% funded.
Vermont would add $200 million of one-time funding to the systems’ pensions ($75 million to the Vermont State Employees’ Retirement System (VSERS) and $125 million to the Vermont State Teachers’ Retirement System (VSTRS).
It would add another $67 million to prefund the systems’ retiree health care benefits. Vermont also agrees to annually allocate $30 million for pensions beginning in F2024.
S.286 makes no changes to the benefits of current retirees, but does obligate current/future employees and teachers to pay a higher portion of their current income into the plan, increasing annual funding by $24 million. Additional limitations would be placed upon cost-of-living increases.
Analysis: Some voting YES believe that S.286 is an excellent compromise on funding the pensions, noting that teachers and employees must pay more money into their plans, but their benefits will not be reduced when they retire. S.286 follows the recommendations offered by the legislative Pension Task Force in its recent report (see 'Related' documents below). Others voting YES had hoped to reduce the deficit to a greater extent, but supported S.286 because it was better than nothing.
While no senators voted NO, pension experts are skeptical that S.286 will leave Vermont in a fiscally superior situation. The systems’ unfunded liabilities would be reduced by just 10%, with the other 90% unaccounted for, which is 80% short of the outlined goal. Even this ‘progress’ could disappear within a few years: the governor’s forecast predicts that plan expenses for all covered retirees will grow 20% over the next 4 years. State revenues are projected to only increase 1-3%. Vermont will still assume a 7% rate of return from its pension investments, a rate rarely approached by pension funds anywhere in the country, and never in Vermont over the long term.
As Recorded in the Senate Journal for Wednesday, May 4, 2022: “Shall the bill pass, notwithstanding the refusal of the Governor to approve it?, was decided in the affirmative on a roll call required by the Vermont Constitution, Yeas 30, Nays 0. (the necessary override two-thirds vote having been attained).…” (Read the Journal, p. 1225-26).
Vermont Joint Fiscal Office fiscal note (Mar. 2022).
Pension Benefits, Design and Funding Task Force’s Final Report (Jan. 2022)
How They Voted
Becca Balint (D-Windham) – YES
Philip Baruth (D-Chittenden) – YES
Joe Benning (R-Caledonia) – YES
Christopher Bray (D-Addison) – YES
Randy Brock (R-Franklin) – YES
Brian Campion (D-Bennington) – YES
Thomas Chittenden (D-Chittenden) – YES
Alison Clarkson (D-Windsor) – YES
Brian Collamore (R-Rutland) – YES
Ann Cummings (D-Washington) – YES
Ruth Hardy (D-Addison) – YES
Cheryl Hooker (D-Rutland) – YES
Russ Ingalls (R-Essex-Orleans) –YES
M. Jane Kitchel (D-Caledonia) – YES
Virginia Lyons (D-Chittenden) – YES
Mark MacDonald (D-Orange) – YES
Richard Mazza (D-Chittenden-Grand Isle) – YES
Richard McCormack (D-Windsor) – YES
Alice Nitka (D-Windsor District) – YES
Corey Parent (R-Franklin) – YES
Chris Pearson (P-Chittenden) – YES
Andrew Perchlik (D-Washington) – YES
Anthony Pollina (P/D-Washington) – YES
Kesha Ram (D-Chittenden) – YES
Richard Sears (D-Bennington) – YES
Michael Sirotkin (D-Chittenden) – YES
Robert Starr (D-Essex-Orleans) – YES
Joshua Terenzini (R-Rutland) – YES
Richard Westman (R-Lamoille) – YES
Jeanette White (D-Windham) – YES
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