MONTPELIER, Vt. — Teachers and state employees told lawmakers to leave their pensions alone in a public hearing this week.

On Monday evening, about 20 members of the public addressed the “Pension Benefits, Design and Funding Task Force,” urging the body not to alter state retirement benefits.

According to an interim report released by the task force last month, unfunded liabilities in state’s pension system are projected to increase by more than $600 million next year.

“The Vermont State Employees’ Retirement System (VSERS) and the Vermont State Teachers’ Retirement System (VSTRS) are vital components of recruiting and retaining an excellent public sector workforce, but neither system has enough assets today to cover the projected cost of retirement benefits they must pay out in the future, and the size of the shortfall has grown significantly in recent years,” the report states.

In March, the House Government Operations Committee unveiled an initial proposal that would overhaul VSERS and VSTRS.

State Treasurer Beth Pearce initiated the pension conversation in January, when she called for deep cuts to the system in order to maintain long-term sustainability. At the time, she projected almost $3 billion in unfunded liability.

Factors precipitating the shortfall include historic underfunding, lower than anticipated investment returns, changes to demographic assumptions and revised economic assumptions.

The plan proposed increasing base employee contribution rates, raising the retirement age to the Social Security eligibility age, requiring employees to work 10 years to qualify for benefits instead of five, and applying the cost-of-living adjustment to only the first $24,000 of a retirement benefit.

In addition, the average final compensation would be calculated using the seven highest consecutive years of salary as opposed to the current three years, resulting in a reduction of the average benefit.

All together, the cumulative cost to school and state employees under the proposal would be about $500 million.

The proposal drew sharp backlash from state employees and teachers, who held demonstrations across the state this spring.

In response, lawmakers hit pause on the plan and, instead, created the task force to study the problem.

The 13-member task force includes legislators, representatives from labor organizations, an administration official, and a non-voting designee from the State Treasurer’s Office.

While speakers Monday expressed gratitude that the task force was looking for solutions, they stressed the importance of not losing any more benefits.

Patricia Bennett, a Department of Corrections worker, said uncertainty about the state pension system is “rocking my world.”

“I am financially on my own. So I’m counting on my pension, I’m counting on the other things that I have in the works, so that when I get off and retire that I do not become a dependent on the state,” she said.

Bennett said state employees are leaving their jobs over the proposed changes to the system and she is concerned there won’t be enough people to staff state correctional facilities because no one else is going to replace them.

“The new people are not going to be looking at a pension that’s going to make them work until they’re in their 60s,” she said.

Paul Cherrier, a teacher at Middlebury Union Middle School, raised concerns about teacher retention and attracting new teachers to the state.

He noted that some of his colleagues have expressed a desire to seek teaching jobs out of state, or leave the profession altogether over potentially losing their benefits.

He added that several open teaching jobs at his school last year attracted only a handful of applicants, with only one person applying for an open math position. In the past, he said, such postings would have had as many as 60 applicants each.

“We must be able to retain and attract talented teachers, and saving the pension the right way will help ensure that we do that,” he said.

Cherrier encouraged the task force to save pensions by maintaining current benefits for all workers, dedicating funds to pay down the unfunded liabilities and creating a dedicated funding source to maintain the system.

“This is an investment in the future of our state both educationally and economically,” he said.

Paul Anderson offered an alternate take, saying he was speaking Monday to “represent the taxpayer.”

Anderson criticized the makeup of the task force, saying that having half of it was composed of members of public employees unions is “kind of like having the fox in the hen house.”

He pointed to his experience as a longtime employee at a Fortune 50 company for how to solve the state’s pension problems.

“In my 33 years there, the defined benefit pension plan was frozen. It was transitioned to defined contribution plans and a 401(k). The retiree medical supplement was eliminated. There was no cost of living increases. These are all things that the private sector has done.”

He added it was “unconscionable that public sector unions continue to advocate for things that their taxpayer constituents have long lost.”

Michelle Mathias, a retired school administrator, stated she was opposed to raising the age limit for pension eligibility, citing teacher burnout and cost.

“Even the most passionate and skilled teachers know when they have reached the point when they are not able to sustain at the level their students and colleagues need,” she said. “Forcing teachers to stay years beyond that point for financial reasons will reduce the quality of education for the students and the school climate.”

Mathias argued that extending retirement eligibility also will result in higher school budgets, property taxes and pension payouts, saying younger teachers and administrators represent a $30,000-40,000 per-teacher savings annually “while getting the energy enthusiasm and newer skills needed within our schools.”

She noted that teachers work hours equivalent to salaried professionals but within a compressed 10-month period, and often go above and beyond their job description by supplying students with food, clothing and supplies — “all paid out of pocket, something that employees in private industry would never dream of doing.”

“Pension is a form of deferred compensation and contracted benefit that attracts educators,” she said. “Although contributions appear to need adjustment in recognition of longer lifespans, it is critical that we not extend the required term of service beyond 30 years.”

The task force is expected to deliver its final report to the governor and lawmakers next month.


(1) comment

David E. Melton

Kentucky done the task force thing in 2012. Vermont will come to the same conclusion if they are honest.

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