by Rep. Scott Beck
For many decades there has been significant distrust of government. The 1960s and 70s, and the Vietnam War and Watergate turned the tide of public sentiment from which it has never regained its footing. There is no point in placing blame, said events are too far in the rearview mirror and those policymakers are no longer in positions of power.
Government can only influence public sentiment going forward in an attempt to reverse this unfortunate situation. At the top of the pyramid of actions government can take to restore the public’s trust is accountability.
Currently, mismanagement and a change in accounting rules share equally in having caused a $5.7B unfunded liability in Vermont’s Teacher and State Employee retirement systems. Vermont has attempted to eliminate this unfunded liability for over a decade, but instead it has grown from $1B to $5.7B in just the last 13 years.
On Wednesday, a proposal to repair the Vermont Teacher and State Employee defined benefit retirement systems was introduced in the Vermont House of Representatives. The proposal is detailed and contemplates significant, some would say draconian changes to retirement benefits promised to educators and state employees that have foregone private retirement savings and investment. Educators and state employees have dutifully paid every contribution required of them since the formation of the defined benefit pension funds, every cent.
The proposal reduces the State’s annual required commitment (ADEC) to retire the unfunded liability by $80.4M. It does this by decreasing the benefits of educators and state employees more than 5 years from retirement by $520M. It also increases the employee contribution amount by as much as 2.25%, part of the increase to help with the unfunded liability and part to address the increased normal cost paid by employees based on demographic shifts, average final compensation, and expected fund investment return.
When Vermont decided to create a defined benefit system and require state employees and educators to join, it assumed all risk associated with these plans. Vermont chose not to manage that risk correctly and it now has an unfunded liability of $5.7B.
The State is 100% responsible for the $5.7B unfunded pension liability, this is where accountability lies. The State needs to own it and come up w a plan to address it. Employees are 100% responsible for the normal cost that supports the benefits they will enjoy. Employee contribution rates will need to increase by about one percent to modernize the normal cost contribution, which supports the increased cost of guaranteed benefits.
Categories: Commentary
A total and complete audit of Vermont’s finances, programs, grants to 501c’s and shams such as the Health Care debacle and EB5 scam. Where did the pension money go… who’s responsible? I really don’t think this will ever happen, the criminals are in charge and we ain’t.
Not all the state’s fault and the unions are not innocent. Its was the unions that demanded pensions set on the 3 highest years of earnings.
Rep Beck hit it hard and that is what will have to happen to deal with this monstrosity before it gets any bigger. When the audit happens, it needs to go back a couple of administrations, in my opinion.
It goes much deeper than the pension funds…there needs to be a moratorium on ALL NEW spending programs until all the underfunded existing programs have been fully funded/reformed.
Kinda like closing a wound before you release the tourniquet ? The idiots under the “Golden Dumb” are like sugar drunk children in a candy store when it comes to spending our money so I really don’t hold much hope of them changing until their goose (taxpayers) craps blood instead of golden eggs.
Re: “The State is 100% responsible for the $5.7B unfunded pension liability, this is where accountability lies.”
Not so. I think all individual State elected officials, and their administrative financial appointees, going back to when these defined benefit plans were created, should be identified personally, and assessed a portion of these costs. It’s time our elected officials had some skin the game too. If they think they’re doing such a great job for their constituents, prove it.
Personally I wish tar and feathering of dishonest, or self serving, politicians would make a comeback . Maybe at that time “Statesmanship” could once again be a driving reason to become involved in public service .
Politician, Definitions from Oxford Languages, a person who acts in a manipulative and devious way, typically to gain advancement within an organization.
Perhaps we should call it ‘reparations’.
Biden’s COVID bill has $86 BILLION to bail out pensions across the US so VT should take it’s turn at the slop trough of taxpayer $.
This huge problem is borne from two factors…TOO MANY state employees enjoying TOO MANY benefits. Both should be reduced going into the future…cut state employees by attrition and all new hires should be on a defined contribution retirement plan with a 3-5% employee match.
This will never happen as long as the VTNEA and VSEA own the VT democrat party lock, stock and barrel. Public sector unions are killing this country and should be ELIMINATED. If teachers are so “essential”, then why are they allowed to go on strike?
Hey this is what liberal socialists demonRATS do.. STEAL LIE and COVER-UP and most of all BLAME OTHERS…