By Kim Jarrett | The Center Square
Deficits in Vermont’s state retirement accounts are continuing to grow and a committee tasked with addressing the shortfall is continuing its discussion on possible solutions.
The unfunded liabilities for the Vermont State Teacher’s Retirement fund increased last year by $379 million as compared to the 2019 valuation while the same liabilities increased by $225 million in the Vermont State Employees’ Retirement, according to numbers presented in a letter dated Oct. 29, 2021, from State Treasurer Beth Pearce.
“Pension costs have been growing much faster than the size of the overall workforce,” according to a presentation by Chris Rupe of the Joint Fiscal Office.
The Pension Benefits, Design and Funding Task Force is hearing from state officials and other stakeholders and will make recommendations to the Vermont General Assembly.
Lawmakers have been aware of the pension problems. Pearce proposed cuts to cost-of-living increases, also known as COLA, for future retirees before the 2021 legislative session but the Legislature did not act on her recommendations. Instead, lawmakers passed a bill creating the task force that Gov. Phil Scott signed.
“I was disappointed that the General Assembly was unable to make the needed legislative changes to reduce these liabilities,” Pearce said in her letter. “The Task Force must produce feasible recommendations and subsequently, the General Assembly must act this year. Each year we delay addressing the problem results in increased costs.”
Teachers and state employees are also worried about their future pension plans, according to testimony.
“All of my financial decisions have been based upon my compensation benefits – to retire with my pension promised to me when I signed my first teaching contract,” Amy Kahofer said in written testimony. “I’ve had no option but to contribute to this system. I support the idea of potentially contributing more to my pension system if necessary. I do not see how our elected officials have the right to change the benefits promised to me.”
The task force is considering another revenue source for the unfunded liability. Some of the suggestions included a wealth tax, sports wagering and revenue from cannabis sales. Legal cannabis marketplaces are expected to open in October 2022. The state has implemented a 14% excise tax and a 6% sales taxes.
As for sports wagering, it is still not legal in Vermont, however, a separate task force is studying the issue.
The task force is holding three more meetings on Nov. 10, 17, and 22.