Don Turner: The Legislature’s irresponsibility on pensions

Editor’s note: This commentary is by Don Turner, a former Republican state representative from Milton, former House minority leader, current Milton town manager and longtime member of the Milton Fire and Rescue departments. He was a candidate for lieutenant governor in 2018.

The last thing you do in the middle of a crisis is kick the can down the road. Yet, that’s exactly what the Legislature just did on Vermont’s mounting pension liabilities.

Earlier this year, State Treasurer Beth Pearce delivered a long overdue message to the Legislature–calling for painful cuts in order to keep the state employees’ and state teachers’ pensions operation. This comes years after resisting calls for structural reform to the pension system.

Lou Varricchio/TNR

Don Turner

However, the Treasurer deserves recognition for having the courage to at least present a plan. The Legislature did too–with leadership in the House Government Operations Committee unveiling its own similar plan.

But, the Legislature’s plan broke our promises to state employees and teachers. It called for painful cuts and unfair modifications to arrangements that the state had assured its workers it would cover. Unions, state employees, and teachers were rightly outraged.

However, instead of considering other options to reform the pension system, Legislative Leadership caved to political pressure.

For example, Lieutenant Governor Molly Gray issued a vague, ambiguous statement criticizing the plan(link is external)–with absolutely no suggestion for any substantive alternatives.

Senate President Pro Tem Becca Balint did much the same.

And, unsurprisingly, House Speaker Jill Krowinski ditched the plan(link is external)–effectively throwing her own colleagues in the House Government Operations Committee under the bus. She called for Montpelier’s favorite tool–a “task force”–which really means doing nothing now.

It will also allow the Legislative Majority to deflect responsibility and start the blame game. I am sure that Governor Scott will be their first target.

In response, Treasurer Pearce rightly noted her disappointment(link is external) in the Legislature’s inability to come to an agreement. The Treasurer is correct. By delaying action this year, the Legislature is only making our problems worse. We can’t afford to break our promises, but we certainly can’t afford to delay action either.

There are other options out there–options that don’t break our promises and avoid painful cuts. The Legislature could give state employees an option to switch to less-expensive defined contribution plans (and transition new employees into these plans); move other-post employment benefits (OPEB) into the Vermont health exchange; impose a small tax on retirement allowances until we reach an 80% funded ratio (a far better alternative than deep cuts); slightly tweak up the retirement age to match Social Security; and perhaps most importantly, phase-in reasonable increases to employee contribution rates over time.

outlined all of these ideas earlier this year.

I would also encourage modifications to prevent future bureaucrats from gaming the pension system. It is far too common for agencies to promote or move staff around at the end of their career to inflate their retirement pension. Modifying the system to determine beneficiaries pension based on the average of their annual salary over their career versus the highest two years would be more equitable to all and would not allow someone to manipulate the pension system.

Put simply, there are other options out there. But instead of considering them, House lawmakers came up with a rushed, poorly-designed proposal–excluding key stakeholders from the process–and then abandoned it and established a measly “task force.”

While abandoning a bad plan is a good step, opting for no plan which will cost taxpayers hundreds of millions of dollars annually is not an acceptable alternative. I believe everyone involved in this conversation understands what needs to be done to stabilize the pensions now. The is problem lays with the political fortitude to get it done.

Moving forward, the Legislature should make sure the task force process is inclusive, open and transparent, and considers all ideas as timing is of the essence.

But the very fact that we’re in this situation is a sign of failed Legislative leadership. Let’s hope they wise up and incorporate some realistic, substantive ideas for next year–or else it will haunt them in the 2022 election.

Images courtesy of Wikimedia Commons and Lou Varricchio/TNR

9 thoughts on “Don Turner: The Legislature’s irresponsibility on pensions

  1. The question is, why is the State managing these defined benefit pension programs in the first place? Why not allocate a negotiated amount of money to each teacher or government employee and let them manage their own pension program? They can have their own 401K with employer contributions. They can have their unions manage their accounts or do it themselves. They can use the Teachers Insurance and Annuity Association of America (TIAA) to manage their accounts.

    The State has proven itself to be absolutely incompetent in managing most everything else it does. Why would anyone expect something different in this case? Why is the State of Vermont managing these accounts?

    I’d like to see an explanation from the Governor, the State Treasurer, or one of our legislators. Is there anyone out there with the courage to explain this to we little people? – we who are expected to guaranty whatever it is our elected and appointed officials are promising.

  2. Don,

    This is an excellent article thank you. I would also like to point out another problem we have relating to retirement costs. According to the Governing website, Vermont ranks third in the nation for the number of FTE state employees on a per capita basis.

    Vermont has 148 FTE for every 10,000 people. I think it’s time a the legislature or the governor appoint a some beloved commission to look into this and find out why we can come more into line with other states.

    Also, as we know, the legislature has consistently year after year for decades underfunded the require amount they knew was needed to keep the system solvent. Legislators would rather reward their political donners than do the right thing. Our legislature has definitely become a pay to play form of government. In my opinion, we now have too many legislators in Montpelier who are just political activists with an agenda, instead of people trying to work for a better Vermont for all.

  3. Pay-to-Play:

    This sums up how Vermont’s unfunded pension & healthcare liabilities accrued.

    In return for overly generous and unaffordable benefits by Government, VOTES and CAMPAIGN DONATIONS were secured for the progressive-Democrat Party by the teacher’s and state worker’s union.

    Knowingly using unrealistically high discount rates of seven to eight percent by the primarily progressive-Democrat Government, kept the CAMPAIGN DONATIONS and VOTES rolling in for decades for the progressive-Democrat Party.

    Now, the jig is up. It’s corruption. Pure and simple.

    The fairest but unlikely solution would be for both the progressive-Democrat Party and Unions to bear the full costs of this scandal.

  4. Once an issue becomes the “responsibility” of “the State” through thoughtlessly assembled “Boards” or “Committees”, it becomes no one’s responsibility and there is no accountability. The Legislature has happily shed many of their troublesome responsibilities by taking this approach. Pensions, Water Quality, Health Care, “Global Warming”, Broadband …. etc…..

  5. I published the following comment on Front Porch Forum in response to a typically mundane assessment of this pension fiasco by Carolyn Partridge, Windham County, Democrat, in which she said everything she could to redirect responsibility for the legislative management of this mess. To date, the only response to my remarks, by any elected official, has been…. you guessed it… crickets.

    “Who manages, makes decisions about, and oversees the investments…….[for] three pension systems that are managed by the State of Vermont[?]”

    “They ….. are all governed by boards of trustees, each of which includes the State Treasurer.”

    OK. These boards of trustees are appointed by Vermont Executive Administrators, State Legislators, and State Treasurers. They are the people, elected and appointed, who have a ‘fiduciary’ responsibility to the pensioners, Vermont taxpayers, and voters who co-fund these investments. They must be held accountable for the mismanagement of the pension funds.

    The mismanagement includes the legislative failure to invest the $163.61 Million allocated to fund the teacher’s pension program. Apparently, the money was available, but the legislature chose to invest it elsewhere. That they reallocated the money of their own fruition, or at the recommendation of State Treasurers, is beside the point. They are all responsible. And that $1.933 Billion is now the current low-balled shortfall indicates that the Legislature and State Treasurers were negligent in monitoring the financial environment and adjusting the investments to these funds over the years too.

    That people are living longer, that the rates of return on investments fell short of projections, and that other States are having similar problems, is also beside the point. We all know the common investment disclaimer – ‘past performance is no guaranty of future result’. Our Executives, Legislators and State Treasurers were negligent in conducting their fiduciary responsibilities. They intentionally initiated undue influence on their victims – the pensioners, who apparently fulfilled their investment obligation – and Vermont voters and taxpayers, who relied on the promises of the Executives, Legislators and State Treasurers they elected.

    Were these elected and appointed officials inclined to exercise undue influence over their victims (i.e. pensioners, taxpayers, and voters)? You bet. Their motive was to remain in power and control the flow of taxpayer monies to the special interest groups that provided the political contributions to their respective election campaigns.

    And, very importantly, lest we forget, one of the most powerful special interest groups are those same public employees and teachers who are now claiming foul. The unions representing government workers and teachers are nothing short of complicit.

    We all know what happens to people in the private sector who perpetrate a Ponzi scheme fraud of this nature. Bernie Madoff comes to mind. And it is precisely why we should all run for cover whenever a politician says, ‘we’re all in this together’. What better way is there to avoid personal responsibility?

    For people who want to learn more and view Chris Rupe’s presentations – it’s worth a listen. As a business finance manager, I understand the presentation. Unfortunately, it is likely most people won’t understand. Which is why they hire fiduciaries to manage these accounts in the first place.

    Will our Legislators and State Treasurers do what they must to rectify our path to bankruptcy?

    Don’t hold your breath. For one thing, Vermont’s public pensions are facing nearly $6 Billion in unfunded liabilities, considerably more than the $2 Billion referenced by Ms. Partridge. And the Vermont National Education Association (VTNEA) and Vermont State Employees Association (VSEA) special interest groups are anything but reasonable participants. Unfortunately, our elected officials are, for the most part, beholden to them.

    If I knew for a certainty that a man was coming to my house with the conscious design of doing me good, I should run for my life. – H.D. Thoreau

    “Half the harm that is done in this world is due to people who want to feel important. They don’t mean to do harm; but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves.” ― T.S. Eliot

    “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies…; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. – C. S. Lewis

    When will they ever learn? When will they ever learn? – Bob Dylan

  6. If I remember correctly, issues with pension funding are chronic- dating back to then State Treasurer Jim Douglas’ warning 25 years ago. That’s a long time to kick a can. But, the Legislatures for the past 25+ years have all been skilled at kicking cans and not solving much. Health Care, Act 250 and Education funding are still unresolved problems. This legislature will continue the tradition, as long as the Unions are somewhat sated in their demands. There’s bigger fish to fry! Systemic Racism, Policing and all the “free” federal dollars headed to Vermont need to be spent! Krowinski will get around to pension funding….well, maybe in 2023- after the elections…

  7. Donny we hardly knew ye 😀 Pls run for office Mr Turner – we need all conservative hands on deck asap. Your solution is stunning in its simplicity and fairness while Beth Pearce calls for state, er, taxpayer funds of $68 million if memory serves.

    • I agree. Mr. Turner’s proposals, while requiring some sacrifice, actually would fully address the problem, something the Treasurer Pearce’s ( while a significant step in the right direction) do not).

      This absolute failure of leadership by the new Democratic leadership who caved to what the shortsighted demands of the unions rather than what is needed for the good of Vermont should be highlighted wherever possible. I am sharpening my pencil for letters to the editor to my local papers and would encourage others to do the same.

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