When we talk about Vermont’s nearly $6 billion unfunded liability, most of us think about the teachers’ and state employees’ pensions. But these two giant liabilities only account for half of the state’s total unfunded liabilities. Where’s the other half?
In its Jan. 16 legislative update, Campaign for Vermont offers an in-depth look at what lawmakers and the governor have planned for state pensions, fiscal responsibility, workforce and economic development, housing, good government and education.
To stop the bleeding and secure the future of its pension system, Vermont must follow the lead of its peer states that have already taken action to move to a defined contribution or hybrid system for new hires.
In one scenario, the state would make a one-time $75 million contribution, in addition to a recurring, dedicated $15 million revenue source in the annual state budget. The other scenario calls for a one-time $50 million contribution and recurring $40 million revenue source.
If we do nothing now, it will mean even greater and harder benefit cuts down the road as the unfunded liabilities continue to mount. Today’s $5.6 plus billion unfunded liability will look like chump change if we continue to kick the can down the road.
When Vermont’s Legislature appointed the Pension Benefits, Design, and Funding Task Force, there was a good chance tax increases would be discussed at some point. Now, Vermonters have a little clearer idea of what those could look like.
CFV hopes that having this information will help the Legislative Pension Task Force to ask the tough questions about the total compensation of public employees that are necessary as they set about making the changes to address the $4.5 Billion pension liability situation.
The notion that public school teachers are at a financial disadvantage relative to their private-sector counterparts has been debunked in a new study by Vermont-based think tank Campaign for Vermont.
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 from State Treasurer Beth Pearce.
“I’m challenged to agree with your assessment of this way of determining sustainability, because we may have thought we were buying a $200,000 house and may in fact be that we are buying an $800,000 house or a $1 million house,” Rep. Sarah Copeland Hanzas said.
Only through making painful cuts to spending can the Legislature ‘admit guilt’ to taxpayers in their willful neglect of fiscal responsibility. Let’s not let them shift the blame for underfunded pension to taxpayers.
The state’s largest union for public workers, the Vermont-NEA, is asking that the state use as much federal money as possible from its massive $5 billion influx over the past year to pay down an ever-increasing liability in its pension program.