Tuesday

The Senate Government Operations Committee took testimony on Tuesday regarding S.42, which proposes to divest fossil fuel investments from the state's pension funds. In their previous meeting, the Committee still had not come to a consensus on several issues. Some stakeholders agreed to meet Friday and Saturday to hopefully come up with a compromise so bill could be voted out of Committee.

Legislative Counsel presented an amendment, recommended by the Treasurer, on Friday. The amendment adds a new definition of de-minimus exposure which means holding less than 2% of the overall investment. The language recommends that VPIC develop a plan which identifies stocks and securities are carbon-heavy and make suggestions on how to divest by the end of 2030 with minimum exposure of funds.

Eric Henry, the CFO of the Vermont Pension Investment Commission (VPIC) joined the House Appropriations Committee on Tuesday. He highlighted that it's important for them to be separate from the Treasurer's office to provide more transparency.

The Senate Government Operations Committee reviewed S.42 on Thursday, which would divest state pension funds from fossil fuel investments.

This week the legislature overrode Governor Scott's veto of the pension bill unanimously. While only addressing less than half of the deficit, the legislature resoundingly chose incremental progress over sweeping reform. Other bills are following this trend, such as the Act 250 bill, shying away from bold reforms and towards minor tweaks to existing laws.

Other bills moving forward include housing and workforce development, economic development, student weighting (headed for the Governor's desk). Universal school meals were also approved by the Senate this week, setting up a likely slash to the $36M in property tax savings that were offered by the House.

The pension bill is now in the Governor's hands after the Senate gave final approval on Friday. He will be faced with a choice to approve a bill he has criticized in recent weeks as not going far enough to address the pension deficit or accept the incremental progress that the bill offers.

We are also, by the way, waiting for the Governor to sign the ethics bill which passed over a week ago...

After the House more or less accepted Governor Scotts plan to return half of the $95M property tax surplus to taxpayers, the Senate may not be so quick to jump on the bandwagon. After testimony this week they seem inclined to reject the 20 cent decrease to property taxes in favor of providing funding for both PCB remediation and universal school meals.

As the Pension Benefits Task Force debated how to solve Vermont's $4.5B pension deficit, we heard repeated claims that public employee benefits (which are 2-3 times as generous as the private sector) were necessary to make teachers and state employees competitive because their salaries are lower. While this has been a long-standing claim, we decided to dig into data and what we found was surprising.

“As a former Commissioner of the Department of Labor and Commissioner of Human Resources, I was surprised by what we found in this report. I think everyone needs to read this report because there were a number of assumptions that were carried through the years that were just plain wrong.” - Pat McDonald (President, Campaign for Vermont)

In November CFV released a new report that compares the wages and benefits of teachers and state employees to the private sector and what that means for the current discussions around pension reform. If you missed it, you can find the report here.

We are planning to continue into Phase 2 of this project over the coming months, which MAY include:

1. A further in-depth comparison of specific jobs between the public and private sector.
2. An analysis of hiring competitiveness between the public and private sector.
3. Comparing benefits offered by top-rated employers in the private sector to the public sector offerings.
4. Analyzing how many private sector workers it takes to support one position in state government.

If you have additional ideas, we would love to hear about them! You can contact us here.

Please support this project by pledging below.

TO:                   THE PENSION BENEFITS TASK FORCE
FROM:             PATRICIA MCDONALD – PRESIDENT, CAMPAIGN FOR VERMONT PROSPERITY
DATE:              DECEMBER 6, 2021
RE:                   FOLLOW UP FROM TESTIMONY ON DECEMBER 1, 2021

Dear Members of Pension Benefits Task Force:

First, I want to thank you for giving Ben Kinsley and me the opportunity to present the findings of our report entitled “The Public Sector Reality.” The purpose of this report was to examine the overall competitiveness of our public and private employee wages. We believe this question does have an impact on how we should address the pension crisis because it gets at what level of benefits we should be offering to new hires. We cannot meaningfully change the promises we have already made to fully vested employees (nor should we), but we can make adjustments for new employees as a large portion of our workforce potentially turns over within the next several years.

It turns out that some government officials have known for a while that state government salaries are competitive. This letter (dated October 29, 2009) from Jeff Carr to Governor James Douglas about a review of a VSEA memo to Donna Sweaney, Chair of Government Accountability Committee. Carr’s letter, over a decade old now, points to many of the same factors we found in our recent report around compensation levels and the growth rate of state employee compensation compared to the private sector.

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