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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At the 8/17/2021 task force meeting, Chris Rupe (part of the Joint Fiscal Office) submitted a document entitled: impact of various possible changes to plan design. The task force reported that there are various scenarios that are being considered, to include:

• Adjusting employee contributions to the pension plans
• COLA (cost of living) adjustments for active employees, for all except those within 5-10 years of retirement
• New one-time or ongoing revenue sources. None yet been selected, but under consideration are:
  • Cannabis tax revenue
  • Sports gambling
  • High-income tax surcharges
  • Elimination of capital gains income tax exclusion

Wow, it has been a year, hasn't it?

Between major federal costly government initiatives, the delta wave, workforce shortages, historic inflation, and supply chain nightmares I think it is safe to say we are all exhausted. And that was just the last six months. It almost seems like 2020 never ended, it just continued right on through 2021 and will end... who knows?

At the state level we are not immune to the national headwinds, we feel all of those developments here as well. In fact, we have a few of our own to add to the list: our waterways continue to degrade while our attempts to eliminate point-source pollution fail to find meaningful success, we have spent another year debating pension reform after the deficit in our pension obligations grew by $1B in 2020, affordable housing is impossible to find, emergency measures to connect rural Vermonters to broadband internet have ended long ago but the need is still painfully apparent, and our state college system is still in financial crisis and needs transformation into a vibrant educational ecosystem.

On November 10^th Campaign for Vermont (CFV) held a press conference to review the details of its report entitled The Public Sector Reality. For the record, I am the President of the Board of Directors of CFV.  Over the past months of pension discussions at the Legislature we heard claims about the state’s non-competitive wages and we decided to verify those statements. We set out expecting to find that pension benefits were an unquestionable asset to recruiting and retaining our public sector workforce. What we found surprised us.

November 10, 2021

CONTACT:
BEN KINSLEY
(802) 310-3904
[email protected]

Montpelier, VT – On Wednesday Campaign for Vermont (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.

“As a former Commissioner of the Department of Labor and Commissioner of Human Resources, I was surprised by what we found in this report,” said CFV President Pat McDonald, “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.”