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.
VPIC is currently comprised of three employees: one is exempt, two are not. They want to make the other two exempt also because they are at "significant risk" of loosing employees. Classification system doesn’t work for these specialized positions because pay is noncompetitive with the private sector for similar skill sets. They would also like to add a fourth position as a classified employee as an admin person.
The Governor has three exempt positions in his budget, they asked for a the fourth but it was taken out. To bring their staff up to 50% salary parity with their peer group would cost $350,000 over five years.
There were questions from the Committee about the currently projected 7% rate of return (actual returns were negative last year). Henry warned that current legislation may impact that projected return amount and would create a shift in what VPIC does. They have significant concerns with Senate bill on divestiture. Lowering the expected rate of return to just 6.5% will cost $50M per year. Divestment would prevent VPIC from investing private equity funds, which is one of the ways they have been able to maintain that relatively high ROI.
Another bill was introduced to raise the CPI for teachers, which would also have an impact. Cost of Living adjustments have a significant impact if the actuaries don’t predict inflation rate correctly.