Vermont Governor Vetoes Pension Reform Bill; Treasurer to Retire in January

Vermont Governor Phil Scott has vetoed a pension and benefits reform bill that addresses a $3 billion public retirement fund shortfall that had been unanimously approved by the state senate last week.

Although Scott said the bill “takes some positive steps,” he added that “it does not include enough structural change to solve the enormous unfunded liability problems the state faces.”

In a letter to the state’s general assembly explaining his decision not to sign the bill, Scott acknowledged that the veto will likely be easily overridden, but said that “given the scope of this problem and the risk it poses to the financial health of our state, I cannot bring myself to do that. It would be disingenuous because I know we could have done better.”

Vermont House Speaker Jill Krowinski and Senate President Pro Tempore Becca Balint said in a joint statement that they plan to “override the veto expeditiously.”

The bill proposes various amendments to pension benefits and other post-employment benefits for participants in the Vermont State Employees’ Retirement System and the Vermont State Teachers’ Retirement System.  It also changes reporting dates for certain actuarial studies for VSERS and VSTRS, as well as for the Vermont Municipal Employees’ Retirement System.

The legislation calls for one-time payments from the state totaling $200 million to pay down the unfunded liability in the state pension systems. It would also require phased-in increases in contributions from state employees and teachers, as well as some reductions in pension benefits. It makes no changes to the benefits of current retirees and beneficiaries, and modifies the formula for calculating cost-of-living adjustments.

The Vermont-National Education Association, the state’s largest union, said it was “disappointed” by Scott’s veto.

“Today’s veto is an affront to teachers, an affront to state employees, and an affront to troopers,” Vermont-NEA President Don Tinney said in a statement, adding that “our 13,000 members stand ready to work with lawmakers as they override this irresponsible and thoughtless veto.”

Meanwhile, Vermont State Treasurer Beth Pearce said she will not seek reelection for a seventh term and plans to retire in January after “having received some health news this past month.”

In her six terms as treasurer, Pearce has served as president of the National Association of State Treasurers, president of the National Association of State Auditors, Comptrollers and Treasurers and chair of the Government Accounting Standards Advisory Council.

“It has been my greatest personal and professional honor to serve the people of Vermont for the past 19 years … this service has been the highpoint of my more than 45 years in government finance,” Pearce said at a May 4 press conference. “I am so proud of this office and what we have accomplished over the past decade.”

Following Pearce’s announcement, Scott said in a statement that Pearce “has been a steadfast public servant, deeply committed to Vermont,” adding that “regardless of our differences, we have worked together well on several issues. I know Beth will continue to serve Vermonters well for the remainder of her term, and I wish her a speedy recovery.”