MONTPELIER — Vermont's largest city withdrew nearly $145 million in retirement funds for city employees from the pool of pension funds overseen by the state, and some see the action as potentially opening the door for Burlington to divest from fossil fuel companies, a move the governor proposed for the state.
City officials said they withdrew the funds from oversight by the Vermont Pension Investment Committee — the city got a wire transfer on Dec. 30 — and will manage them separately in hopes of significant savings on management fees.
"That (divestment) never came into play in our decision to leave VPIC," James Strouse, chairman of the Burlington Employee Retirement System board, said in an interview.
But separately, the Burlington City Council has a special divestment committee to consider ridding the city's funds of fossil fuel investments out of concern about climate change. Its chairwoman said she sees the change in the city's investment strategy as an opening to push divestment.
Fossil fuel divestment has been a high-profile issue recently in Vermont. In his State of the State address last week, Gov. Peter Shumlin called for Vermont to sell off its investments in coal companies, as well as Exxon Mobil Corp., which the governor accused of concealing information about climate change from the public. Shumlin called for following a California study on divesting for fossil fuel companies completely.
State Treasurer Beth Pearce, a Democrat like Shumlin and usually closely allied with the governor, issued a statement a day later disagreeing with him.
"I believe that divestment is not the appropriate strategy for our fund and is counter to our fiduciary responsibilities to the fund and its beneficiaries," Pearce said.
Selene Colburn, a Progressive Burlington city councilor who chairs the divestment committee, said its study of the issue will include a public hearing tentatively set for Feb. 3. She said she understood the city retirement system's main goal is strong investment performance, but said long-term costs of not pursuing the goals set at the recent climate conference in Paris could be far higher.
"The costs to citizens and municipalities that are coming down the road if we don't start to meet some of the targets that are being set internationally could be devastating," Colburn said.
Strouse said if divestment advocates make a proposal to the city retirement system's board that the city can divest without harming investment performance, the board would consider it. "They would need to come to us with the case" for doing so, he said.