A new plan was unveiled Friday to shore up an old problem with the way Vermont pays for retired teachers' health care.

State Treasurer Beth Pearce says the state will no longer borrow money from the teachers' pension fund to pay for health care. The deal between the teachers' union, lawmakers and the Shumlin administration will avoid nearly a half billion dollars of interest payments over the next 25 years.

Pearce mediated the tenuous agreement between Gov. Peter Shumlin's administration, legislative leaders and the Vermont chapter of the National Education Association.

The Vermont School Boards Association and the Vermont League of Cities and Towns are not entirely on board with the plan, however.

Pearce told the House Committee on Government Operations Friday afternoon that the plan "spreads the cost and spreads the pain."

Retired teachers will not see a reduction in benefits, and teachers already vested in the retirement system will not see an increase in contributions.

An annual fee of $1,072 would be assessed on all new contracts for each new hire. Stephen Dale, executive director of the Vermont School Boards Association, said school districts would likely see it as an unfunded mandate.

Dale urged lawmakers to deduct the fees from the Education Fund rather than imposing it on local school districts. Then, the cumulative cost of the fees would affect the statewide property tax and would not be concentrated in districts that experience turnover.


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The fund now costs Vermont at least $28 million per year - a figure that's projected to climb to $44 million in a decade.