A conference committee has reached compromise on a bill changing the governance of the state’s pension fund and establishing a task force to study the state’s multi-billion unfunded pension liability.
The conferees, including Sen. Jeanette White, D-Windham, and Rep. John Gannon, D-Windham-6, reached accord on the compromise version of H. 449 Monday afternoon. It’s due to be taken up first by the Senate later this week, and then by the House if successful.
“I think the Senate and House conferees wanted to get to a deal because of the importance of this issue,” Gannon, the vice chair of the House Government Operations Committee, said Monday. “The two sides really weren’t that far apart.”
“We reached a good compromise so we can get this passed, signed by the governor and begin the task force’s work in June,” Gannon said. “If this did not move forward, I would be deeply concerned.”
The House bill emerged when more ambitious plans to reform the state pension system, which faces a combined unfunded liability of nearly $3 billion in pension funds and $2.6 billion in additional benefits such as health care, met with strong resistance from state employee unions.
Workers were upset that the initial reform proposals would have led to their working longer to qualify for benefits, paying more into the system, and receiving less in retirement.
Instead, the bill aimed at improving oversight of the pensions to assure that realistic rates of return are set and actuarial assumptions are tested more frequently. It also established a task force to study the more politically difficult questions about plan design, benefits and contributions.
Gov. Phil Scott, Treasurer Beth Pearce and legislative leaders in both houses agree the pension system must be reformed to reduce annual state contributions, which have grown out of control in the past two years, and assure that the pensions will be solvent for future retirees. The state is allocating $316 million from its general fund for its annual payment in fiscal 2022 — a steep increase over past years, and money that can’t be spent on other needs.
Conference committee versions of bills must be voted on up or down without additional amendment.
The most significant differences in the House and Senate versions of the bill focused on the makeup of the Vermont Pension Investment Committee (VPIC), and of the task force.
On VPIC membership, the two sides agrees with the Senate proposal to set the roster at 9 members. The House had proposed 10 members, but the Senate reduced the panel by one, removing the Commissioner of Financial Regulation or designee.
The conference committee also agreed to set a 20-year term limit for the chair of VPIC, which is responsible for managing the state’s pension funds and investing those dollars.
On the task force, the House had proposed three House and Senate members each, while the Senate sought two members of both bodies. A compromise was reached, with three House members and two Senate members, and the Commissioner of Financial Regulation taking the place of the third Senate member.
Both bodies had already agreed to three members of the Vermont-NEA, two members of the Vermont State Employees Association and a member of the Vermont Troopers Association. Those remained the same.
The conference committee also removed the State Treasurer’s office from the task force, instead opting for a non-voting member appointed by the Treasurer.
The conference committee also expanded the task force’s meetings to 20 from 15, and moved its deadlines forward to a draft report due Oct. 15 and a final report due Dec. 2.