Plans to cut retirement fund decried
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By Louis Porter Vermont Press Bureau - Published: December 5, 2009
MONTPELIER — A commission trying to find acceptable ways to save costs in the state's public employees' retirement systems asked to hear from Vermonters about the issue.
Did they ever.
Words of praise for cost-cutting plans were hard to hear among the more than 280 teachers, school board members and state employees who gathered Thursday evening at the Vermont Interactive Television sites around the state.
Instead, person after person told the commission members the state should "honor the contract" with workers and not "cost-shift" retirement expenses onto the property tax by moving some of the teacher's retirement system obligations from the General Fund into the state's Education Fund. That idea was floated by the Douglas administration last legislative session.
The increasing cost of the retirement system is "not because the teachers have shirked our responsibility," said teacher Jack McKiernan from Brattleboro. "Vermont's legislators repeatedly underfunded the system."
And it was not only those who are benefiting – or will benefit – from the taxpayer-supported retirement programs who worried about moving the teacher's retirement system to the Education Fund.
That move could mean that small schools, which pay their teachers less, will have to pay higher property taxes to support retirement of teachers in districts that are more generous, said Jennifer Smith, a member of the Waterford School Board.
"The overall burden on the smaller schools is going to be heavier," Smith said.
The discussion about possible changes to the retirement programs of teachers and state employees came about because of the fiscal difficulties facing state government.
The state of Vermont will be obligated to put aside $73.5 million this year for those retirement systems and, without changes, it will be $103.5 million next year "a $32 million one-year increase in a year the state is facing at least a $90 million deficit," according to the state treasurer's office.
The collapse of financial markets is a large part of the reason for the increase. So is the increased number of retirees: This year there are 2,800 more retired teachers and state employees than in 2003, according to the treasurer.
"The cost of these programs are escalating faster than the state's ability to pay for them," state Treasurer Jeb Spaulding said.
The commission is not considering changes to the benefits for those already retired, but that fact has not mollified critics or made any proposed changes less controversial. Among ideas being considered are including raising the early and normal retirement ages, increasing the number of years of work to calculate benefits, and having some future retirees pay a larger share of their health insurance depending on how long they have working.
"This is a fairness issue," said Dave Bellini, a long-time state worker who joined the statewide public hearing from Montpelier. "You need to keep your promises."
The hearing fell on the same day that many state workers learned they may well see a pay cut to help the state balance its budget, Bellini pointed out. To now also tell those state workers that they would have to work longer – perhaps a decade longer – to get the same amount of retirement income is not right, Bellini said.
But Spaulding told those at the hearing that doing nothing to change the retirement system and its costs is not a possibility. Few of those concerned about the proposed changes to the retirement system had alternative solutions, but they urged the commission to keep working towards a different solution.
"Please be innovative and look for these other options. They have to be there," said Doug Horne, a teacher from Williston. "We are taxpayers too, and we are voters. We expect you to protect this pension system."
Although several members of the commission are state employees – although not in the union – and another, Rep. Terry Macaig, works for the Vermont State Employees Association and is a former state worker, several speakers said they did not believe the commission has enough members who represent teachers.
In part because of that "any conclusion reached by this commission will be flawed, obviously," said Ernie Clerihew, a Rutland teacher.
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