For years we’ve been told the state’s pension fund for state employees and teachers was in trouble. Little to nothing was ever done to change the fund’s trajectory. We have looked at it as tomorrow’s problem, not today’s.
Politically, it’s been an untouchable. Teachers and state employees are one of the most powerful groups in Vermont.
Last week, State Treasurer Beth Pearce met [virtually] with about a thousand of the state’s teachers, and she was not bearing good news. The worst, in fact. She was proposing a plan that would result in “active” employees paying more in to the pension plans and getting a lower payout.
Why? Her office had a new analysis of the pension system that showed its unfunded liability shooting by over $600 million. That’s in addition to the $1.5 billion that’s already part of the system’s underfunding.
It’s a problem that began in the 1990s when the Legislature and governor’s office began to habitually underfund the pension’s plan, knowing the payback was inevitable, but proceeding regardless.
The payback, in the form of an overdue bill, is here. It’s been a hit that’s dented the budget on a yearly basis of late. But the $600 million surprise was obviously not expected. The last thing Ms. Pearce wants to do is to ask teachers and state employees to pay more and, in return, give them less.
There is one thin reed of hope, which comes with a Biden administration that might send additional aid to the states. If so, and if there are no strings attached, Ms. Pearce’s suggestion is that the money could be applied directly to the state’s pension problem.
NEA president Don Tinney, offered his two cents when he said: “There’s no doubt that the fund needs more revenue And we see that that revenue can be generated by asking the wealthiest among us to pay their fair share.”
Mr. Tinney said the fund could be helped by placing an income tax surcharge on those making over $400,000 or $500,000 a year.
Right. That would be yet another surcharge levied against the wealthy, the others being surcharges to pay for health care, education and a host of other promises.
It should be clear that a surcharge on those making a half million dollars a year won’t go very far when dealing with a $2 billion underfunding issue. It should be equally clear that Washington won’t be sending us that sort of change; besides in our Covid-19 wrecked world, we’re staring at sizable budget deficits and programs that run the gamut which will be competing for those same resources.
Ms. Pearce is right. Late. But right.
What needs to happen now, considering the gravity of the problem and the implications of her proposals, is that the issue be laid out in a way that the average Vermonter can understand. The timing of the pension issue crisis along with everything else demands our attention. Our resources as a state are limited. We need to know where our tax payer resources are being spent, and for what reasons.
by Emerson Lynn