Pension Reform for VT Teachers Vetoed, But Override Possible

Vermont Gov. Phil Scott (R) on May 2 vetoed legislation that included provisions that would have made changes to pension benefits of members of the Vermont State Teachers’ Retirement System (VSTRS). Scott said in a letter to Secretary of the Senate John Bloomer that while the bill “takes some positive steps,” it did not go far enough and “did not include enough structural change to solve the enormous unfunded liability problems the state faces.” 

The bill, S. 286, was introduced after the actuarially determined employer contribution for VSTRS had increased by an annual growth rate of 13% between fiscal years (FY) 2009 and 2023, and that the funded ratio of VSTRS has declined from 80.9% in FY 2008 to 52.9% by the end of FY 2021.

Since FY 2009, the accrued liabilities of the Vermont State Employees’ Retirement System (VSERS) and VSTRS grew faster than the assets of each plan, resulting in a widening gap between the expected payout of future benefits and the assets VSERS and VSTRS have to pay out those benefits to retired state employees and teachers. 
The bill would have amended pension benefits and other postemployment benefits for members of VSERS and VSTRS. It called for a variety of adjustments to benefits not only for retirees but also those who retire early; in addition, it provided for adjustments to the way allowances for changes in the consumer price index are made. And the bill also would have changed the reporting dates for certain actuarial studies for the VSERS, VSTRS and the Vermont Municipal Employees’ Retirement System.

“Since the day after this bill was introduced, before it was voted out of a single committee, in either chamber of the General Assembly, I have been clear it does not include enough structural change to solve the enormous unfunded liability problems the State faces,” wrote Scott in his veto message, adding that he had made counter suggestions. 

The bill is now on the legislature’s calendar for a vote to override Scott’s veto; he acknowledged in his letter that it is likely that his veto will “be easily overridden.”