House Speaker Jill Krowinski, D-Burlington, has abandoned a controversial proposal to reform the state’s pension system. At a press conference April 2, she said she would instead establish a task force to address Vermont’s ballooning pension debt. 

The move comes just days after House leaders unveiled the plan, which was drafted behind closed doors. The proposal was roundly criticized by unions, public-sector employees and key Democratic leaders, largely because it would require teachers and state employees to work longer, contribute more and receive fewer benefits. 

The House speaker said that instead of addressing the retirement system’s unfunded liabilities — which state Treasurer Beth Pearce recently announced were projected to grow by another $600 million — lawmakers would continue to study the problem over the summer.

Krowinski said the new task force would consider “possible revenue sources” in addition to plan and benefit changes. It would be tasked with proposing recommendations to lawmakers when they reconvene next January. The panel would include labor union representatives and members of the Scott administration, according to the speaker.

Krowinski said lawmakers still intend to pass legislation this year to reform the pension system’s governance. Legislators have expressed concern that current members of the Vermont Pensions Investment Committee have not been vigilant enough over the fund’s returns, which have consistently come in below expectations. 

“Moving forward, I believe we should focus on where I’m seeing the most consensus, which is changing the way we make our investment decisions with governance structure,” Krowinski said. 

“The Legislature doesn’t make investment decisions, but we can change the board structure to make it more transparent, independent and get more expertise at the table.”

Pension reform became a central issue of this year’s legislative session after Pearce outlined the growing problem in January and made a series of recommendations even she described as “painful.”

House Democratic leaders spent weeks developing their own proposal, mostly out of the public eye. When they unveiled it last week, labor leaders and even members of their own party criticized it.

The debate has tested Krowinski and Senate President Pro Tempore Becca Balint, D-Windham — both of whom assumed their leadership positions in January — and their loyalty to Vermont’s largest public-sector unions, which have long backed Democratic candidates.

In recent days, prominent Democrats including Balint and Lt. Gov. Molly Gray had distanced themselves from the House proposal — and Krowinski faced a mounting pressure campaign from labor leaders.

Unions had called on the House to slow down and form a pension task force, instead of overhauling the system this year.

Steve Howard, executive director of the state employees’ association, said April 2 that he applauded Krowinski for “listening to the concerns of our members and basically adopting what we asked them to adopt in terms of a process and a strategy.”

“It’s not easy to back off when you’ve made a mistake,” Howard said. “I think by making this decision today, she’s demonstrating her leadership skills, which include being able to say, ‘I was wrong, and I have to get it right.’”

In a written statement, Vermont-National Education Association President Don Tinney thanked Krowinski for her “decision to take a long, methodical look at our public pensions.” 

Gov. Phil Scott has largely stayed out of the pension debate, and in recent days his absence has drawn criticism from Democrats. 

Scott, who had previously signaled support for the House’s plan, said at a press conference last week that he was “disappointed” that Democrats had shelved the proposal. He said the state retirement system’s $5.7 billion unfunded liability — which includes debt from both the pension system and retiree health benefits — “has to be dealt with.”  

Scott called himself a “willing partner” in the pension discussions but reiterated that he believes the Legislature’s Democratic leaders should take charge of the issue.

The governor also said he would not support the Democrats’ plan to use $150 million in one-time money to help pay down retirement system debt, unless the Legislature also advanced “structural changes” to the pension system. 

Pearce, the state treasurer, said she was also “disappointed” that Democrats couldn’t reach consensus on a plan to address Vermont’s unfunded liabilities.

“While I recognize that any required benefit changes will be painful, we cannot afford to delay action,” she said.

Pearce also urged state leaders to invest additional dollars into pre-funding retiree health benefits now, a move she argues could save the state $1.6 billion in the long term.

“The state cannot afford to kick this can down the road any longer,” she said.

Read more at VTDigger.org (House speaker drops pension plan after labor backlash).

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