MIDDLEBURY — It was almost two years ago that Beth Pearce was appointed to the position of state treasurer.
Now the Barre Democrat wants to earn the job at the polls on Nov. 6, when she faces Republican challenger Wendy Wilton, the Rutland City treasurer (see relates story).
Pearce, 59, served as the state’s deputy treasurer for seven years prior to being appointed to the top post in January 2011, by Gov. Peter Shumlin. Pearce replaced longtime Treasurer Jeb Spaulding, who stepped down from the office to become Shumlin’s secretary of administration.
In her campaign, Pearce has touted her nearly 35 years of experience in government finance at both the state and local levels. As deputy treasurer, she oversaw administration of the three statewide retirement systems covering state employees, teachers and municipal employees. She also was responsible for unclaimed property, accounting, budget, debt and capital financing, cash management, investment of short-term funds in state custody and risk management, according to her campaign website.
Prior to joining the Vermont State Treasurer’s Office, she served as deputy treasurer for cash management at the Massachusetts State Treasurer’s Office from 1999-2003; deputy comptroller for the town of Greenburgh, N.Y.; and as the accounting and financial operations manager for the town of West Hartford, Conn. In addition, she has served as a fiscal officer with the Massachusetts Department of Social Services and as a project director for the Massachusetts Executive Office of Human Services.
In a recent interview with the Independent, Pearce did not mince words when asked about her top priority for the next two years and beyond: Maintaining the AAA bond rating (highest available) the state has earned from Moody’s and Fitch Investor Services. Vermont currently has an AA+ rating from the third big ratings service, Standard & Poor’s. She wants to see the state attain AAA ratings from all three agencies.
“It’s important for a number of reasons,” Pearce said of the superior bond rating. “It saves us money when we go out to bond … We are able to get a very competitive rate.”
The state was recently able to refinance some old bonds and, thanks to its excellent rating, was able to save taxpayers $5.4 million in the process, according to Pearce.
“(The state bonding rating) also affects every person, nonprofit and business in the state,” Pearce said. “We have something called ‘moral obligation,’ which means we put our moral obligation behind bonding for various state authorities. That lowers the cost of financing.”
Specifically, the state’s good credit has lowered the cost of affordable housing, as well as student, business and municipal loans, according to Pearce.
Also of prime concern to Pearce is the solvency of the state’s retirement funds for state workers and teachers.
“We have an unfunded liability in the pension programs of about $1.2 billion and $1.8 billion on the health care side,” Pearce said. “The health care side is a larger issue that we have to deal with. On the pension side, a lot of that unfunded liability resulted from investment losses during the great recession.”
The state employee retirement system actually had an $11 million surplus in 2007, according to Pearce.
It is clear the state won’t be able to make up the current liability through future investment returns, Pearce said. This will require some solutions, which the state began implementing in 2005, she noted. The Legislature has ramped up the state’s contribution to the teachers’ pension fund, which should help reduce the shortfall over time, according to Pearce. And workers hired after July 1, 2008, are having to assume a greater share of their retirement contributions.
“The end result is that we’ve reduced the cost to the taxpayers by about $20 million per year,” Pearce said. “On the teachers’ side, we did it by pushing out the age of retirement a little bit (from 62 to 65) … On the state side, the employees are paying more for their retirement, and that has netted around $5 million per year. All in, that’s about $20 million of savings to the taxpayer. It’s affordable for the taxpayer, it’s affordable for the employee and it still provides an adequate and reliable income in retirement.”
She noted roughly 84 percent of state retirees are drawing annual pension benefits of $25,000 or less.
Vermont has also tweaked its investment strategy to reduce the impact of large swings in a volatile stock market, Pearce noted.
If the state follows current plans, the unfunded liability in the state’s retirement system should be retired by 2038.
“We have to continue to monitor it, make sure our assumptions are reasonable and that the structural changes we have made are continuing to yield the type of savings we expected them to,” Pearce said.
“If we need to do more, we will.”
Pearce described other priorities for the next two years, including:
• Instituting more financial literacy programs. The treasurer’s office already sponsors such programs for children, adults and seniors through schools, libraries and on-line offerings.
“We want to help our citizens develop good financial management practices, so that they can have adequate income in retirement,” Pearce said.
• Encouraging local investment.
“I think the more we can do investing locally in Vermont is important,” Pearce said. “We obviously have to maintain our fiduciary responsibility and get a good rate of return on our investments, but we invest some of our trust funds and pension funds with local managers.”
She noted the state has given Vermont investors first crack at around $27 million in bonds in $1,000 increments (instead of the usual $5,000 increments).
• Encouraging investment in renewable energy and energy efficiency. Pearce was a big supporter of the Property Assessed Clean Energy (PACE) program that has been adopted in six Addison County towns. It is a program that encourages investment in renewable energy systems for homes and businesses.
Pearce has two children and three grandchildren. She said she wants to continue to play a role in shaping the state’s economic fortunes to benefit the future generations of Vermonters.
“I would like to make sure they have an economically prosperous future,” she said.
Reporter John Flowers is at [email protected]