The deficit in the state’s pension fund is worrisome and demands redress, but State Treasurer Beth Pearce’s solution is unfair.
In brief, the state of Vermont is facing a crisis in its pension system. For over a decade, Vermont has allowed a gap to grow between what it paid in and what it promised teachers and state employees. This ever-growing gap was an issue prior to COVID, but now that the state is looking at its revenue drying up, it is using the pandemic to change the rules.
One important issue is promised cost-of-living adjustments. We cannot back fill a decades-long and ever-growing gap by ignoring necessary cost-of-living adjustments for future retirees. A pension is not a lottery or a simple bank account — it is a cooperative security made between the teacher and taxpayers, and the state. It is determined by a formula based on a teacher’s years of experience and final salary, not the whims of the market or the legislature, or returns on investment. Pearce’s report (January 2021) would eliminate cost-of-living adjustments for nearly 10,000 public school teachers.
A pension is a promise. For decades the state made a promise to teachers and state employees that, for their service and a portion of their paycheck, it would pay out upon their retirement. Employees have done their part. They have made financial plans based on what was promised. Now, some in our state government want to change the rules.
The deficit in pension funds is clearly a problem that needs to be solved. We all agree that it is unsustainable. But Pearce’s solution does not honor the promise made. It is not worthy of our state and its values.
Catherine Stoddert
Bristol