Editor’s note: This commentary is by David Coates, a retired managing partner at KPMG — Vermont and a member of the Vermont Business Roundtable. He was a member of the 2010 state Commission on the Design and Funding of Retirement and Retiree Health Benefits Plans for State Employees and Teachers. He lives in Colchester.
[R]ecently lieutenant governor candidate Randy Brock, a former state senator and state auditor, declared that the state should raise an additional $100 million of new revenues. It would be hard to disagree with his assessment especially when the first $60 million would be required to shore up the annual underfunding of the state workers and teachers retiree health care benefits.
As I have mentioned previously, the total unfunded retirement liability (for state workers and teachers) facing the state as of June 30, 2015, is $3.8 billion. Likely in excess of $5 billion if held to the same standards as private sector employers. For comparison purposes, in 2005 the amount was $1.6 billion. Nearly a 150 per cent increase. This state debt, which taxpayers are liable for, has more than doubled in 10 years.
Our political leaders are squandering an opportunity to head off this financial disaster by instituting even the most basic of changes by ending these benefits for new state workers and teachers, but not those already in the system or those fully retired.
The $3.8 billion is more than double all of the state’s other debt (including bonds) both direct and indirect. One would think this would be a major concern for our elected leaders in Montpelier. Apparently not, as their attention seems to be more concerned with the likes of divestiture and marijuana. And the Big Bill (Appropriations) will be $60 million short … and that is just for this year. The same will be true for the following years unless a solution is found along the lines Randy Brock has proposed, or changes are made to the system.
Other states are making these changes or at least have proposals to make these changes. The biggest obstacle continues to be the vested interests. As the unions continue to fight any, and all, changes just like they do in Vermont. Our political leaders are squandering an opportunity to head off this financial disaster by instituting even the most basic of changes by ending these benefits for new state workers and teachers, but not those already in the system or those fully retired. Since 2010 over 600 workers have been added to just the state plans alone representing about 8 percent of plan participants. Just think if we had instituted these changes then!
You should know, that a few brave bipartisan legislators have sponsored a bill (H.772) that would in part do just that. It is unlikely to see any meaningful discussion or action this year. It is not difficult to see why, as the unions do not support it and they, effectively, control the legislative agenda.
