Politics

House speaker drops pension plan after labor backlash

House Speaker Jill Krowinski, D-Burlington, at the Statehouse in Montpelier, February 4, 2020. Photo by Glenn Russell/VTDigger

Updated at 3:59 p.m.

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

The move comes just nine 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. They also planned a series of protests to take place this weekend. 

The Vermont State Employees’ Association, which represents most state workers, organized a car rally in Krowinski’s Burlington district. Rank-and-file educators and state workers, meanwhile, planned a protest on the Statehouse lawn. 

Expected speakers at the Montpelier event, which is still planned for Saturday, include Jen Ellis, the Essex Junction teacher who made national headlines when mittens she made for U.S. Sen. Bernie Sanders, I-Vt., went viral. 

Steve Howard, executive director of the state employees’ association, said Friday 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.” 

“Throughout the pandemic — and before — educators have kept their promise to Vermont’s students,” said Tinney, whose union represents most of the state’s public school teachers. “We look forward to working with all stakeholders to ensure that the state keeps its promise of a secure retirement to teachers and all public employees.”

In a statement on Friday, Balint said the speaker’s decision is the “right path forward and strikes a balance between taking steps to prevent a crisis and acknowledging how difficult this discussion is and how thoughtful our work must be.” 

“As Pro Tem, I will help make sure that the Senate is doing its part to support this sensible approach. I want public employees to know that we heard them and that we are committed to working together to save the pension system,” she said. 

Balint said that she and the speaker “recognize that all options must be on the table for the Task Force,” including raising new revenues and making changes to employee benefits. 

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

“It’s clear that people are struggling with how to find real systemic change to resolve this crisis right now,” Krowinski said Friday. “Some stakeholders like the Vermont state employees’ union have brought some ideas to the table, while others like the governor have not.”

Scott, who had previously signaled support for the House’s plan, said at a press conference Friday 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.”  

“Because if we don't, we're going to be facing insolvency, and that's something that we can't let happen,” the governor said. 

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.

“I don't want to be the main course, but I'll be at the table,” he said. “This is their moment to shine. This is their responsibility as the majority party to get something done. Something I advocate for is probably not going to be accepted at first out-of-hand, so it’s going to take them to lead.”

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. 

The disagreement could set up a clash between Scott and the Legislature over next year’s state budget. The House-passed version of the spending bill includes the $150 million on top of $316 million the state will owe in pension and health care liabilities next year. 

Lawmakers have wanted to put extra money toward the debt to keep Vermont’s bond rating from falling. But Scott said he believes the additional funding and structural changes to the retirement system need to be “tied together.”

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

“That being said, I want to acknowledge the difficult conversations that have been held to date by all parties,” Pearce said.  

“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.

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Xander Landen

About Xander

Xander Landen is VTDigger's political reporter. He previously worked at the Keene Sentinel covering crime, courts and local government. Xander got his start in public radio, writing and producing stories for NPR affiliates including WBUR in Boston and WNYC in New York. While at WNYC, he contributed to an award-winning investigation of how police departments shield misconduct records from the public. He is a graduate of Tufts University and his work has also appeared in PBS NewsHour and The Christian Science Monitor.

Email: [email protected]

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