Politics

How the House plan to reform Vermont’s pension system quickly unraveled

Jill Krowinski
Rep. Jill Krowinski, D-Burlington, addresses her colleagues after being elected Speaker of the House on the opening day of the Legislature at the Statehouse in Montpelier on Wednesday, Jan. 6, 2021. Photo by Glenn Russell/VTDigger

They called the plan “foolish and shortsighted,” “shameful” and a “shocking moral failure.” 

When dozens of teachers and state employees weighed in on a House plan to reform Vermont’s pension system during a pair of public hearings late last month, they didn’t mince words. 

They told lawmakers the proposal would put the burden of the system’s growing debt on employees, forcing them to work longer before reaching retirement age. They said it would discourage young Vermonters from joining the public sector. 

At that point, it became clear to Rep. John Gannon, D-Wilmington, the vice chair of the House Government Operations Committee, that it was going to be difficult for Democratic leaders to move a pension plan forward this year. 

“Most of the witnesses were unhappy with what we were proposing,” said Gannon, whose committee hosted the public meetings. “They were hard hearings to listen to those people, and I understand their concerns. I wish we weren’t in this position.”

Days later — less than two weeks after Democratic legislators put the proposal on the table — House Speaker Jill Krowinski, D-Burlington, dropped it. In its place, the speaker said last Friday, would be a task force charged with proposing an overhaul next legislative session, just as labor unions and workers had urged. 

“I think the power and urgency of those voices was clearly, clearly heard,” said Rep. Selene Colburn, P/D-Burlington, the House Progressive leader, who opposed the Democrats’ pension plan. 

Colburn called the initial proposal “a brutal place to start after the year that we’ve all been through — especially teachers.” 

“There were enough folks inside and outside the Legislature who were just not going to be able to support that approach,” Colburn said. 

‘No idea what happened’

According to Steve Howard, executive director of the Vermont State Employees’ Association, “unrelenting” pressure from teachers and state employees weighed on House Democrats. 

“Increasingly in our conversations with members of (Krowinski’s) caucus, people were saying they were not happy that they were being put in this position,” said Howard, whose union represents roughly 6,000 state workers. 

Howard has criticized Democratic leaders for crafting their pension proposal behind closed doors. He said he was “stunned” when he first learned about the contours of the plan, which would trim benefits while asking for higher contributions from teachers and state employees.

“I’ve known Jill for a long time, and she’s one of the smartest women I know, one of the most politically savvy women I’ve ever met,” said Howard, a former state legislator and Democratic Party official. “I have no idea what happened here.”

Until now, according to Howard, Krowinski has had a “stellar reputation with labor.” The union leader said he gives Krowinski a lot of credit for changing course on the pension plan, and said it’s not too late for her and other House leaders to rebuild their relationship with public-sector employees.

“But we can never have a secret committee of legislators behind closed doors again,” Howard said. “We just can’t do that. That leaves labor sitting out in the hallway wondering what’s happening to them.”

In an interview Tuesday, Krowinski did not mention pressure from the teachers and state workers when asked why she dropped the pension proposal. Rather, she cited the difficulty of educating members of the public about the pension crisis while legislating remotely. She said she hoped it would be easier to find consensus once lawmakers returned to the Statehouse.

“If this was an easy problem to solve, it would have been solved by now,” Krowinski said. “And attempting to do this while governing remotely is even more challenging.”

‘We have a problem’

This year’s pension debate began after state Treasurer Beth Pearce announced in January that the retirement system’s unfunded liabilities were projected to grow by another $600 million — to about $3 billion. 

By putting a plan forward, Krowinski said, she wanted to raise alarm bells about the serious nature of the pension crisis — even if the initial proposal was never meant to be a final product.

“I knew it was going to be really hard and that it would just be one of the biggest challenges that I face as a speaker, but you’ve got to put yourself out there if you know that there’s a problem,”  Krowinski said. “I wouldn’t be doing my job as speaker if I wasn’t raising this issue and really putting it in front of people to say, ‘We have a problem, and if we don’t act now, and we wait a couple years, the pain that we will go through when we have to figure this out will be substantial.’”

The House speaker said that if the Legislature doesn’t act soon, the cost of funding the pension system — which already eats up 13% of the state’s general fund each year — will only grow and threaten funding for other programs. 

While Democrats no longer intend to move forward with their original plan this year, they haven’t abandoned pension reform entirely. House lawmakers still intend to pass legislation this session to alter the pension system’s governance.

Legislators have expressed concern that members of the Vermont Pension Investment Committee have not been vigilant enough over the fund’s returns, which have consistently come in below expectations. 

‘Over the edge’

Rep. Sarah Copeland Hanzas, D-Bradford, the chair of the House Government Operations Committee, said she understood why public employees had a hard time engaging in the conversation, noting that it came during the middle of a pandemic. 

Copeland Hanzas said the proposed provision to raise the retirement age “really sent people over the edge.” 

“Having just gotten to the one-year mark of the most difficult work year of their lives, now the Legislature’s opening volley is that we want you to keep doing this ’til you’re 67,” Copeland Hanzas said. “My humanity wins out over a desire to do the expedient thing right now at this moment. I understand that state employees and teachers just can’t engage in this right now.”

Copeland Hanzas believes lawmakers could have done a better job underscoring that the proposal was just a starting point — and not what they planned on passing. 

“In the absence of a real clear explanation of what we were proposing being just a menu of ideas, in the absence of that clear message, the unions were able to get out there and just call it a nonstarter, and nobody disagreed with them,” Copeland Hanzas said. 

Gannon said he wished the unions had been more willing to negotiate and take on pension reform this year. As the retirement system sees growing debt, he doesn’t want to see it “go into a death spiral.”

“I want to protect our state employees and our teachers. And in order to do that we all have to come to the table,” Gannon said. “I didn’t anticipate our original proposal would be fully enacted, but we need to be serious about putting in modifications that ensure that our pensions will be around for a long time.”

‘She made the hard decision’

Rep. Pattie McCoy, R-Poultney, the House minority leader, said she continues to believe the Legislature should act to address the matter this year. She said no Republicans were invited to help draft the proposal that House Democrats unveiled in March. 

Nevertheless, McCoy said she admired Krowinski for putting forward a plan to solve the problem. 

“She made the hard decision to put it out there, and she’s getting all of the backlash. Not quite sure if it’s deserved that she gets it all,” McCoy said, adding that she would hope Democratic leaders in the House and Senate were working together on the matter. 

But across the Statehouse, Democratic leaders were not in sync on the issue. 

Senate President Pro Tempore Becca Balint, D-Windham, and Democratic Lt. Gov. Molly Gray both publicly distanced themselves from the pension proposal in the days after it was released. 

Gov. Phil Scott generally steered clear of the debate, leaving it up to Democrats to come up with a plan. Democrats have said that Scott’s absence made it harder to move a proposal forward. 

“I think the unions saw that they had an opportunity to beat back the Legislature and that there wasn’t any gubernatorial leadership that was going to be backing us up on it,” Copeland Hanzas said. 

Former Democratic Rep. Joey Donovan, who represented Burlington for 20 years and had opposed the House pension plan, said she was proud of Krowinski for shelving the proposal. 

“I think she listened and heard loud and clear that this was something that did not bode well for two of the largest, reliable voting groups in the state of Vermont and two natural constituencies for the Democratic Party,” Donovan said, referring to teachers and state employees.

Donovan previously chaired the House Education Committee. Her daughter, Deirdre Donovan, a teacher in South Burlington, was among the employees who spoke out against the plan. 

“I just want to emphasize that sometimes it’s not easy to publicly change your mind and admit that you perhaps had gone in the wrong direction,” Donovan said. “I would love to give her credit and hope that others would give (her) credit as well for changing direction.”

‘I think there will be repercussions’

It’s unclear if the pension proposal will lead to a long-term fracture between Democrats and public-sector unions, which play a powerful role in Vermont politics — but some suspect it might. 

“If I want volunteers to help me pass out literature in my neighborhood, I’ll call the (Vermont-National Education Association), or I’ll call VSEA, or they will actually be there already doing the phone banks,” said Rep. Bob Hooper, D-Burlington, a former president of the state employees’ union who opposed the House plan. 

“So yeah, I think there will be repercussions. Somebody is going to be aggravated enough to say, ‘I’m sitting out this election’ or ‘I’m not going to help,’” he said.

But much could change as Democrats form a task force and work with unions and others to make some of the thorniest decisions about reforming the state’s pension system in the coming year. 

And with Democrats pushing back their timeline for pension reform, many of those decisions will be made in 2022 — when public officials are up for reelection.

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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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