 Good morning. You are with the Vermont House Government Operations Committee. We are meeting this morning before House floor to consider an amendment that's being brought to us by the member from Stowe. So I would love to give representative Sherman a moment to describe what she is proposing as an amendment you all can find that amendment on our committee page. And then we'll have some committee discussions so welcome representative Sherman. Oh, thank you madam chair. I appreciate it. I just literally left the other meeting so I'm just getting myself organized but I think I spoke my apologies what you just getting your feet under you. Yeah, really I'm like, but my apologies if I if I sound a little flustered but I spoke briefly on this on the on the floor yesterday this concern that I have with the bill. Overall, I think I thank you for doing the bill and bringing it forward I think it's important. I think, you know it's all we need to get, we need to get this resolved and and a long term strategy in place to deal with our unfunded liabilities and, and I think this is. This is a good step toward that end and and and I'm hopeful that next year will have something in front of us that will will actually do do do something meaningful in that regard. The issue that I found in the bill was that that was was with one with one specific section. It's in the definitions. And it relates obviously to the to the membership of the of the VPIC and specifically in in section, well it's on page four of the bill itself at the top it talks about the two members and one alternate appointed by the governor, who shall each be independent and independent and as that relates to the definitions under independent when you're talking about the definition of independent, there's a section again this is at the bottom of page two, three C the individual should be considered independent pursuant to this subdivision. If the individual spouse parent child sibling or in law is a beneficiary of any of the plans provided the individual files and annual disclosure reports the commission. My, my, my simple concern is I don't think that a that the, that the potential or the, the perception or real potential conflict of interest isn't really remedied by a disclosure to the commission. And, and I really would like to ensure that the financial experts, the, these folks are independent. We have other members of the committee who are representing certain interests, and I would just like to ensure that that the financial experts are are in fact independent and and that the perception is there for the for the public and taxpayers and everybody to understand that that, that that is our goal here as as legislators that that these, that these folks be truly independent. And, and I just, I worry that that disclosure doesn't doesn't remedy that so that is my my proposal is to just simply delete that three C. Okay. I'm just processing in my mind. I, I completely understand your rationale for, you know, for, for wanting to, to have some clear independence I'm just sort of thinking in Vermont of those circles of connection. So, just trying to imagine what that looks like representative Anthony. Thank you Heidi for bringing this forward. I'm a little puzzled though if you eliminate the entire section. What is it that assures greater distance or disinterest or non prejudicial participation by any appointee. I'm puzzled by your strategy not your purpose but I, I'm not sure that what you've done is actually executes what you say you intend. Thanks. I think, I think the prior under a one and two actually ensures that those that the end of the definition of individual is somebody who doesn't have a spouse parent child sibling or in law or anything so I think that that is, that's, that's in that section of the bill prior to that section of the definition prior to it so I believe if I'm mistaken. If I'm doing something that I don't intend to do I am. I am all ears. That was my intention with this with this amendment and if that's not, if that's not what I'm doing I'm, I'm, I'm hopeful. Maybe Rebecca has a thought. I don't know. I wish I missed good morning Becky Wasserman legislative council I missed the, the, the actual question of what the. I think he's he's concerned that just deleting the section doesn't ensure the independence that I'm looking for. And I thought that in three a one and two ensures the independence that I'm looking for that that that see is sort of is see has to do with the sort of relatives of a member of the task force so if you're moving to see then you're saying that. See is saying somebody can be a member of the task force if one of their relatives is a beneficiary of the system, but they just have to make a disclosure about that so if you're removing that, then it's removing that sort of exception exception to it. And so up above a one and two ensures and be actually ensures that the individual is not. Well, it was too specifically is that the family is not. You can't be a member if a family member is a beneficiary. I think that you could have a situation where somebody is married to someone who's a beneficiary and they are technically a beneficiary because they're relying on that on that in a retirement income for example. So that would if you remove a that I think that that does take away the ability for them to be married. I'm just using the word married but some some some relationship where they are also relying on there also somehow a beneficiary of it through a family member. Yeah we're not we're not talking about removing a he just wants to. I don't know I shouldn't speak representative Anthony can explain what what his concern was. Except he's frozen. John Gannon, can you bring some clarity to this. Yes, thank you. Thank you. You are so patient. The amendment. So what I believe representative Sherman's amendment does is it does not provide an opportunity for someone to be independent by just having their by filing an individual disclosure. So therefore someone who has this conflict of interest could not serve as a member of the pick under C it allows a person to be considered independent if there's a disclosure filed. If we remove this section, you couldn't just file disclosure and be considered independent. You would not be independent. Representative Sherman that's what you're going for right that that is what I'm going for yes. Other questions representative Higley. Thank you madam chair, I understood that to be the way that the representative Sherman is looking at that. I know initially I had a little bit of a red flag on that I know we had talked about how Vermont is such a small state. And you know there's, it's kind of hard to achieve that but again I can thinking about it about it again I, I, I'm willing to support representative Sherman's amendment. McCarthy. This might be a question more for Rebecca than representative Sherman I. I just want to make sure that we understand that if if we were to accept this amendment that a financial expert in one of those seats that has the independent requirement that they wouldn't be able to have a teacher that was a beneficiary of the plan so like if there was a financial expert that was qualified met met all of those, that if they had a child who was a teacher for instance, that they wouldn't be any way for them to be in that seat. And so I, I'm kind of of two minds about this I mean I, I just want to make sure I understand it but if that's the case. I'm like okay I like the independence that's what we're going for here at these seats, but then we also are shrinking the pool so I just want to make sure we understand what we're talking about. So, first I would say that the financial expert and independence requirement is just applying to the appointees by the governor. And this is also in the case that the chair would be would be unable to serve in that position, and there would be an interim chair, and that person would have to be a financial expert or independent so it's just those sort of three scenarios in which this applies. So, I think that the definition of independent says that the person does not have a direct or indirect material interest in the plan. I think depending on it probably depends on who you're talking about. For example, if an in law is a teacher. I'm a financial expert, and they have an in law that's a teacher I don't know if that makes them a beneficiary of the plan versus if somebody is has a spouse that is a beneficiary of the plan I think that probably makes them also a beneficiary so I think it probably depends on the relationship you're talking about. I'm sorry to interrupt you Rebecca but if I could just clarify so if there was an appointee to one of those, those two seats a candidate for the gubernatorial appointment to one of those two seats, and they happen to have a child who was a teacher. If we remove this that their child being a teacher would just call if we keep this in with the bill as written, they could disclose that they have a child who's a beneficiary of the plan. Well, so the child one I think is a difficult because if they're not actually benefiting from their child's having being a member of the plan then I don't actually know that the language impacts them I mean the language does if the individual has a director indirect material interest in the plan and that means if they're if they are a beneficiary of the plan I don't know if someone's parent would be a beneficiary of the plan just by virtue of their, their child being a member of that again I perhaps that child could could designate that person as a beneficiary somehow but I don't think it immediately makes them unable to serve. Okay thanks that's that's what I wanted to know. Representative Sherman did you want to respond to that before I go to rep Ganon. I was just going to recommend just just removed like I just recommend reading like it's really just a one and two and so it really just I was just going to say what Rebecca said it an individual has a director indirect material interest in the plans if the individual is a beneficiary the plan. And then it goes on about the individual or individual spouse has been within the last five years and employee director that's all the publicly traded company stuff so it's really just an individual has a director indirect interest in the plan if the individual is a beneficiary of the plan so in many cases that is not going to be the case. Most cases I would suspect that is not going to be the case that a child that a parent is a is a beneficiary of the child's plan or as a teacher or something so that's. Thank you. Thank you madam chair. So just trying to bring some clarity to this discussion and so Becky if we look up at page two subsection three the definition of independence in three a one in an individual has a director in indirect material interest in the plan if the individual is a beneficiary of the plan. Okay so if they're there. However if we move remove see there is no language above which relates to siblings parents. So we need to add that to that that definition in Roman number one I think to achieve what representative Sherman is trying to do which is say if your spouse parent child sibling or in law is a beneficiary of the plan then you're not independent. Right. Is that correct represent if that's the intent that having that relationship to any of those people makes you have a material in or indirect or direct material interest in the plan then you would have to add that to. If you're a three a one. I think you would have to rephrase it to the individual or the individual spouse parent child sibling or in law is a beneficiary of any of the plans. But it depends on what the intent is. Yeah. Do you see what I mean representative Sherman. I'm just trying to. I'm trying to. Now I'm trying to. Is I guess. No that's good that's a good catch represent again and I just that's. So that was what had me scratching my head when when you talked about it because that then the question becomes. Is it are you not independent if you have an in law for instance who is a beneficiary of the system because I don't know whether that necessarily creates a conflict for for most people but if that's what you're going for then we need to figure out what that list of the relationship circles what does that list look like to you if that's what you're aiming for. Yeah that's a boy I. Good great catch. Obviously both of all of you I just. Oh, let's let's let you chew on that for a moment because representative Hooper has his hand up. Okay. Thank you Madam chair and thank you Heidi. I'm trying to figure out what tail the dog is trying to chase here. When we talk about eliminating all of these people. We're probably talking about eliminating from the poll of qualified candidates, something that approaches 100,000 people in the state of Vermont, because this is a pretty broad net. Everybody that sits on VPIC is obligated by the federal the fiduciary responsibility that sort of limits anything they can do in terms of self serving. But thirdly, VPIC does absolutely nothing to do with benefits structure, benefit amounts, anything that has to do with benefits, it's solely that that responsibility remains with the legislature. It's solely obligated to make money. And quite frankly, if my son or daughter is a teacher. And they're relying on that retirement plan in the future. I'm sort of going to be more motivated to do the best job that I can because I don't want to live in in my basement. So, I don't know what I can, I can, I can do that. I think pretty easily it's, it's perception. It's the perception it is the, the assurance that we are giving to the people of Vermont that that independence is there that's, that's what it is so I'm not. Again, as I, when I, when I was, as I continued from 2013 arguing for an ethics commission in the, in the house a lot of you were on this, or some of you were on this committee then and kept, but I, I, it's the I think that we might be a small state, it might be able to see everybody and talk to them at the, at the gas station but that doesn't necessarily mean that we're free of conflicts or the perception of conflicts. So that's, so that's, I, I, it is, it is, you know, we're very accessible but that there is the, there is the potential for conflicts and so I just want to ensure that the Vermonters know that the independence is there. In the, I think, since 2005, this has really not been raised as an issue. And at this point you're talking about two maybe three people on the board. Yeah. So, again, it's not, I'm not saying it's unworthy of consideration but it's, I don't think it's big an issue is maybe we're creating. Thank you. Representative Sherman, have you had a chance to think about what, what circle of familial relations you were going for in terms of establishing independence. You know, I guess I would, I would. Yeah, I have. I think most definitely a spouse, the individual or spouse is a beneficiary. Maybe changing that in I and and parent child sibling. Yeah, I don't, I don't think, I guess I'm trying to, you know, I just worry about, I worry about it. I would, I guess I would say the inlaw, I think is that could be even a sister in law or something. But I just I, yeah, I guess I would like to say, I would like to change this my apologies madam chair for this. If the individual, individual spouse, parent or child is a beneficiary of any plans and again this is only, this is a very select group. So, so cross, not the inlaw, it would be spouse parent child. I think, and then the sibling again that, you know, that's what the sibling or inlaw would be. I just I'm willing to do that. Yeah, that's just a little but the individual spouse parent or child and again this is so I guess Rebecca can we can we change it. Can we can I make sure I change that amendment to deleting see but adding in a one spouse parent or child. I can I can make that change except to figure out how to how it would be presented on the floor but I can I can do that now. Okay. So I guess that's what I'd like to change it to a madam chair. If that is. Well, that's what I'd like to change it to. And thank you for the catch representative again and I didn't catch it representative Anthony. Thank you madam chair and representative Sherman. I'm going back to representative Hooper's observation that because this group is really focused on making the the fund perform. I'm just wondering, since it appears that it will eliminate a couple of current members. I'm hesitant because, frankly, one of the things we were urged to be conscientious about was continuity as well as independence and I'm not sure that a group that's focused on making the fund make money. So, is in conflict with being a beneficiary that's sort of where I'm stuck I'm not sure whether that's exactly what rep Hooper said but this. This is not an issue of wanting to sell the state anything or wanting to change the beneficiary structure that happens elsewhere. And I guess again, what is, what's the conflict in in standard terms I mean these don't seem to be, you almost seem to be complimentary objectives that is to say, make money. So the fund is healthy. And that would be in the interest of any beneficiary from my point of view so I'm kind of stuck as to the notion of appearance. Representative Ganon. No, I understand representative Sherman's concern well, obviously the performance, you know good performance is good for for beneficiaries. The VP also does another thing which is a sets the assumed rate of return. And as we know if you set, you know, that is something that does impact the pension directly if we set the assumed rate of return too high, and our performance isn't good. That may lower the ADAC payment for a year, but can increase the unfunded liability after that year. So I do think there is an appearance of independence here throughout this bill we have tried to ensure independence of various people. I think this would be a good change. Once we see some language. Now that I understand it more, I, I'm inclined to agree. I can get comfortable with this. Any other committee discussion. So Becky, if we give you screen share, are you able to show us what you have magically created. All right, you are co host, go right ahead. I wanted to just send this to editing, but that's up. One second. Hey, do you all see that. Yes. Okay. So the changes highlighted in yellow. So the change would be in three a, I after where it says the individual is a benefit, the individual, you'd be adding or the individual spouse parent or child. So it would read the individual or the individual spouse parent or child is a beneficiary of the, of the plans, and then still striking out subdivision three C. Okay. Any other questions from committee members. Representative Anthony. Yes, thank you madam chair and thank you Becky. I had my reticence has to do with the continuity aspect, and I would like to read on and I suppose Rebecca's the ideal person. Is it provided in the transition that the folks who are currently there will serve out their terms do I understand that with this change. Nobody will be removed prior to the transition or am I I don't have the full document in front of me so I'm sort of struggling from memory but the transition language and I, I think it's important for the folks who were there to serve out their terms and then the new language triggers if you will the filter for appointment to the new team. That's the way I would think about it but I want to be assured that that's the way it's going to work. Thanks. That's correct there is transition language. The, let me just. So no, so everyone who's currently serving would be able to serve until at least one year before their term is expired, and their ability to be reappointed. So that depends on meeting the qualifications in the bill that the new qualifications and whether or not they have exceeded their maximum term limits. So, for the two members who are appointed by the governor who have this financial expert and independent requirement. I'd have to look at the term, what their current term explorations are I don't remember those those two members term limits. But they would be able to serve until one year prior to the June 30 of one year prior to when their term is up, whether or not they can be reappointed depends on if they meet this independence, this new independence requirement. If I may a follow up my understanding. Again, this is from my memory, maybe john or or madam chair. Or rep Hooper, the current chair man. Tom Galanca does not run a foul of this. So I understand that or am I wrong about it. That is to say he's not a beneficiary nor his spouse, etc, etc. I had rep Ganon. I don't believe he runs a file of this. That's what I kind of remember and again I'm interested in so I think he he was very, you know, I had a number of email communications with him he never indicated that this was an issue for him. Great, I appreciate it again I'm a continuity person here want the transition to go as well as it possibly can. Thanks. Thank you madam chair. I guess I do want to point out that we're only talking about basically three of these positions on this 10 member board for one and two. I know there's been some concern about the pool from what we would which we could draw from for these financial and independent experts. That's correct me it's my understanding that it doesn't have to always be somebody that comes from within the Vermont borders. The governor could appoint somebody that meets those qualifications but they don't necessarily have to come from Vermont. Not that that's a good thing. Yeah, there's no there's no residence requirement in the language. I mean also I just checked the VPIC website and it happens that those two government governors appointees their terms expired June 30 2022 which under this language would have those two positions being reappointed June 30 2021 representative Dan and and then let's see if we can put this to a vote. That is what I was going to do madam chair I was going to move to find this amendment favorable as we saw it on our screen a few moments ago. All right, are we ready to have a vote representative Cooper. So just to be clear this eliminates any and all disclosure requirements for everybody. Although there is currently an annual disclosure as part of the VPIC rules. So I imagine that would not prohibit that right. Representative Dan and is nodding his head. Yes. That is correct representative Cooper. So this is we're voting on representative Sherman's amendment. You can wait a couple of minutes. Friendly amended. That okay. You are unmuted. Sorry. What's the what's the signal for that. Universal sign of meeting problem. All right. Rep Colston are you ready to call the roll. I'm ready. I shall call the roll. Canon. Yes. Mariki. Yes. Leclerc. Yes. Cooper. Yes. Yes. Anthony. Yes. Behovsky. No. The fave. I certified as representative of the faith. And your vote. I didn't hear. Oh, yes. Sorry. Thank you. Higley. Yes. McCarthy. Yes. Copeland Hanses. Yes. The vote is. 1010. Thank you all. And again, I thank you for your catching. I'm glad I got what I was actually going for. I clearly I. I miss I. I didn't do it completely well, but I appreciate the help representative Ganon and all. So thank you. See you all on the floor.