 Good morning. Good snowy morning. It is the morning meeting of the House Appropriations Committee on April 16th. And we are gathered here this morning to understand H449, which is a bill related to the creation of the reconfiguration of the Vermont Pension Investment Committee to a commission and then the creation of a task force to do some important work for the state of Vermont. We're joined by Representative John Gannon and Rob LeClaire from the House Government Operations Committee as well as Ledge Council Rebecca Wasserman and JFO analyst Chris Roup. And we have about an hour or an hour and 15 maybe minutes to begin becoming familiar with this and then we'll see where we go from there. So with that, let me turn this over to Representative Gannon to help us understand this. Thank you, Madam Chair and thank you committee for having me in this morning to talk about this really important issue which is how we can save our pensions. I think you all know that there's $5.6 billion in unfunded liabilities today between the teachers, the state employees, pensions, and OPEP or Retiree Healthcare. So House Government Operations has been looking at this issue now for what seems like several years but is actually several weeks to try to identify ways to solve this problem. As some of you may know, we initially started with two proposals. One was to shift the governance around our investments and that was because there are two drivers to the unfunded liability today. One is missed actuarial assumptions and the other is investment performance and assumed investment returns. So that's why one of our focuses immediately was on VPIC and its governance structure because we wanted to address the investment performance issue and the assumed rate of return issue. So we did propose a governance change and then we also proposed benefit changes to the two pensions based on actuarial work that was conducted for our committee. As you may know we then held public hearings where we heard from literally hundreds of state employees and teachers who were very concerned about the speed of the work we were doing and urged us to form a task force to look at this issue of how we save our pensions over the summer. So we took a step back. I also should say we heard from the Chair of VPIC and the Treasurer with respect to our governance proposals and we started working with them to come up with the governance proposal that's in front of you today. So based on feedback from both state employees and teachers and from the Chair of VPIC and the whole VPIC board were committee and the Treasurer we ended up with the bill that is in front of you. So I think it balances moving forward with governance changes in VPIC and there I'll focus on we are moving from a seven. First of all we're standing up an independent commission. The name of VPIC is changing in the bill from the Vermont Pension Investment Committee to the Vermont Pension Investment Commission and while one word change may not seem significant it is significant that this bill sets forth making VPIC independent from the Treasurer's office and I think that is a critical change because we need to ensure that our investment decisions and how we set our assumed rate of return are based on independent investment information with respect to how we anticipate the markets will perform in the future. The less politics that are involved with VPIC I think the better off we are. I mean you know we should not be sitting our assumed rate of return in order to lower our ADAC payments. We should be setting our assumed rate of return based on reality. I think we've seen over the history for the last 10 to 15 years that our assumed rates of return have been too high. In many years we have missed those assumed rate of return and that's added to our unfunded liability. So that's why we think that it's very important that VPIC be an independent voice with respect to picking our investments and setting the assumed rate of return. So a big change is how that assumed rate of return is set. Currently it's set by not only VPIC but the three retirement boards, V-SIRS, V-STRS and V-MERS. They all basically have a veto power over setting that assumed rate of return. Under the proposed in the language in the proposed bill only VPIC will be responsible for that decision and for all decisions around setting the assumed rate of return such as smoothing and other issues. Another addition to VPIC is independent investment experts. Currently the VPIC statute doesn't require any investment expertise at all. It does require training for VPIC members but it does not require independent financial experts and so the governor's appointments, there's two appointments by the governor as well as an alternate, those positions will need to be independent experts going forward and we think that's important and if you look at the research out of the Boston College Center for Retirement, one of the things that's important to investment performance is investment expertise on your pension order or investment committee and so that's why we set that up. The other thing that you know that's the big changes to the VPIC, we also add two employer representatives, one municipal employer and one school board employer or representative of those. So that's how it gets up to 10. The other I think significant change that we did in VPIC is changing how often the experience studies are done. The experience study basically determined how you're doing with your actual real assumptions based on reality. We currently do those every five years and we are proposing this bill to do them every three years. We think that this will ensure that our assumptions are closer to reality and that we're doing checks sooner than later so if we are missing our assumptions we can correct those changes much more quickly. So those are really the significant changes to VPIC. We also require reports in statute. Some of those reports are already being conducted but they're not required in statute. I see Representative Fagan has a stand up. Yeah, please Rep Fagan. Thank you Madam Chair. Rep Gannon, thank you for coming in. I read this bill. I think this is going to get us on a path of making better decisions. Just a couple of, you know, just a couple of, as I would term it, nit-noyed questions but really important questions. Has VPIC been charged with fiduciary responsibility over the fund and will that fiduciary responsibility be transferred onto the new commission? The answer to both those questions is yes. Okay, good. Have they been trained in what a fiduciary, what that means? Yes they have and one of the things that's in the bill is in the training section is that they will get not only investment training but training with respect to their fiduciary duties. Good, thank you. Voting members, this new 10 member commission, are they all voting members? The 10 members are all voting members except for the chair who can only vote in a tie. However, there are alternates also that are non-voting so if a member is absent then the alternate would replace that member for a meeting and would have voting rights. Do the labor representatives need to have investment experience in order to be elected to this because if they have and they walk in and they find out what their fiduciary responsibility is it's going to be uncomfortable but they can be okay. If they haven't, if they don't have investment experience, they walk in and they learn what fiduciary responsibility is and that were me. I'd turn around and leave and say no thank you. This bill nor the current VPIC statute required the employee or the pension participant representatives to have investment or fiduciary experience. Obviously, they will be trained. One of the things that this bill does is require onboarding training so that hopefully they can get quickly up to speed. I should note that we are setting term limits in the bill. However, based on our analysis of the current makeup of VPIC only two members would turn off after the transition period which would be in 2023. Most of the members and alterants would still be participating and be allowed to be reappointed so I don't see a big shift in institutional knowledge right away. Obviously, over time now with term limits there will be some change but I think term limits is a best practice with respect to pension board governance as well as board governance in general. But I don't think there will be a huge shift right away in institutional knowledge on VPIC. Thank you very much. I really appreciate it. Thank you, Madam Chair. So, Representative Jessup. Yes, good morning. Thank you, Madam Chair and thank you both for coming in. I'm looking at page four of the bill and I'm on the version is introduced. I hope it's the right one. On line two it talks about the financial expert being independent which I totally agree with and then it has though both of those independent experts appointed by one branch of government which is the governor, the administration and then in addition there's the commissioner financial regulation and my question is was there any thought given to having just to again I think of it as disbursement of risk and responsibility I'd view that as a positive to having one of those appointees come from some other source. Sure. So, VPIC currently has the the public members appointed by the governor. We did not change that in this bill. I think there was some brief discussion about whether there should be another appointing authority but we chose to keep those appointments with with the governor. I think it's important that everybody have a stake in the decisions that we are making with respect to our pensions and that it's important that the governor be you know part of this process and I'll say one thing that we shifted at the near near the end was we had the commissioner for finance on VPIC but we chose to move to the commissioner for financial regulation and the reason for that is that you know the commissioner for financial for the department of financial regulation is a securities regulator and so has you know the securities regulatory expertise and our current commissioner who may not be our commissioner forever you know also you know worked for scat and ARPS, a law firm and was in mergers and acquisitions so has you know a fairly good knowledge of securities. Right, but for example was it considered that the treasurer might appoint one of those independent? Well, one of the things that we are trying to achieve with respect to VPIC is its independence from the treasurer's office. We are attempting throughout this these sections of the bill with respect to VPIC in ensuring that VPIC is independent and won't be pushed in one direction or another with respect to its investments or setting the assumed rate of return by politics. We have a terrific treasurer in office right now but you know things may change as the treasurer pointed out in her own testimony and one of the goals that both the treasurer and VPIC supports is creating an independent commission to you know make our investment decisions and set our assumed rate of returns. And can I continue Madam Chair? Yes, so also on page 15 as I understand it and again I'm like so many members trying to learn quickly about what is a complicated issue. The role of the actuary and my question is is that as my understanding is that's perhaps one individual versus a firm and again in the same thinking that I was applying to who chooses the independent person disbursement is are there states or are there models out there were an actual there are two or three actuaries and they have to reach consensus? That's a good question and then we actually and I specifically looked into this so typically we'd only have one actuary being the independent actuary and it's typically a firm not an individual. Right now we have Siegel as our actuary and they've been our actuary since I believe 2018 which was a good change since they were not responsible for many of the incorrect actuary assumptions but there is a process where you could have an actuary audit done. We actually talked to our state auditor about this he couldn't conduct it on his own he would have to retain an independent actuary of his own to do it but you could have a second actuary on a periodic basis look at the work of the the actuary who actually does the experience studies. Thank you so I see Jim's hand and I'll call on him in a second what I'd like to do is suggest that we allow representative Gannon to get through his broad overview of the bill and then we can come back down into our questioning around the particulars of the bill but I open the door so let me let representative Harrison through the door and then I'm going to shut it. Rep Harrison. Yeah thank you Madam Chair. Representative Gannon on the VPIC new VPIC makeup I think the addition of the DFR commissioner is an excellent one given what they do for a living over there but I'm questioning what what do the members representing municipal employers or school employers or the union members add to the investment expertise at the table. That's a very good question representative Harrison I don't know if they they add investment expertise per se but one of the things if you look at the the Boston College Center for Retirement Research on board compensation one of the things that they recommend and that research has shown is important is that all stakeholders be represented on a pension board or on an investment committee like this because well they may not bring a wealth of investment experience they bring buying from the various stakeholders which I think based on our public hearings and what we heard through those is critically important for VPIC to be a success. All right thank you so I I guess what I'm hearing from you on overall you would consider consider this fair and balanced. That is what we try to achieve with both VPIC and our task force. I believe that we that we focused on having representatives from the three stakeholder groups that are important on VPIC and I think that this the task force in its current form is extremely balanced. So I shouldn't expect any more emails with that title then. I can't promise you that member. All right thank you. So let us let Rep Ganon continue walking us through the report we haven't even gotten to the task force yet. I think you left off in describing your reporting requirements. Right. So we have put in statute many of the reporting requirements that are currently being conducted by VPIC and you know we shift I already mentioned we shifted the experience study from five to three years. I mean I think that's a pretty good overview of VPIC. I mean there's a lot of details. For example the term limits are important. We changed the forums. One of the things that we did with respect to changing the forums is we do require a super majority for setting the assumed rate of return. I think that's important that we have buy-in from a larger group of people with respect to that. One of the things that was important and is a significant change is legislators cannot serve on VPIC. We heard that from many voices. We need to de-politicize this process and so we cannot have people on VPIC who may be setting the assumed rate of return simply to lower our ADAC payment. That is not how I believe it should be set. So I think that's an important change. So VPIC will be funded from collecting funds from the three retirement plans to cover its expenses and any expenses that the Treasurer's Office incurs in supporting the work of VPIC. So now I'm going to move on to the task force if that's okay Madam Chair. Yes please. So section 10 of the bill creates a 15 member task force comprised of six legislators three from the House and three from the Senate chosen by the Speaker and the Committee of Committees in the Senate three state officials the Commissioner for Financial Regulation the Commissioner of Human Resources and the Director of Retirement who's in the Office of the Treasurer. We thought she was a key person to have on this because she is the expert in the Treasurer's Office with respect to retirement benefits. She really understands the difference between the various groups within visas which is an issue that you know I think the task force is going to have to tackle and I'll go into that in a minute. And then we have six members chosen by labor organizations the Vermont NEA the VSEA and the Vermont Troopers Association. So as you can see I mean there's six legislators three state officials and six members of labor organizations. So we're trying to balance between employers and unions and the legislature and the legislature represents both state employees and teachers as well as Vermont taxpayers. And we think you know because we will be tackling this next year with whatever recommendations the task force comes out out with it's very important that legislators be part of the task force. The task force will have its first meeting on honor before June 15th and hold up to 15 weekly meetings and will submit a written report to the governor and the house and senate government operations committee on or before September 1st 2021. The task force will will make recommendations about benefits and appropriate funding sources including setting a stabilization target number and actually in the bill we have set that stabilization target number. I think that's important and I'll be glad to go into more detail about that. It's going to conduct a five-year review of benefit expenditure levels as well as employer and employee contribution levels and growth rates and three five and tenure projections of those levels and rates. It's going to look at benefit and funding benchmarks with proposed new benefit structures with the objective of adequate benefits within the established cost containment benchmarks including an evaluation of shared risk models for employee contributions and cost of living adjustments. That's new right now there is no risk sharing between employers employees. It's going to estimate the cost of current and proposed benefit structures on a budgetary pay as you go as well as a full actuarial accrual basis. It's going to evaluate the intermediate and long-term impacts to the state and local economies of benefit changes and their potential impact on retiree spending. It's going to evaluate any cross subsidization between groups within visas and adjusting contribution amounts to eliminate cross subsidization. Just a quick word on that. There was a lot of questioning about whether there was cross subsidization between the various groups within the VCIRS plan. We requested from the Treasurer's Office information on that. We did not obtain that information for whatever reason but we think it's important to determine one way or the other whether in fact there is cross subsidization because if you look at the plans, the benefits especially in group D are much more or better than they are for say group F which is the largest has the largest number of participants or even group C so I think it's at least worth looking into that. The task force is going to evaluate alternative plan design such as hybrid or defined contribution options or a defined contribution and defined benefit combination. It's going to examine permanent and temporary revenue streams to fund VCIRS and VCIRS and review all or part and review whether all or part of retirement income should be tax exempt. Finally, it's going to develop a plan to pre-fund OPEP health care costs including reviewing health care benefit design innovations, state regulatory measures and alternative methods of providing pooled health care benefits. I will say one thing. While most of the focus in our committee and has been on pensions, I do think that retiree health care is a place we need to look to reduce the overall costs and reduce our unfunded liability. I think a lot more work can be done there to reduce our overall costs. So I think that's really an important thing for the task force to do. The task force will not make any recommendations on adjusting the assumed rate of return. That is in VPICS ball court and we think it's important because that would basically be financial gamesmanship for the task force to recommend changing the assumed rate of return. We've had enough of that over the last several years. I don't think we want to go down that path anymore. The task force will seek stakeholder input before it makes its final recommendations. It will solicit input through public hearings and reach out to affected stakeholders, including representatives of the judicial branch, group D members, and B-Service members who are employees of the Department of Corrections. As you may know, there is a bill that's on our wall currently that would propose shifting some Department of Corrections employees who are in facilities to a new what they call group G plan that would have earlier retirement. So that is something perhaps the task force can take a look at. There is a cost to that. So I mean, and I realize that, but at least we can take a look at that. The task force will be supported by the Treasurer's Office, receive fiscal assistance from Joint Fiscal Office, and I'll say one, I just want to do a call out to Chris Rube. I mean, Chris Rube and Joint Fiscal has been incredible in assisting our committee in getting through this and his knowledge has been invaluable to our committee. You know, we will also get support services from the Office of Legislative Council. The task force will contract for advisory services and these advisory services are two things. For an actuary who can look at our benefit decisions or recommendations initially and determine how much they cost or how much they save. We also need a outside legal expert to look at legal issues around any benefit changes we make. As you may know, well, you know, there is a contractual component to some benefits. And you have to be careful with respect to what you can do without getting an agreement from the unions with respect to those benefits. That was done in 2009 with the Retirement Commission. They hired an outside legal expert to give them recommendations about what can and cannot be done unilaterally by the legislature with respect to benefit changes. So I think that's important. And so the costs for those outside experts will be $200,000. And that is basically the bill. Thank you, Representative Gannon. I am wondering if you will go back to the list of responsibilities established for the task force and elaborate a bit more. You ran through the list and we're not as familiar as you with that. And I think we need to linger and see what particular questions we have. One that has come up is what does cross subsidization mean? So if you could just go back to that and understand that more deeply. So the first task is setting a pension stabilization target number. And we actually identified what that should be in the bill. And it's to reduce the actual accrued liability based on actual value of assets by a sum equivalent to the amount of the increase from fiscal year 21 to fiscal year 22 in the state employees and teachers pensions. And also to reduce the actual determined employer contributions by a sum of equivalent to the amount of the increase from fiscal year 2021 to fiscal 2022 in the teachers and state employees pensions. And let me explain that one because that's really an important thing. Chris Roup did a great presentation for us. It's important to focus on both the liabilities and budgetary pressures. If you only focus on one, you could have very poor results. For example, if we just focus on budgetary pressures, we could, for example, and this is one example, reamortize the two pensions. Well, that would reduce the ADAC payments. It would increase our unfunded liability. So just focusing on budgetary pressures could have unintended results in increasing our unfunded liabilities. So we thought it was very important that both liabilities and budgetary pressures be the focus of any target. We wanted to establish a numerical target so that that was before the task force already identified so they could begin their work immediately. So I think it's very important to look at those things and assessing the full picture. And we also wanted to set achievable targets because that was one of the things. You could look at just unfunded liability and say, oh, let's reduce unfunded liability by two billion. We talked with Chris Roup about that and that just seemed hard to achieve. And why we chose the numbers that we did is there's a lot of actual research that the Treasurer's Office did with respect to trying to move back to fiscal year 2021. Much of the work that we did in house government operations was focused on sort of the same goals. So that's why we chose these targets for the task force. So hopefully that makes some sense. So the next task for the task force was conducting a five-year review of benefit expenditure levels as well as employer and employee contribution levels and growth rates. And then project them out for three, five, and 10 years. This shouldn't take too long because we already know what the contribution levels have been for the last several years. Chris Roup has a great presentation that explains that. But what we haven't done is project those out, especially with any benefit changes that the task force may propose. Then it's looking at new benefit structures, and this is where the real hard work will be. And we've done a lot of work in our committee on that. As I mentioned, our initial proposal did look at benefit changes. And so we do have a lot of information and data on that, which I think can help the task force move quickly through looking for new benefit structures, changing cost of living, changing retirement age, or whatever other recommendations it chooses to come up with. So there is work done in that area. One of the things that I think is important is looking at a shared risk model with respect to employer employee contributions or cost of living adjustments. Right now, each year the state pays more and more for contributions, whereas teachers and state employees do not. So one thing to think about or that the task force should think about is whether there can be risk sharing with respect to those contribution amounts, because the state just keeps paying more, whereas the state employees and the teachers do not. That can also be cost of living adjustments can also be done on a risk sharing basis and be either set to meeting our investment performance or some other measure. Next is just evaluating the intermediate and long-term impacts to the state and local economies of benefit changes and their potential impact on retirees. This proposed language actually came from Jeff Bannon from Vermont NEA, and I think it's important that we do, that the task force looks at if we do make benefit changes, what are the long-term and intermediate impacts to the state into our local economy. Because retirees from the state and from teachers mostly stay in Vermont, I think 80% of them stay in Vermont. We want to make sure that we are not doing anything that will require them to fall into our social safety net and will allow them to continue to have make a good living through their pension and social security. The other thing I'll get back now, the next thing they have to do is look at cross subsidization. I wish I could tell you more about this, except that we kept hearing references to the fact that there is cross subsidization in visas between the various groups. And if you just compare, for example, the benefits in group D. So a group D is a small group. It's basically the judges in the Vermont court system. But if you look at their benefits compared to the other groups in visas, they get 100% of their final salary. So compared to the other groups who don't get anywhere close to that, there's no averaging of their last three years of their salary or anything like that. So we're just going to explore that. There is some dated information that there is cross subsidization. And so I think it's important that each group within visas support itself, that the contributions being made support that so that there isn't another group that's doing that. So that's cross subsidization. I see Representative Fagan has his hand up. I'm not going to call on them. I want you to get to the end of the list and I'll call on people. Okay. So next is evaluating alternative plan design. This came up in our committee. Some of our members wanted us to look at defined contribution plans or a hybrid plan, or a combination DC DB plan. I will have to say, having looked at what happened in West Virginia who went from a DB plan to a DC plan, it actually cost the state more money to do that. But we think that the task force should look at that. Perhaps West Virginia did it wrong. And there is a way to do it correctly. So that's on the table to look at. And the other thing that we may want to look at is should there be in addition to the DB plan a DC plan that people can participate in. I think they already have that. So that's it on plan design. So the next thing is examining permanent and temporary revenue streams to fund visors and vistas. I think you all know that there's been a lot of discussion of either creating a wealth tax or some other tax to help fund the pension system. So I mean the task force can look at what might be an appropriate permanent or temporary revenue stream for visors and vistas. The other thing that we didn't hear a lot of discussion about that we considered and it came up on the floor yesterday is whether retirement income should be tax exempt. And is that another way if we do change benefits to keep our state employees and teachers whole? So we think that it's important to at least look at that and consider what the cost may be less of a cost to the state to do that. But I think Representative Ansel can tell you more about that than I can. And then the final task and an important one is developing a plan to pre-fund OPEP. As I think you all know and as the treasurer has repeatedly reminded us pre-funding OPEP can save $1.68 billion. So that is an important consideration to make. Now a lot of people you know as you well know there's $150 million set aside to address our pension problems. You know some people are asking why don't we use some of that money right now to pre-fund OPEP. And my response to that is I really believe that it's important that the task force not have its arms tied with respect to its decisions and that it should guide the legislature or make recommendations to the legislature as how that $150 million should be spent. Yes this may add some to our unfunded liability between now and when the task force where I should say the legislature drafts a bill I think it's important that the task force be given the opportunity to make its recommendations and identify what is the best place for that $150 million. So those those are really the tasks that are in the bill with respect to the task force. Thank you for returning to that list and helping us better understand that bunch of hands now. Representative Fagan. Thank you Madam Chair and Dan and thank you. You absolutely just answered one of my questions which was on the $150 million you know should we go ahead and invest it now and thank you for saying that. We know all about creating temporary reserves so we'll be able to handle that. Regarding the cross subsidization so obviously the pension fund itself is not meant to be each part. There's not a set amount for one group set amount for one group set amount for one group although it's kind of looked at a little bit in that regard. The issue here is that you've got some individuals receiving far higher pension benefits yet paying in the same amount as everyone else as far as a percentage of salary. So sort of maybe not the exact same amount but the question is you know are there employee contributions and are employer contributions covering the cost of the benefits they receive? Sure. Or is another group subsidizing those benefits? Okay and thank you and then the final question just escaped me so I may put my hand up again Madam Chair when I remember it. Thank you. Thank you and excuse me I thank you. Pardon Representative Leclerc. I should have asked if in addition they're welcoming you if you wanted to add to this presentation. I beg your pardon for not turning to you first. Not at all Madam Chair thank you and I think the only thing I'd say is didn't I do an excellent job of preparing the member from Wilmington for this? Such a good job that I forgot to call on you so well done. I'll jump in if I feel it's appropriate but thank you Madam Chair. Okay thanks very much. I think Representative Yacoboni was next but I could well be wrong. Thank you. No you spotted me. Thank you. I have two questions. This is not a criticism. I'm seeking your rationale and explanation. On page 23 of 27 it says a double I. It says the employer contribution will be reduced for a certain period of time. So my question is I'm seeking your explanation. If an employee were to say to me Representative why why should I as an employee shoulder 100% of that reduction when I'm not responsible for 100% of the problem. So first how would you help me explain that? Well I think you know and Chris Roop can show you the slides on this. Employer contributions have been increasing tremendously over the last several years whereas employee contributions have not. So I think that in order to solve that problem and I think it is a problem. I mean the more employer contributions go up the more the pensions cost us is that there needs to be an analysis of what is a fair level of employer contribution versus employee contributions. So you've made that in a sense already in this language because you're saying they've got to pick up all of that fiscal year it's a hundred million dollars I believe. That is a target. Okay okay I guess that's open then for a discussion. But my other question is would you welcome some guardrails to the task force along the lines of if there shall be a recommendation for an increase in retirement age it will not apply to those within 10 years of retirement. That's a very good question Representative. That is something that in our initial proposal with respect to benefit changes and house gov ops we we did put two guardrails in place one that retirees would not be impacted by any benefit changes and two that people within five years of retirement would not be impacted by benefit changes. So that is something that we did consider and then you could put in those guardrails I will just say the more guardrails you put in the more difficult it will be for the task force to to come up with recommendations to meet the targets. Thank you there's an upside there's a downside. Yes appreciate that thank you Madam Chair thank you members. Let's see I think Representative Helm but actually Leclerc you put your hand up in response to that question I believe yeah. Thank you Madam Chair and I just want to add to this and that timing is of the essence here and like the Representative for a moment and said we didn't want to put a lot of conditions on this because currently the teacher's pension right now is hemorrhaging to the tune of about 13 million dollars a month. So this is an issue that timing is very very important and if you just do the math the 150 million that we have set aside if we took a year to address this issue not only would that 150 million dollars have really done nothing we'd still be six million dollars more added to the deficit. So we were looking to make this as quick and I guess the right word isn't easy but as productive as we could. Thank you. Thank you Representative Helm. Can I spin away from this or is somebody else want to I want to go into a little different section of this. All right. Let us stick with the with the task force duty for a bit. So go ahead. Yeah okay I'll be here. Yes you will. Thank you. Rep Townsend. Thank you Madam Chair and thank you to both Rep Scan and Leclerc for coming and explaining this to us. My question popped into my head as you reached letter D among the tasks of the task force evaluating the economic impacts. Did you folks hear or did you folks discuss any possibility of including as a task evaluating the evaluating the potential impact on the ability of the state with regard to state employees or the education world in terms of teachers the ability the impact on the ability to attract and retain personnel. Yes Representative Townsend we had discussion in our committee about that there were concerns about that and we believe within D we sort of capture that you know looking at the the economic impacts can include the ability to retain either teachers or state employees. So that's sort of captured in that subsection I would argue. And we had that discussion in our committee and we thought that this covered those issues. So that could be read as the legislative intent of those words. Yes absolutely yes. Thank you very much. Representative Feltas. Yes thank you. I am be followed by the first task the number A of setting a pension stabilization target number. Can you explain that in just plain all layman's terms does that mean we don't want to spend actually spend a finite amount of money above a particular target and you're going to do it by these two different methods or just what does that mean can you explain it better for me please. Yeah so this this subsection ties the fiscal target to the size of the increase in liabilities and ADACs from FY 21 to FY 22. These increases were driven mostly by recent changes in demographic and economic assumptions including lowering the assumed rate of return. So for visas these targets translate to reducing 36 million on the ADAC and 225 million on the liability. For visas those targets translate to reducing 60 million on the ADAC and 379 million on the liability. So does this mean you don't want to go beyond those numbers or I'm sorry I still don't understand. Yes you're going to say we're not going to go beyond. You have it right Representative Feltas. So we don't intend to spend beyond that increase that occurred just recently irrespective of whatever some of the other analysis shows. That's correct and I think we are in a very good place with respect to our assumed rate of return right now. I think you know for many years our assumed rate of return was overly optimistic. I would anticipate when we finish this fiscal year that we will have an actuarial gain on our investments. That is in part due to market timing of where our market was at the beginning of the fiscal year and where it hopefully will end at the end of the fiscal year. So I think we're in good state state there and I see that Chris Rup is appeared so he may have some information to share too. Thank you Representative. Again just to add a minor point of clarity to your question was you know I think realistically numbers are going to increase from year to year between now and the end of the amortization period and they're going to increase due to payroll growth and they're going to increase due to you know the fact that the statutory amortization schedule calls for the unfunded liability amortization payments to go up by 3% every year and the thinking with that was you know if the budget or the payrolls assumed to grow up by 3% every year this would kind of maintain a steady a steady slice of the pie. I think the intent with this was to look at the the size of that increase from year to year and use that size as the target value. So I just want to clarify that you know realistically I don't think we would keep all costs at FY21's levels from now until FY2038 because things are still going to increase as payroll goes up but this is more about how do you sort of lower the floor of those increases a little bit so they're back in line with where they would have been before the recent changes of assumptions that led to such big jumps in costs from last year to this year. Thank you that helps. Thank you. Representative Shine. Thanks I'm going to wait till the end I'm going to just keep my hand up but I'd like to come back at the end for my question. It's not this directly. Oh it's going to be a good one then. Representative Harrison. Yeah thank you Madam Chair. Representative Gannon in terms of the duties and responsibilities of this task force ideally I guess at the end of the day there's some kind of grand bargain you know the state does ask the employees maybe at different age groups do y or z or whatever and you know we can you know endorse it next year but are there any limitations to you know you talk about you know plan for pre-funding Obed you know I look at these things it's all a liability right now that's how we get to the 5.7 plus billion dollar liability it's Obed plus the regular pension is there anything that you know in the give and take world that we can do you know the parties can agree to something on Obed and then but you know in exchange there's something else that's done on the retirement age is there anything that limits any of that conversation or discussion. Thank you representative Harrison for that question. So I think if this plays out similar to how the 2009 retirement commission played out what will happen is that the task force will make recommendations then if it recommends benefit changes that impact vested employees there would likely have to be negotiation between the state and last time that was done it was with the speaker of the house the senate president pro tem the treasurer and the governor to negotiate with the unions with respect to benefit changes and then a package came to the legislature to approve but there are things that we can do unilaterally we have a lot more flexibility with respect to OPEP than benefit changes with respect to new hires we have the flexibility to make our own decisions with respect to them and even with respect to some benefits we may have some flexibility to act unilaterally I'm not sure that answered your question but I think that's what you were trying to ask. Yeah I don't know what the answer is I mean if I did I give it to you and say here we go and everybody's happy and and we are going to erase that liability it's not simple and I appreciate all the work your committee has done in probably the body armor that you've had to wear for the last few months but the other part you know you talk about you know looking at revenue sources to add to the mix is there anything that prevents them from saying and said of you know additional revenue we reallocate some of the current spending obviously that's not easy but could that be part of the mix as well. Reallocate it where? In our budget. Madam Chair I think you're muted. I was asking him to clarify too what what do you mean Jim? Well I mean we spend you know whoever billion dollars on a whole variety of programs if this is considered by the legislature to be a priority what's to prevent us from saying okay we need to spend an extra 50 million instead of raising taxes um which may not be palatable to some of us um what's to say we couldn't reduce spending in certain areas of government. Isn't that our job every year to ask and answer those questions I mean you know as we develop? Yeah yeah I know I guess it is I just didn't know in terms of the task force whether or not they would be um you know instead of you know you know proposing an increase in income taxes for example or some other tax that you know maybe they come back with a recommendation to reallocate yes it is our our responsibility and our job. Thank you. Um I I let's see uh representative Helm you wanted to take us in a different direction what you're muted Bob. Oh come on there we go. There you are. A little bit not that much but yeah oh yeah and I'm gonna go into an area I don't know anything about which isn't uncommon however I have always stayed away from unions by luck and by choice at the same time however at one time I got I was uh a select board member and a new one and so they made me the negotiator with the union I had no idea what I was doing and they knew I did and they played the time game with me I was a working guy you know I'm doing things I've got a family later right this guy comes in great guy but anyways he sat me out and they got what they wanted and I said boy is that how that works now I'm gonna get to where I need to go all the years I've sat here with this whole union thing and negotiations every year daddy not every year but almost um I I wonder why do we we appear to me that we the government the governor's office really loses every year I believe the governor has somebody come out of the department of labor to negotiate I'm not sure if he's a negotiator she is but I do know one thing even back when we were getting discharged from the state house due to covid they had we were right into it at that time and there there had been I thought another very favorable to the union members um agreement which included as I recall a check to be sent to every one of them and I never got the under the total grief on it because we we'd left and everything kind of dissolved for a while anyways um my point is is there any look or will there be from from this proposal at us dealing with our union negotiations I I believe we need to deal a little more directly and seriously now maybe I'm wrong and if I am I hope somebody can show me that but my point is I think we give away the farm more than we need to and I and I'm not trying to get at union people I don't care they they've got their thing and they deserve it but I just say what's fair is fair and I I'd like to try to keep it that way can you come close to answering that john I can try I don't think it's the role of the task force to negotiate with our unions the unions will have representatives on the task force and ideally I would hope that the task force could reach consensus recommendations with respect to any benefit changes or or any other recommendations it makes now when the retirement commission met back in 2009 it it did not have any union representatives on it so unit union representatives will have a say in what the task force does but ultimately it will be up to other people to negotiate with the unions if it's necessary to make any changes that the task force proposes well if you don't try to tighten the strings and I see made us sit in there or very antsy if you don't try to tighten the strings the strings get loose and that's just the way it is and I'm not saying the task force should be involved in in that but they if they're going to truly be a task force they should have a some concern with the process absolutely and I think you know that's why I think there is a good balance on the task force to hear from all the stakeholders so unlike the last time we did this which was I think a mistake we do have union represent representation that will be working on this I do think there's hard negotiations that are ahead and the representative of Claire has his hand up yeah I see that too but let me just put my two cents in let's don't conflate the question about around retirement benefits and the overall issue of how we compensate employees one is a subset of the other and it period and if one has a concern with how the governor is negotiating with the union I mean to me that is a separate you know that that biannual conversation is a separate discussion to what we are doing here and like we we need to not confuse the two the two issues I you're raising a point of view but I I'm just wanting to separate the two issues I I get what you're saying however if you if you if you don't fix or at least work on fixing the whole problem you aren't going to get where maybe you need to go that's all I'm saying representative Leclerc did you want to add to this I can briefly there madam chair thank you I understand where the the members coming from however we did want to keep this focused it primarily on the pensions and the op-ed because as somebody who has dealt with organized labor for decades and a variety of fashions there is an awful lot that gets drawn into the collective bargaining discussions and we wanted to make sure this was focused exclusively around those basically two items because it's in itself this is going to be very contentious and a lot of work is going to have to go into to affect the change that's going to stabilize these pensions and put them on a trajectory where there's long-term faith in their stability thank you representative shy are you ready for your yeah I just didn't want to interrupt the flow of the other conversation first of all I just want to thank Rep Ganon and Leclerc and the whole Govots committee this is you guys did incredible work on this and I just really appreciate this and it's the bill is great so my question is we have this great bill where is the senate on this have they been in part of any of these discussions I'm just kind of worried what's going to happen when it leaves our body so yesterday house and senate leadership and the chairs of house gov ops and senate gov ops met to discuss the bill this afternoon the chair and I will be in senate gov ops walking through the bill so there have been discussions and we will be presenting the bill this afternoon senate gov ops even though we are aware that appropriations may amend it at least senate gov ops will get a good head start and at least understanding the direction that we're headed but no sense of how they're feeling about this at this point I think they're aware of the problem and the work that we've done and so it's my hope that they will follow through with the concepts that we put into our bill thank you good luck thank you representative jessa thank you madam chair so I have a question but before I get to it I just want to make a couple comments um on the on the issue of process one of my biggest concerns is what kind of process led us to the legislature under funding this for so long which is why we landed here so I just wish to put that on the table and the other comment that I wish to make is I think um representative yakovoni raised an excellent point about uh little sub two on page 23 he used the term guard rails and and uh that resonates with me um for any number of reasons which I will go into right now but my question has to do with uh op-ed in pre-funding um here's what I'm struggling with on the one hand we have what I understand to be fairly uh defined targets there were some numbers read out which actually I'd love to get those in reading uh in writing rather and yet on the other hand we're told we don't want to tie the hands by dedicating this 150 million despite the fact that these numbers keep increasing uh day by day month by month as we heard so I'm just trying to balance those two tensions and I'm having a hard time doing that if someone could help me well I mean I think it was important um to have targets for the task force um because I mean in order to finish their work by September to first I think taking that off the table because we could have said okay task force you set the targets um we decided in husk of ops that it was important that we set the targets um to take that task off the task force responsibilities um so I think you know that that is important to have that sort of guard rail around it um as far as the 150 million goes I mean we do not know what direction the task force will go with respect to op-ed or the pensions the way the treasurer's recommendations were designed was that you know by well pre-funding op-ed will cost us money she hoped to make up that cost in savings in changing the pension benefits so I think you have to balance all of that um before you make a determination of how to spend the 150 million dollars is how where where are the savings going to come from um and that will help identify where the money should be spent and I think you know spending the money now um may restrict what decisions the task force can make throughout the process okay I might not be understanding because I'm sorry even though it's no no you're doing a great job this is um unfamiliar terrain to to me as an appropriator and I'm not speaking for anyone else here I I'm still not following if you have a debt that is accruing on a time basis why if the whole purpose of the task force is to deal with a substantial liability depending how you frame it in budgetary terms or any other terms I don't understand why lessening those pressures upstream is incongruent with what you are asking the task force to do I'm still not getting that representative jessif we could spend the 150 million dollars million dollars right now reducing our unfunded liabilities that is not going to necessarily solve any problems if we don't identify how we're going to achieve savings by using that money I mean I mean we we could just representable clear has his hand up so maybe Rob can help us yeah um those are excellent questions I think what the intent was is to first identify what the real issues are for instance like the OPEB the 20 million dollars to pre-fund it that's based on some assumptions of I think an initial investment of like the 20 million and 10 percent and then a three and a half percent but you don't have to look too far to understand at health care costs they're increasing at double digits so is the 20 million really enough or should there be more on the other hand we've heard uh for like the teacher's pension which like I had said is is hemorrhaging money every month maybe of the 150 million 90 million should be allocated exclusively to that so until you can really quantify exactly what the problems are and what some of the potential solutions are you're better off to take a pause and figure out if there's a better place to put that money that'll have a greater effect up front does that does that help or make any sense yeah it does and I also wonder and then again uh this is my my last point I'm not trying to belabor this um here in house appropriations depending what happens with future funding streams what we may want to think about in terms of set asides that's just a another place to go in appreciating that does help in terms of appreciating ultimate use of that set aside is is what you're getting at and I I think I understand that now but I still um I don't want those dollars if they can be used to address what I see as a fundamental responsibility of ours to somehow get swept for all the many good causes that come into this committee every single day and that's my concern sure I I might add just briefly and then you folks would know this is that you've already allocated I think it's what 350 million dollars um to this so it's not like we're making an insignificant um investment in this that is the interesting issue that we have because because we are in rather flush times we have been able to um fund the current the current year's expectation if this had been a different time we would have been so struggling to find an additional hundred million dollars to put to this obligation it would have been heartbreaking the sort of choices that we would be forced to be making and I so I think clearly this is an attempt to avoid those heart breaks further out that when when we know this these times of one time money are going to be gone in two or three years and we're going to be back to the time of having a structural gap between revenue revenues and expenditures that is continuing to grow we we we we cannot keep dedicating an increasing amount of our general fund dollars to just paying for um pension obligations we were at below 10 percent we are now at over over 11 percent and our general fund dollar obligation to the pension and it's just plain unsustainable and so the question is how do we barely to the people who work for the state of Vermont how do we protect their interests but also how do we protect the interests of all Vermonters so that we can continue delivering the the services that those employees who work for us and our teachers desperately want to be delivering to folks um and so it's it's it's a delicate balancing act um folks I'm so we're at 10 of not of 10 um there is action on the floor I want to honor that I see hands I I know that we're going to continue having a conversation I think we need to kind of continue understanding the bill before we even figure out where we are with regard to our position on it um hand went down and I wasn't trying to ask you not to ask questions I'm just doing a check in here representative Fagan thank you madam chair so um it represented again and I noticed on one of the pages that the VPIC chair will now be receiving a salary equal to not more than one-third of the treasurer's salary um are we sure that we're not actually establishing a new state employee by doing this in some type of de facto manner representative Fagan um actually that is not new language um that only moved over from three vsa section 523 to section three vsa 522 um he's already getting a salary of one-third of the treasurer's however I will say um the bill does ask for a compensation study with respect to the chair um uh you know in some of the testimony we heard with respect to other states and how they set up their their pension offices um we do want to know whether we're fairly compensating the chair or not um it is a very difficult job um you know we are very lucky to have Tom Goloka as chair of VPIC I mean I think he is really responsible for the turnaround with respect to our investment performance in the last couple of years and with respect to setting a conservative assumed ready return um so we do want to look at that okay thank you and then one more question um does VPIC have the authority certainly they they ought to have the responsibility but do they have the authority to send the the the two bargaining elements back to the table if the if a uh if a proposed contract um has an increase to benefits or change to benefits that are not funded in the contract in other words causing there to be more um unfunded liability in the funds and and also damage or also impacting the fiduciary responsibilities of the uh of the uh the trustees in the commission um neither the current um VPIC statute nor this bill would give VPIC the authority to send back um I guess collective bargaining changes that might impact their decisions so I mean the decisions of VPIC are very basically two in nature one one is investing um the pension funds and two is setting the assumed ready return and with respect to those I'm not totally sure how any um collective bargaining changes um that nobody working today impact um those decisions um okay so um my concern of course is is this um if you have an increase in benefits but because of that increase in benefits the the unfunded liability immediately grows um I've been a part of a pension board that had the responsibility to kick it back to the to the negotiating table we did and they renegotiated um it does the commission have the ability to to make a recommendation that this be that this be taken in that this be put into statute this type concept be put into statute um the bill does not conflict that at this moment but do they have the do they does the commission have the ability to go where where it feels is appropriate if it needs it thinks that this is a material aspect that needs to be addressed I um having I don't think so no yeah um I will say I mean I understand what you're saying because if if unfunded well not really unfunded liabilities unfunded liabilities increase in the funding ratios to the teachers or state employees go down um if it does impact how the pick will have to invest its money um the lower the funded ratio the more liquidity it needs um with respect to its pension investments so it would change the way it invests its money if the funded ratio becomes too low and we did hear testimony from the chair of vpik and I think that the treasurer that there is a point um where the funding ratio gets so low that basically you're in a death spiral um because you're having to to pump out so much money and benefits um that you really have to be an investment of vehicles that are very liquid and probably have very low returns thank you um representative townsend thank you madam chair uh just wanting to double check uh once we have a chance to have all of our respective questions um answered with regard to the bill per se we will yes have a chance to walk through the fiscal note yes yeah um so we've been engaged in in broadly trying to understand the bill um I had thought that you all would have some desire to be on the floor um given the the bills that are being considered there um so I wanted us to have the broad overview our good folks friends from lege council and jfo have been patiently sitting here my thought was maybe we should go to the floor um and then come back um hopefully late morning and maybe we can walk through the fiscal note and um in with lege council if you need to go through the bill per se Teresa is going to come on and tell us if that works or not I want to remind you that we also have the um child advocate bill which we sent away and it has now come back to us and we're taking testimony on that this afternoon and with the intention of garnering enough information to make a decision on tuesday to vote that bill out and our intention is also to move this bill out on tuesday um so let's see where we all are um by by noon um and we can figure out kind of how to proceed here um let me let me just add so we've got the child advocate bill at one 30 115 something like that one um and um then we can also take time after that um to come back to this so can we stay flexible is that that's okay um I I'm seeing us running out of steam in terms of our questions for representative gannon and la claire and so maybe we can say thank you for this um and um you're welcome to sit with us but you're I I think we're done thinking about this portion of the bill right now um Teresa what are you trying to tell me oh I'm not I'm I'm listening intently so okay to figure out what the plan is what's next okay and I I I need to I think my only concern is uh Becky and Chris's schedule and what they're capable I I think they're okay this morning but if we jump to this afternoon I'm not you guys are capable of anything right right so Chris how's your schedule can you and and Becky can you guys come back um around 11 I can make that work I need to jump over to Senate transportation for a little bit but I'll be free late back and forth yeah um and I'm also free yeah I'm also free late uh late morning I do the afternoon I have I am scheduled yeah yeah um Ms. Wasserman as you know we're not used to actually doing bill walkthroughs it's kind of a strange concept for us to look at words um and so committee do you need a um kind of a traditional walkthrough from Ledge Council I I'm I'm feeling no um so I think we've see we're so easy it's a little scary isn't it um I can still be here for questions though okay terrific and be working too great thank you okay no um so let us go to the floor um let us um well actually why don't we is anybody monitoring the floor do you know what's going on there do you want to be there now or that s88 when I checked in with somebody but I don't know if they passed out the other two bills or whether they started with s88 okay I we could ask Chris to walk us through the fiscal note right now is what I'm let's do that okay let's do fiscal note right now so thank you for joining us Mr. Roop um pleasure yeah we we've actually not attended at all to the kind of appropriation details in this bill and there are some and so if you'll help us understand those please um madam chair would you prefer that I share my screen or can everybody bring it up on their secondary devices we we like um secondary devices including paper so no screen share very good um that the fiscal note is uploaded on the jfo website um so I attempted to to summarize in some bullet points sort of the top line um fiscal impacts here um and I'll spend some time just sort of briefly going over those um you know expanding the membership of the pick from seven to ten members um adds two additional public members who would be entitled to per diem and expense reimbursement so you know that that is a pretty small fiscal impact but I did add it in here and estimated at about $250 a meeting when you when you factor in what the per diem and estimated expense reimbursements could be you know working from working in a remote environment may change realistically what your what your expense reimbursements are um because people tend to be incurring fewer expenses when they're working at home but um overall the the impact of adding those members is rather de minimis and uh depick to you know they don't meet every single month but they meet roughly monthly sometimes they might meet twice a month so you know this doesn't translate into a very significant fiscal impact by adding these two public members and with all of the expenses related to depick um their costs are paid by the the assets of the respective retirement funds that they manage and uh those costs are assessed based in proportion to those assets um section three of the bill requires a governance study um so to take a look at depick's current operations in a relationship with the treasurer's office and propose uh you know what would it take to sort of spin them off and become a more independent um entity that study's already underway um right now it's in its earliest stages um i spoke to the treasurer's office they expect this cost will be you know way less than $100,000 i don't think they've exactly had the bill yet but this is codifying into statute what they're already doing so um this does not represent you know an additional cost um above and beyond uh what they're currently doing so sections four six and eight of the bill excuse me uh mr roo and so they are those costs associated with that analysis is already being covered by existing budgets or evidently out of the retirement system so that's not a new cost to us that's correct thank you so sections four six and eight of the bill and they all amend different statutes but they're all they're all pertain to the different uh three retirement systems uh those are the provisions that increase the frequency of the experience studies from every five years to every three years uh you know that that means that over a 30-year period you'd be doing four more experience studies than you would be otherwise you know if you're on a five-year cycle you'd be doing six over 30 years if you're on a three-year cycle you'd be doing 10 so um most recently uh they performed experience studies and and the costs ended up being um for each of those studies in the ballpark of uh $25,000 give or take a few thousand and i added those numbers later in the fiscal note um you know and again those are paid from from the respective retirement funds so you know adding these additional studies will will translate into our rather small impact on a year-to-year basis um few thousand dollars um but you know adding adding four more studies over a 30-year period you know if you project out from those current from those current recent costs you know you're looking at anywhere from 96,000 to 112,000 of extra costs per system over a 30-year period and and again these are subject to inflationary pressures and since these studies are done through professional service contracts that have to be you know RFP that and renewed on a periodic basis you know there's some unknown cost growth that will happen from year to year but um you know and it's really hard to project these things out over a 30-year time horizon but we're not looking at very very significant changes in the context of funds that have billions of dollars of assets um and quite frankly the experience study cost estimates we got from the church's office were less than I thought they would be um pivoting over to the task force at the top of page two um you know the 15 member task force most of the expenses that are envisioned would be per DMN expenses for the respective members for the legislative members um the estimate uh that our team arrived at was roughly 20,000 dollars that would that would fall to the budget of the general assembly um most of those costs would fall into FY 22 but since the the first meeting would be convened in FY 21 um you know by by June 15th you know there will be some proportion of expenses that would fall in FY 21 um I've been told that those costs will likely be able to be absorbed in the existing general assembly budget and the bill contemplates uh paying for the per diems and expenses for those six legislative members to come out of the general assembly's budget for the uh public members on the committee that are not state employees the budget contemplates um assessing those expenses to the budget of the state treasurer we expect those will be you know in the ballpark of about 11,000 dollars or so because the per DM rate is lower um then for the legislative members and again this would be an area where you'd have some costs fall in FY 21 but most of it would fall in FY 22 depending on the based on the timing of the meeting schedule and and if if the meetings are still being performed in a remote environment it's likely that um you know reimbursable expenses are probably going to be a little bit less than we're accustomed to estimating and budgeting for based on historical data um the most significant fiscal impact here that that I think is that is new would be um section 10 of the bill right toward the very end calls for an appropriation of up to 200,000 dollars in the general fund for contracted advisory services to support the work of the task force so this would be the actuarial services that Representative Gannon mentioned legal services and any other sort of contracted um advisory services that that may be needed to support the work I think it's it's envisioned that we could add on to the existing contracts for the existing actuary um it's it's much more cost efficient to use the existing actuary who is already already has our data loaded into their computers they already have our models they understand our system um so it's much easier to to sort of ask them to do additional work and pay them for that work than to go out and try to bring another actuary in and bring them up to speed and everything else so I think that's that's the arrangement that's contemplated there the bill does not specify where that 200,000 dollar appropriation should live in terms of a department but it does specify um you know supporting supporting the work of the task force with 200,000 dollars from the general fund so those are that's the high level overview of the fiscal impacts I have more detail further down in the note that just arrives at some of the methodology and some statutory citations and you know I'm happy to go into that in further detail if anybody would like but I tried tried to keep this uh rather high level so you could you could get the main summary from looking at the first two pages thank you uh representative can uh Jessup thank you Madam Chair um Mr. Rue before maybe you were already on the call I was curious about the actuary and uh Rep Ganon mentioned um a possibility of doing an audit and again I don't pretend to have any expertise of this but if there were to be any tweak to that section um that any additional cost would would be on that 200,000 here in section 10 and it would be difficult to predict what that range might be because I'm obviously being incredibly vague right now right I think you're correct um and and you know quite frankly an actuarial audit might might take a little longer than than the task force's work is envision I think the actuarial work that the task force would be realistically asked to do ask them to do would be model out different scenarios so what would be what would the impact be if we change this benefit provision or you know if if people would like to see what a new plan for new hires would look like what how do you cost that out and what would the normal cost be and you know is that more or less expensive than the current plan so I think that's the type of work um we would envision that the task force would most frequently be asking the actuary to model out and it all comes down you know the actual cost comes down to how complex is the work and and how much time does it take so if if you can build off sort of their existing models that cost will be much lower than um giving them something that's that's you know a complete blank slate or or or asking them to work back to arrive to a number if we say here here's a scenario we want you to project out forward that is a much easier thing for them to do than to say you know here's a number tell us what we need to do to back into it representative tanson thank you madam chair um mr just double checking with regard to the the two references to section 10 for the task force the three figures there's the 20 000 the 11 000 and the 200 000 is the bottom line source for those three amounts the general fund I believe so yes and I think that the first two numbers you throughout are likely able to be absorbed through existing appropriations they're not they're not particularly large amounts but the yeah the 200 000 for the professional services was the the bill stipulates um general thank you thank you other questions for mr rube another piece of this bill is the contemplation of uh creating v pic as an independent organization right now it is housed under in the treasurer's office um what we're going to get a recommendation I believe on how to think about that in forgetting yeah yeah madam chair that's part of the the governance study that um it stipulated in the bill but that work is already underway right now um v pic has begun that work um on their own initiative to take a look at you know what what would what would be entailed with spinning off their operations to be an independent entity so um I noted in the fiscal note that since that's already underway and we're just sort of this bill would just sort of codify that into statute and formally ask them to do it that doesn't represent an additional cost above and beyond what they're already doing but I think that the results of that study would inform what future costs may be to to ultimately spin them off to to an independent entity thank you and then that's where I'm going is what uh so it is thinking that there could be an independent office and so we need to be aware that we may be supporting creating an additional cost at a later date um and just remind me so this this governance study is ongoing are we likely to see the creation of this as an independent organization in 2022 or is that 23 that's a great question I'm not sure I have the answer on on the timing I think the study is in its earliest stages um but it is underway um I'm not sure when they expect it to be done um one one point I just want to note is um you know currently under the statute depicts expenses are assessed back to the retirement funds that they managed so um they you know the general fund really doesn't support their operations the way you know it would if it was if it was some other entity or independent entity so you know I I'm sure that the report will address that but um whenever we're looking at what what the cost may be to to support VPIC as a freestanding entity those costs would fall to what would be assessed in proportion to the assets they manage so therefore we would be creating an additional cost to those funds I think we would need to understand what that cost would be I'm teasing being amused by this okay um I can sit with that other other questions with regard to the fiscal note folks anything else you need to know in order you know so they're very broad and interesting policy questions before us thinking about our role on the appropriations committee what do you need to know from just an appropriation standpoint in order to make a decision on this bill do you need additional information um related to this representative Fagan thank you no I'm good with the information I'm I think we are we're we're darn close here the only issue and and Chris Roop brought it up earlier the $200,000 for the uh for the contract support for the actuary and legal assistance is not really um we haven't directed it to any entity and I would recommend that we direct that to the treasurer's office uh that's my that's my initial thinking maybe rep Ganon can give give me a thumbs up or a sign you know let me know if if that was kind of in line with their thinking as well uh represent Fagan that that could be one place to put it um it makes sense I mean I I would agree I think it does make sense other than that having read the bill and read the fiscal note I don't see anything else we need to really amend okay I'm just looking to the rest of the committee um we we do need to think about where we're getting $200,000 to remember that usually is an issue um okay so with that why aren't I shall we adjourn and I guess I'm hearing you say you don't need additional information so I see you made up so we don't necessarily have to come back together again before this afternoon is that correct okay um representative Townsend thank you Madam Chair my apologies for not having been quicker with finding my little hand icon um circling back to that issue of where to house the $200,000 um is do we need to be um inquiring or anything or being sensitive in any way with regard to the treasurer's office and and just saying that's where it would be housed if I I asked that given that I believe I heard conversation in listening to discussions in in gov ops that the uh the treasurer was wanting some distance from from the work of the task force do I remember that correctly yes representative Townsend I think that is a lot correct um but with that said I mean the treasurer has been very involved with working on VPICS governance and supports the recommendations that are in this bill um with respect to the task force I think she wanted uh you know some distance and this $200,000 is supporting the work of the task force yes so a recommendation could be it be with the treasurer an alternative recommendation is that it could be with the legislature um we are essentially a convener of the task force by passing this legislation if we do um so that's another place to put it one of the other questions that we haven't asked ourselves that I'll come back to because there are other hands here uh rec felt us well I was just going to suggest jfo as the source of the $200,000 since they are supposed to be giving technical assistance to the task force anyway ask them to make the contracts as requested yeah um yes another another alternative um representative shy yeah just quickly and I I kind of like uh rep belt is a suggestion of jfo I'm just I have a quick process question is in terms of are we voting this out today or next week or what's our timeline Tuesday okay thank you um so one of the things this task force says that I mean the creation of the task force says the technical assistance is provided to jfo and the office of legislative operations um normally we're very careful and would be asking jfo and ledge council or ledge operations if they are able to do this very frequently we say oh jfo can do it and their list is too long did you have this conversation with um j with both ledge counts or ledge ops and jfo rep gannon about their capacity to do this work um I don't think we did I mean I think with respect well I think I think chris I mean we've talked with chris about his capacity to handle the work um and he has been always available to our committee um when we've needed him to to deal with many of the complex issues um that underlie this bill um so I mean I think maybe chris can speak to that better than I can yeah if I if I may madam chair I believe I mean I'm I'm happy to help however though I certainly don't speak for jfo I do think this is going to have to be a team effort in order for it to be successful so you know I think you know realistically regardless of what is said in in the wording of the statute um it's going to be an all hands on deck effort um you know throughout all the offices of the legislature as well as the treasurer and you know the the language also does stipulate that that the treasurer's office would be providing a level of assistance um to the effort as well um which would mirror what um what past practice has been with prior task forces that have looked at pension issues I appreciate that I um I personally believe this is a high a high level priority for the legislature but we need to be very cognizant of capacity of staff to be able to do this work rep of um miss Wasserman I I I don't want to put staff either mr rup or you on in an awkward place but has there been a conversation within your shop about supporting this or can you direct us to whom we should speak um yeah I think uh this um I think the supervisors in lech council and um also lech operations would be the best yeah people to speak to um so I just want to say that the bill is does not specifically say lech council it's it's um asking for the committee support services from legislative operations so I can't really speak to their capacity to do that um and right now it is just asking for the for sort of fiscal assistance from jfo and I think it was mostly contemplating a lot of the assistance coming from the treasurer's office um in terms of contracting um kind of just going along with what chris said I think realistically you can you can put jfo but I know I I draft the most of the contracts for the legislature and if it's done with jfo it is definitely sort of a group effort between us to get that done so I guess realistically it is it is an additional task for lech council too to um be drafting those contracts if that's what is being asked so I think I think maybe for chris and I would be better if you know Steve and Jen and Mike and Mike ferrott Michael Grady and Mike ferrott were the ones who spoke to capacity okay thank you I think that's wise it's not fair to put you all in that position I just don't want us to assume that oh this will happen um and so this I so I'm imagining that there is a thought that we will just um we need to be you know somebody needs to be setting up zoom meetings and sending out meeting invitations and all of that and that's one sort of work but there is additional work perhaps of research and um a different type of work and so which I again is what um legislative operations etc as well as jfo provide rep gannon had you thought would this task force need specific assistance um you know a dedicated staff person over the course of it I mean I just don't want to hobble you by not having provided the the proper level of support to make this work well right now that that's a great question madam chair I want to say two things first of all I mean you mentioned research so one of the things that $200,000 for the task force to do is to hire a league outside legal council and that will be to assess any legal issues around benefit changes um and so as far as that type of work goes um that's contemplated to be done by outside council um with respect to legislative council staffing um the task force I do think based on my experience in sitting on various um legislative summer study groups I think that would be beneficial yeah okay so let's just again we just need to put our brains around that a wee bit to make sure we're properly supporting it representative yacoboni I don't want to assume anything but is there a way to uh front the money and then to recoup it through some kind of a billback through state government and thereby get the federal participation to help us on this I'd be surprised if the $200,000 is enough but that's you know I see you smiling madam chair I think well I just love you see this is what we're supposed to do how to stretch dollars how do one dollar turn into two dollars it's a design of a fringe benefit the way I look at it and and the departments pay the fringe benefits of all the staff just like they pay HR they pay for that but maybe it's a stretch maybe jfo could advise us I don't know yeah okay we can put some yeah okay thank you um others not seen any show uh shall we I'm not thinking of anything any stone that we haven't picked up um so shall we go to the floor be back here um I keep forgetting is it at one or one fifteen must be 115 our usual time child advocate we one one o'clock one o'clock okay one o'clock go to the floor be back here at one o'clock be ready to with the new bill on the child advocate so it's going to look different than what we have seen um and they need to take all the testimony we can on that so that you're prepared to make a decision and vote it out on Tuesday morning um and then we'll have more conversations about the pension bill but again to be clear the intention is to also move the pension bill out on on Tuesday so be thinking so that we're ready to do that anything else representative Harrison yeah thank you madam chair um earlier there were some comments made about you know putting additional bumper guards as to the pension bill any changes we could do and I I'm very very sympathetic to them however I guess in this case I would encourage us to look at what house gov ops did and not tie the hands of the task force you know arguably nothing should be exempt but certainly we want to protect current retirees um in our hearts so and and not give them angst that we're going to change anything so I would in gov ops has done has not had an easy task I have to tell you you know I was probably happy at times that I was no longer on gov ops uh especially when I was watching those public hearings um so um I would encourage us to you know do whatever we can to endorse their hard work this is not a done deal this is going to be an ongoing conversation uh and we are going to be dealing with this issue next January one way or another so um let's let's continue the conversation and hopefully we get something done thank you so thank you for that and so there was a suggestion that some bumpers be put around the analysis and there was also a suggestion that we that um there should also be an analysis of other benefits and the compensation structure of the entire system and similarly I think it would be wise to not go down that area also we can all think of ways that we would try to manage the system differently but if we put all of those ways on the table now we will get nothing done and I think what what gov ops has tried to do is to discreetly state a problem to be solved and not allow other problems to trickle into the resolution of what I hope we regard just from a straight appropriation standpoint of a profound issue with the increasing cost of pensions crowding out or crowding the work that our dollars have to do across the board um in needing to attend to that um rep leclerc thank you madam just be quick I agree with a member from chitin and with exception of I think we should maybe take a look at the current retirees and the teachers fund maybe just exclusively from chitin and county however oh what a there there's some payback that will happen there um rep yakavoni I appreciate what the member from chitin and said and I appreciate your comments too madam chair but to some um moral issues um need to be addressed and I personally feel that someone has committed much of their work life in service to the state I would be complicit if I was silent so I may I may realizing it may not be successful I may offer a guardrail amendment and I hope that's not disrespectful it's just something I feel strongly about thank you thank you and rep gain and remind us of what the conversation in your committee and I think what I understood you to say the intentions were that of of holding um harmless um let serato and trying to put words you tell us what the conversation was initial um proposal on the table which reduced benefits in some cases um two of our goals were not to harm existing retirees and not to harm folks within five years of retirement um and I will say to um sort of address some some of these things around guardrails I think there are a lot of legal restraints or restraints on touching retiree benefits um and and Becky Wasserman may be able to talk about that um with respect to people within five years of retirement I think that was just you know us acting in good faith um because we did not want to um impact people that are close to retirement who are already making decisions about how to spend those benefits okay thank you um so perhaps we'll have a continuing conversation about about that um which is good that's exactly what we're trying to identify right now okay don't folks um anything else that the people need to raise and I really am looking for asking you to say these are the substantive issues that I need to have resolved in order to make a decision on this bill from an appropriations committee standpoint not seeing any okay let us go to the floor and then back here at one will you take us off live to read